Exhibit 99.20
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LUMINENT MORTGAGE CAPITAL, INC.,
MAIA MORTGAGE FINANCE STATUTORY TRUST,
MERCURY MORTGAGE FINANCE STATUTORY TRUST
each, an Owner
and
CENTRAL MORTGAGE COMPANY
Servicer
SERVICING AGREEMENT
Dated as of July 17, 2006
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS...................................................... 1
Section 1.01 Defined Terms.............................................. 1
ARTICLE II SERVICING OF MORTGAGE LOANS; POSSESSION OF SERVICING FILES;
BOOKS AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS.................. 10
Section 2.01 Servicing of Mortgage Loans................................ 10
Section 2.02 Maintenance of Servicing Files............................. 11
Section 2.03 Books and Records.......................................... 11
Section 2.04 Transfer of Mortgage Loans................................. 11
Section 2.05 Delivery of Mortgage Loan Documents........................ 12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SERVICER................. 12
ARTICLE IV ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.................. 14
Section 4.01 Servicer to Act as Servicer................................ 14
Section 4.02 Collection of Mortgage Loan Payments....................... 16
Section 4.03 Realization Upon Defaulted Mortgage Loans.................. 16
Section 4.04 Establishment of Custodial Accounts; Deposits in
Custodial Accounts......................................... 17
Section 4.05 Permitted Withdrawals From the Custodial Account........... 18
Section 4.06 Establishment of Escrow Accounts; Deposits in
Escrow Accounts............................................ 19
Section 4.07 Permitted Withdrawals From Escrow Account.................. 20
Section 4.08 Payment of Taxes, Insurance and Other Charges,
Maintenance of Primary Mortgage Insurance Policies,
Collections Thereunder..................................... 21
Section 4.09 Transfer of Accounts....................................... 22
Section 4.10 Maintenance of Hazard Insurance............................ 22
Section 4.11 Blanket Hazard Insurance................................... 23
Section 4.12 Fidelity Bond, Errors and Omissions Insurance.............. 23
Section 4.13 Title, Management and Disposition of REO Property.......... 24
Section 4.14 Notification of Adjustments................................ 25
ARTICLE V PAYMENTS TO THE OWNER............................................ 26
Section 5.01 Remittances................................................ 26
Section 5.02 Statements to the Owner.................................... 26
Section 5.03 Monthly Advances by the Servicer........................... 26
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Section 5.04 Liquidation Reports........................................ 27
ARTICLE VI GENERAL SERVICING PROCEDURES.................................... 27
Section 6.01 Assumption Agreements...................................... 27
Section 6.02 Satisfaction of Mortgages and Release of Mortgage
Loan Documents............................................. 28
Section 6.03 Servicing Compensation..................................... 29
Section 6.04 Annual Statement as to Compliance; Financial Statements.... 29
Section 6.05 Annual Independent Certified Public Accountants'
Servicing Report........................................... 29
Section 6.06 Owner's Right to Examine Servicer Records.................. 30
Section 6.07 Compliance with REMIC Provisions........................... 30
Section 6.08 Non-solicitation........................................... 30
Section 6.09 Annual Certification and Indemnification................... 30
ARTICLE VII REPORTS TO BE PREPARED BY SERVICER............................. 31
Section 7.01 Servicer Shall Provide Information as Reasonably Required.. 31
ARTICLE VIII THE SERVICER.................................................. 31
Section 8.01 Indemnification; Third Party Claims........................ 31
Section 8.02 Merger or Consolidation of the Servicer.................... 32
Section 8.03 Limitation on Liability of the Servicer and Others......... 32
Section 8.04 Servicer Not to Resign..................................... 33
Section 8.05 No Transfer of Servicing................................... 33
ARTICLE IX DEFAULT......................................................... 34
Section 9.01 Events of Default.......................................... 34
Section 9.02 Waiver of Defaults......................................... 35
ARTICLE X TERMINATION...................................................... 36
Section 10.01 Termination................................................ 36
Section 10.02 Removal of Mortgage Loans from Inclusion Under this
Agreement Upon a Securitization Transaction or Whole
Loan Transfer.............................................. 36
ARTICLE XI COMPLIANCE WITH REGULATION AB................................... 38
Section 11.01 Intent of the Parties; Reasonableness...................... 38
Section 11.02 Additional Representations and Warranties of the Servicer.. 39
Section 11.03 Information to Be Provided by the Servicer................. 39
Section 11.04 Servicer Compliance Statement.............................. 43
Section 11.05 Report on Assessment of Compliance and Attestation......... 43
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Section 11.06 Use of Subservicers and Subcontractors..................... 44
Section 11.07 Indemnification; Remedies.................................. 45
Section 11.08 Third Party Beneficiary.................................... 47
ARTICLE XII MISCELLANEOUS PROVISIONS....................................... 48
Section 12.01 Successor to the Servicer.................................. 48
Section 12.02 Amendment.................................................. 49
Section 12.03 Governing Law.............................................. 49
Section 12.04 Notices.................................................... 49
Section 12.05 Severability of Provisions................................. 50
Section 12.06 Exhibits and Schedules..................................... 50
Section 12.07 General Interpretive Principles............................ 51
Section 12.08 Reproduction of Documents.................................. 51
Section 12.09 Confidentiality of Information............................. 51
Section 12.10 Assignment by the Owner.................................... 52
Section 12.11 No Partnership............................................. 52
Section 12.12 Counterparts; Successors and Assigns....................... 52
Section 12.13 Entire Agreement........................................... 52
Section 12.14 Further Agreements......................................... 52
Section 12.15 Third Party Beneficiary.................................... 52
EXHIBITS
Exhibit A Mortgage Loan Schedule
Exhibit B Custodial Account Letter Agreement
Exhibit C Escrow Account Letter Agreement
Exhibit D Form of Request for Release of Documents
Exhibit E Form of Xxxxxxxx-Xxxxx Certification
Exhibit F Format for Monthly Loan Remittance Data
Exhibit G Default Reporting Format
Exhibit H Format for Reporting Realized Losses or Gains
Exhibit I Servicing Criteria To Be Addressed In Assessment Of Compliance
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Exhibit J Form Of Back-Up Certification
Exhibit K Special Foreclosure Rights
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THIS IS A SERVICING AGREEMENT, dated as of July 17, 2006 (the "Agreement"), and
is executed between Luminent Mortgage Capital, Inc., Maia Mortgage Finance
Statutory Trust, Mercury Mortgage Finance Statutory Trust (as applicable, the
"Owner") and Central Mortgage Company (the "Servicer").
WITNESSETH:
WHEREAS, The Owner will acquire Mortgage Loans on a servicing-related basis
from one or more sellers (each, a "Seller") from time to time.
WHEREAS, the Owner and the Servicer desire that, from and after the related
Effective Date, the Mortgage Loans which are subject to this agreement will be
serviced by the Servicer on behalf of the Owner in accordance with the terms and
provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Owner and the Servicer agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, all
applicable federal, state and local laws and regulations and those mortgage
servicing practices and procedures (including collection practices and
procedures) of prudent mortgage banking institutions which service mortgage
loans of the same type as such Mortgage Loan in the jurisdiction where the
related Mortgaged Property is located and which, except as otherwise
specifically provided herein, are no lower than the standards employed by the
Servicer in servicing similar mortgage loans for its own account and the
standards established by Xxxxxx Mae under the Xxxxxx Xxx Guide with respect to
similar mortgage loans that are purchased by and serviced on behalf of Xxxxxx
Mae.
Adjustment Date: As to each ARM Loan, the date on which the Mortgage
Interest Rate is adjusted in accordance with the terms of the related Mortgage
Note and Mortgage.
Agreement: This Servicing Agreement including all exhibits hereto,
amendments hereof and supplements hereto.
ARM Loan: A first lien, conventional, 1-4 family residential Mortgage
Loan with an interest rate which adjusts from time to time in accordance with
the related Index and is subject to a Periodic Rate Cap and a Lifetime Rate Cap
and which may permit conversion to a fixed interest rate.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a
legal holiday in the States of Arkansas, California, Pennsylvania, New York or
the jurisdiction in which the Servicer conducts its servicing activities, or
(iii) a day on which banking and savings and loan institutions in the States of
Arkansas, California, Pennsylvania, New York or the jurisdiction in which the
Servicer conducts its servicing activities are authorized or obligated by law or
executive order to be closed.
Code: The Internal Revenue Code of 1986, as it may be amended from
time to time, or any successor statute thereto, and applicable U.S. Department
of the Treasury regulations issued pursuant thereto.
Commission: The United States Securities and Exchange Commission.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Custodial Account: The separate demand account or accounts created and
maintained pursuant to Section 4.04 which shall be entitled "Central Mortgage
Company Custodial Account in trust for [Owner]" and shall be established at a
Qualified Depository.
Custodial Agreement: Any agreement among a Custodian, the Owner and
the Servicer, providing for the custody of Mortgage Loan Documents.
Custodian: Any document custodian holding Mortgage Loan Documents
pursuant to the terms of a Custodial Agreement.
Depositor: The depositor, as such term is defined in Regulation AB,
with respect to any Securitization Transaction.
Determination Date: The 15th day of any month, or if such 15th day is
not a Business Day, the first Business Day immediately preceding such 15th day.
Due Date: With respect to any Mortgage Loan, each day on which
payments of principal and interest are required to be paid in accordance with
the terms of the related Mortgage Note, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period
commencing on the second day of the month preceding the month of such Remittance
Date and ending on the first day of the month of such Remittance Date.
Effective Date: With respect to the Mortgage Loans initially subject
hereto, September 1, 2006, or such later date as is mutually agreed. With
respect to additional Mortgage Loans to be subject hereto from time to time, the
date set forth in the related Transmission (which shall be the closing date of
the sale of the related Mortgage Loans by the Seller to the Owner).
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Escrow Account: The separate trust account or accounts created and
maintained pursuant to Section 4.06 which shall be entitled "Central Mortgage
Company Escrow Account, in trust for [Owner] and various Mortgagors" and shall
be established at a Qualified Depository.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other related
document.
Event of Default: Any one of the conditions or circumstances
enumerated in Section 9.01.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Xxxxxx Xxx: Xxxxxx Xxx, or any successor thereto.
Xxxxxx Mae Guide: The Xxxxxx Xxx Selling Guide and the Xxxxxx Mae
Servicing Guide and all amendments or additions thereto.
Fidelity Bond: A fidelity bond to be maintained by the Servicer
pursuant to Section 4.12.
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement
Act of 1989, as amended from time to time.
Xxxxxxx Mac: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
Xxxxxxx Mac Guide: The Xxxxxxx Mac Selling Guide and the Xxxxxxx Mac
Servicing Guide and all amendments or additions thereto.
Full Principal Prepayment: A Principal Prepayment made by a Mortgagor
of the entire principal balance of a Mortgage Loan.
GAAP: Generally accepted accounting principles and procedures,
consistently applied.
HUD: The United States Department of Housing and Urban Development or
any successor thereto.
Index: With respect to each ARM Loan, the index, as specified in the
related Mortgage Note, used to determine the Mortgage Interest Rate on each
Adjustment Date on such ARM Loan.
Index Rate: With respect to each ARM Loan, on each Adjustment Date,
the rate per annum equal to the Index, calculated as provided in the related
Mortgage Note.
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Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Lifetime Rate Cap: With respect to each ARM Loan, the maximum Mortgage
Interest Rate over the term of such Mortgage Loan, as specified in the related
Mortgage Note.
Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, other than amounts
received following the acquisition of an REO Property pursuant to Section 4.13.
LMPI Rate: With respect to each Mortgage Loan with a lender-paid
Primary Mortgage Insurance Policy, the rate per annum for such Mortgage Loan
specified in the Mortgage Loan Schedule.
Margin: With respect to each ARM Loan, the fixed percentage amount set
forth in the related Mortgage Note which is added to the Index in order to
determine the related Mortgage Interest Rate.
Master Servicer: With respect to any Securitization Transaction, the
"master servicer" and/or "securities administrator," if any, identified in the
related transaction documents.
Monthly Advance: The portion of each Monthly Payment that is
delinquent with respect to each Mortgage Loan at the close of business on the
Determination Date required to be advanced by the Servicer pursuant to Section
5.03 on the Business Day immediately preceding the Remittance Date of the
related month.
Monthly Payment: With respect to each Mortgage Loan, the scheduled
monthly payment of principal and interest thereon which is payable by the
related Mortgagor under the related Mortgage Note.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a lien on real property securing the Mortgage Note.
Mortgage Interest Rate: The annual rate at which interest accrues on
any Mortgage Loan in accordance with the provisions of the related Mortgage
Note, and in the case of an ARM Loan, as adjusted from time to time on each
Adjustment Date for such Mortgage Loan to equal the Index Rate for such Mortgage
Loan plus the Margin for such Mortgage Loan, and subject to the limitations on
such interest rate imposed by the Periodic Rate Cap and the Lifetime Rate Cap.
Mortgage Loan: An individual Mortgage Loan described herein and as
further identified on the Mortgage Loan Schedule, as amended from time to time,
which Mortgage Loan includes without limitation the Mortgage Loan Documents, the
Monthly Payments, Principal Prepayments, Prepayment Penalties, Liquidation
Proceeds, Condemnation Proceeds, Insurance Proceeds, REO Disposition Proceeds
and all other rights, benefits, proceeds and obligations arising from or in
connection with such Mortgage Loan.
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Mortgage Loan Documents: With respect to each Mortgage Loan, the
original mortgage loan legal documents held by the Owner or by a Custodian on
the Owner's behalf.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Owner, which shall be equal to the
related Mortgage Interest Rate minus the Servicing Fee Rate and if applicable,
the LPMI Rate and the Pool Rate.
Mortgage Loan Schedule: The schedule of Mortgage Loans attached hereto
as Exhibit A, as supplemented from time to time in accordance with the
provisions hereof.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The underlying real property securing repayment of
the debt evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Nonrecoverable Advance: Any advance previously made by the Servicer
pursuant to Section 5.03 or any Servicing Advance which, in the good faith
judgment of the Servicer, will not be ultimately recoverable by the Servicer
from Liquidation Proceeds or other proceeds of the related Mortgage Loan. The
determination by the Servicer that is has made a Nonrecoverable Advance, shall
be evidenced by an Officer's Certificate of the Servicer delivered to the Owner
and detailing the reasons for such determination.
Officers' Certificate: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Senior Vice President or
a Vice President or by the Treasurer or the Secretary or one of the Assistant
Treasurers or Assistant Secretaries of the Servicer, and delivered to the Owner
as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the party on behalf of whom the opinion is being given, reasonably
acceptable to the other party.
Owner: Luminent Mortgage Capital, Inc., Maia Mortgage Finance
Statutory Trust, Mercury Mortgage Finance Trust, as applicable, and their
respective successors in interest and assigns (including the Trustee in
connection with a Securitization Transaction).
Partial Principal Prepayment: A Principal Prepayment by a Mortgagor in
part but not in full of the outstanding principal balance of a Mortgage Loan.
Periodic Rate Cap: With respect to each ARM Loan, the maximum number
of percentage points by which the Mortgage Interest Rate may increase or
decrease on any Adjustment Date.
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Permitted Investments: Any one or more of the following obligations or
securities:
(i) direct obligations of, and obligations the timely payment of which
are fully guaranteed by the United States of America or any agency or
instrumentality of the United States of America the obligations of
which are backed by the full faith and credit of the United States of
America;
(ii) (a) demand or time deposits, federal funds or bankers'
acceptances issued by any depository institution or trust company
incorporated under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal
and/or state banking authorities, and (b) any other demand or time
deposit or certificate of deposit that is fully insured by the FDIC;
(iii) repurchase obligations with respect to (a) any security
described in clause (i) above or (b) any other security issued or
guaranteed by an agency or instrumentality of the United States of
America, the obligations of which are backed by the full faith and
credit of the United States of America, in either case entered into
with a depository institution or trust company (acting as principal)
described in clause (ii)(a) above;
(iv) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of
America or any state thereof; provided, however, that securities
issued by any particular corporation will not be Permitted Investments
to the extent that investments therein will cause the then outstanding
principal amount of securities issued by such corporation and held as
Permitted Investments to exceed 10% of the aggregate outstanding
principal balances and amounts of all the Permitted Investments;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance
thereof);
(vi) any other demand, money market or time deposit, obligation,
security or investment as may be acceptable to each Rating Agency; and
(vii) any money market funds the collateral of which consists of
obligations fully guaranteed by the United States of America or any
agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the
United States of America (which may include repurchase obligations
secured by collateral described in clause (i));
provided, however, that no instrument or security shall be a Permitted
Investment if such instrument or security evidences a right to receive only
interest payments with respect to the obligations underlying such instrument or
if such security provides for payment of both principal and interest with a
yield to maturity in excess of 120% of the yield to maturity at par; and
provided further that any such instrument or security must be payable on demand
or on a
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specified date not later than the Remittance Date on which amounts held therein
are required to be distributed.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization, government or any agency or political subdivision
thereof.
Pool Rate: With respect to any group of Mortgage Loans covered by a
pool mortgage insurance policy, the rate per annum set forth in the Confirmation
or Reconstitution with respect thereto.
Prepayment Interest Shortfall: On any Remittance Date, the sum of the
differences between (a) interest actually received in a Due Period as a result
of a Full Principal Prepayment or Partial Principal Prepayment or other
unscheduled receipt of principal (including as a result of a liquidation) on
each Mortgage Loan as to which such a payment is received and (b) the scheduled
interest portion of the Monthly Payment of such Mortgage Loan, adjusted to the
applicable Mortgage Loan Remittance Rate.
Prepayment Penalties: With respect to any Mortgage Loans, any
prepayment penalty or premium thereon payable in connection with a Principal
Prepayment on such Mortgage Loan pursuant to the terms of the related Mortgage
Note.
Primary Mortgage Insurance Policy: Each primary policy of mortgage
insurance, or any replacement policy therefor obtained by the Servicer pursuant
to Section 4.08.
Prime Rate: The prime rate of U.S. money center banks as published
from time to time in The Wall Street Journal.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan, full or partial, which is received in advance of its scheduled
Due Date, including any prepayment penalty or premium thereon, and which is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.
