Exhibit 10.3(A)
Execution Copy
MASTER FLOW SALE AND SERVICING AGREEMENT
Dated and effective as of August 1, 0000
XXXX XX XXXXXXX MORTGAGE CAPITAL CORPORATION
(Initial Owner)
and
GMAC MORTGAGE CORPORATION
(Company)
Fixed Rate Conventional Mortgage Loans
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS .........................................................2
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS AND
RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS........................... 11
Section 2.01 Conveyance of Mortgage Loans; Possession of Mortgage
Files...................................................11
Section 2.02 Books and Records.......................................12
Section 2.03 Delivery of the Collateral File.........................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY; REPURCHASE AND
SUBSTITUTION; REVIEW OF MORTGAGE LOANS........................................14
Section 3.01 Representations and Warranties of the Company...........14
Section 3.02 Representations and Warranties as to Individual Mortgage
Loans...................................................16
Section 3.03 Repurchase and Substitution.............................23
ARTICLE IV ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.....................24
Section 4.01 Company to Act as Servicer..............................24
Section 4.02 Liquidation of Mortgage Loans; Servicing Advances and
Foreclosure.............................................25
Section 4.03 Collection of Mortgage Loan Payments....................26
Section 4.04 Establishment of Custodial Account; Deposits in Custodial
Account.................................................26
Section 4.05 Withdrawals From the Custodial Account..................28
Section 4.06 Establishment of Escrow Account; Deposits in Escrow
Account.................................................29
Section 4.07 Withdrawals From Escrow Account.........................29
Section 4.08 Payment of Taxes, Insurance and Other Charges...........30
Section 4.09 Transfer of Accounts....................................30
Section 4.10 Maintenance of Hazard Insurance.........................30
Section 4.11 Maintenance of Blanket Insurance Policy.................31
Section 4.12 Maintenance of Mortgage Impairment Insurance Policy.....32
Section 4.13 Fidelity Bond; Errors and Omissions Insurance...........32
Section 4.14 Title, Management and Disposition of REO Property.......32
Section 4.15 Reserved................................................34
Section 4.16 Inspections.............................................34
Section 4.17 Restoration of Mortgaged Property.......................34
Section 4.18 Maintenance of Primary Insurance Policy; Claims.........35
Section 4.19 Real Estate Owned Reports...............................35
Section 4.20 Liquidation Reports.....................................36
Section 4.21 Reports of Foreclosures and Abandonments of Mortgaged
Property................................................36
Section 4.22 Disaster Recovery/Business Continuity Plan..............36
ARTICLE V PAYMENTS TO THE OWNER...............................................36
Section 5.01 Distributions...........................................36
Section 5.02 Statements to the Owner.................................37
Section 5.03 P&I Advances by the Company.............................37
Section 5.04 Prepayment Interest Shortfalls..........................38
ARTICLE VI GENERAL SERVICING PROCEDURE........................................38
Section 6.01 Assumption Agreements...................................38
Section 6.02 Release of Mortgage Files; Wrongful Satisfaction of
Mortgages...............................................39
Section 6.03 Servicing Compensation..................................39
Section 6.04 Annual Statement as to Compliance.......................39
Section 6.05 Annual Independent Public Accountants' Servicing Report.40
Section 6.06 Owner's Right to Examine the Company Records............40
Section 6.07 Compliance with REMIC Provisions........................40
Section 6.08 Fair Credit Reporting Act Compliance....................40
ARTICLE VII REPORTS TO BE PREPARED BY THE COMPANY.............................40
Section 7.01 The Company Shall Provide Access and Information as
Reasonably Required.....................................40
Section 7.02 Financial Statements....................................41
Section 7.03 Cooperation with Third-Party Service Providers..........41
ARTICLE VIII THE COMPANY......................................................41
Section 8.01 Indemnification; Third Party Claims.....................41
Section 8.02 Merger or Consolidation of the Company..................42
Section 8.03 Company Not to Resign...................................42
ARTICLE IX DEFAULT 42
Section 9.01 Events of Default.......................................42
Section 9.02 Waiver of Defaults......................................44
ARTICLE X TERMINATION 44
Section 10.01 Termination.............................................44
Section 10.02 Termination Without Cause...............................44
ARTICLE XI MISCELLANEOUS PROVISIONS...........................................45
Section 11.01 Successor to the Company................................45
Section 11.02 Repurchases and Related Assurances......................46
Section 11.03 Amendment...............................................46
Section 11.04 Reserved................................................46
Section 11.05 Duration of Agreement...................................46
Section 11.06 Governing Law...........................................46
Section 11.07 Notices.................................................47
Section 11.08 Severability of Provisions..............................47
Section 11.09 No Partnership..........................................47
Section 11.10 Counterparts............................................47
Section 11.11 Successors and Assigns..................................47
Section 11.12 Intention of the Parties................................47
Section 11.13 Solicitation of Mortgagor...............................48
Section 11.14 Further Agreements......................................48
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Section 11.15 Confidential Information................................48
Section 11.16 Exhibits................................................49
Section 11.17 General Interpretive Principles.........................49
ARTICLE XII WHOLE LOAN TRANSFER; PASS-THROUGH TRANSFER........................49
Section 12.01 Removal of Mortgage Loans from Inclusion under this
Agreement upon a Whole Loan Transfer or a Pass-Through
Transfer on One or More Reconstitution Dates...............................49
EXHIBITS
Exhibit A Contents of Mortgage Files
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 Monthly Remittance Advice
Exhibit F Underwriting Standards
Exhibit G SEC Certification
Exhibit H Form of Assignment and Conveyance
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This is a Master Flow Sale and Servicing Agreement, dated and effective as
of August 1, 2003, and is executed between Banc of America Mortgage Capital
Corporation, a North Carolina corporation, as purchaser and initial owner
(hereinafter, the "Initial Owner"), and GMAC Mortgage Corporation, a
Pennsylvania corporation, as seller and servicer (the "Company"). The Initial
Owner has agreed to purchase from time to time, from the Company and the Company
has agreed to sell, from time to time, to the Initial Owner, certain
conventional fixed rate residential mortgage loans (the "Mortgage Loans") as
described herein on a servicing retained basis, which shall be delivered in
groups of whole loans on various dates as provided herein (each a "Closing
Date").