Qualified Appraiser: An appraiser, duly appointed by the Servicer, who
had no interest, direct or indirect, in the Mortgaged Property or in any loan
made on the security thereof, and whose compensation is not affected by the
approval or disapproval of the Mortgage Loan, which appraiser and the appraisal
made by such appraiser both satisfy the requirements of Title XI of FIRREA and
the regulations promulgated thereunder, all as in effect on the date the
Mortgage Loan was originated.
Qualified Depository: A deposit account or accounts maintained with a
federal or state chartered depository institution the deposits in which are
insured by the FDIC to the applicable limits and the short-term unsecured debt
obligations (or, in the case of a depository institution that is a subsidiary of
a holding company, the short-term unsecured debt obligations of such holding
company) at the time any deposits are held on deposit therein and that is
acceptable to Xxxxxx Xxx or Xxxxxxx Mac for similar accounts with respect to
mortgage loans serviced for Xxxxxx Mae or Xxxxxxx Mac, as the case may be.
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Qualified Insurer: An insurance company duly qualified as such under
the laws of the states in which the Mortgaged Properties are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, and approved as an insurer by
Xxxxxx Mae and Xxxxxxx Mac.
Rating Agency: Any of Standard & Poor's Ratings Service, a division of
The McGraw Hill Companies Inc., Xxxxx'x Investors Service, Inc., Fitch, Inc. or
Dominion Bond Rating Service.
Reconstitution: Any Securitization Transaction or Whole Loan Transfer.
Reconstitution Date: With respect to any Mortgage Loan, the date on
which such Mortgage Loan is removed from coverage by this Agreement upon a
Securitization Transaction or a Whole Loan Transfer.
Reg AB Servicer: As defined in Section 11.03(c).
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation
AB), 17 C.F.R. Sections 229.1100-229.1123, as such may be amended from time to
time, and subject to such clarification and interpretation as have been provided
by the Commission in the adopting release (Asset-Backed Securities, Securities
Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the
staff of the Commission, or as may be provided by the Commission or its staff
from time to time.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC Provisions: The provisions of the federal income tax law
relating to a REMIC, which appear at Section 860A through 860G of Subchapter M
of Chapter 1, Subtitle A of the Code, and related provisions, and regulations,
rulings or pronouncements promulgated thereunder, as the foregoing may be in
effect from time to time.
Remittance Date: The 18th day of any month, or if such 18th day is not
a Business Day, the first Business Day immediately following such 18th day.
REO Disposition: The final sale by the Servicer of any REO Property.
REO Disposition Proceeds: Amounts received by the Servicer in
connection with a related REO Disposition.
REO Property: A Mortgaged Property acquired by the Servicer on behalf
of the Owner as described in Section 4.13.
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction: Any transaction involving either (1) a
sale or other transfer of some or all of the Mortgage Loans directly or
indirectly to an issuing entity in connection with an issuance of publicly
offered or privately placed, rated or unrated mortgage-
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backed securities or (2) an issuance of publicly offered or privately placed,
rated or unrated securities, the payments on which are determined primarily by
reference to one or more portfolios of residential mortgage loans consisting, in
whole or in part, of some or all of the Mortgage Loans.
Seller: As defined in the recitals hereto.
Servicer: Central Mortgage Company, or any of its successors in
interest or any successor under this Agreement appointed as herein provided.
Servicer Information: As defined in Section 11.07(a).
Servicing Advances: All customary, reasonable and necessary
"out-of-pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred in the performance by the Servicer of its servicing
obligations relating to each Mortgage Loan, including the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement, administrative or judicial proceedings, or any legal work or advice
specifically related to servicing the Mortgage Loans, including foreclosures,
bankruptcies, condemnations, drug seizures, elections, foreclosures by
subordinate or superior lienholders, and other legal actions incidental to the
servicing of the Mortgage Loans (provided that such expenses are reasonable and
that the Servicer specifies the Mortgage Loan(s) to which such expenses relate),
(c) the management and liquidation of the Mortgaged Property if the Mortgaged
Property is acquired in full or partial satisfaction of the Mortgage, (d) taxes,
assessments, water rates, sewer rates and other charges which are or may become
a lien upon the Mortgaged Property, and Primary Mortgage Insurance Policy
premiums and fire and hazard insurance coverage and (e) compliance with the
obligations under Section 4.08.
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d)
of Regulation AB, as such may be amended from time to time.
Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual fee the Owner shall pay to the Servicer, which shall, for a period of one
full month, be equal to one-twelfth of the product of (a) the applicable
Servicing Fee Rate and (b) the outstanding principal balance of such Mortgage
Loan. Such fee shall be payable monthly, computed on the basis of the same
principal amount and period respecting which any related interest payment on a
Mortgage Loan is computed. The obligation of the Owner to pay the Servicing Fee
is limited to, and the Servicing Fee is payable from the interest portion of
such Monthly Payment collected by the Servicer or as otherwise provided under
Section 4.05.
Servicing Fee Rate: The Servicing Fee Rate with respect to each
Mortgage Loan shall be a rate per annum for such Mortgage Loan specified in the
Mortgage Loan Schedule.
Servicing File: The documents, records and other items pertaining to a
particular Mortgage Loan, and any additional documents relating to such Mortgage
Loan as are in, or as may from time to time come into, the Servicer's
possession.
Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing
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officers furnished by the Servicer to the Owner upon request, as such list may
from time to time be amended.
Stated Principal Balance: As to each Mortgage Loan as of any date of
determination, (i) the principal balance of such Mortgage Loan after giving
effect to payments of principal due, whether or not received, minus (ii) all
other amounts attributable to principal previously distributed to the Owner with
respect to the Mortgage Loan.
Subcontractor: Any vendor, subcontractor or other Person that is not
responsible for the overall servicing (as "servicing" is commonly understood by
participants in the mortgage-backed securities market) of Mortgage Loans but
performs one or more discrete functions identified in Item 1122(d) of Regulation
AB with respect to Mortgage Loans under the direction or authority of the
Servicer or a Subservicer.
Subservicer: Any Person that services Mortgage Loans on behalf of the
Servicer or any Subservicer and is responsible for the performance (whether
directly or through Subservicers or Subcontractors) of a substantial portion of
the material servicing functions required to be performed by the Servicer under
this Agreement or any Reconstitution Agreement that are identified in Item
1122(d) of Regulation AB.
Transmission: A notice, dated as of the related Effective Date, given
by the Owner to the Servicer, from time to time, pursuant to which additional
Mortgage Loans, as described on the schedule attached thereto (which schedule
shall become part of the Mortgage Loan Schedule as of the related Effective
Date), are made subject to the terms of this Agreement.
Trustee: The Person appointed as trustee in connection with any
Securitization Transaction.
Whole Loan Transfer: The sale or transfer of some or all of the
ownership interest in the Mortgage Loans by the Owner to one or more third
parties in whole loan or participation format, which third party may be Xxxxxx
Xxx or Xxxxxxx Mac.
ARTICLE II
SERVICING OF MORTGAGE LOANS; POSSESSION OF SERVICING FILES; BOOKS AND RECORDS;
DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01 Servicing of Mortgage Loans.
The Servicer does hereby agree to service the Mortgage Loans, from and
after the related Effective Date, pursuant to the terms of this Agreement. The
Mortgage Loans initially subject to this Agreement are described in the Mortgage
Loan Schedule attached hereto on the initial Effective Date. Additional Mortgage
Loans may be subject hereto pursuant to a Transmission to the Servicer by the
Owner, setting forth the Effective Date with respect thereto.
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Section 2.02 Maintenance of Servicing Files.
The Servicer shall maintain a Servicing File consisting of all
documents necessary to service the Mortgage Loans. The possession of each
Servicing File by the Servicer is for the sole purpose of servicing the related
Mortgage Loan, and such retention and possession by the Servicer is in a
custodial capacity only. The Servicer acknowledges that the ownership of each
Mortgage Loan is vested in the Owner. All rights arising out of the Mortgage
Loans including all funds received on or in connection with the Mortgage Loans
and all records or documents with respect to the Mortgage Loans prepared by or
which come into the possession of the Servicer shall be received and held by the
Servicer for the sole purpose of servicing the Mortgage Loans and such retention
and possession by the Servicer is in a custodial capacity only in trust for the
exclusive benefit of the Owner as the owner of the related Mortgage Loans. Any
portion of the related Servicing Files retained by the Servicer shall be
appropriately identified in the Servicer's computer system to reflect clearly
the ownership of the related Mortgage Loans by the Owner. The Servicer shall
release its custody of the contents of the related Servicing Files only in
accordance with written instructions of the Owner, except when such release is
required as incidental to the Servicer's servicing of the Mortgage Loans, such
written instructions shall not be required.
Section 2.03 Books and Records.
The Servicer shall be responsible for maintaining, and shall maintain,
a complete set of books and records for the Mortgage Loans which shall be
appropriately identified in the Servicer's computer system to clearly reflect
the ownership of the Mortgage Loan by the Owner. In particular, the Servicer
shall maintain in its possession, available for inspection by the Owner, or its
designee and shall deliver to the Owner upon demand, evidence of compliance with
all federal, state and local laws, rules and regulations, and requirements of
Xxxxxx Mae and Xxxxxxx Mac, as applicable, including documentation as to the
method used in determining the applicability of the provisions of the Flood
Disaster Protection Act of 1973, as amended, to the Mortgaged Property,
documentation evidencing insurance coverage and eligibility of any condominium
project for approval by Xxxxxx Mae and periodic inspection reports as required
by Section 4.13. To the extent that original documents are not required for
purposes of realization of Liquidation Proceeds or Insurance Proceeds, documents
maintained by the Servicer may be in the form of microfilm or microfiche or such
other reliable means of recreating original documents, including optical imagery
techniques so long as the Servicer complies with the requirements of the Xxxxxx
Xxx Guide.
The Servicer shall maintain with respect to each Mortgage Loan and
shall make available for inspection by the Owner or its designee the related
Servicing File (or copies thereof) during the time the Owner retains ownership
of a Mortgage Loan and thereafter in accordance with applicable laws and
regulations.
Section 2.04 Transfer of Mortgage Loans.
No transfer of a Mortgage Loan may be made unless such transfer is in
compliance with the terms hereof. For the purposes of this Agreement, the
Servicer shall be under no obligation to deal with any person with respect to
this Agreement or any Mortgage
Page 11
Loan unless a notice of the transfer of such Mortgage Loan has been delivered to
the Servicer in accordance with this Section 2.04. The Owner may, subject to the
terms of this Agreement, sell and transfer one or more of the Mortgage Loans in
accordance with Sections 10.02 and 11.11; provided, however, that the transferee
will not be deemed to be an Owner hereunder binding upon the Servicer unless
such transferee shall agree in writing to be bound by the terms of this
Agreement and an assignment and assumption of this Agreement reasonably
acceptable to the Servicer (except as provided in Section 10.02 with respect to
a Securitization Transaction by the Owner). The Owner also shall advise the
Servicer in writing of the transfer. Upon receipt of notice of the permitted
transfer, the Servicer shall xxxx its books and records to reflect such
assignee's ownership of the related Mortgage Loans, and the previous Owner shall
be deemed released from its obligations hereunder with respect to such Mortgage
Loans from and after the date of such sale or transfer without the necessity of
any action on the part of the Servicer.
Section 2.05 Delivery of Mortgage Loan Documents.
The Servicer shall forward to the Custodian on behalf of the Owner
original documents evidencing an assumption, modification, consolidation or
extension of any Mortgage Loan entered into in accordance with Section 4.01 or
6.01 promptly after their execution; provided, however, that the Servicer shall
provide the Custodian on behalf of the Owner with a certified true copy of any
such document submitted for recordation promptly after its execution, and shall
provide the original of any document submitted for recordation or a copy of such
document certified by the appropriate public recording office to be a true and
complete copy of the original promptly after receipt thereof, but in no event
later than 180 days after its execution, provided, however, that if delivery is
not completed within 180 days solely due to delays in making such delivery by
reason of the fact that such documents shall not have been returned by the
appropriate recording office, the Servicer shall continue to use its best
efforts to obtain such documents and effect delivery as soon as possible after
its receipt thereof.
From time to time the Servicer may have a need for Mortgage Loan
Documents to be released by the Custodian. If the Servicer shall require any of
the Mortgage Loan Documents, the Servicer shall notify the Custodian in writing
of such request in the form of the request for release attached hereto as
Exhibit D. During the time that any such documentation is held by the Servicer,
such possession is in trust for the benefit of the Owner, and the Servicer shall
return such documentation to the Custodian upon the request of the Owner or when
the Servicer's need therefore no longer exists.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SERVICER
The Servicer represents and warrants to and covenants with the Owner
that as of the date hereof and as of each Effective Date or as of such other
date specifically provided herein:
(i) The Servicer is a validly existing corporation in good standing under
the laws of the State of its organization and is qualified to transact business
in, is in good standing under the laws of, and possesses all licenses necessary
for the conduct of its business in, each state in
Page 12
which any Mortgaged Property is located or is otherwise exempt or not required
under applicable law to effect such qualification or license and no demand for
such qualification or license has been made upon the Servicer by any such state,
and in any event the Servicer is in compliance with the laws of each such State
to the extent necessary to ensure the enforceability of each Mortgage Loan and
the servicing of the Mortgage Loans in accordance with the terms of this
Agreement.
(ii) The Servicer has full power and authority to execute, deliver and
perform, and to enter into and consummate all transactions contemplated by this
Agreement and to conduct its business as presently conducted, has duly
authorized the execution, delivery and performance of this Agreement, has duly
executed and delivered this Agreement, and this Agreement constitutes a legal,
valid and binding obligation of the Servicer, enforceable against it in
accordance with its terms subject to bankruptcy laws and other similar laws of
general application affecting rights of creditors and subject to the application
of the rules of equity, including those respecting the availability of specific
performance.
(iii) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated thereby and hereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement
will conflict with any of the terms, conditions or provisions of the Servicer's
articles of incorporation or by-laws or materially conflict with or result in a
material breach of any of the terms, conditions or provisions of any legal
restriction or any agreement or instrument to which the Servicer is now a party
or by which it is bound, or constitute a default or result in an acceleration
under any of the foregoing, or result in the material violation of any law,
rule, regulation, order, judgment or decree to which the Servicer or its
property is subject.
(iv) There is no litigation pending or, to the Servicer's knowledge,
threatened with respect to the Servicer which is reasonably likely to have a
material adverse effect on the execution, delivery or enforceability of this
Agreement, or which is reasonably likely to have a material adverse effect on
the financial condition of the Servicer.
(v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of or compliance by the Servicer with this Agreement
or the consummation of the transactions contemplated by this Agreement except
for consents, approvals, authorizations and orders which have been obtained.
(vi) The Servicer is an approved seller/servicer of residential mortgage
loans for Xxxxxx Xxx and Xxxxxxx Mac. The Servicer is in good standing to
service mortgage loans for Xxxxxx Mae and Xxxxxxx Mac and no event has occurred
which would make the Servicer unable to comply with eligibility requirements or
which would require notification to either Xxxxxx Mae or Xxxxxxx Mac.
(vii) No written statement, report or other document furnished or to be
furnished pursuant to the Agreement contains or will contain any statement that
is or will be inaccurate or misleading in any material respect or omits to state
a material fact required to be stated therein or necessary to make the
information and statements therein not misleading.
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ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Servicer to Act as Servicer.
The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans in accordance with this Agreement and with
Accepted Servicing Practices (giving due consideration to the Owner's reliance
on the Servicer), and shall have full power and authority, acting alone, to do
or cause to be done any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement and with Accepted Servicing Practices. Except
as otherwise set forth in this Agreement, the Servicer shall service the
Mortgage Loans in compliance with the servicing provisions of the Xxxxxx Xxx
Guide, including provisions regarding the liquidation of Mortgage Loans, the
collection of Mortgage Loan payments, the payment of taxes, insurance and other
charges, the maintenance of title insurance, hazard insurance, flood insurance,
Primary Mortgage Insurance Policies, a Fidelity Bond and errors and omissions
insurance, all such coverage to be maintained with a Qualified Insurer,
inspections, the restoration of Mortgaged Property, management of REO Property,
permitted withdrawals with respect to REO Property, liquidation reports, and
reports of foreclosures and abandonments of Mortgaged Property, the transfer of
Mortgaged Property, the release of Mortgage Loan Documents, annual statements,
and examination of records and facilities. In the event of any conflict,
inconsistency or discrepancy between any of the servicing provisions of this
Agreement and any of the servicing provisions of the Xxxxxx Mae Guide, the
provisions of this Agreement shall control and be binding upon the Owner and the
Servicer. The Owner may, at its option, deliver powers-of-attorney to the
Servicer sufficient to allow the Servicer as servicer to execute all
documentation requiring execution on behalf of Owner with respect to the
servicing of the Mortgage Loans, including satisfactions, partial releases,
modifications and foreclosure documentation or, in the alternative, shall as
promptly as reasonably feasible, execute and return such documentation to the
Servicer.
Consistent with the terms of this Agreement, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
any such term or in any manner grant indulgence to any Mortgagor if in the
Servicer's reasonable and prudent determination such waiver, modification,
postponement or indulgence is not materially adverse to the Owner; provided,
however, that unless the Servicer has obtained the prior written consent of the
Owner, the Servicer shall not permit any modification with respect to any
Mortgage Loan that would change the Mortgage Interest Rate, forgive the payment
of principal or interest, reduce or increase the outstanding principal balance
(except for actual payments of principal) or change the final maturity date on
such Mortgage Loan. In the event of any such modification which has been agreed
to in writing by the Owner and which permits the deferral of interest or
principal payments on any Mortgage Loan, the Servicer shall, on the Business Day
immediately preceding the related Remittance Date in any month in which any such
principal or interest payment has been deferred, deposit in the Custodial
Account from its own funds, in accordance with Section 4.04 and Section 5.03,
the difference between (a) such month's principal and one month's interest at
the related Mortgage Loan Remittance Rate on the unpaid principal balance of
such Mortgage Loan and (b) the amount paid by the Mortgagor. The Servicer shall
be entitled
Page 14
to reimbursement for such advances to the same extent as for all other advances
pursuant to Section 4.05. Without limiting the generality of the foregoing, the
Servicer shall continue, and is hereby authorized and empowered, to prepare,
execute and deliver, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Properties.
Notwithstanding anything in this Agreement to the contrary, if a REMIC
election is made, the Servicer shall not (unless the related Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Servicer, reasonably foreseeable) make or permit any modification, waiver or
amendment of any term of any Mortgage Loan that would both (i) effect an
exchange or reissuance of such Mortgage Loan under Section 1001 of the Code (or
Treasury regulations promulgated thereunder) and (ii) cause the related REMIC to
fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions" after the "startup date" of such
REMIC under the REMIC Provisions.
The Servicer shall perform all of its servicing responsibilities
hereunder or may cause a subservicer to perform any such servicing
responsibilities on its behalf, but the use by the Servicer of a subservicer
shall not release the Servicer from any of its obligations hereunder and the
Servicer shall remain responsible hereunder for all acts and omissions of each
subservicer as fully as if such acts and omissions were those of the Servicer.
Any such subservicer must be a Xxxxxx Xxx approved seller/servicer or a Xxxxxxx
Mac approved seller/servicer in good standing and no event shall have occurred,
including but not limited to, a change in insurance coverage, which would make
it unable to comply with the eligibility requirements for seller/servicers
imposed by Xxxxxx Xxx or Xxxxxxx Mac, or which would require notification to
Xxxxxx Mae or Xxxxxxx Mac. The Servicer shall pay all fees and expenses of each
subservicer from its own funds, and a subservicer's fee shall not exceed the
Servicing Fee.
At the cost and expense of the Servicer, without any right of
reimbursement from the Custodial Account, the Servicer shall be entitled to
terminate the rights and responsibilities of a subservicer and arrange for any
servicing responsibilities to be performed by a successor subservicer meeting
the requirements in the preceding paragraph; provided, however, that nothing
contained herein shall be deemed to prevent or prohibit the Servicer, at the
Servicer's option, from electing to service the related Mortgage Loans itself.
In the event that the Servicer's responsibilities and duties under this
Agreement are terminated pursuant to Section 8.04, 9.01 or 10.01, and if
requested to do so by the Owner, the Servicer shall at its own cost and expense
terminate the rights and responsibilities of each subservicer effective as of
the date of termination of the Servicer. The Servicer shall pay all fees,
expenses or penalties necessary in order to terminate the rights and
responsibilities of each subservicer from the Servicer's own funds without
reimbursement from the Owner.
Notwithstanding any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer and a subservicer or any
reference herein to actions taken through a subservicer or otherwise, the
Servicer shall not be relieved of its obligations to the Owner and shall be
obligated to the same extent and under the same terms and conditions as if it
alone were servicing and administering the Mortgage Loans. The Servicer shall be
entitled to enter into an agreement with a subservicer for indemnification of
the Servicer by the subservicer
Page 15
and nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
Any subservicing agreement and any other transactions or services
relating to the Mortgage Loans involving a subservicer shall be deemed to be
between such subservicer and Servicer alone, and the Owner shall have no
obligations, duties or liabilities with respect to such Subservicer including no
obligation, duty or liability of Owner to pay such subservicer's fees and
expenses. For purposes of distributions and advances by the Servicer pursuant to
this Agreement, the Servicer shall be deemed to have received a payment on a
Mortgage Loan when a subservicer has received such payment.
Section 4.02 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the date each Mortgage Loan
ceases to be subject to this Agreement, the Servicer shall proceed with
reasonable diligence and in accordance with Accepted Servicing Practices, to
collect all payments due under each Mortgage Loan when the same shall become due
and payable. Further, the Servicer shall take reasonable care in ascertaining
and estimating annual ground rents, taxes, assessments, water rates, fire and
hazard insurance premiums, mortgage insurance premiums, and all other charges
that, as provided in the Mortgage, will become due and payable to the end that
the installments payable by the Mortgagors will be sufficient to pay such
charges as and when they become due and payable.
The Servicer (a) shall seek the timely and complete recovery of
principal and interest on the Mortgage Notes and (b) shall waive a prepayment
penalty or charge only under the following circumstances: (i) such waiver is
standard and customary in servicing similar Mortgage Loans and such waiver
relates to a default or a reasonably foreseeable default and would, in the
reasonable judgment of the Servicer, maximize recovery of total proceeds taking
into account the value of such prepayment penalty or charge and the related
Mortgage Loan or (ii) the collection of such prepayment penalty or charge would
be in violation of applicable laws. The Servicer hereby acknowledges that for
the purposes of the preceding sentence, (i) the law applicable to the
enforcement of prepayment penalties and charges is the law applicable to the
related originator of the Mortgage Loans and (ii) state laws prohibiting or
limiting prepayment penalties or charges are preempted and thereby inapplicable
if the related originator of the mortgage loans is a federal association or
federal bank or an operating subsidiary of such institution. In the event the
Servicer determines that (i) the foregoing acknowledgement is no longer accurate
and (ii) applicable state law would prevent it from fully enforcing prepayment
penalties or charges, the Servicer shall (i) provide prompt notice to such
effect to the Owner and (ii) provide a written opinion of counsel from a
nationally recognized law firm experienced in regulatory matters concluding that
fully enforcing prepayment penalties or charges would violate applicable law.
Section 4.03 Realization Upon Defaulted Mortgage Loans.
The Servicer shall use its reasonable efforts, consistent with
Accepted Servicing Practices, to foreclose upon or otherwise comparably convert
the ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no
Page 16
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 4.01. The Servicer shall use its reasonable efforts to
realize upon defaulted Mortgage Loans in such manner as will maximize the
receipt of principal and interest by the Owner, taking into account, among other
things, the timing of foreclosure proceedings. The foregoing is subject to the
provisions that, in any case in which any Mortgaged Property shall have suffered
damage, the Servicer shall not be required to expend its own funds toward the
restoration of such property unless it shall determine in its discretion (i)
that such restoration will increase the proceeds of liquidation of the related
Mortgage Loan to the Owner after reimbursement to itself for such expenses, and
(ii) that such expenses will be recoverable by the Servicer through Insurance
Proceeds or Liquidation Proceeds from the related Mortgaged Property, as
contemplated in Section 4.05. The Servicer shall be responsible for all costs
and expenses incurred by it in any such proceedings or functions as Servicing
Advances; provided, however, that it shall be entitled to reimbursement therefor
as provided in Section 4.05. Notwithstanding anything to the contrary contained
herein, in connection with a foreclosure or acceptance of a deed in lieu of
foreclosure, in the event the Servicer has reasonable cause to believe that a
Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
or if the Owner otherwise requests an environmental inspection or review of such
Mortgaged Property, such an inspection or review is to be conducted by a
qualified inspector. Upon completion of the inspection, the Servicer shall
promptly provide the Owner with a written report of the environmental
inspection. After reviewing the environmental inspection report, the Owner shall
direct the Servicer as to how the Servicer shall proceed with respect to the
Mortgaged Property, and the Servicer shall follow the Owner's directions with
respect thereto.
The Servicer and the Owner hereby agree that, in the event of a
Securitization Transaction, the Special Foreclosure Rights substantially in the
form attached hereto as Exhibit K shall be applicable to the Servicer or any
Subservicer with respect to the applicable Mortgage Loans.
Section 4.04 Establishment of Custodial Accounts; Deposits in Custodial
Accounts.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts.
Each Custodial Account shall be established with a Qualified Depository. Any
funds in a Custodial Account may be invested in Permitted Investments for the
benefit of the Owner (with any income earned thereon for the benefit of the
Servicer). Funds deposited in the Custodial Account may be drawn on by the
Servicer only in accordance with Section 4.05. The creation of any Custodial
Account shall be evidenced by an account certification in the form shown in
Exhibit B hereto. The original of such account certification shall be furnished
to the Owner upon reasonable request. The Servicer acknowledges and agrees that
the Servicer shall bear any losses incurred with respect to Permitted
Investments. The amount of any such losses shall be immediately deposited by the
Servicer in the Custodial Account, out of the Servicer's own funds, with no
right to reimbursement therefor.
The Servicer shall deposit in the Custodial Account within two (2)
Business Days of Servicer's receipt, and retain therein, the following
collections:
Page 17
(i) all payments on account of principal, including Principal
Prepayments and Prepayment Penalties on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the related Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds and REO Disposition Proceeds;
(iv) any net amounts received by the Servicer in connection with
any REO Property pursuant to Section 4.13;
(v) all Insurance Proceeds including amounts required to be
deposited pursuant to Sections 4.08, 4.10 and 4.11, other than proceeds to
be held in the Escrow Account and applied to the restoration or repair of
the Mortgaged Property or released to the Mortgagor in accordance with
Accepted Servicing Practices, the loan documents or applicable law;
(vi) all Condemnation Proceeds affecting any Mortgaged Property
other than proceeds to be held in the Escrow Account and applied to the
restoration or repair of the Mortgaged Property or released to the
Mortgagor in accordance with Accepted Servicing Practices, the loan
documents or applicable law;
(vii) any Monthly Advances as provided in Section 5.03;
(viii) any amounts required to be deposited in the Custodial
Account pursuant to Sections 4.01, 4.14, 6.01 and 6.02; and
(ix) with respect to each Full Principal Prepayment or Partial
Principal Prepayment, any Prepayment Interest Shortfall, to the extent of
the Servicer's aggregate Servicing Fee received with respect to the related
Due Period.
The foregoing requirements for deposit in the Custodial Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges and
assumption fees, to the extent permitted by Section 6.01, need not be deposited
by the Servicer in the Custodial Account.
Section 4.05 Permitted Withdrawals From the Custodial Account.
The Servicer may, from time to time, make withdrawals from the
Custodial Account for the following purposes:
(i) to make payments to the Owner in the amounts and in the manner
provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances, the Servicer's right to
reimburse itself pursuant to this subclause (ii) being limited to amounts
received on the related Mortgage Loan which represent late collections (net
of the related Servicing Fees) of principal and/or interest respecting
which any such Monthly Advance was made;
Page 18
(iii) to reimburse itself for unreimbursed Servicing Advances and
Monthly Advances, the Servicer's right to reimburse itself pursuant to this
subclause (iii) with respect to any Mortgage Loan being limited to
Liquidation Proceeds, Condemnation Proceeds, and Insurance Proceeds and REO
Disposition Proceeds related to such Mortgage Loan;
(iv) to pay to itself as servicing compensation (a) any interest
earned on funds in the Custodial Account (all such interest to be withdrawn
monthly not later than each Remittance Date) and (b) any Servicing Fee to
which the Servicer is entitled in accordance with the terms hereof to the
extent such Servicing Fee has not been paid to or retained by the Servicer;
(v) to reimburse itself for any Nonrecoverable Advances;
(vi) to transfer funds to another Qualified Depository in accordance
with Section 4.09 hereof;
(vii) to remove funds deposited in the Custodial Account in error by
the Servicer; and
(viii) to clear and terminate the Custodial Account upon the
termination of this Agreement.
Section 4.06 Establishment of Escrow Accounts; Deposits in Escrow Accounts.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts. Each Escrow Account shall be established
with a Qualified Depository. Any funds deposited in an Escrow Account may be
invested in Permitted Investments. Funds deposited in an Escrow Account may be
drawn on by the Servicer in accordance with Section 4.07. The creation of any
Escrow Account shall be evidenced by an account certification in the form shown
in Exhibit C. The original of such account certification shall be furnished to
the Owner upon request. The Servicer acknowledges and agrees that the Servicer
shall bear any losses incurred with respect to Permitted Investments. The amount
of any such losses shall be immediately deposited by the Servicer in the Escrow
Account out of the Servicer's own funds, with no right to reimbursement
therefor.
The Servicer shall deposit in the Escrow Account or Accounts within
two (2) Business Days of Servicer's receipt, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans,
for the purpose of effecting timely payment of any items as are required
under the terms of this Agreement;
(ii) all Insurance Proceeds which are to be applied to the restoration
or repair of any Mortgaged Property; and
Page 19
(iii) all Servicing Advances for Mortgagors whose Escrow Payments are
insufficient to cover escrow disbursements.
The Servicer shall make withdrawals from an Escrow Account only to
effect such payments as are required under this Agreement, and for such other
purposes as shall be as set forth in and in accordance with Section 4.07. Except
as provided in Section 4.07, the Servicer shall be entitled to retain any
interest paid on funds deposited in an Escrow Account by the Qualified
Depository.
Section 4.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by the Servicer only:
(i) to effect timely payments of ground rents, taxes, assessments,
water rates, fire and hazard insurance premiums, Primary Mortgage Insurance
Policy premiums, if applicable, and comparable items;
(ii) to reimburse the Servicer for any Servicing Advance made by the
Servicer with respect to a related Mortgage Loan but only from amounts
received on the related Mortgage Loan which represent late payments or
collections of Escrow Payments thereunder;
(iii) to refund to the Mortgagor any funds as may be determined to be
overages;
(iv) for transfer to the Custodial Account in connection with an
acquisition of REO Property;
(v) for application to restoration or repair of the Mortgaged
Property;
(vi) to pay to the Servicer, or to the Mortgagor to the extent
required by law, any interest paid on the funds deposited in the Escrow
Account;
(vii) to pay to the Mortgagors or other parties Insurance Proceeds
deposited in accordance with Section 4.06;
(viii) to remove funds placed in an Escrow Account in error by the
Servicer; and
(ix) to clear and terminate the Escrow Account on the termination of
this Agreement.
As part of its servicing duties, the Servicer shall pay to the
Mortgagors interest on funds in an Escrow Account, to the extent required by
law, and to the extent that interest earned on funds in the Escrow Account is
insufficient, shall pay such interest from its own funds, without any
reimbursement therefor.
Page 20
Section 4.08 Payment of Taxes, Insurance and Other Charges, Maintenance of
Primary Mortgage Insurance Policies, Collections Thereunder.
With respect to each Mortgage Loan, the Servicer shall maintain
accurate records reflecting the status of ground rents, taxes, assessments,
water rates and other charges which are or may become a lien upon the Mortgaged
Property and the status of Primary Mortgage Insurance Policy premiums and fire
and hazard insurance coverage and shall obtain, from time to time, all bills for
the payment of such charges, including renewal premiums and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such purpose
deposits of the Mortgagor in the Escrow Account which shall have been estimated
and accumulated by the Servicer in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage or applicable law. To the extent that
the Mortgage does not provide for Escrow Payments, the Servicer shall determine
that any such payments are made by the Mortgagor when due. The Servicer assumes
full responsibility for the timely payment of all such bills and shall effect
timely payments of all such bills irrespective of the Mortgagor's faithful
performance in the payment of same or the making of the Escrow Payments and
shall make advances from its own funds to effect such payments.
The Servicer shall maintain in full force and effect Primary Mortgage
Insurance Policies issued by a Qualified Insurer with respect to each Mortgage
Loan for which such coverage is herein required. Such coverage will be
maintained until the ratio of the current outstanding principal balance of the
related Mortgage Loan to the appraised value of the related Mortgaged Property,
based on the most recent appraisal of the Mortgaged Property performed by a
Qualified Appraiser, such appraisal to be included in the Servicing File, is
reduced to 80.00% or less (or such other amount provided under applicable law).
The Servicer shall not cancel or refuse to renew any Primary Mortgage Insurance
Policy that is required to be kept in force under this Agreement unless a
replacement Primary Mortgage Insurance Policy for such canceled or nonrenewed
policy is obtained from and maintained with a Qualified Insurer. The Servicer
shall not take any action which would result in noncoverage under any applicable
Primary Mortgage Insurance Policy of any loss which, but for the actions of the
Servicer would have been covered thereunder. In connection with any assumption
or substitution agreement entered into or to be entered into pursuant to Section
6.01, the Servicer shall promptly notify the insurer under the related Primary
Mortgage Insurance Policy, if any, of such assumption or substitution of
liability in accordance with the terms of such policy and shall take all actions
which may be required by such insurer as a condition to the continuation of
coverage under the Primary Mortgage Insurance Policy. If such Primary Mortgage
Insurance Policy is terminated as a result of such assumption or substitution of
liability, the Servicer shall obtain a replacement Primary Mortgage Insurance
Policy as provided above.
In connection with its activities as servicer, the Servicer agrees to
prepare and present, on behalf of itself and the Owner, claims to the insurer
under any Private Mortgage Insurance Policy in a timely fashion in accordance
with the terms of such Primary Mortgage Insurance Policy and, in this regard, to
take such action as shall be necessary to permit recovery under any Primary
Mortgage Insurance Policy respecting a defaulted Mortgage Loan. Pursuant to
Section 4.04, any amounts collected by the Servicer under any Primary Mortgage
Insurance
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Policy shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 4.05.
Section 4.09 Transfer of Accounts.
The Servicer may transfer the Custodial Account or the Escrow Account
to a different Qualified Depository from time to time. The Servicer shall notify
the Owner of any such transfer prior to the effective date of such transfer.