Each Mortgage Loan is secured by first lien mortgages or deeds of trust on
residential dwellings located in the jurisdiction indicated on the Mortgage Loan
Schedule.
The Initial Owner and the Company wish to prescribe the manner of
conveyance, servicing and control of the Mortgage Loans.
In consideration of the premises and the mutual agreements hereinafter set
forth, the Initial Owner and the Company agree as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
"Agreement": This Master Flow Sale and Servicing Agreement, including all
exhibits hereto, and all amendments hereof and supplements hereto.
"ALTA": The American Land Title Association.
"Appraisal": A written appraisal of a Mortgaged Property made by a
qualified appraiser satisfying the requirements of Title XI of The Financial
Institutions Reform, and Enforcement Act of 1989, as amended, and the
regulations promulgated thereunder, which appraisal must be written, in form and
substance, to FDIC, Xxxxxx Xxx and Xxxxxxx Mac standards, and must meet the
appraisal standards of the Uniform Standards of Professional Appraisal Practice.
"Appraised Value": The amount set forth in an Appraisal in connection with
the origination of each Mortgage Loan as the value of the Mortgaged Property,
or, if the Mortgage Loan is a refinanced Mortgage Loan processed and originated
under the Company's "express refinance," "streamline refinance," "GM family" or
"select processing" program (as described in the Company's underwriting
guidelines attached hereto as Exhibit F) the Appraised Value shall equal the
amount indicated on the Company's servicing system as the appraised value of the
Mortgaged Property; or if the Mortgage Loan is a purchase Mortgage Loan
originated under the Company's "select processing" or "GM family" programs (as
described in the Company's underwriting guidelines attached hereto as Exhibit F)
the Appraised Value shall equal the amount of the purchase price of the
Mortgaged Property.
"Assignment and Conveyance": An assignment and conveyance with respect to
the Mortgage Loans purchased on a Closing Date in the form annexed hereto as
Exhibit H.
"Assignment of Mortgage": An assignment of the Mortgage, notice of transfer
or equivalent instrument in recordable form (but not recorded) that, when
properly completed and recorded, is sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage Loan to the Owner.
"Assumed Principal Balance": As to each Mortgage Loan as of any date of
determination, (i) the principal balance of the Mortgage Loan outstanding as of
the related Cut-off Date after application of payments due on or before the
related Cut-off Date, whether or not received, minus (ii) all amounts previously
distributed to the Owner with respect to the Mortgage Loan pursuant to Section
5.01 and representing (a) payments or other recoveries of principal or (b)
advances of scheduled principal payments made pursuant to Section 5.03.
"Business Day": Any day other than (i) a Saturday or Sunday, or (ii) a day
on which banking or savings and loan institutions in the Commonwealth of
Pennsylvania, State of Iowa or State of New York are authorized or obligated by
law or executive order to be closed.
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"Closing Date": The date or dates on which the Initial Owner, from time to
time, shall purchase and the Company, from time to time, shall sell to the
Initial Owner, the Mortgage Loans listed on the Mortgage Loan Schedule with
respect to the related Mortgage Loan Package.
"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.
"Collateral File": The documents outlined in Section 2.03 required to be
delivered to the Owner under same.
"Company": GMAC Mortgage Corporation, a Pennsylvania corporation, or its
successor in interest or any successor to the Company under this Agreement
appointed as herein provided.
"Condemnation Proceeds": All awards or settlements in respect of a taking
of an entire Mortgaged Property by exercise of the power of eminent domain or
condemnation.
"Consumer Information": Information including but not limited to all
personal information about any Mortgagor that is supplied to the Company by or
on behalf of the Mortgagor.
"Custodial Account": The separate account or accounts created and
maintained pursuant to Section 4.04.
"Custodian": The custodian, or its successor in interest or assigns, under
a certain custodial agreement governing the retention of the originals of each
Mortgage Note, Mortgage, Assignment of Mortgage and other documents upon
purchase of the Mortgage Loans by the Initial Owner.
"Curtailment": Any Principal Prepayment made by a Mortgagor that is not a
Full Principal Prepayment.
"Customary Servicing Procedures": Procedures (including collection
procedures) using the same care that the Company customarily employs and
exercises in servicing and administering mortgage loans for its own account
giving due consideration to accepted mortgage servicing practices.
"Cut-off Date": The first day of the month in which the respective Closing
Date occurs or if the first day of such month is not a Business Day, the first
Business Day immediately following.
"Deleted Mortgage Loan": A Mortgage Loan which is repurchased by the
Company in accordance with the terms of this Agreement or which is replaced or
to be replaced with a Qualified Substitute Mortgage Loan in accordance with the
terms of this Agreement.
"Determination Date": The 16th day (or if such 16th day is not a Business
Day, the Business Day immediately preceding such 16th day) of the month of the
related Remittance Date.
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"Due Date": The day of the month on which each Monthly Payment is due on a
Mortgage Loan, exclusive of any days of grace.
"Due Period": With respect to each Remittance Date, the period beginning on
the second day of the month preceding the month of the Remittance Date, and
ending on the first day of the month of the Remittance Date.
"Eligible Depository Institution": An account or accounts maintained with a
depository institution which is acceptable to Xxxxxx Xxx or Xxxxxxx Mac for
establishment of custodial accounts.