Section 4.10 Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Mortgage Loan fire
and hazard insurance with extended coverage as is customary in the area where
the Mortgaged Property is located in an amount which is equal to the lesser of
(i) the maximum insurable value of the improvements securing such Mortgage Loan
and (ii) the greater of (a) the outstanding principal balance of the Mortgage
Loan, and (b) the percentage such that the proceeds thereof shall be sufficient
to prevent the Mortgagor and/or the mortgagee from becoming a co-insurer. If the
Mortgaged Property is in an area identified in the Federal Register by the
Federal Emergency Management Agency as being a special flood hazard area that
has federally-mandated flood insurance requirements, the Servicer will cause to
be maintained a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least of
(i) the outstanding principal balance of the Mortgage Loan, (ii) the maximum
insurable value of the improvements securing such Mortgage Loan and (iii) the
maximum amount of insurance which is available under the Flood Disaster
Protection Act of 1973, as amended. The Servicer shall also maintain on each REO
Property, fire and hazard insurance with extended coverage in an amount which is
at least equal to the maximum insurable value of the improvements which are a
part of such property, liability insurance and, to the extent required and
available under the Flood Disaster Protection Act of 1973, as amended, flood
insurance in an amount as provided above. Any amounts collected by the Servicer
under any such policies other than amounts to be deposited in the Escrow Account
and applied to the restoration or repair of the Mortgaged Property or REO
Property, or released to the Mortgagor in accordance with the Servicer's normal
servicing procedures, shall be deposited in the Custodial Account, subject to
withdrawal pursuant to Section 4.05. It is understood and agreed that no other
additional insurance need be required by the Servicer or the Mortgagor or
maintained on property acquired in respect of the Mortgage Loans, other than as
provided in the Xxxxxx Xxx Guide or such applicable state or federal laws and
regulations as shall at any time be in force and as shall require such
additional insurance. All such policies shall be endorsed with standard
mortgagee clauses with loss payable to the Servicer and its successors and/or
assigns and shall provide for at least thirty days prior written notice of any
cancellation, reduction in the amount or material change in coverage to the
Servicer. The Servicer shall not interfere with the Mortgagor's freedom of
choice in selecting either his insurance carrier or agent; provided, however,
that the Servicer shall not accept any such insurance policies from insurance
companies unless such companies currently reflect a General Policy Rating in
Best's Key Rating Guide currently acceptable to Xxxxxx Mae and are licensed to
do business in the state wherein the property subject to the policy is located.
All insurance policies maintained pursuant to this Section 4.10 shall be
maintained with a Qualified Insurer.
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Section 4.11 Blanket Hazard Insurance.
In the event that the Servicer shall obtain and maintain a blanket
policy with a Qualified Insurer insuring against fire and hazards of extended
coverage on all of the Mortgage Loans, then, to the extent such policy names the
Owner as loss payee and provides coverage in an amount equal to the amount
required under Section 4.10, and otherwise complies with the requirements of
Section 4.10, the Servicer shall be deemed conclusively to have satisfied its
obligations under Section 4.10, 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 Section 4.10, and there shall have been a loss
which would have been covered by such policy, deposit in the Custodial Account
the difference, if any, between the amount that would have been payable under a
policy complying with Section 4.10 and the amount paid under such blanket
policy. Upon the request of the Owner, the Servicer shall cause to be delivered
to the Owner a certified true copy of such policy and a statement from the
insurer thereunder that such policy shall in no event be terminated or
materially modified without 30 days prior written notice to the Owner.
Section 4.12 Fidelity Bond, Errors and Omissions Insurance.
The Servicer shall maintain, at its own expense, with a Qualified
Insurer, a blanket Fidelity Bond and an errors and omissions insurance policy,
with broad coverage with responsible companies that meet the requirements of
Xxxxxx Xxx on all officers, employees and other persons acting in any capacity
with regard to the Mortgage Loans and who handle funds, money, documents and
papers relating to the Mortgage Loans. The Fidelity Bond and errors and
omissions insurance shall be in the form of the Mortgage Banker's Blanket Bond
and shall protect and insure the Servicer against losses, including forgery,
theft, embezzlement, fraud, errors and omissions and negligent acts of such
persons. Such Fidelity Bond and errors and omissions insurance shall also
protect and insure the Servicer against losses in connection with the failure to
maintain any insurance policies required pursuant to this Agreement and the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section 4.12
requiring the Fidelity Bond and errors and omissions insurance shall diminish or
relieve the Servicer from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such Fidelity Bond and insurance
policy shall be at least equal to the corresponding amounts acceptable to Xxxxxx
Mae in the Xxxxxx Xxx Guide or by Xxxxxxx Mac in the Xxxxxxx Mac Guide. The
Servicer shall, upon request of Owner, deliver to the Owner a certificate from
the surety and the insurer as to the existence of the Fidelity Bond and errors
and omissions insurance policy and shall obtain a statement from the surety and
the insurer that such Fidelity Bond or insurance policy shall in no event be
terminated or materially modified without thirty days prior written notice to
the Owner. The Servicer shall notify the Owner within five Business Days of
receipt of notice that such Fidelity Bond or insurance policy will be, or has
been, materially modified or terminated. The Owner and its successors or assigns
as their interests may appear must be named as loss payees on the Fidelity Bond
and as additional insured on the errors and omissions policy.
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Section 4.13 Title, Management and Disposition of REO Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Owner or its designee. Any such Person or
Persons holding such title other than the Owner shall acknowledge in writing
that such title is being held as nominee for the benefit of the Owner.
The Servicer shall assume the responsibility for marketing each REO
Property in accordance with Accepted Servicing Practices. Thereafter, the
Servicer shall continue to provide certain administrative services to the Owner
relating to such REO Property as set forth in this Section 4.13. The REO
Property must be sold within three years following the end of the calendar year
of the date of acquisition if a REMIC election has been made with respect to the
arrangement under which the Mortgage Loans and REO Property are held, unless (i)
the Owner shall have been supplied with an Opinion of Counsel (at the Servicer's
expense) to the effect that the holding by the related trust of such Mortgaged
Property subsequent to such three-year period (and specifying the period beyond
such three-year period for which the Mortgaged Property may be held) will not
result in the imposition of taxes on "prohibited transactions" of the related
trust as defined in Section 860F of the Code, or cause the related REMIC to fail
to qualify as a REMIC, in which case the related trust may continue to hold such
Mortgaged Property (subject to any conditions contained in such Opinion of
Counsel), or (ii) the Owner (at the Servicer's expense) or the Servicer shall
have applied for, prior to the expiration of such three-year period, an
extension of such three-year period in the manner contemplated by Section
856(e)(3) of the Code, in which case the three-year period shall be extended by
the applicable period. If a period longer than three years is permitted under
the foregoing sentence and is necessary to sell any REO Property, the Servicer
shall report monthly to the Owner as to progress being made in selling such REO
Property.
Notwithstanding any other provision of this Agreement, if a REMIC
election has been made, no Mortgaged Property held by a REMIC shall be rented
(or allowed to continue to be rented) or otherwise used for the production of
income by or on behalf of the related trust or sold in such a manner or pursuant
to any terms that would (i) cause such Mortgaged Property to fail to qualify at
any time as "foreclosure property" within a meaning of Section 860G(a)(8) of the
Code, (ii) subject the related trust to the imposition of any federal or state
income taxes on "net income from foreclosure property" with respect to such
Mortgaged Property within the meaning of Section 860G(c) of the Code, or (iii)
cause the sale of such Mortgaged Property to result in the receipt by the
related trust or any income from non-permitted assets as described in Section
860F(a) (2)(B) of the Code, unless the Servicer has agreed to indemnify and hold
harmless the related trust with respect to the imposition of any such taxes.
The Servicer shall, either itself or through an agent selected by the
Servicer, and in accordance with the Xxxxxx Mae Guide and Accepted Servicing
Practices, manage, conserve, protect and operate each REO Property. Each REO
Disposition shall be carried out by the Servicer at such price and upon such
terms and conditions as the Servicer deems to be in the best interest of the
Owner and as are approved in writing by the Owner. The REO Disposition Proceeds
from the sale of the REO Property shall be promptly deposited in the Custodial
Account. As soon as practical thereafter, the expenses of such sale shall be
paid and the Servicer
Page 24
shall reimburse itself for any related Servicing Advances, or Monthly Advances
made pursuant to Section 5.03.
The Servicer shall cause each REO Property to be inspected promptly
upon the acquisition of title thereto and shall cause each REO Property to be
inspected at least monthly thereafter or more frequently as may be required by
the circumstances. The Servicer shall make or cause the inspector to make a
written report of each such inspection. Such reports shall be retained in the
Servicing File and copies thereof shall be forwarded by the Servicer to the
Owner.
Notwithstanding anything to the contrary set forth in this Section
4.13, the parties hereto hereby agree that the Owner, at its option, shall be
entitled to manage, conserve, protect and operate each REO Property for its own
benefit (such option, an "REO Option"). In connection with the exercise of an
REO Option, the prior two paragraphs and the related provisions of Section 4.03
and Section 4.04(iii) (such provisions, the "REO Marketing Provisions") shall be
revised as follows. Following the acquisition of any Mortgaged Property, the
Servicer shall submit a detailed invoice to the Owner for all related Servicing
Advances and, upon exercising the REO Option, the Owner shall promptly reimburse
the Servicer for such amounts. In the event the REO Option is exercised with
respect to an REO Property, Section 4.04 (iii) shall not be applicable thereto.
References made in Section 4.03 with respect to the reimbursement of Servicing
Advances shall, for purposes of such REO Property, be deemed to be covered by
this paragraph. The Owner acknowledges that, in the event it exercises an REO
Option, with respect to the related REO Property, there shall be no breach by
the Servicer based upon or arising out of the Servicer's failure to comply with
the REO Marketing Provisions from and after the date on which such REO Option is
exercised by the Owner.
Section 4.14 Notification of Adjustments.
With respect to each Mortgage Loan, the Servicer shall adjust the
Mortgage Interest Rate on the related Interest Rate Adjustment Date in
compliance with requirements of applicable law and the related electronic data
received on the Mortgage and Mortgage Note. The Servicer shall execute and
deliver any and all necessary notices required under applicable law and the
terms of the related electronic data received on the Mortgage Note and Mortgage
regarding the Mortgage Interest Rate adjustments. The Servicer shall promptly,
upon written request by the Owner, deliver to the Owner such notifications and
any additional applicable data regarding such adjustments and the methods used
to calculate and implement such adjustments. Upon the discovery by the Servicer
or the receipt of notice from the Owner that the Servicer has failed to adjust a
Mortgage Interest Rate in accordance with the terms of the related Mortgage Note
and Mortgage, the Servicer shall immediately deposit in the Custodial Account
from its own funds the amount of any interest loss or deferral caused to the
Owner thereby.
Page 25
ARTICLE V
PAYMENTS TO THE OWNER
Section 5.01 Remittances.
On each Remittance Date the Servicer shall remit, by wire transfer of
immediately available funds, to the Owner (a) all amounts deposited in the
Custodial Account as of the close of business on the Determination Date (net of
charges against or withdrawals from the Custodial Account pursuant to Section
4.05), plus (b) all amounts, if any, which the Servicer is obligated to
distribute pursuant to Section 5.03, minus (c) any amounts attributable to
Principal Prepayments received after the end of the preceding month which
amounts shall be remitted on the following Remittance Date, together with any
additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayment in accordance with Section 4.04(viii);
minus (d) any amounts attributable to Monthly Payments collected but due on a
Due Date or Dates subsequent to the first day of the month of the Remittance
Date, which amounts shall be remitted on the related Remittance Date next
succeeding the Due Period for such amounts.
With respect to any remittance received by the Owner after the
Business Day on which such payment was due, the Servicer shall pay to the Owner
interest on any such late payment at an annual rate equal to the Prime Rate,
adjusted as of the date of each change, plus two percentage points, but in no
event greater than the maximum amount permitted by applicable law. Such interest
shall be deposited in the Custodial Account by the Servicer on the date such
late payment is made and shall cover the period commencing with the day
following such Business Day and ending with the Business Day on which such
payment is made, both inclusive. Such interest shall be remitted along with the
distribution payable on the next succeeding related Remittance Date. The payment
by the Servicer of any such interest shall not be deemed an extension of time
for payment or a waiver of any Event of Default by the Servicer.
Section 5.02 Statements to the Owner.
Not later than the tenth calendar day, or if such day is not a
Business Day, the first Business Day immediately preceding the tenth calendar
day of the month of the related Remittance Date, the Servicer shall furnish to
the Owner, a monthly remittance advice in the format set forth in Exhibit F
attached hereto (or in such other electronic format mutually agreed to by the
Servicer and Owner), with regard to monthly loan remittance data and Exhibit G
(or in such other electronic format mutually agreed to by the Servicer and
Owner) with respect to defaulted mortgage loans, with a trial balance report
attached thereto, and such other loan level information reasonably available to
the Servicer and requested by the Owner. Upon request of the Owner, the Servicer
will have a telephone conversation monthly to discuss the status of the
defaulted mortgage loans and the servicing hereunder.
Section 5.03 Monthly Advances by the Servicer.
Not later than the close of business on the Business Day preceding
each Remittance Date, the Servicer shall deposit in the Custodial Account an
amount equal to all payments not previously advanced by the Servicer, whether or
not deferred pursuant to Section
Page 26
4.01, of Monthly Payments, adjusted to the related Mortgage Loan Remittance
Rate, which are delinquent at the close of business on the related Determination
Date. The Servicer's obligation to make such Monthly Advances as to any Mortgage
Loan will continue through the final disposition or liquidation of the Mortgaged
Property, unless the Servicer deems such advance to be nonrecoverable from
Liquidation Proceeds, REO Disposition Proceeds or Insurance Proceeds with
respect to the applicable Mortgage Loan. In such latter event, the Servicer
shall deliver to the Owner an Officer's Certificate of the Servicer to the
effect that an officer of the Servicer has reviewed the related Servicing File
and has obtained a recent appraisal and has made the reasonable determination
that any additional advances are nonrecoverable from Liquidation or Insurance
Proceeds with respect to the applicable Mortgage Loan.
Section 5.04 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Owner pursuant to a deed-in-lieu of foreclosure, the Servicer
shall submit to the Owner a liquidation report in the format set forth in
Exhibit H attached hereto (or in such other format mutually agreed to by the
Servicer and Owner) with respect to such Mortgaged Property. The Servicer shall
also provide reports on the status of REO Property containing such information
as Owner may reasonably require.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Assumption Agreements.
The Servicer shall, to the extent it has knowledge of any conveyance
or prospective conveyance by any Mortgagor of a Mortgaged Property (whether by
absolute conveyance or by contract of, sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under any
"due-on-sale" clause to the extent permitted by law; provided, however, that the
Servicer shall not exercise any such rights if prohibited by law or the terms of
the Mortgage Note from doing so or if the exercise of such rights would impair
or threaten to impair any recovery under the related Primary Mortgage Insurance
Policy, if any. If the Servicer reasonably believes it is unable under
applicable law to enforce such "due-on-sale" clause, the Servicer shall enter
into an assumption agreement with the person to whom the Mortgaged Property has
been conveyed or is proposed to be conveyed, pursuant to which such person
becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon. If an assumption is
allowed pursuant to this Section 6.01, the Servicer, with the prior consent of
the primary mortgage insurer, if any, is authorized to enter into a substitution
of liability agreement with the person to whom the Mortgaged Property has been
conveyed or is proposed to be conveyed pursuant to which the original mortgagor
is released from liability and such Person is substituted as mortgagor and
becomes liable under the related Mortgage Note. Any such substitution of
liability agreement shall be in lieu of an assumption agreement.
Page 27
In connection with any such assumption or substitution of liability,
the Servicer shall follow the underwriting practices and procedures of the
Xxxxxx Xxx Guide. With respect to an assumption or substitution of liability,
the Mortgage Interest Rate borne by the related Mortgage Note and the amount of
the Monthly Payment may not be changed. The Servicer shall notify the Owner that
any such substitution of liability or assumption agreement has been completed by
forwarding to the Owner the original of any such substitution of liability or
assumption agreement, which document shall be added to the related Mortgage Loan
Documents and shall, for all purposes, be considered a part of such related
mortgage file to the same extent as all other documents and instruments
constituting a part thereof. All fees collected by the Servicer for entering
into an assumption or substitution of liability agreement shall belong to the
Servicer.
Notwithstanding the foregoing paragraphs of this section or any other
provision of this Agreement, the Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which the
Servicer may be restricted by law from preventing, for any reason whatsoever.
For purposes of this Section 6.01, the term "assumption" is deemed to also
include a sale of the Mortgaged Property subject to the Mortgage that is not
accompanied by an assumption or substitution of liability agreement.
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Loan
Documents.
Upon the payment in full of any Mortgage Loan, the Servicer will
immediately notify the Custodian with a certification and request for release by
a Servicing Officer, which certification shall include a statement to the effect
that all amounts received in connection with such payment which are required to
be deposited in the Custodial Account pursuant to Section 4.04 have been so
deposited, and a request for delivery to the Servicer of the portion of the
Mortgage Loan Documents held by the Custodian. Upon receipt of such
certification and request, the Owner shall promptly release or cause the
Custodian to promptly release the related Mortgage Loan Documents to the
Servicer and the Servicer shall prepare and deliver for execution by the Owner
or at the Owner's option execute under the authority of a power of attorney
delivered to the Servicer by the Owner any satisfaction or release. No expense
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Custodial Account.
In the event the Servicer satisfies or releases a Mortgage without
having obtained payment in full of the indebtedness secured by the Mortgage or
should it otherwise prejudice any right the Owner may have under the mortgage
instruments, the Servicer, upon written demand, shall remit to the Owner within
two Business Days the then outstanding principal balance of the related Mortgage
Loan by deposit thereof in the Custodial Account. The Servicer shall maintain
the Fidelity Bond and errors and omissions insurance insuring the Servicer
against any loss it may sustain with respect to any Mortgage Loan not satisfied
in accordance with the procedures set forth herein.
From time to time and as appropriate for the servicing or foreclosure
of the Mortgage Loans, including for the purpose of collection under any Primary
Mortgage Insurance Policy, upon request of the Servicer and delivery to the
Custodian of a servicing receipt signed
Page 28
by a Servicing Officer, all as provided in the Custodial Agreement, the Servicer
may request the Custodian to release to the Servicer the portion of the Mortgage
Loan Documents held by the Custodian to the Servicer. Such servicing receipt
shall obligate the Servicer to promptly return the related Mortgage Loan
Documents to the Custodian, when the need therefor by the Servicer no longer
exists, unless the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Custodial
Account or such documents have been delivered to an attorney, or to a public
trustee or other public official as required by law, for purposes of initiating
or pursuing legal action or other proceedings for the foreclosure of the
Mortgaged Property either judicially or non-judicially, and the Servicer has
promptly delivered to the Owner or the Custodian a certificate of a Servicing
Officer certifying as to the name and address of the Person to which such
documents were delivered and the purpose or purposes of such delivery.
Section 6.03 Servicing Compensation.