"Eligible Investments": Any one or more of the following obligations or
securities:
(i) obligations of or guaranteed as to principal and interest by the
United States, Xxxxxxx Mac, Xxxxxx Xxx or any agency or instrumentality of
the United States when such obligations are backed by the full faith and
credit of the United States; provided, that such obligations of Xxxxxxx Mac
or Xxxxxx Xxx shall be limited to senior debt obligations and mortgage
participation certificates except that investments in mortgage-backed or
mortgage participation securities with yields evidencing extreme
sensitivity to the rate of principal payments on the underlying mortgages
shall not constitute Eligible Investments hereunder;
(ii) repurchase agreements (which must be fully collateralized) on
obligations specified in clause (i) maturing not more than one month from
the date of acquisition thereof;
(iii) federal funds, certificates of deposit, demand deposits, time
deposits and bankers' acceptances (which shall each have an original
maturity of not more than 90 days and, in the case of bankers' acceptances,
shall in no event have an original maturity of more than 365 days or a
remaining maturity of more than 30 days) denominated in United States
dollars of any U.S. depository institution or trust company incorporated
under the laws of the United States or any state thereof or of any domestic
branch of a foreign depository institution or trust company;
(iv) commercial paper (having original maturities of not more than 365
days) of any corporation incorporated under the laws of the United States
or any state thereof which are rated at least "A-1" or "P-1" by S & P and
Moody's, respectively;
(v) obligations of major foreign commercial banks, limited to
Eurodollar deposits, time deposits, certificate of deposits, bankers
acceptances, Yankee Bankers acceptances and Yankee certificate of deposits;
(vi) obligations of major foreign corporations limited to commercial
paper, auction rate preferred stock, medium term notes, master notes and
loan participations;
(vii) money market funds comprised of securities described in the
aforementioned clauses (i) through (iv) and having a stated policy of
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maintaining a set net asset value per share (a "Money Market Fund"). All
Money Market Funds will conform to Rule 2a-7 of the Investment Company Act
of 1940;
provided, however, that no instrument shall be an Eligible Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest with respect to such instrument provide a yield to
maturity greater than 120% of the yield to maturity at par of such underlying
obligations.
"Escrow Account": The separate account or accounts created and maintained
pursuant to Section 4.06.
"Escrow Payments": The amounts constituting taxes, assessments, mortgage
insurance premiums, fire and hazard insurance premiums and other payments
required to be escrowed by the Mortgagor with the mortgagee pursuant to any
Mortgage Loan.
"Event of Default": Any one of the conditions or circumstances enumerated
in Section 9.01.
"Xxxxxx Xxx": The Federal National Mortgage Association or any successor
organization.
"Fidelity Bond": A fidelity bond required to be maintained by the Company
pursuant to Section 4.13.
"FDIC": The Federal Deposit Insurance Corporation or any successor
organization.
"Xxxxxxx Mac": The Federal Home Loan Mortgage Corporation or any successor
organization.
"Full Principal Prepayment": A Principal Prepayment made by a Mortgagor of
the entire principal balance of a Mortgage Loan.
"HUD": The Department of Housing and Urban Development or any successor
organization.
"Initial Owner": Banc of America Mortgage Capital Corporation, a North
Carolina corporation.
"Insurance Proceeds": Proceeds of any Primary Insurance Policy, title
policy, hazard policy or other insurance policy covering a Mortgage Loan, if
any, to the extent such proceeds are not to be applied to the restoration of the
related Mortgaged Property or released to the Mortgagor in accordance with
Customary Servicing Procedures or in accordance with the terms of the related
Mortgage Loan or applicable law.
"Liquidation Proceeds": Cash, other than Insurance Proceeds, Condemnation
Proceeds or REO Disposition Proceeds, received in connection with the
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liquidation of a defaulted Mortgage Loan, whether through the sale or assignment
of the Mortgage Loan, trustee's sale, foreclosure sale or otherwise.
"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage Loan, the
original principal balance of such Mortgage Loan divided by the Appraised Value
of the related Mortgaged Property.
"MERS": Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
"MERS(R) System": The system of recording transfers of Mortgages
electronically maintained by MERS.
"Monthly Payment": The scheduled monthly payment of principal and interest
on a Mortgage Loan which is payable by a Mortgagor under the related Mortgage
Note.
"Moody's": Xxxxx'x Investor Services, Inc. or any successor thereto.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on or first priority ownership interest in an estate in fee simple,
in real property securing a Mortgage Note, including any rider incorporated by
reference therein.
"Mortgage File": The documents, records and other items referred to in
Exhibit A annexed hereto pertaining to a particular Mortgage Loan.
"Mortgage Interest Rate": The annual rate at which interest accrues on any
Mortgage Loan in accordance with the provisions of the related Mortgage Note.
"Mortgage Loan": An individual mortgage loan that is the subject of this
Agreement, each mortgage loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule.
"Mortgage Loan Package": A pool or group of Mortgage Loans purchased on a
Closing Date, as described in the Mortgage Loan Schedule annexed to the related
Assignment and Conveyance.
"Mortgage Loan Remittance Rate": As to each Mortgage Loan, the annual rate
of interest required to be remitted hereunder to the Owner, which shall be equal
to the related Mortgage Interest Rate minus the related Servicing Fee.
"Mortgage Loan Schedule": With respect to each Mortgage Loan Package, the
schedule of Mortgage Loans annexed to the related Assignment and Conveyance,
such schedule setting forth the following information as to each Mortgage Loan,
as applicable: (a) the Mortgage Loan identifying number, (b) state and zip code
of the Mortgaged Property, (c) the Mortgage Interest Rate, (d) the original
principal balance of the Mortgage Loan, (e) principal balance of the Mortgage
Loan as of the Cut-off Date after deduction of payments of principal due on or
before the Cut-off Date, whether or not collected, (f) the first payment date,
(g) a code indicating whether the Mortgaged Property is occupied by the owner
6
(and, if so, whether it is occupied as a primary, secondary or vacation
residence), (h) the purpose of the Mortgage Loan, (i) the "MIN" or mortgage
identification number indicating loans registered with MERS, (j) a code
indicating whether the Mortgaged Property is a single family residence,
two-family residence, three-family residence, four-family residence, PUD or
Condominium, (k) the Monthly Payment, (l) the original term to maturity, (m) the
scheduled maturity date, (n) LTV Ratio, (o) a code indicating the name of the
issuer of the Primary Insurance Policy and (p) the Appraised Value.
"Mortgage Note": The note or other evidence of the indebtedness of a
Mortgagor secured by the related Mortgage.
"Mortgaged Property": The real property and improvements subject to a
Mortgage, constituting security for repayment of the debt evidenced by the
related Mortgage Note. "Mortgagor": The obligor on a Mortgage Note.
"Nonrecoverable Advance": Any advance previously made by the Company
pursuant to Section 5.03 or Section 5.04 or any expenses incurred pursuant to
Section 4.08 which, in the good faith judgment of the Company, may not be
ultimately recoverable by the Company from Liquidation Proceeds. The
determination by the Company that it has made a Nonrecoverable Advance, shall be
evidenced by an Officer's Certificate of the Company delivered to the Owner and
detailing the reasons for such determination.
"Officers' Certificate": A certificate signed by the President, a Senior
Vice President or a Vice President and by the Treasurer or the Secretary or one
of the Assistant Secretaries of the Company, or by other duly authorized
officers or agents of the Company, and delivered to the Owner as required by
this Agreement.
"Opinion of Counsel": A written opinion of counsel, who may be salaried
counsel employed by the Company.
"Owner": The Initial Owner and any successor or assign to this Agreement of
the Initial Owner or an Owner.
"P&I Advance": As to any Mortgage Loan, any advance made by the Company
pursuant to Section 5.03.
"Pass-Through Transfer": The sale or transfer of some or all of the
Mortgage Loans by the Initial Owner to a trust to be formed as part of a
publicly issued or privately placed mortgage-backed securities transaction.
"Person": Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Prepayment Interest Shortfall": As to any Remittance Date and any Mortgage
Loan, (a) if such Mortgage Loan was the subject of a Full Principal Prepayment
during the related Principal Prepayment Period, the excess of one month's
interest (adjusted to the Mortgage Loan Remittance Rate) on the Assumed
7
Principal Balance of such Mortgage Loan outstanding immediately prior to such
prepayment, over the amount of interest (adjusted to the Mortgage Loan
Remittance Rate) actually paid by the Mortgagor in respect of such Principal
Prepayment Period, and (b) if such Mortgage Loan was the subject of a
Curtailment during the related Principal Prepayment Period, an amount equal to
one month's interest at the Mortgage Loan Remittance Rate on the amount of such
Curtailment.
"Primary Insurance Policy": With respect to each Mortgage Loan, the primary
policy of mortgage insurance in effect, or any replacement policy therefor
obtained by the Company pursuant to Section 4.08.
"Principal Prepayment": Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any prepayment penalty or premium thereon, and 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.
"Principal Prepayment Period": As to any Remittance Date, the calendar
month preceding the calendar month in which such Remittance Date occurs.
"Purchase Price": The price paid on the related Closing Date by the Initial
Owner to the Company for the Mortgage Loans, as calculated as set forth in the
Purchase Price and Terms Letter.
"Purchase Price and Terms Letter": With respect to any Mortgage Loan
Package purchased and sold on any Closing Date, the letter agreement between the
Initial Owner and the Company, setting forth the terms and conditions of such
transaction and describing the Mortgage Loans to be purchased by the Initial
Owner on such Closing Date.
"Qualified Substitute Mortgage Loan": A mortgage loan substituted by the
Company for a Deleted Mortgage Loan which must, on the date of such
substitution, (i) have a principal balance at the time of substitution not in
excess of the principal balance of the Deleted Mortgage Loan (the amount of any
difference being deemed to be a principal payment to be credited to or deposited
by the Company in the Custodial Account), (ii) have a Mortgage Interest Rate not
less than and not more than 1% greater than that of the Deleted Mortgage Loan,
(iii) have a remaining maturity not later than and not more than one year less
than the remaining maturity of the Deleted Mortgage Loan and (iv) be, in the
reasonable determination of the Company of the same type, quality and character
as the Deleted Mortgage Loan as if the breach had not occurred.
"Rating Agency": Each of Fitch, Inc., Moody's, and S & P, or any successor
thereto.
"Reconstitution Agreement": The agreement or agreements entered into by the
Company and the Owner and certain third parties on any Reconstitution Date or
Dates with respect to any or all of the Mortgage Loans serviced hereunder, in
connection with a Whole Loan Transfer or a Pass-Through Transfer as provided in
Section 12.01.
"Reconstitution Date": The date or dates on which any or all of the
Mortgage Loans serviced under this Agreement shall be removed from this
Agreement and reconstituted as part of a Whole Loan Transfer or Pass-Through
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Transfer pursuant to Section 12.01 hereof. On such date, the Mortgage Loans
transferred shall cease to be covered by this Agreement and the Company shall
cease to service such Mortgage Loans under this Agreement.
"Record Date": The close of business of the last Business Day of the month
preceding the month of the related Remittance Date.
"Refinanced Mortgage Loan": A Mortgage Loan that was made to a Mortgagor
who owned the Mortgaged Property prior to the origination of such Mortgage Loan.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"REMIC Provisions": 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.
"REO Disposition": The final sale by the Company of a Mortgaged Property
acquired by the Company in foreclosure or by deed in lieu of foreclosure.
"REO Disposition Proceeds": All amounts received with respect to an REO
Disposition pursuant to Section 4.14.
"REO Property": A Mortgaged Property acquired by the Company through
foreclosure or deed in lieu of foreclosure, as described in Section 4.14.
"Repurchase Price": With respect to any Mortgage Loan to be repurchased by
the Company pursuant to Section 3.03, an amount equal to the Assumed Principal
Balance of such Mortgage Loan as of the date of such repurchase, plus interest
on such Assumed Principal Balance at the Mortgage Loan Remittance Rate from the
date to which interest has last been paid to the day prior to the day of the
repurchase, plus with regard to any Mortgage Loan subject to a Pass-Through
Transfer, any costs and damages incurred by a related trust in connection with
any violation by such Mortgage Loan of any predatory or abusive lending law.
"S & P": Standard & Poor's Ratings Service, a division of The XxXxxx-Xxxx
Companies Inc., or any successor thereto.
"Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Company of its
servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the management
and liquidation of REO Property pursuant to Section 4.14 and (d) compliance with
the Company's obligations described in Section 4.08.
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"Servicing Fee": The amount of the annual fee the Owner shall pay to the
Company, equal to .25% of the outstanding principal amount of each Mortgage
Loan. Such fee shall be payable monthly and shall be computed on the basis of
the same principal amount and for the period respecting which any related
interest payment on a Mortgage Loan is computed.