As compensation for its services hereunder, the Servicer shall be
entitled to withdraw from the Custodial Account or to retain from interest
payments on the Mortgage Loans the amounts provided for as the Servicer's
Servicing Fee. Additional servicing compensation in the form of assumption fees,
as provided in Section 6.01, late payment charges and other ancillary fees
(excluding Prepayment Penalties) shall be retained by the Servicer to the extent
not required to be deposited in the Custodial Account. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided for.
Section 6.04 Annual Statement as to Compliance; Financial Statements.
The Servicer shall deliver to the Owner, on or before February 28th
each year beginning February 28, 2007, an Officer's Certificate, stating that
(i) a review of the activities of the Servicer during the preceding calendar
year and of performance under this Agreement or similar agreements has been made
under such officer's supervision, and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its
responsibilities and obligations under this Agreement throughout such year, or,
if there has been a default in the fulfillment of any such responsibilities and
obligation, specifying each such default known to such officer and the nature
and status thereof and the action being taken by the Servicer to cure such
default.
Section 6.05 Annual Independent Certified Public Accountants' Servicing
Report.
On or before February 28th of each year beginning February 28, 2007,
the Servicer, at its expense, shall cause a firm of independent public
accountants which is a member of the American Institute of Certified Public
Accountants to furnish a statement to the Owner to the effect that such firm has
examined certain documents and records relating to the servicing of the mortgage
loans similar in nature and that such firm is of the opinion that the provisions
of this or similar Agreements have been complied with, and that, on the basis of
such examination conducted in compliance with the Uniform Single Attestation
Program for Mortgage Bankers, nothing has come to their attention which would
indicate that such servicing has not been conducted in compliance therewith,
except for (i) such exceptions as such firm shall believe to be
Page 29
immaterial, and (ii) such other exceptions as shall be set forth in such
statement. By providing Owner a copy of a Uniform Single Attestation Program
Report from their independent public accountant's on an annual basis, Servicer
shall be considered to have fulfilled its obligations under this Section 6.05.
Section 6.06 Owner's Right to Examine Servicer Records.
The Owner shall have the right to examine and audit, at its expense,
upon reasonable notice to the Servicer, during business hours or at such other
times as might be reasonable under applicable circumstances, any and all of the
books, records, documentation or other information of the Servicer, or held by
another for the Servicer or on its behalf or otherwise, which relate to the
performance or observance by the Servicer of the terms, covenants or conditions
of this Agreement.
The Servicer shall provide to the Owner and any supervisory agents or
examiners representing a state or federal governmental agency having
jurisdiction over the Owner access to any documentation regarding the Mortgage
Loans in the possession of the Servicer which may be required by any applicable
regulations. Such access shall be afforded without charge, upon reasonable
request, during normal business hours and at the offices of the Servicer, and in
accordance with the applicable federal or state government regulations.
Section 6.07 Compliance with REMIC Provisions.
If a REMIC election has been made with respect to the arrangement
under which the Mortgage Loans and REO Property are held, the Servicer shall not
take any action, cause the REMIC to take any action or fail to take (or fail to
cause to be taken) any action that, under the REMIC Provisions, if taken or not
taken, as the case may be, could (i) endanger the status of the REMIC as a REMIC
or (ii) result in the imposition of a tax upon the REMIC (including but not
limited to the tax on "prohibited transactions" as defined in Section 860F(a)(2)
of the Code and the tax on "contribution" to a REMIC set forth in Section
860G(d) of the Code unless the Servicer has received an Opinion of Counsel (at
the expense of the party seeking to take such actions) to the effect that the
contemplated action will not endanger such REMIC status or result in the
imposition of any such tax.
Section 6.08 Non-solicitation.
The Servicer shall not conduct any solicitation targeted to the
Mortgagors for the purpose of inducing or encouraging the early prepayment or
refinancing of the related Mortgage Loans. It is understood and agreed that
promotions undertaken by the Servicer or any agent or affiliate of the Servicer
which are directed to the general public at large, including mass mailings based
on commercially acquired mailing lists, newspaper, radio and television
advertisements, shall not constitute solicitation under this Section 6.08.
Section 6.09 Annual Certification and Indemnification.
(i) With respect to any Mortgage Loans that are subject to a pass-through
transfer or other securitization (a "Securitization") in which the filing of a
Xxxxxxxx-Xxxxx Certification directly with the Securities and Exchange
Commission is required, by February 28th of each year
Page 30
or in connection with any additional Xxxxxxxx-Xxxxx Certification required to be
filed upon thirty (30) days written request, an officer of the Servicer shall
execute and deliver an Officer's Certification substantially in the form
attached hereto as Exhibit E, to the entity filing the Xxxxxxxx-Xxxxx
Certification directly with the Securities and Exchange Commission (the
"Sarbanes Certifying Party") for the benefit of such entity and such entity's
affiliates and the officers, directors and agents of such entity.
(ii) The Servicer shall indemnify and hold harmless the Sarbanes Certifying
Party and its officers, directors, agents and affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments and other costs and expenses arising out of or based
upon a breach by the Servicer or any of its officers, directors, agents or
affiliates of its obligations under Sections 6.04, 6.05 and 6.09 or the
negligence, bad faith or willful misconduct of the Servicer in connection
therewith. If the indemnification provided for herein is unavailable or
insufficient to hold harmless the Sarbanes Certifying Party, then the Servicer
agrees that it shall contribute to the amount paid or payable by the Sarbanes
Certifying Party as a result of the losses, claims, damages or liabilities of
the Sarbanes Certifying Party in such proportion as is appropriate to reflect
the relative fault of the Sarbanes Certifying Party on the one hand and the
Servicer on the other in connection with a breach of the Servicer's obligations
under Sections 6.04, 6.05 and 6.09 or the Servicer's negligence, bad faith or
willful misconduct in connection therewith.
ARTICLE VII
REPORTS TO BE PREPARED BY SERVICER
Section 7.01 Servicer Shall Provide Information as Reasonably Required.
The Servicer shall furnish to the Owner upon reasonable request,
during the term of this Agreement, such periodic, special or other reports or
information, whether or not provided for herein, as shall be necessary,
reasonable or appropriate with respect to the purposes of this Agreement. The
Servicer may negotiate with the Owner for a reasonable fee for providing such
report or information, unless (i) the Servicer is required to supply such report
or information pursuant to any other section of this Agreement, or (ii) the
report or information has been requested in connection with Internal Revenue
Service or other regulatory agency requirements. All such reports or information
shall be provided by and in accordance with all reasonable instructions and
directions given by the Owner. The Servicer agrees to execute and deliver all
such instruments and take all such action as the Owner, from time to time, may
reasonably request in order to effectuate the purpose and to carry out the terms
of this Agreement.
ARTICLE VIII
THE SERVICER
Section 8.01 Indemnification; Third Party Claims.
The Servicer agrees to indemnify the Owner, its successors and
assigns, and any agent of the Owner (each an "Indemnified Person") and hold each
such Indemnified Person
Page 31
harmless from and against any and all claims, losses, damages, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that such Indemnified Person may sustain in any way related to the
failure of the Servicer to perform its duties and service the Mortgage Loans in
strict compliance with the terms of this Agreement and for breach of any
representation, warranty or covenant of the Servicer contained herein. The
Servicer shall immediately notify the Owner or other Indemnified Person if a
claim is made by a third party with respect to this Agreement or the Mortgage
Loans, assume (with the prior written consent of the Owner and such other
Indemnified Person) the defense of any such claim and pay all expenses in
connection therewith, including counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or such other
Indemnified Person in respect of such claim but failure to so notify the Owner
and such other Indemnified Person shall not limit its obligations hereunder. The
Servicer agrees that it will not enter into any settlement of any such claim
without the consent of the Owner and such other Indemnified Person unless such
settlement includes an unconditional release of the Owner and such other
Indemnified Person from all liability that is the subject matter of such claim.
The provisions of this Section 8.01 shall survive termination of this Agreement.
Section 8.02 Merger or Consolidation of the Servicer.
The Servicer shall keep in full effect its existence, rights and
franchises as a corporation under the laws of the state of its incorporation
except as permitted herein, and will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform its
duties under this Agreement.
Any Person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of the
Servicer whether or not related to loan servicing, 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; provided, however, that the successor or surviving Person shall
be an institution (i) having a GAAP net worth of not less than $25,000,000, (ii)
the deposits of which are insured by the FDIC, or which is a HUD-approved
mortgagee whose primary business is in origination and servicing of first lien
1-4 family mortgage loans, and (iii) which is a Xxxxxx Mae or Xxxxxxx Mac
approved seller/servicer in good standing. Furthermore, in the event the
Servicer transfers or otherwise disposes of all or substantially all of its
assets to an affiliate of the Servicer, such affiliate shall satisfy the
condition above, and shall also be fully liable to the Owner for all of the
Servicer's obligations and liabilities hereunder.
Section 8.03 Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors, officers, employees or
agents of the Servicer shall be under any liability to the Owner for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment made in good faith; provided, however,
that this provision shall not protect the Servicer or any such person against
any breach of warranties or representations made herein, or failure to perform
in any way its obligations in compliance with any standard of care set forth in
this Agreement, or
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any liability which would otherwise be imposed by reason of negligence or any
breach of the terms and conditions of this Agreement. The Servicer and any
officer, employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by the Owner
respecting any matters arising hereunder. The Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties to service the Mortgage Loans in accordance with this
Agreement and which in its opinion may involve it in any expenses or liability;
provided, however, that the Servicer may, with the consent of the Owner,
undertake any such action which it may deem necessary or desirable with respect
to this Agreement and the rights and duties of the parties hereto. In such
event, the reasonable legal expenses and costs of such action and any liability
resulting therefrom shall be expenses, costs and liabilities for which the Owner
will be liable, the Owner shall reimburse the Servicer within thirty days of
receipt by the Owner of a billing statement from the Servicer providing
reasonable detail with respect thereto, unless the Owner is disputing such
charges, in which event the Owner shall reimburse the Servicer as promptly as
feasible upon resolution of such dispute.
Section 8.04 Servicer Not to Resign.
The Servicer shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Servicer and the Owner or upon the determination that its duties hereunder are
no longer permissible under applicable law and such incapacity cannot be cured
by 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 Owner which Opinion of Counsel shall be in form and substance acceptable to
the Owner. No such resignation shall become effective until a successor shall
have assumed the Servicer's responsibilities and obligations hereunder in the
manner provided in Section 12.01.
Section 8.05 No Transfer of Servicing.
With respect to the retention of the Servicer to service the Mortgage
Loans hereunder, the Servicer acknowledges that the Owner has acted in reliance
upon the Servicer's independent status, the adequacy of its servicing
facilities, plan, personnel, records and procedures, its integrity, reputation
and financial standing and the continuance thereof. Without in any way limiting
the generality of this section, the Servicer shall not either assign this
Agreement or the servicing hereunder or delegate its rights or duties hereunder
or any portion thereof, or sell or otherwise dispose of all or substantially all
of its property or assets, without the prior written approval of the Owner.
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ARTICLE IX
DEFAULT
Section 9.01 Events of Default.
Each of the following shall constitute an Event of Default on the part
of the Servicer:
(i) any failure by the Servicer to remit to the Owner any payment
required to be made under the terms of this Agreement which continues
unremedied for a period of two (2) Business Days after written notice
thereof (it being understood that this subparagraph shall not affect
Servicer's obligation pursuant to Section 5.01 to pay default interest on
any remittance received by the Owner after the Business Day on which such
payment was due); or
(ii) any failure by the Servicer duly to observe or perform in any
material respect any other of the covenants or agreements on the part of
the Servicer set forth in this Agreement, the breach of which has a
material adverse effect and which continue unremedied for a period of sixty
days (except that such number of days shall be fifteen in the case of a
failure to pay any premium for any insurance policy required to be
maintained under this Agreement and such failure shall be deemed to have a
material adverse effect) after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Owner; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, bankruptcy, readjustment of debt, marshaling
of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force undischarged or
unstayed for a period of sixty days; or
(iv) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating
to the Servicer or of or relating to all or substantially all of its
property; or
(v) the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency, bankruptcy or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend payment of
its obligations or cease its normal business operations for two Business
Days; or
(vi) the Servicer ceases to meet the qualifications of a Xxxxxx Xxx or
Xxxxxxx Mac servicer; or
(vii) the Servicer attempts to assign its right to servicing
compensation hereunder or the Servicer attempts, without the consent of the
Owner, to sell or otherwise
Page 34
dispose of all or substantially all of its property or assets or to assign
this Agreement or the servicing responsibilities hereunder or to delegate
its duties hereunder or any portion thereof except as otherwise permitted
herein;
(viii) the Servicer ceases to be qualified to transact business in any
jurisdiction where it is currently so qualified, but only to the extent
such non-qualification materially and adversely affects the Servicer's
ability to perform its obligations hereunder; or
(ix) failure by the Servicer to duly perform, within the required time
period, its obligations under Section 6.04, Section 6.05, Section 6.09 or
Article XI of this Agreement which failure continues unremedied for a
period of fifteen (15) days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by any party to this Agreement or by any master servicer
responsible for master servicing the Mortgage Loans pursuant to a
securitization of such Mortgage Loans.
In each and every such case, so long as an Event of Default shall not
have been remedied, the Owner, by notice in writing to the Servicer may, in
addition to whatever rights the Owner may have under Section 8.01 and at law or
equity to damages, including injunctive relief and specific performance,
terminate all the rights and obligations of the Servicer under this Agreement
and in and to the Mortgage Loans and the proceeds thereof without compensating
the Servicer for the same.
From and after the receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Mortgage Loans or otherwise, shall pass to and be vested in the successor
appointed pursuant to Section 12.01. Upon written request from the Owner, the
Servicer shall prepare, execute and deliver, any and all documents and other
instruments, place in such successor's possession all Servicing Files, and do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise, at the Servicer's sole expense. The Servicer agrees to cooperate with
the Owner and such successor in effecting the termination of the Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Servicer to the Custodial Account or Escrow
Account or thereafter received with respect to the Mortgage Loans or any REO
Property.
Section 9.02 Waiver of Defaults.
The Owner may waive, only by written notice, any default by the
Servicer in the performance of its obligations hereunder and its consequences.
Upon any such waiver of a past default, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon except to the extent
expressly so waived in writing.
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ARTICLE X
TERMINATION
Section 10.01 Termination.
The respective obligations and responsibilities of the Servicer shall
terminate upon the earliest to occur of the following: (i) the later of the
final payment or other liquidation (or any advance with respect thereto) of the
last Mortgage Loan or the disposition of all REO Property and the remittance of
all funds due hereunder; and (ii) termination by the Owner pursuant to Section
9.01. Simultaneously with any such termination and the transfer of servicing
hereunder, the Servicer shall be entitled to be reimbursed for any outstanding
Servicing Advances and Monthly Advances (net of any amounts owed by the Servicer
to the Owner hereunder). In no event shall the Servicer be entitled to any
termination fee or other compensation with respect to any termination of this
Agreement or the Servicer's rights hereunder, in whole or in part, which is
effected pursuant to Section 9.01.
Section 10.02 Removal of Mortgage Loans from Inclusion Under this Agreement
Upon a Securitization Transaction or Whole Loan Transfer.
The Owner and the Servicer agree that with respect to some or all of
the Mortgage Loans, the Owner, at its sole option, may effect Whole Loan
Transfers or Securitization Transactions, retaining the Servicer as the servicer
thereof or subservicer if a master servicer is employed, or as applicable the
"servicer". At the election of the Owner, from and after the Reconstitution
Date, the Mortgage Loans transferred shall remain covered by this Agreement,
insofar as the Servicer shall continue to service such Mortgage Loans on behalf
of the Owner in accordance with the terms and provisions of this Agreement or
shall be subject to a pooling and servicing agreement or a subservicing
agreement containing customary secondary market servicing provisions with
respect to mortgage loans that are subject to a rated mortgage loan
securitization, including without limitation, the provisions specified in
paragraph (e) below.
The Servicer shall cooperate with the Owner in connection with each
Whole Loan Transfer or Securitization Transaction in accordance with this
Section 10.02. In connection therewith the Servicer shall:
(i) make all representations and warranties with respect to the Servicer
itself as of the Reconstitution Date of the related Whole Loan Transfer or
Securitization Transaction;
(ii) negotiate in good faith and execute any seller/servicer agreements
required by the shelf registrant to effectuate the foregoing provided such
agreements create no greater obligation or cost on the part of the Servicer than
otherwise set forth in this Agreement;
(iii) provide as applicable:
(i) any and all information and appropriate verification of
information which may be reasonably available to the Servicer, including
the Servicer's foreclosure, delinquency experience and the Servicer's
standards, whether through letters of its auditors and counsel or
otherwise, as the Owner shall request; and
Page 36
(ii) such additional representations, warranties, covenants, opinions
of counsel, letters from auditors, financial description of the Servicer as
servicer for inclusion in any disclosure document or offering memorandum to
be distributed to potential investors in connection with a Securitization
Transaction with respect to the Mortgage Loans, and certificates of public
officials or officers of the Servicer as are reasonably believed necessary
by the Trustee, any Rating Agency, or the Owner, as the case may be, in
connection with such Whole Loan Transfers or Securitization Transactions.