"Servicing Officer": Any officer of the Company involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name appears
on a list of servicing officers furnished by the Company to the Owner upon
request, as such list may from time to time be amended.
"Whole Loan Transfer": Any sale or transfer of all of the Mortgage Loans by
the Initial Owner to a third party.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS;
DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01 Conveyance of Mortgage Loans; Possession of Mortgage Files.
------------------------------------------------------------
(a) The Company, in exchange for the payment of the applicable Purchase
Price by the Initial Owner on the related Closing Date, shall sell, transfer,
assign, set over and convey to the Initial Owner, without recourse, but subject
to the terms of this Agreement, all of its rights, title and interest in and to
the Mortgage Loans in that Mortgage Loan Package having an aggregate principal
balance on the related Cut-off Date in an amount as set forth in the related
Purchase Price and Terms Letter, or in such other amount as agreed to by the
Initial Owner and the Company as evidenced by the actual aggregate principal
balance of such Mortgage Loan Package accepted by the Initial Owner on the
related Closing Date, together with the related Mortgage Files and all rights
and obligations arising under the documents contained therein.
(b) On each Closing Date, the Initial Owner shall be entitled to receive
all interest and principal received by the Company on or with respect to the
Mortgage Loans in the related Mortgage Loan Packages after the related Cut-off
Date (other than payments of principal and interest due on the Mortgage Loans on
or before such Cut-off Date). The Company shall deliver to the Initial Owner the
Mortgage Loan Schedule at least two (2) Business Days prior to the related
Closing Date. Pursuant to Section 2.03 hereof, the Company shall deliver a
portion of each Mortgage File to the Owner. The contents of each Mortgage File
not delivered to the Owner shall be held in trust by the Company for the benefit
of the Owner as the owner thereof and the Company's possession of the portion of
each Mortgage File so retained shall be at the will of the Owner for the sole
purpose of servicing the related Mortgage Loan, and such retention and
possession by the Company shall be in a custodial capacity only. On the related
Closing Date, the ownership of each Mortgage Note, Mortgage and each related
Mortgage File shall be vested in the Owner and the ownership of all records and
documents with respect to each related Mortgage Loan prepared by or which come
into the possession of the Company shall immediately vest in the Owner and shall
be retained and maintained, in trust, by the Company at the will of the Owner in
such custodial capacity only. The Mortgage File may be retained in microfilm,
microfiche, optical storage or magnetic media in lieu of hard copy. The Company
shall maintain records (i) confirming the sale of the related Mortgage Loan to
the Owner and (ii) confirming the Owner's ownership interest in the Mortgage
File. The Company shall release from its custody the contents of any Mortgage
File only in accordance with written instructions from the Owner, unless such
release is required as incidental to the Company's servicing of the Mortgage
Loans or is in connection with a repurchase of any Mortgage Loan or the removal
of any Mortgage Loan or related REO Property from the terms of this Agreement
pursuant to Section 3.03 in which case such written instructions shall not be
required.
(c) The Purchase Price for the Mortgage Loans in each Mortgage Loan Package
shall be the percentage of par as stated in or as otherwise calculated pursuant
to the related Purchase Price and Terms Letter (subject to adjustment as
provided therein), plus accrued interest on the aggregate scheduled principal
balance of such Mortgage Loans at the weighted average Mortgage Loan Remittance
11
Rate from the related Cut-off Date through the day prior to the related Closing
Date inclusive. The initial principal amount of such Mortgage Loans shall be the
aggregate principal balance of such Mortgage Loans, so computed as of the
related Cut-off Date, after application of scheduled payments of principal due
on or before the related Cut-off Date, whether or not collected. Such payments
shall be made to the account designated by the Company by wire transfer of
immediately available funds.
Section 2.02 Books and Records.
-----------------
(a) Notwithstanding the sale of the Mortgage Loans to the Owner, record
title to each Mortgage and the related Mortgage Note shall continue in the name
of the Company and be retained by the Company in trust for the Owner for the
sole purpose of facilitating the servicing and the supervision of the servicing
of the Mortgage Loans. All rights arising out of the Mortgage Loans including,
but not limited to, all funds received on or in connection with a Mortgage Loan
shall be held by the Company in trust for the benefit of the Owner as the owner
of the Mortgage Loans, subject to subsequent deduction of amounts to which the
Company is entitled pursuant to the terms of this Agreement.
(b) The sale of each Mortgage Loan shall be reflected on the Company's
balance sheet and other financial statements as a sale of assets by the Company.
The Company shall be responsible for maintaining, and shall maintain, a complete
set of books and records for each Mortgage Loan, which shall be clearly marked
to reflect the ownership of each Mortgage Loan by the Owner.
Section 2.03 Delivery of the Collateral File.
-------------------------------
(a) The Company shall, on or prior to each Closing Date, deliver to the
Initial Owner or its designee each of the following documents for each Mortgage
Loan in the related Mortgage Loan Package:
(i) The original Mortgage Note endorsed, "Pay to the order of
______________________, without recourse" and signed in the name of the
Company by an authorized officer. Such signature may be an original
signature or a facsimile signature of such officer. In the event the
original Mortgage Note is lost, misplaced or destroyed, the Company shall
deliver a lost note affidavit in lieu of the original Mortgage Note. If the
Mortgage Loan was acquired by the Company in a merger, the endorsement must
be by "GMAC Mortgage Corporation, successor by merger to [name of
predecessor]"; and if the Mortgage Loan was acquired or originated by the
Company while doing business under another name, the endorsement must be by
"GMAC Mortgage Corporation, formerly known as [previous name]". The
Mortgage Note shall include all intervening endorsements showing a complete
chain of title from the originator to the Company.
(ii) Unless the Mortgage Loan is registered on the MERS System, the
original Assignment of Mortgage, assigned to ______________________, but
otherwise in form and substance acceptable for recording and sent for
recording; provided, however, that certain recording information will not
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be available if, as of the related Closing Date, the Company has not
received the related Mortgage from the appropriate recording office. If the
Mortgage Loan was acquired by the Company in a merger, the assignment must
be by "GMAC Mortgage Corporation, successor by merger to [name of
predecessor]"; and if the Mortgage Loan was acquired or originated by the
Company while doing business under another name, the assignment must be by
"GMAC Mortgage Corporation, formerly known as [previous name]".
Within thirty (30) days of the related Closing Date, the Company shall
deliver to the Initial Owner or the Custodian as the Initial Owner's designee,
for each Mortgage Loan in the related Mortgage Loan Package, the Collateral
File, to the extent not already delivered. The Collateral File shall consist of
the documents referred to in Exhibit A as items 1 through 9. The Company shall
be responsible for recording the Assignments of Mortgage, if necessary, in
accordance with Customary Servicing Procedures and this Agreement. The Owner
shall be responsible for the initial and on-going fees and expenses of the
Custodian.
Except as otherwise provided in this Section 2.03, upon discovery or
receipt of notice of any materially defective document in the Collateral File,
or that a document in the Collateral File is missing, the Company shall have
sixty (60) days to cure such defect or deliver such missing document to the
Custodian. If the Company does not cure such defect or deliver such missing
document within such time period, the Company shall either repurchase or
substitute for such Mortgage Loan in accordance with Section 3.03.
The Company shall promptly forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with Section 4.01 or 6.01.
If (i) the original Mortgage, or copy thereof with evidence of recording
thereon certified by the appropriate recording office to be a true copy of the
recorded Mortgage, was not delivered pursuant to the above or (ii) any
intervening assignment was not delivered pursuant to the above, the Company
shall promptly secure the delivery of such originals and shall use its best
efforts to cause such originals to be delivered to the Initial Owner or its
designee within 240 days of the related Closing Date; provided, however, that in
the event that the Company cannot deliver originals of items (i) or (ii) above
within the specified period due to a delay caused by the recording office in the
applicable jurisdiction, the Company shall instead deliver a recording receipt
of such recording office or, if such recording receipt is not available, an
Officer's Certificate of a servicing officer of the Company confirming that item
(i) or (ii) has been accepted for recording.
(b) From time to time and as appropriate for the foreclosure or servicing
of any of the Mortgage Loans, the Owner shall release to the Company, upon
written request and receipt of the Company in the form annexed hereto as Exhibit
D, the original Collateral File. All documents so released to the Company shall
be held by it in trust for the benefit of the Owner in accordance with Section
2.01 of this Agreement. The Company shall return to the Owner the original
Collateral File, when the Company's need therefor in connection with such
foreclosure or servicing no longer exists, unless the Mortgage Loan shall be
liquidated, in which case, the Company shall deliver a certification to this
effect to Owner in the form annexed hereto as Exhibit D, and shall deposit the
Liquidation Proceeds into the Custodial Account.
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(c) Upon the repurchase of any Mortgage Loan pursuant to Section 3.03 of
this Agreement or the payment in full of any Mortgage Loan and upon receipt by
the Owner from the Company of a request and receipt in the form annexed hereto
as Exhibit D (which request and receipt shall include a statement to the effect
that all amounts received in connection with such payment or repurchase,
including but not limited to the Repurchase Price, have been credited to the
Custodial Account as provided in this Agreement), the Owner shall cause the
Custodian to promptly release the related Collateral File to the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY;
REPURCHASE AND SUBSTITUTION; REVIEW OF MORTGAGE LOANS
Section 3.01 Representations and Warranties of the Company.
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The Company represents, warrants and covenants to the Owner, as of the related
Closing Date or as of such other date specified below, that:
(i) The Company is a validly existing corporation in good standing
under the laws of the Commonwealth of Pennsylvania 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
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 Company
by any such state, and in any event the Company is in compliance with the
laws of each such State to the extent necessary to ensure the
enforceability of each Mortgage Loan;
(ii) The Company has full power and authority to hold each Mortgage
Loan, and 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 each Assignment of Mortgage (if applicable) to the Owner and
this Agreement and each Assignment of Mortgage (if applicable) constitutes
a legal, valid and binding obligation of the Company, 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 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 Company'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 Company 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 Company or its property is subject;
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(iv) There is no litigation pending or, to the best of Company's
knowledge, threatened, with respect to the Company which is reasonably
likely to have a material adverse effect on the sale of the related
Mortgage Loans, 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 Company;
(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 Company of or compliance by the Company with the terms
of this Agreement, the sale of the Mortgage Loans or the consummation of
the transactions contemplated by this Agreement except for consents,
approvals, authorizations and orders which have been obtained;
(vi) The consideration received by the Company upon the sale of the
Mortgage Loans under this Agreement shall constitute fair consideration and
reasonably equivalent value for the Mortgage Loans;
(vii) The Servicing Fee received by the Company represents reasonable
compensation for performing such services.
(viii) The Company does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained
in this Agreement. The Company is solvent and the sale of the Mortgage
Loans will not cause the Company to become insolvent. The sale of the
Mortgage Loans is not undertaken to hinder, delay or defraud any of the
Company's creditors;
(ix) Neither this Agreement nor any statement, report or other
document furnished by or on behalf of the Company or to be furnished by or
on behalf of the Company pursuant to this Agreement or in connection with
the transactions contemplated hereby contains any untrue statement of fact
or omits to state a fact necessary to make the statements contained therein
not misleading;
(x) The Company has not dealt with any broker, investment banker,
agent or other Person that may be entitled to any commission or
compensation in the connection with the sale of the Mortgage Loans;
(xii) The consummation of the transactions contemplated by this
Agreement is in the ordinary course of business of the Company, and the
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages
by the Company pursuant to this Agreement are not subject to bulk transfer
or any similar statutory provisions in effect in any applicable
jurisdiction;
(xiii) The Mortgage Loans were selected on a random basis from among
the outstanding residential mortgage loans contained in the Company's
30-year nonconforming fixed rate portfolio immediately prior to the related
Closing Date as to which the representations and warranties set forth in
this Section 3.01 and Section 3.02 could be made; and
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(xiv) Company has complied with all applicable anti-money laundering laws
and regulations, including without limitation the USA Patriot Act of 2001
(collectively, the "Anti-Money Laundering Laws"); Company has established an
anti-money laundering compliance program as required by the Anti-Money
Laundering Laws, has conducted the requisite due diligence in connection with
the origination of each Mortgage Loan for purposes of the Anti-Money Laundering
Laws, including with respect to the legitimacy of the applicable Mortgagor and
the origin of the assets used by the said Mortgagor to purchase the property in
question, and maintains, and will maintain, sufficient information to identify
the applicable Mortgagor for purposes of the Anti-Money Laundering Laws.