The Owner shall pay all third party costs associated with the preparation
of such information. The Servicer shall execute any servicer agreements
required within a reasonable period of time after receipt of such servicer
agreements which time shall be sufficient for the Servicer and Servicer's
counsel to review such servicer agreements. Under this Agreement, the
Servicer shall retain a servicing fee at a rate per annum equal to no less
than the rate specified on the Mortgage Loan Schedule for such Mortgage
Loan;
(iv) indemnify the Owner for any material misstatements or omissions
contained in the information provided pursuant to (c) above; and
(v) in connection with any Securitization Transaction of any Mortgage
Loans, to execute a pooling and servicing agreement or a subservicing agreement,
which pooling and servicing agreement or subservicing agreement may, at the
Owner's direction, contain contractual provisions including a 24-day certificate
payment delay (54-day total payment delay), servicer advances of delinquent
scheduled payments of principal and interest through liquidation (unless deemed
non-recoverable) and prepayment interest shortfalls (to the extent of the
monthly servicing fee payable thereto), servicing and mortgage loan
representations and warranties which in form and substance conform to the
representations and warranties in this Agreement and to secondary market
standards for securities backed by mortgage loans similar to the Mortgage Loans
and such provisions with regard to servicing responsibilities, investor
reporting, segregation and deposit of principal and interest payments, custody
of the Mortgage Loans, special foreclosure rights, and other covenants as are
required by the Owner and one or more Rating Agencies for "AAA" rated mortgage
pass-through transactions which are "mortgage related securities" for the
purposes of the Secondary Mortgage Market Enhancement Act of 1984, unless
otherwise mutually agreed. If a REMIC election has been made with respect to the
arrangement under which the Mortgage Loans and REO Property are held, the
Servicer shall not take any action, cause the REMIC to take any action or fail
to take (or fail to cause to be taken) any action that, under the REMIC
Provisions, if taken or not taken, as the case may be, could (i) endanger the
status of the REMIC as a REMIC or (ii) result in the imposition of a tax upon
the REMIC (including but not limited to the tax on "prohibited transactions" as
defined in Section 860G(a)(2) of the Code and the tax on "contributions" to a
REMIC set forth in Section 860(D) of the Code) unless the Servicer has received
an Opinion of Counsel (at the expense of the party seeking to take such action)
to the effect that the contemplated action will not endanger such REMIC status
or result in the imposition of any such tax.
In the event the Owner has elected to have the Servicer hold record
title to the Mortgages, prior to the Reconstitution Date the Servicer shall
prepare an assignment in blank or, at the option of the Owner, to the Trustee
from the Servicer acceptable to the Trustee for each Mortgage Loan that is part
of the Whole Loan Transfers or Securitization Transactions. The
Page 37
Owner shall pay all preparation and recording costs associated therewith. The
Servicer shall execute each assignment, track such assignments to ensure they
have been recorded and deliver them as required by the trustee upon the
Servicer's receipt thereof. Additionally, the Servicer shall prepare and
execute, at the direction of the Owner, any note endorsements in connection with
any and all seller/servicer agreements.
All Mortgage Loans not sold or transferred pursuant to a Whole Loan
Transfer or Securitization Transaction shall remain subject to this agreement
and shall continue to be serviced in accordance with the terms of this agreement
and with respect thereto this agreement shall remain in full force and effect.
ARTICLE XI
COMPLIANCE WITH REGULATION AB
Section 11.01 Intent of the Parties; Reasonableness.
The Owner and the Servicer acknowledge and agree that the purpose of
Article XI of this Agreement is to facilitate compliance by the Owner and any
Depositor with the provisions of Regulation AB and related rules and regulations
of the Commission and that the provisions of this Article shall be applicable to
all Mortgage Loans. Although Regulation AB is applicable by its terms only to
offerings of asset-backed securities that are registered under the Securities
Act, the Servicer acknowledges that investors in privately offered securities
may require that the Owner or any Depositor provide comparable disclosure in
unregistered offerings. References in this Agreement to compliance with
Regulation AB include provision of comparable disclosure in private offerings.
Neither the Owner nor any Depositor shall exercise its right to request
delivery of information or other performance under these provisions other than
in good faith, or for purposes other than compliance with the Securities Act,
the Exchange Act and the rules and regulations of the Commission thereunder. The
Servicer acknowledges that interpretations of the requirements of Regulation AB
may change over time, whether due to interpretive guidance provided by the
Commission or its staff, consensus among participants in the asset-backed
securities markets, advice of counsel, or otherwise, and agrees to comply with
requests made by the Owner, any Master Servicer or any Depositor in good faith
for delivery of information under these provisions on the basis of evolving
interpretations of Regulation AB. In connection with any Securitization
Transaction, the Servicer shall cooperate fully with the Owner and any Master
Servicer to deliver to the Owner (including any of its assignees or designees),
any Master Servicer and any Depositor, any and all statements, reports,
certifications, records and any other information necessary in the good faith
determination of the Owner, the Master Servicer or any Depositor to permit the
Owner, such Master Servicer or such Depositor to comply with the provisions of
Regulation AB, together with such disclosures relating to the Servicer, any
Subservicer, and the Mortgage Loans, or the servicing of the Mortgage Loans,
reasonably believed by the Owner or any Depositor to be necessary in order to
effect such compliance.
Page 38
Section 11.02 Additional Representations and Warranties of the
Servicer.
(a) The Servicer hereby represents to the Owner, to any Master
Servicer and to any Depositor, as of the date on which information is first
provided to the Owner, any Master Servicer or any Depositor under Section 11.03
that, except as disclosed in writing to the Owner, such Master Servicer or such
Depositor prior to such date: (i) the Servicer is not aware and has not received
notice that any default, early amortization or other performance triggering
event has occurred as to any other securitization due to any act or failure to
act of the Servicer; (ii) the Servicer has not been terminated as servicer in a
residential mortgage loan securitization, either due to a servicing default or
to application of a servicing performance test or trigger; (iii) no material
noncompliance with the applicable servicing criteria with respect to other
securitizations of residential mortgage loans involving the Servicer as servicer
has been disclosed or reported by the Servicer; (iv) no material changes to the
Servicer's policies or procedures with respect to the servicing function it will
perform under this Agreement and any Reconstitution Agreement for mortgage loans
of a type similar to the Mortgage Loans have occurred during the three-year
period immediately preceding the related Securitization Transaction; (v) there
are no aspects of the Servicer's financial condition that could have a material
adverse effect on the performance by the Servicer of its servicing obligations
under this Agreement or any Reconstitution Agreement; (vi) there are no material
legal or governmental proceedings pending (or known to be contemplated) against
the Servicer or any Subservicer; and (vii) there are no affiliations,
relationships or transactions relating to the Servicer or any Subservicer with
respect to any Securitization Transaction and any party thereto identified by
the related Depositor of a type described in Item 1119 of Regulation AB.
(b) If so requested by the Owner, any Master Servicer or any Depositor
on any date following the date on which information is first provided to the
Owner, any Master Servicer or any Depositor under Section 11.03, the Servicer
shall, within five Business Days following such request, confirm in writing the
accuracy of the representations and warranties set forth in paragraph (a) of
this Section or, if any such representation and warranty is not accurate as of
the date of such request, provide reasonably adequate disclosure of the
pertinent facts, in writing, to the requesting party.
Section 11.03 Information to Be Provided by the Servicer.
In connection with any Securitization Transaction the Servicer shall
(i) within five Business Days following request by the Owner or any Depositor,
provide to the Owner and such Depositor (or, as applicable, cause each
Subservicer to provide), in writing and in form and substance reasonably
satisfactory to the Owner and such Depositor, the information and materials
specified in paragraphs (c) and (g) of this Section, and (ii) as promptly as
practicable following notice to or discovery by the Servicer, provide to the
Owner and any Depositor (in writing and in form and substance reasonably
satisfactory to the Owner and such Depositor) the information specified in
paragraph (d) of this Section.
(a) [Reserved]
(b) [Reserved]
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(c) If so requested by the Owner or any Depositor, the Servicer shall
provide such information regarding the Servicer, as servicer of the Mortgage
Loans, and each Subservicer (each of the Servicer and each Subservicer, for
purposes of this paragraph, a "Reg AB Servicer"), as is requested for the
purpose of compliance with Items 1108, 1117 and 1119 of Regulation AB. Such
information shall include, at a minimum:
(A) the Reg AB Servicer's form of organization;
(B) a description of how long the Reg AB Servicer has been
servicing residential mortgage loans; a general discussion of the Reg
AB Servicer's experience in servicing assets of any type as well as a
more detailed discussion of the Reg AB Servicer's experience in, and
procedures for, the servicing function it will perform under this
Agreement and any Reconstitution Agreements; information regarding the
size, composition and growth of the Reg AB Servicer's portfolio of
residential mortgage loans of a type similar to the Mortgage Loans and
information on factors related to the Reg AB Servicer that may be
material, in the good faith judgment of the Owner or any Depositor, to
any analysis of the servicing of the Mortgage Loans or the related
asset-backed securities, as applicable, including, without limitation:
(1) whether any prior securitizations of mortgage loans of a
type similar to the Mortgage Loans involving the Reg AB
Servicer have defaulted or experienced an early amortization
or other performance triggering event because of servicing
during the three-year period immediately preceding the
related Securitization Transaction;
(2) the extent of outsourcing the Reg AB Servicer utilizes;
(3) whether there has been previous disclosure of material
noncompliance with the applicable servicing criteria with
respect to other securitizations of residential mortgage
loans involving the Reg AB Servicer as a servicer during the
three-year period immediately preceding the related
Securitization Transaction;
(4) whether the Reg AB Servicer has been terminated as
servicer in a residential mortgage loan securitization,
either due to a servicing default or to application of a
servicing performance test or trigger; and
(5) such other information as the Owner or any Depositor may
reasonably request for the purpose of compliance with Item
1108(b)(2) of Regulation AB;
(C) a description of any material changes during the three-year
period immediately preceding the related Securitization Transaction to
the Reg AB Servicer's policies or procedures with respect to the
servicing function it xxxx
Xxxx 40
perform under this Agreement and any Reconstitution Agreements for
mortgage loans of a type similar to the Mortgage Loans;
(D) information regarding the Reg AB Servicer's financial
condition, to the extent that there is a material risk that an adverse
financial event or circumstance involving the Reg AB Servicer could
have a material adverse effect on the performance by the Reg AB
Servicer of its servicing obligations under this Agreement or any
Reconstitution Agreement;
(E) information regarding advances made by the Reg AB Servicer on
the Mortgage Loans and the Reg AB Servicer's overall servicing
portfolio of residential mortgage loans for the three-year period
immediately preceding the related Securitization Transaction, which
may be limited to a statement by an authorized officer of the Reg AB
Servicer to the effect that the Reg AB Servicer has made all advances
required to be made on residential mortgage loans serviced by it
during such period, or, if such statement would not be accurate,
information regarding the percentage and type of advances not made as
required, and the reasons for such failure to advance;
(F) a description of the Reg AB Servicer's processes and
procedures designed to address any special or unique factors involved
in servicing loans of a similar type as the Mortgage Loans;
(G) a description of the Reg AB Servicer's processes for handling
delinquencies, losses, bankruptcies and recoveries, such as through
liquidation of mortgaged properties, sale of defaulted mortgage loans
or workouts;
(H) information as to how the Reg AB Servicer defines or
determines delinquencies and charge-offs, including the effect of any
grace period, re-aging, restructuring, partial payments considered
current or other practices with respect to delinquency and loss
experience; and
(I) a description of any material legal or governmental
proceedings pending (or known to be contemplated) against the Reg AB
Servicer; and
(J) a description of any affiliation or relationship between the
Reg AB Servicer and any of the following parties to a Securitization
Transaction, as such parties are identified to the Reg AB Servicer by
the Owner or any Depositor in writing in advance of such
Securitization Transaction:
(1) the sponsor;
(2) the depositor;
(3) the issuing entity;
(4) any servicer;
(5) any trustee;
(6) any originator;
(7) any significant obligor;
(8) any enhancement or support provider; and
Page 41
(9) any other material transaction party.
(d) For the purpose of satisfying the reporting obligation under the
Exchange Act with respect to any class of asset-backed securities, the Servicer
shall (or shall cause each Subservicer to) (i) provide prompt notice to the
Owner, any Master Servicer and any Depositor in writing of (A) any material
litigation or governmental proceedings involving the Servicer or any
Subservicer, (B) any affiliations or relationships that develop following the
closing date of a Securitization Transaction between the Servicer, any
Subservicer (and any other parties identified in writing by the requesting
party) with respect to such Securitization Transaction, (C) any Event of Default
under the terms of this Agreement or any Reconstitution Agreement, (D) any
merger, consolidation or sale of substantially all of the assets of the
Servicer, and (E) the Servicer's entry into an agreement with a Subservicer or
Subcontractor to perform or assist in the performance of any of the Servicer's
obligations under this Agreement or any Reconstitution Agreement and (ii)
provide to the Owner and any Depositor a description of such proceedings,
affiliations or relationships.
(e) As a condition to the succession to the Servicer or any
Subservicer as servicer or subservicer under this Agreement or any
Reconstitution Agreement by any Person (i) into which the Servicer or such
Subservicer may be merged or consolidated, or (ii) which may be appointed as a
successor to the Servicer or any Subservicer, the Servicer shall provide to the
Owner and any Depositor, at least 15 calendar days prior to the effective date
of such succession or appointment, (x) written notice to the Owner and any
Depositor of such succession or appointment and (y) in writing and in form and
substance reasonably satisfactory to the Owner and such Depositor, all
information reasonably requested by the Owner or any Depositor in order to
comply with its reporting obligation under Item 6.02 of Form 8-K with respect to
any class of asset-backed securities.
(f) In addition to such information as the Servicer, as servicer, is
obligated to provide pursuant to other provisions of this Agreement, not later
than ten days prior to the deadline for the filing of any distribution report on
Form 10-D in respect of any Securitization Transaction that includes any of the
Mortgage Loans serviced by the Servicer or any Subservicer, the Servicer or such
Subservicer, as applicable, shall provide to the party responsible for filing
such report (including, if applicable, the Master Servicer) notice of the
occurrence of any of the following events along with all information, data, and
materials related thereto as may be required to be included in the related
distribution report on Form 10-D (as specified in the provisions of Regulation
AB referenced below):
(i) any material modifications, extensions or waivers of pool
asset terms, fees, penalties or payments during the distribution
period or that have cumulatively become material over time (Item
1121(a)(11) of Regulation AB);
(ii) material breaches of pool asset representations or
warranties or transaction covenants (Item 1121(a)(12) of
Regulation AB); and
(iii) information regarding new asset-backed securities issuances
backed by the same pool assets, any pool asset changes (such as,
Page 42
additions, substitutions or repurchases), and any material
changes in origination, underwriting or other criteria for
acquisition or selection of pool assets (Item 1121(a)(14)
of Regulation AB).
(g) The Servicer shall provide to the Owner, any Master Servicer and
any Depositor, such additional information as such party may reasonably request,
including evidence of the authorization of the person signing any certification
or statement, financial information and reports, and such other information
related to the Servicer or any Subservicer or the Servicer or such Subservicer's
performance hereunder.
Section 11.04 Servicer Compliance Statement.
On or before March 1 of each calendar year, commencing in 2007, the
Servicer shall deliver to the Owner, any Master Servicer and any Depositor a
statement of compliance addressed to the Owner, such Master Servicer and such
Depositor and signed by an authorized officer of the Servicer, to the effect
that (i) a review of the Servicer's activities during the immediately preceding
calendar year (or applicable portion thereof) and of its performance under this
Agreement and any applicable Reconstitution Agreement during such period has
been made under such officer's 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 and any applicable Reconstitution Agreement in
all material respects throughout such calendar year (or applicable portion
thereof) or, if there has been a failure to fulfill any such obligation in any
material respect, specifically identifying each such failure known to such
officer and the nature and the status thereof.
Section 11.05 Report on Assessment of Compliance and Attestation.
(a) On or before March 1 of each calendar year, commencing in 2007,
the Servicer shall:
(i) deliver to the Owner, any Master Servicer and any Depositor a
report (in form and substance reasonably satisfactory to the
Owner, such Master Servicer and such Depositor) regarding the
Servicer's assessment of compliance with the Servicing Criteria
during the immediately preceding calendar year, as required under
Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of
Regulation AB. Such report shall be addressed to the Owner, such
Master Servicer and such Depositor and signed by an authorized
officer of the Servicer, and shall address each of the
"Applicable Servicing Criteria" specified on Exhibit E hereto;
(ii) deliver to the Owner, any Master Servicer and any Depositor
a report of a registered public accounting firm reasonably
acceptable to the Owner, such Master Servicer and such Depositor
that attests to, and reports on, the assessment of compliance
made by the Servicer and delivered pursuant to the preceding
paragraph. Such attestation shall be in accordance with Rules
1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act
and the Exchange Act;
Page 43
(iii) cause each Subservicer, and each Subcontractor determined
by the Servicer pursuant to Section 11.06(b) to be "participating
in the servicing function" within the meaning of Item 1122 of
Regulation AB, to deliver to the Owner, any Master Servicer and
any Depositor an assessment of compliance and accountants'
attestation as and when provided in paragraphs (a) and (b) of
this Section; and
(iv) deliver and cause each Subservicer and Subcontractor
described in clause (iii) above to provide, to the Owner, any
Depositor, any Master Servicer and any other Person that will be
responsible for signing the certification (a "Sarbanes
Certification") required by Rules 13a-14(d) and 15d-14(d) under
the Exchange Act (pursuant to Section 302 of the Xxxxxxxx-Xxxxx
Act of 2002) on behalf of an asset-backed issuer with respect to
a Securitization Transaction a certification, signed by the
appropriate officer of the Servicer, in the form attached hereto
as Exhibit A.
(b) The Servicer acknowledges that the parties identified in clause
(a)(iv) above may rely on the certification provided by the Servicer pursuant to
such clause in signing a Sarbanes Certification and filing such with the
Commission.
Each assessment of compliance provided by a Subservicer pursuant to
Section 11.05(a)(i) shall address each of the Servicing Criteria specified on a
certification substantially in the form of Exhibit E hereto delivered to the
Owner concurrently with the execution of this Agreement or, in the case of a
Subservicer subsequently appointed as such, on or prior to the date of such
appointment. An assessment of compliance provided by a Subcontractor pursuant to
Section 11.05(a)(iii) need not address any elements of the Servicing Criteria
other than those specified by the Servicer pursuant to Section 11.06.
Section 11.06 Use of Subservicers and Subcontractors.
The Servicer shall not hire or otherwise utilize the services of any
Subservicer to fulfill any of the obligations of the Servicer as servicer under
this Agreement or any Reconstitution Agreement unless the Servicer complies with
the provisions of paragraph (a) of this Section. The Servicer shall not hire or
otherwise utilize the services of any Subcontractor, and shall not permit any
Subservicer to hire or otherwise utilize the services of any Subcontractor, to
fulfill any of the obligations of the Servicer as servicer under this Agreement
or any Reconstitution Agreement unless the Servicer complies with the provisions
of paragraph (b) of this Section.