Section 3.02 Representations and Warranties as to Individual Mortgage
Loans.
-------------------------------------------------------------
The Company, hereby represents and warrants to the Owner, as to each Mortgage
Loan as of the related Closing Date or such other date as may be specified
below, that:
(i) The information set forth in the Mortgage Loan Schedule and the
related electronic data file are true, complete and correct in all material
respects as of the related Cut-off Date;
(ii) The Mortgage creates a first lien or a first priority ownership
interest in the related Mortgaged Property, free and clear of all adverse
claims, liens and encumbrances having priority over the first lien of the
Mortgage subject only to (1) the lien of non-delinquent current real
property taxes and assessments not yet due and payable, (2) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording which are acceptable to mortgage
lending institutions generally and, with respect to any Mortgage Loan for
which an Appraisal was made prior to the related Cut-off Date, either (A)
which are referred to or otherwise considered in the Appraisal made for the
originator of the Mortgage Loan, or (B) which do not adversely affect the
appraised value of the Mortgaged Property as set forth in such Appraisal,
and (3) other matters to which like properties are commonly subject which
do not materially interfere with the benefits of the security intended to
be provided by the Mortgage or the use, enjoyment, value or marketability
of the related Mortgaged Property. Any security agreement, chattel mortgage
or equivalent document related to and delivered in connection with the
Mortgage Loan establishes and creates a valid, subsisting and enforceable
first lien and first priority security interest on the property described
therein;
(iii) The Mortgage Loan has not been delinquent thirty (30) days or
more at any time during the twelve (12) month period prior to the Cut-off
Date for such Mortgage Loan. There are no defaults under the terms of the
Mortgage Loan; and the Company has not advanced funds, or induced,
solicited or knowingly received any advance of funds from a party other
than the owner of the Mortgaged Property subject to the Mortgage, directly
or indirectly, for the payment of any amount required by the Mortgage Loan;
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(iv) There are no delinquent taxes which are due and payable, ground
rents, insurance premium, leasehold payments, assessments or other
outstanding charges affecting the lien priority on the related Mortgaged
Property;
(v) The terms of the Mortgage Note of the related Mortgagor and the
Mortgage have not been impaired, waived, altered or modified in any
respect, except by written instruments which have been recorded to the
extent any such recordation is required by applicable law or is necessary
to protect the interests of the Owner, and which have been approved by the
title insurer and the primary mortgage insurer, as applicable, and copies
of which written instruments are included in the Mortgage File. No other
instrument of waiver, alteration or modification has been executed, and no
Mortgagor has been released, in whole or in part, from the terms thereof
except in connection with an assumption agreement, which assumption
agreement is part of the Mortgage File and the terms of which are reflected
on the Mortgage Loan Schedule;
(vi) The Mortgage Note and the Mortgage are not subject to any right
of rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, nor will the operation of any of the terms
of the Mortgage Note and the Mortgage, or the exercise of any right
thereunder, render the Mortgage Note or Mortgage unenforceable, in whole or
in part, or subject to any right of rescission, set-off, counterclaim or
defense, including without limitation the defense of usury, and no such
right of rescission, set-off, counterclaim or defense has been asserted
with respect thereto;
(vii) All buildings upon the Mortgaged Property are insured by a
generally acceptable insurer pursuant to standard hazard policies
conforming to the requirements of Xxxxxx Mae and Xxxxxxx Mac, Customary
Servicing Procedures and the requirements of Section 4.10. All such
standard hazard policies are in effect and on the date of origination
contained a standard mortgagee clause naming the Company and its successors
in interest as loss payee and such clause is still in effect and all
premiums due thereon have been paid. If the Mortgaged Property is located
in an area identified by the Federal Emergency Management Agency as having
special flood hazards under the Flood Disaster Protection Act of 1973, as
amended, such Mortgaged Property is covered by flood insurance by a
generally acceptable insurer in an amount not less than the requirements of
Xxxxxx Mae and Xxxxxxx Mac. The Mortgage obligates the Mortgagor thereunder
to maintain all such insurance at the Mortgagor's cost and expense, and on
the Mortgagor's failure to do so, authorizes the holder of the Mortgage to
maintain such insurance at the Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;
(viii) Any and all requirements of any federal, state or local law
including, without limitation, all applicable predatory or abusive lending,
usury, truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity or disclosure laws applicable to the
origination and servicing of the Mortgage Loan have been complied with in
all material respects. All inspections, licenses and certificates required
to be made or issued with respect to all occupied portions of the Mortgaged
Property have been made or obtained from the appropriate authorities;
17
(ix) The Mortgage has not been satisfied, canceled or subordinated, in
whole or in part, or rescinded, and the Mortgaged Property has not been
released from the lien of the Mortgage, in whole or in part nor has any
instrument been executed that would effect any such satisfaction, release,
cancellation, subordination or rescission;
(x) The Mortgage Note and the related Mortgage are original and
genuine and each is the legal, valid and binding obligation of the maker
thereof, enforceable in all respects in accordance with its terms subject
to bankruptcy, insolvency and other laws of general application affecting
the rights of creditors, and the Company has taken all action necessary to
transfer such rights of enforceability to the Owner. All parties to the
Mortgage Note and the Mortgage had the legal capacity to enter into the
Mortgage Loan and to execute and deliver the Mortgage Note and the
Mortgage. The Mortgage Note and the Mortgage have been duly and properly
executed by such parties. The proceeds of the Mortgage Note have been fully
disbursed and there is no requirement for future advances thereunder, and
any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have been
complied with. All costs, fees and expenses incurred in making or closing
the Mortgage Loan and the recording of the Mortgage were paid, and the
Mortgagor is not entitled to any refund of any amounts paid or due under
the Mortgage Note or Mortgage;
(xi) Any future advances made prior to the related Cut-off Date have
been consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the Mortgage Loan