(a) It shall not be necessary for the Servicer to seek the consent of
the Owner, any Master Servicer or any Depositor to the utilization of any
Subservicer. The Servicer shall cause any Subservicer used by the Servicer (or
by any Subservicer) for the benefit of the Owner and any Depositor to comply
with the provisions of this Section and with Sections 11.02, 11.03(c), (e), (f)
and (g), 11.04, 11.05 and 11.07 of this Agreement to the same extent as if such
Subservicer were the Servicer, and to provide the information required with
respect to such Subservicer under Section 11.03(d) of this Agreement. The
Servicer shall be responsible for
Page 44
obtaining from each Subservicer and delivering to the Owner and any Depositor
any servicer compliance statement required to be delivered by such Subservicer
under Section 11.04, any assessment of compliance and attestation required to be
delivered by such Subservicer under Section 11.05 and any certification required
to be delivered to the Person that will be responsible for signing the Sarbanes
Certification under Section 11.05 as and when required to be delivered.
(b) It shall not be necessary for the Servicer to seek the consent of
the Owner, any Master Servicer or any Depositor to the utilization of any
Subcontractor. The Servicer shall promptly upon request provide to the Owner,
any Master Servicer and any Depositor (or any designee of the Depositor, such as
an administrator) a written description (in form and substance satisfactory to
the Owner, such Depositor and such Master Servicer) of the role and function of
each Subcontractor utilized by the Servicer or any Subservicer, specifying (i)
the identity of each such Subcontractor, (ii) which (if any) of such
Subcontractors are "participating in the servicing function" within the meaning
of Item 1122 of Regulation AB, and (iii) which elements of the Servicing
Criteria will be addressed in assessments of compliance provided by each
Subcontractor identified pursuant to clause (ii) of this paragraph.
As a condition to the utilization of any Subcontractor determined to
be "participating in the servicing function" within the meaning of Item 1122 of
Regulation AB, the Servicer shall cause any such Subcontractor used by the
Servicer (or by any Subservicer) for the benefit of the Owner and any Depositor
to comply with the provisions of Sections 11.05 and 11.07 of this Agreement to
the same extent as if such Subcontractor were the Servicer. The Servicer shall
be responsible for obtaining from each Subcontractor and delivering to the Owner
and any Depositor any assessment of compliance and attestation required to be
delivered by such Subcontractor under Section 11.05, in each case as and when
required to be delivered.
Section 11.07 Indemnification; Remedies.
(a) The Servicer shall indemnify the Owner, each affiliate of the
Owner, and each of the following parties participating in a Securitization
Transaction: each sponsor and issuing entity; each Person (including, but not
limited to, any Master Servicer if applicable) responsible for the preparation,
execution or filing of any report required to be filed with the Commission with
respect to such Securitization Transaction, or for execution of a certification
pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect
to such Securitization Transaction; each broker dealer acting as underwriter,
placement agent or initial purchaser, each Person who controls any of such
parties or the Depositor (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act); and the respective present and former
directors, officers, employees, agents and affiliates of each of the foregoing
and of the Depositor (each, an "Indemnified Party"), and shall hold each of them
harmless from and against any claims, losses, damages, penalties, fines,
forfeitures, legal fees and expenses and related costs, judgments, and any other
costs, fees and expenses that any of them may sustain arising out of or based
upon:
(i) (A) any untrue statement of a material fact contained or alleged
to be contained in any information, report, certification, data,
accountants' letter or other material provided under this Article 11 by or
on behalf of the Servicer, or provided under this Article 11 by or on
behalf of any Subservicer or Subcontractor (collectively, the
Page 45
"Servicer Information"), or (B) the omission or alleged omission to state
in the Servicer Information a material fact required to be stated in the
Servicer Information or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, by way of clarification, that clause (B) of this
paragraph shall be construed solely by reference to the Servicer
Information and not to any other information communicated in connection
with a sale or purchase of securities, without regard to whether the
Servicer Information or any portion thereof is presented together with or
separately from such other information;
(ii) any breach by the Servicer of its obligations under this Article
11, including particularly any failure by the Servicer, any Subservicer or
any Subcontractor to deliver any information, report, certification,
accountants' letter or other material when and as required under this
Article 11, including any failure by the Servicer to identify pursuant to
Section 11.06(b) any Subcontractor "participating in the servicing
function" within the meaning of Item 1122 of Regulation AB;
(iii) any breach by the Servicer of a representation or warranty set
forth in Section 11.02(a) or in a writing furnished pursuant to Section
11.02(b) and made as of a date prior to the closing date of the related
Securitization Transaction, to the extent that such breach is not cured by
such closing date, or any breach by the Servicer of a representation or
warranty in a writing furnished pursuant to Section 11.02(b) to the extent
made as of a date subsequent to such closing date; or
(iv) the negligence bad faith or willful misconduct of the Servicer in
connection with its performance under this Article 11.
If the indemnification provided for herein is unavailable or
insufficient to hold harmless an Indemnified Party, then the Servicer agrees
that it shall contribute to the amount paid or payable by such Indemnified Party
as a result of any claims, losses, damages or liabilities incurred by such
Indemnified Party in such proportion as is appropriate to reflect the relative
fault of such Indemnified Party on the one hand and the Servicer on the other.
In the case of any failure of performance described in clause (a)(ii)
of this Section, the Servicer shall promptly reimburse the Owner, any Depositor,
as applicable, and each Person responsible for the preparation, execution or
filing of any report required to be filed with the Commission with respect to
such Securitization Transaction, or for execution of a certification pursuant to
Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to such
Securitization Transaction, for all costs reasonably incurred by each such party
in order to obtain the information, report, certification, accountants' letter
or other material not delivered as required by the Servicer, any Subservicer or
any Subcontractor.
This indemnification shall survive the termination of this Agreement
or the termination of any party to this Agreement.
(b)(i) Any failure by the Servicer, any Subservicer or any
Subcontractor to deliver any information, report, certification, accountants'
letter or other material when and as required under this Article 11, or any
breach by the Servicer of a representation or warranty set
Page 46
forth in Section 11.02(a) or in a writing furnished pursuant to Section 11.02(b)
and made as of a date prior to the closing date of the related Securitization
Transaction, to the extent that such breach is not cured by such closing date,
or any breach by the Servicer of a representation or warranty in a writing
furnished pursuant to Section 11.02(b) to the extent made as of a date
subsequent to such closing date, shall, except as provided in clause (ii) of
this paragraph, immediately and automatically, without notice or grace period,
constitute an Event of Default with respect to the Servicer under this Agreement
and any applicable Reconstitution Agreement, and shall entitle the Owner, any
Master Servicer or any Depositor, as applicable, in its sole discretion to
terminate the rights and obligations of the Servicer as servicer under this
Agreement and/or any applicable Reconstitution Agreement without payment
(notwithstanding anything in this Agreement or any applicable Reconstitution
Agreement to the contrary) of any compensation to the Servicer; provided that to
the extent that any provision of this Agreement and/or any applicable
Reconstitution Agreement expressly provides for the survival of certain rights
or obligations following termination of the Servicer as servicer, such provision
shall be given effect.
(ii) Any failure by the Servicer, any Subservicer or any Subcontractor
to deliver any information, report, certification or accountants' letter when
and as required under Section 11.04 or 11.05, including any failure by the
Servicer to identify pursuant to Section 11.06(b) any Subcontractor
"participating in the servicing function" within the meaning of Item 1122 of
Regulation AB, which continues unremedied for ten calendar days after the date
on which such information, report, certification or accountants' letter was
required to be delivered shall constitute an Event of Default with respect to
the Servicer under this Agreement and any applicable Reconstitution Agreement,
and shall entitle the Owner, any Master Servicer or any Depositor, as
applicable, in its sole discretion to terminate the rights and obligations of
the Servicer as servicer under this Agreement and/or any applicable
Reconstitution Agreement without payment (notwithstanding anything in this
Agreement to the contrary) of any compensation to the Servicer; provided that to
the extent that any provision of this Agreement and/or any applicable
Reconstitution Agreement expressly provides for the survival of certain rights
or obligations following termination of the Servicer as servicer, such provision
shall be given effect.
(iii) The Servicer shall promptly reimburse the Owner (or any designee
of the Owner, such as a master servicer) and any Depositor, as applicable, for
all reasonable expenses incurred by the Owner (or such designee) or such
Depositor, as such are incurred, in connection with the termination of the
Servicer as servicer and the transfer of servicing of the Mortgage Loans to a
successor servicer. The provisions of this paragraph shall not limit whatever
rights the Owner or any Depositor may have under other provisions of this
Agreement and/or any applicable Reconstitution Agreement or otherwise, whether
in equity or at law, such as an action for damages, specific performance or
injunctive relief.
Section 11.08 Third Party Beneficiary.
For purposes of this Article 11 and any related provisions thereto,
each Master Servicer shall be considered a third-party beneficiary of this
Agreement, entitled to all the rights and benefits hereof as if it were a direct
party to this Agreement.
Page 47
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to the Servicer.
Upon termination of the Servicer's responsibilities and duties under
this Agreement pursuant to Sections 8.04 or 9.01, the Owner shall (i) succeed to
and assume all of the Servicer's responsibilities, rights, duties and
obligations under this Agreement, or (ii) appoint a successor having the
characteristics set forth in Section 8.02 and which shall succeed to all rights
and assume all of the responsibilities, duties and liabilities of the Servicer
under this Agreement prior to the termination of the Servicer's
responsibilities, duties and liabilities under this Agreement. In connection
with such appointment and assumption, the Owner may make such arrangements for
the compensation of such successor out of payments on Mortgage Loans as the
Owner and such successor shall agree. In the event that the Servicer's duties,
responsibilities and liabilities under this Agreement should be terminated
pursuant to the aforementioned sections, the Servicer shall discharge such
duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
of the Servicer pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this section and
shall in no event relieve the Servicer of the representations and warranties
made pursuant to Article III and the remedies available to the Owner under
Section 8.01, it being understood and agreed that the provisions of such Article
III and Section 8.01 shall be applicable to the Servicer notwithstanding any
such resignation or termination of the Servicer, or the termination of this
Agreement.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Servicer and to the Owner an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer, with like effect as if originally named as a party to this Agreement.
Any termination or resignation of the Servicer or termination of this Agreement
pursuant to Section 8.04 or 9.01 shall not affect any claims that the Owner may
have against the Servicer arising prior to any such termination or resignation.
The Servicer shall promptly deliver to the successor the funds in the
Custodial Account and the Escrow Account and the Servicing Files and related
documents and statements held by it hereunder and the Servicer shall account for
all funds. The Servicer shall execute and deliver such instruments and do such
other things as may reasonably be required to more fully and definitely vest and
confirm in the successor all such rights, powers, duties, responsibilities,
obligations and liabilities of the Servicer. The successor shall make such
arrangements as it may deem appropriate to reimburse the Servicer for
unrecovered Monthly Advances and Servicing Advances which the successor retains
hereunder and which would otherwise have been
Page 48
recovered by the Servicer pursuant to this Agreement but for the appointment of
the successor servicer.
Upon a successor's acceptance of appointment as such, the Servicer
shall notify the Owner of such appointment.
All reasonable costs and expenses incurred in connection with
replacing the Servicer upon its resignation or the termination of the Servicer
in accordance with the terms of this Agreement, including, without limitation,
(i) all legal costs and expenses and all due diligence costs and expenses
associated with an evaluation of the potential termination of the Servicer as a
result of an Event of Default and (ii) all costs and expenses associated with
the complete transfer of servicing, including all servicing files and all
servicing data and the completion, correction or manipulation of such servicing
data as may be required by the successor servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the successor
service to service the Mortgage Loans in accordance with this Agreement, shall
be payable on demand by the resigning or terminated Servicer without any right
of reimbursement therefor.
Section 12.02 Amendment.
This Agreement may be amended from time to time by the Servicer and
the Owner by written agreement signed by the Servicer and the Owner.
Section 12.03 Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS, OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW Section 5-1401.
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 12.04 Notices.
Any demands, notices or other communications permitted or required
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered mail, postage prepaid, and
return receipt requested or transmitted by telecopier and confirmed by a similar
mailed writing, as follows:
(i) if to the Servicer with respect to servicing issues:
000 Xxxx Xxxxxx Xxxx Xxxxx 0
Xxxxxx Xxxx, XX 00000
Attention: Xxx Xxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Page 49
Xxxxxxxx Xxxxxxxx PLLC
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxx Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(ii) if to the Owner:
Luminent Mortgage Capital, Inc.
Maia Mortgage Finance Statutory Trust
Mercury Mortgage Finance Statutory Trust
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxxxx Xxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice, or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
address (as evidenced, in the case of registered or certified mail, by the date
noted on the return receipt).
Section 12.05 Severability of Provisions.
Any part, provision, representation or warranty of this Agreement
which is prohibited or which is held to be void or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part, provision,
representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in good
faith, to develop a structure the economic effect of which is nearly as possible
the same as the economic effect of this Agreement without regard to such
invalidity.
Section 12.06 Exhibits and Schedules.
The exhibits, schedules and other addenda and supplements to this
Agreement are hereby incorporated and made a part hereof and are an integral
part of this Agreement.
Page 50
Section 12.07 General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(i) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;
(ii) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles;
(iii) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
(iv) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section
in which the reference appears, and this rule shall also apply to
Paragraphs and other subdivisions;
(v) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(vi) the term "include" or "including" shall mean without limitation
by reason of enumeration.
Section 12.08 Reproduction of Documents.
This Agreement and all documents relating hereto, including, without
limitation, (i) consents, waivers and modifications which may hereafter be
executed, (ii) documents received by any party at the closing, and (iii)
financial statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
Section 12.09 Confidentiality of Information.
Each party recognizes that, in connection with this Agreement, it may
become privy to non-public information regarding the financial condition,
operations and prospects of the other party. Except as required to be disclosed
by law, each party agrees to keep all non-public information regarding the other
party strictly confidential, and to use all such information solely in order to
effectuate the purpose of this Agreement.
Page 51
Section 12.10 Assignment by the Owner.
The Owner shall have the right, without the consent of the Servicer to
assign, in whole or in part, its interest under this Agreement with respect to
some or all of the Mortgage Loans, and designate any person to exercise any
rights of the Owner hereunder and the assignee or designee shall accede to the
rights and obligations hereunder of the Owner with respect to such Mortgage
Loans. The Servicer shall not be obligated to recognize any such assignee or
designee unless such person executes an assignment and assumption agreement
reasonably acceptable to the Servicer. All references to the Owner in this
Agreement shall be deemed to include its assignees or designees. The foregoing
shall not affect any of the Servicer's rights under the Servicing Rights
Purchase Agreement dated as of [Agreement Date] between the Owner and the
Servicer.
Section 12.11 No Partnership.
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
Owner.
Section 12.12 Counterparts; Successors and Assigns.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Section 8.05, this Agreement
shall inure to the benefit of and be binding upon the Servicer and the Owner and
their respective successors and assigns.
Section 12.13 Entire Agreement.
Each of the Servicer and the Owner acknowledges that no
representations, agreements or promises were made to it by the other party or
any of its employees other than those representations, agreements or promises
specifically contained herein. This Agreement sets forth the entire
understanding between the parties hereto with respect to the matters set forth
herein, and shall be binding upon all successors of both parties.
Section 12.14 Further Agreements.
The Servicer and the Owner each agrees to execute and deliver to the
other such reasonable and appropriate additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purpose of this
Agreement.
Section 12.15 Third Party Beneficiary.
For purposes of this Agreement, any Master Servicer shall be
considered a third party beneficiary to this Agreement entitled to all the
rights and benefits accruing to any Master Servicer herein as if it were a
direct party to this Agreement.
Page 52
IN WITNESS WHEREOF, the Servicer and the Owner have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the date and year first above written.
LUMINENT MORTGAGE CAPITAL, INC.
By: /s/ Xxxxxxxxxxx X. Xxxx
------------------------------------
Name: Xxxxxxxxxxx X. Xxxx
Title: Chief Financial Officer
MAIA MORTGAGE FINANCE STATUTORY TRUST
By: /s/ Xxxxxxxxxxx X. Xxxx
------------------------------------
Name: Xxxxxxxxxxx X. Xxxx
Title: Trustee & President
MERCURY MORTGAGE FINANCE STATUTORY TRUST
By: /s/ Xxxxxxxxxxx X. Xxxx
------------------------------------
Name: Xxxxxxxxxxx X. Xxxx
Title: Trustee & President
CENTRAL MORTGAGE COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx, Master CMB
Title: President/CEO
Page 53
Exhibit A
MORTGAGE LOAN SCHEDULE
Available Upon Request
A-1
EXHIBIT B
FORM OF CUSTODIAL ACCOUNT CERTIFICATION
____________ __, 200_
To: __________________________________
(the "Depository")
As Servicer under the Servicing Agreement, dated as of July 17, 2006
between Luminent Mortgage Capital, Inc., Maia Mortgage Finance Statutory Trust
and Mercury Mortgage Finance Statutory Trust (the "Owner") and Central Mortgage
Company (the "Servicer"), we hereby authorize and request you to establish an
account, as a Custodial Account, to be designated as "Central Mortgage Company
in trust for the Owner and various Mortgagors, Fixed and Adjustable Rate
Mortgage Loans." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Servicer. You may refuse any deposit which
would result in violation of the requirement that the account be fully insured
as described below. This letter is submitted to you in duplicate. Please execute
and return one original to us.
CENTRAL MORTGAGE COMPANY
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
B-1
The undersigned, as Depository, hereby certifies that the
above-described account has been established under Account Number ___________ at
the office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance Corporation through the
Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
(Depository)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
B-2
EXHIBIT C
FORM OF ESCROW ACCOUNT CERTIFICATION
____________ __, 200_
To: __________________________________
(the "Depository")
As Servicer under the Servicing Agreement, dated as of July 17, 2006
between Luminent Mortgage Capital, Inc., Maia Mortgage Finance Statutory Trust
and Mercury Mortgage Finance Statutory Trust (the "Owner") and Central Mortgage
Company (the "Servicer"), we hereby authorize and request you to establish an
account, as an Escrow Account, to be designated as "Central Mortgage Company in
trust for the Owner and various Mortgagors, Fixed and Adjustable Rate Mortgage
Loans." All deposits in the account shall be subject to withdrawal therefrom by
order signed by the Seller. You may refuse any deposit which would result in
violation of the requirement that the account be fully insured as described
below. This letter is submitted to you in duplicate. Please execute and return
one original to us.
CENTRAL MORTGAGE COMPANY
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
C-1
The undersigned, as Depository, hereby certifies that the
above-described account has been established under Account Number ___________ at
the office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance Corporation through the
Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
(Depository)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
C-2
EXHIBIT D
REQUEST FOR RELEASE OF DOCUMENTS
To: [Addressee]
Re: The Custodial Agreement, dated as of ______________, between [Owner
Legal Name] as the Owner and __________________, as the Custodian.
In connection with the administration of the Mortgage Loans held by you as
the Custodian on behalf of the Owner, we request the release, and acknowledge
receipt, of the (Custodial File/[specify documents]) for the Mortgage Loan
described below, for the reason indicated.
Documents to be sent to Name, Address and Phone Number
Mortgagor's Name Address & Zip Code:
Mortgage Loan Number:
Reason for Requesting Documents (check one)
____ 1. Mortgage Loan Paid in Full. (The [Servicer] hereby certifies that all
amounts received in connection therewith have been credited to the
account of the Owner.
____ 2. Mortgage Loan Liquidated By ____________________________ (The
[Servicer] hereby certifies that all proceed of foreclosure, insurance,
condemnation or other liquidation have been finally received and credited
to the account of the Owner.
____ 3. Mortgage 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 additional documents in your possession
relating to the specified Mortgage Loan.
D-1
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.
[SERVICER]
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Date:
-------------------------------------
Acknowledgment of Documents returned to the Custodian:
___________________________, as Custodian
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Date:
-------------------------------------
D-2
EXHIBIT E
FORM OF XXXXXXXX-XXXXX CERTIFICATION
I, __________________________, certify to ____________________________, and
its officers, directors, agents and affiliates (the "Sarbanes Certifying
Party"), and with the knowledge and intent that they will rely upon this
certification, that:
(i) Based on my knowledge, the information relating to the Mortgage Loans
and the servicing thereof submitted by the Servicer to the Sarbanes
Certifying Party which is used in connection with preparation of the
reports on Form 8-K and the annual report on Form 10-K filed with the
Securities and Exchange Commission with respect to the
Securitization, taken as a whole, does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading as of the date
of this certification;
(ii) The servicing information required to be provided to the Sarbanes
Certifying Party by the Servicer under the [applicable servicing
agreement] has been provided to the Sarbanes Certifying Party;
(iii) I am responsible for reviewing the activities performed by the
Servicer under the [applicable servicing agreement] and based upon
the review required by the [applicable servicing agreement], and
except as disclosed in the Annual Statement of Compliance, the Annual
Independent Public Accountant's Servicing Report and all servicing
reports, officer's certificates and other information relating to the
servicing of the Mortgage Loans submitted to the Sarbanes Certifying
Party, the Servicer has, as of the date of this certification,
fulfilled its obligations under the [applicable servicing agreement];
(iv) I have disclosed to the Sarbanes Certifying Party all significant
deficiencies relating to the Servicer's compliance with the minimum
servicing standards in accordance with a review conducted in
compliance with the Uniform Single Attestation Program for Mortgage
Bankers or similar standard as set forth in the [applicable servicing
agreement]; and
(v) The Servicer shall indemnify and hold harmless the Sarbanes
Certifying Party and its officers, directors, agents and affiliates
from and against any losses, damages, penalties, fines, forfeitures,
reasonable legal fees and related costs, judgments and other costs
and expenses arising out of or based upon a breach by the Servicer or
any of its officers, directors, agents or affiliates of its
obligations or representations under this Certification or the
negligence, bad faith or willful misconduct of the Servicer in
connection therewith. If the indemnification provided for herein is
unavailable or insufficient to hold harmless the Sarbanes Certifying
Party, then the Servicer agrees that it shall contribute to the
amount paid or payable by the Sarbanes Certifying Party as a result
of the losses, claims, damages or liabilities of the Sarbanes
Certifying Party in such proportion as is
appropriate to reflect the relative fault of the Sarbanes Certifying
Party on the one hand and the Servicer on the other in connection
with a breach of the Servicer's obligations under this Certification
or the Servicer's negligence, bad faith or willful misconduct in
connection therewith.
CAPITALIZED WORDS NOT OTHERWISE DEFINED HEREIN HAVE THE MEANING ASSIGNED TO
THEM IN THE SERVICING AGREEMENT DATED JULY 17, 2006 BY AND BETWEEN LUMINENT
MORTGAGE CAPITAL, INC., MAIA MORTGAGE FINANCE STATUTORY TRUST AND MERCURY
MORTGAGE FINANCE STATUTORY TRUST, AS OWNER AND THE SERVICER.
E-2
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company.
Dated:
-----------------------------
By:
---------------------------
Name:
Title:
E-3
EXHIBIT F
F-1
EXHIBIT G
X-0
XXXXXXX X
X-0
XXXXXXX I
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by [the Servicer] [Name
of Subservicer] shall address, at a minimum, the criteria identified as below as
"Applicable Servicing Criteria":
APPLICABLE
SERVICING
SERVICING CRITERIA CRITERIA
--------------------------------------------------------------------------------
REFERENCE CRITERIA
--------------------------------------------------------------------------------
GENERAL SERVICING CONSIDERATIONS
1122(d)(1)(i) Policies and procedures are instituted to X
monitor any performance or other triggers and
events of default in accordance with the
transaction agreements.
1122(d)(1)(ii) If any material servicing activities are X
outsourced to third parties, policies and
procedures are instituted to monitor the third
party's performance and compliance with such
servicing activities.
1122(d)(1)(iii) Any requirements in the transaction agreements
to maintain a back-up servicer for the mortgage
loans are maintained.
1122(d)(1)(iv) A fidelity bond and errors and omissions policy X
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 mortgage loans are deposited into X
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.
1122(d)(2)(ii) Disbursements made via wire transfer on behalf X
of an obligor or to an investor are made only by
authorized personnel.
1122(d)(2)(iii) Advances of funds or guarantees regarding X
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 agreements.
1122(d)(2)(iv) The related accounts for the transaction, such X
as cash reserve accounts or accounts established
as a form of overcollateralization, are
separately maintained (e.g., with respect to
commingling of cash) as set forth in the
transaction agreements.
1122(d)(2)(v) Each custodial account is maintained at a X
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 Exchange Act.
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent X
unauthorized access.
1122(d)(2)(vii) Reconciliations are prepared on a monthly basis X
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
I-1
APPLICABLE
SERVICING
SERVICING CRITERIA CRITERIA
--------------------------------------------------------------------------------
REFERENCE CRITERIA
--------------------------------------------------------------------------------
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 those to be X
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
mortgage loans serviced by the Servicer.
1122(d)(3)(ii) Amounts due to investors are allocated and [X]
remitted in accordance with timeframes,
distribution priority and other terms set forth
in the transaction agreements.
1122(d)(3)(iii) Disbursements made to an investor are posted [X]
within two business days to the Servicer's
investor records, or such other number of days
specified in the transaction agreements.
1122(d)(3)(iv) Amounts remitted to investors per the investor [X]
reports agree with cancelled checks, or other
form of payment, or custodial bank statements.
POOL ASSET ADMINISTRATION
1122(d)(4)(i) Collateral or security on mortgage loans is
maintained as required by the transaction
agreements or related mortgage loan documents.
1122(d)(4)(ii) Mortgage loan and related documents are
safeguarded as required by the transaction
agreements.
1122(d)(4)(iii) Any additions, removals or 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 mortgage loans, including any X
payoffs, made in accordance with the related
mortgage loan 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 mortgage
loan documents.
1122(d)(4)(v) The Servicer's records regarding the mortgage X
loans agree with the Servicer's records with
respect to an obligor's unpaid principal
balance.
1122(d)(4)(vi) Changes with respect to the terms or status of X
an obligor's mortgage loans (e.g., loan
modifications or re-agings) are made, reviewed
and approved by authorized personnel in
accordance with the transaction agreements and
related pool asset documents.
1122(d)(4)(vii) Loss mitigation or recovery actions (e.g., X
forbearance plans, modifications and
I-2
APPLICABLE
SERVICING
SERVICING CRITERIA CRITERIA
--------------------------------------------------------------------------------
REFERENCE CRITERIA
--------------------------------------------------------------------------------
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 agreements.
1122(d)(4)(viii) Records documenting collection efforts are X
maintained during the period a mortgage loan 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 mortgage loans 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 rates of return X
for mortgage loans with variable rates are
computed based on the related mortgage loan
documents.
1122(d)(4)(x) Regarding any funds held in trust for an obligor X
(such as escrow accounts): (A) such funds are
analyzed, in accordance with the obligor's
mortgage loan 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 mortgage loan
documents and state laws; and (C) such funds are
returned to the obligor within 30 calendar days
of full repayment of the related mortgage loans,
or such other number of days specified in the
transaction agreements.
1122(d)(4)(xi) Payments made on behalf of an obligor (such as X
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
transaction agreements.
1122(d)(4)(xii) Any late payment penalties in connection with X
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 or omission.
1122(d)(4)(xiii) Disbursements made on behalf of an obligor are X
posted within two business days to the obligor's
records maintained by the servicer, or such
other number of days specified in the
transaction agreements.
1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible X
accounts are recognized and recorded in
accordance with the transaction agreements.
1122(d)(4)(xv) Any external enhancement or other support, [X]
identified in Item 1114(a)(1) through (3) or
Item 1115 of Regulation AB, is maintained as set
forth in the transaction agreements.
I-3
EXHIBIT J
FORM OF BACK-UP CERTIFICATION
I, [identify certifying individual], certify to the [Owner], [Mortgage
Loan Servicer] [Depositor], [Trustee], [Securities Administrator] and [Master
Servicer] that:
Based on my knowledge, the information in the Annual Statement of
Compliance, the Annual Independent Public Accountant's Servicing Report and
all servicing reports, officer's certificates and other information
relating to the servicing of the Mortgage Loans taken as a whole, does not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading as of the date of
this certification;
The servicing information required to be provided by the Servicer
under this Servicing Agreement has been provided to the Owner and the
Master Servicer;
(I am is responsible for reviewing the activities performed by the
Servicer under the Agreement and based upon the review required by the
Agreement, and except as disclosed in the Annual Statement of Compliance or
the Annual Independent Public Accountant's Servicing Report, the Servicer
has, as of the date of this certification fulfilled its obligations under
the Agreement; and
Such officer has disclosed to the Owner and the Master Servicer all
significant deficiencies relating to the Servicer's compliance with the
minimum servicing standards in accordance with a review conducted in
compliance with the Uniform Single Attestation Program for Mortgage Bankers
or similar standard as set forth in the Servicing Agreement.
[CAPS NAME]
By:
Name:
Title:
Date:
J-1
EXHIBIT K
1. The Servicer shall not commence foreclosure proceedings or any alternative
to foreclosure proceedings with respect to a Mortgage Loan that has become
60 days or more delinquent unless (i) no later than five Business Days
prior to its commencement of such foreclosure proceedings, it notifies the
person that has been identified to it as the majority holder of the most
junior class of the subordinate certificates (the "Majority Holder") of its
intention to do so, and (ii) the Majority Holder does not, within such
five-Business Day period, affirmatively object to such action.
2. In the event that the Servicer determines not to proceed with foreclosure
proceedings or any alternative to foreclosure proceedings with respect to a
Mortgage Loan and the Servicer has determined that it is unable to collect
payments due under such Mortgage Loan in accordance with the Agreement, the
Servicer shall, prior to taking any action with respect to such Mortgage
Loan, promptly provide both the Master Servicer and the Majority Holder
with notice of such determination and a description of such other action as
it intends to take with respect to such Mortgage Loan; provided, that the
Servicer shall not be permitted to proceed with any such action unless the
Majority Holder does not, within such five-Business Day period,
affirmatively object to such action.
(a) If the Majority Holder timely and affirmatively objects to an action
or contemplated action of the Servicer pursuant to paragraph 1 or 2
above, then the Majority Holder shall instruct the Master Servicer to
hire three appraisal firms selected by the Master Servicer in its
reasonable discretion, to compute the fair value of the Mortgaged
Property securing the related Mortgage Loan utilizing the Xxxxxx Xxx
Form 2055 Exterior-Only Inspection Residential Appraisal Report (each
such appraisal-firm computation, a "Fair Value Price"), in each case
no later than 30 days from the date of such Majority Holder objection.
All costs relating to the computation of the Fair Value Prices shall
be for the account of the Majority Holder and shall be paid by the
Majority Holder at the time that such Mortgage Loan is purchased by
the Majority Holder.
(i) If the Master Servicer shall have received three Fair
Value Prices by the end of such 30-day period, then the Majority
Holder shall, no later than five Business Days after the
expiration of such 30-day period, purchase such Mortgage Loan for
an amount equal to the lesser of (i) the unpaid principal balance
of the related Mortgage Loan (the "Unpaid Principal Balance") and
(ii) the average of such three Fair Value Prices respectively
determined by such appraisal firms; and shall deliver such amount
to the Servicer against the assignment of the related Mortgage
Loan and the delivery of the related documents on the purchase
date.
(ii) If the Master Servicer shall not have received three
Fair Value Prices by the end of the 30-day period set forth in
clause (1)(c) above, then:
K-1
(A) If the Master Servicer shall have received only two
Fair Value Prices by the end of such 30-day period, then the
Master Servicer shall determine, in its reasonable
discretion, the fair value of the Mortgaged Property and
other collateral relating to such Mortgage Loan (such fair
value, the "Master Servicer's Fair Value Price") and the
Majority Holder shall, no later than five Business Days
after the expiration of such 30-day period, purchase such
Mortgage Loan for an amount equal to the least of (1) the
Unpaid Principal Balance thereof, (2) the average of such
Fair Value Prices determined by such appraisal firms and (3)
the Master Servicer's Fair Value Price; and shall deliver
such amount to the Servicer against the assignment of the
related Mortgage Loan and the delivery of the related
documents on the purchase date.
(B) If the Master Servicer shall have received only one
Fair Value Price by the end of such 30-day period, then the
Master Servicer will determine the Master Servicer Fair
Value Price of the Mortgaged Property related to such
Mortgage Loan and the Majority Holder shall, no later than
five Business Days after the expiration of such 30-day
period, purchase such Mortgage Loan for an amount equal to
the least of (1) the Unpaid Principal Balance thereof, (2)
the Fair Value Price determined by such appraisal firm and
(3) the Master Servicer's Fair Value Price; and shall
deliver such amount to the Servicer against the assignment
of the related Mortgage Loan and the delivery of the related
documents on the purchase date.
(C) If the Master Servicer shall not have received any
such Fair Value Prices by the end of such 30-day period,
then the Master Servicer will determine the Master Servicer
Fair Value Price of the Mortgaged Property related to such
Mortgage Loan and the Majority Holder shall, no later than
five Business Days after the expiration of such 30-day
period, purchase such Mortgage Loan for an amount equal to
the lesser of (1) the Unpaid Principal Balance thereof and
(2) the Master Servicer's Fair Value Price; and shall
deliver such amount to the Servicer against the assignment
of the related Mortgage Loan and the delivery of the related
documents on the purchase date.
(D) If the Master Servicer has not received three Fair
Value Prices by the end of such 30-day period, it shall
continue for the next 30 days to try to obtain three Fair
Value Prices. Upon the earlier of the date that it obtains
the three Fair Value Prices, or the end of the 30-day
extension, the Master Servicer shall recalculate the price
payable pursuant to this Agreement and, within five Business
Days thereafter, (i) the Majority Holder shall pay the
Servicer the positive difference between the recalculated
purchase price, and the price actually paid by it, or (ii)
the Servicer shall refund to the Majority Holder the
positive difference between the purchase price actually paid
by the Majority Holder, and the recalculated purchase price.
K-2
3. Notwithstanding anything herein to the contrary, the Majority Holder shall
not be entitled to any of its rights set forth herein with respect to a
Mortgage Loan following its failure to purchase such Mortgage Loan and the
related Mortgaged Property, at the related purchase price set forth in this
Exhibit K within the timeframe set forth in this Exhibit K following the
Majority Holder's objection to an action of the Servicer, and the Servicer
shall provide the Master Servicer notice of such failure.
4. Any notice, confirmation, instruction or objection pursuant to paragraphs
(1) and (2) above may be delivered via facsimile or other written or
electronic communication as the parties hereto and the Majority Holder may
agree to from time to time.
5. For the avoidance of doubt, the Majority Holder's rights set forth in this
Exhibit K are intended to provide the Majority Holder, for so long as it
has not forfeited its right under this Exhibit K as set forth in paragraph
(3) above, with the unilateral right to control foreclosure decisions in
respect of delinquent and defaulted Mortgage Loans, and certain exclusive
purchase rights so as to maximize the recovery value on delinquent and
defaulted Mortgage Loans.
6. To the extent that the Majority Holder purchases any Mortgage Loan pursuant
to this Exhibit K, the Servicer will continue to service such Mortgage Loan
in accordance with this Agreement. The parties acknowledge that, in such
event, the Majority Holder will have no duty or responsibility to service
any such Mortgage Loan.
7. In the event that the Majority Holder purchases any Mortgage Loan pursuant
to this Exhibit K, the Servicer and the Majority Holder will work together
in good faith to take any and all actions necessary to effect such
purchase, including, but not limited to, the preparation and execution of
any endorsements or assignments of the Mortgage Loan documents, all at the
expense of the Majority Holder.
8. The Master Servicer shall promptly deliver any written notices that it
receives under this Exhibit K to the Majority Holder.
K-3