Schedule. The lien of the Mortgage securing the consolidated principal
amount is expressly insured as having first lien priority by a title
insurance policy, an endorsement to the policy insuring the mortgagee's
consolidated interest or by other title evidence acceptable to Xxxxxx Mae
or Xxxxxxx Mac; the consolidated principal amount does not exceed the
original principal amount of the Mortgage Loan; the Company shall not make
future advances after the related Cut-off Date;
(xii) The Mortgage Loan is covered by an ALTA lender's title insurance
policy acceptable to Xxxxxx Xxx or Xxxxxxx Mac or other generally
acceptable form of policy of insurance, with all necessary endorsements,
issued by a title insurer acceptable to Xxxxxx Mae or Xxxxxxx Mac and
qualified to do business in the jurisdiction where the Mortgaged Property
is located, insuring (subject to the exceptions contained in clause (ii)
(1), (2) and (3) above) the Company, its successors and assigns, as to the
first priority lien of the Mortgage in the original principal amount of the
Mortgage Loan. Such title insurance policy affirmatively insures ingress
and egress and against encroachments by or upon the Mortgaged Property or
any interest therein. The Company is the sole insured of such lender's
title insurance policy, such title insurance policy has been duly and
validly endorsed to the Owner or the assignment to the Owner of the
Company's interest therein does not require the consent of or notification
to the insurer and such lender's title insurance policy is in full force
and effect and will be in full force and effect upon the consummation of
the transactions contemplated by this Agreement. No claims have been made
18
under such lender's title insurance policy, and no prior holder of the
related Mortgage has done, by act or omission, anything which would impair
the coverage of such lender's title insurance policy;
(xiii) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage Note and, to the
Company's knowledge, no event which, with the passage of time or with
notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event permitting acceleration; and neither
the Company nor any prior mortgagee has waived any default, breach,
violation or event permitting acceleration;
(xiv) Except as insured against by the related title insurance
referenced in paragraph (xii) above, there are no mechanics, or similar
liens or claims which have been filed for work, labor or material (and no
rights are outstanding that under law could give rise to such liens)
affecting the related Mortgaged Property which are or may be liens prior to
or equal to the lien of the related Mortgage;
(xv) All improvements subject to the Mortgage lie wholly within the
boundaries and building restriction lines of the Mortgaged Property (and
wholly within the project with respect to a condominium unit) and no
improvements on adjoining properties encroach upon the Mortgaged Property
except those which are insured against by the title insurance policy
referred to in clause (xii) above and all improvements on the property
comply with all applicable zoning and subdivision laws and ordinances;
(xvi) The Mortgage Loan was originated by the Company or by an
eligible correspondent of the Company. The Mortgage Loan complies in all
material respects with all the terms, conditions and requirements of the
Company's underwriting standards attached here as Exhibit F. The Mortgage
Notes and Mortgages are on forms acceptable to Xxxxxx Xxx or Xxxxxxx Mac;
(xvii) The Mortgage Loan contains the usual and enforceable provisions
of the originator at the time of origination for the acceleration of the
payment of the unpaid principal amount if the related Mortgaged Property is
sold without the prior consent of the mortgagee thereunder. Principal
payments commenced no more than sixty (60) days after the funds were
dispersed to the Mortgagor in connection with the Mortgage Loan. The
Mortgage Loan has an original term to maturity of not more than thirty (30)
years, with interest payable in arrears on the first day of each month. The
Mortgage and related Mortgage Note contain customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the benefits
of the security provided thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure. Except as otherwise set forth on the related Mortgage
Loan Schedule, the Mortgage Loan does not contain terms or provisions which
would result in negative amortization nor contain "graduated payment"
features;
(xviii) The Mortgaged Property at origination of the Mortgage Loan was
and, to the Company's knowledge, currently is free of damage and waste and
19
at origination of the Mortgage Loan there was, and, to the Company's
knowledge, there currently is, no proceeding pending, for the total or
partial condemnation thereof;
(xix) The related Mortgage contains enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (1) in the case of a Mortgage designated as a
deed of trust, by trustee's sale, and (2) otherwise by judicial
foreclosure;
(xx) If the Mortgage constitutes a deed of trust, a trustee, duly
qualified if required under applicable law to act as such, has been
properly designated and currently so serves and is named in the Mortgage,
and no fees or expenses are or will become payable by the Owner to the
trustee under the deed of trust, except in connection with a trustee's sale
or attempted sale after default by the Mortgagor;
(xxi) If required by the applicable processing style, the Mortgage
File contains an Appraisal of the related Mortgaged Property made and
signed prior to the final approval of the mortgage loan application by a
qualified appraiser satisfying the requirements of Title XI of The
Financial Institutions Reform, and Enforcement Act of 1989, as amended, and
the regulations promulgated thereunder, that is acceptable to Xxxxxx Mae or
Xxxxxxx Mac and approved by the Company. The Appraisal, if applicable, is
in a form generally acceptable to Xxxxxx Mae or Xxxxxxx Mac;
(xxii) All parties which have had any interest in the Mortgage,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) (A) in
substantial compliance with any and all applicable licensing requirements
of the laws of the state wherein the Mortgaged Property is located, and (B)
(1) organized under the laws of such state, or (2) qualified to do business
in such state, or (3) federal savings and loan associations, national
banks, a Federal Home Loan Bank or the Federal Reserve Bank, or (4) not
doing business in such state;
(xxiii) To the best of the Company's knowledge, there does not exist
any circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that could
reasonably be expected to cause private institutional investors to regard
the Mortgage Loan as an unacceptable investment, to cause the Mortgage Loan
to become delinquent, or to materially adversely affect the value or
marketability of the Mortgage Loan;
(xxiv) Each of the Mortgaged Properties consists of a single parcel of
real property with a detached single-family residence erected thereon, or a
two- to four-family dwelling, or a townhouse, or an individual condominium
unit in a condominium project or an individual unit in a planned unit
development. Any condominium unit or planned unit development either
conforms with applicable Xxxxxx Mae or Xxxxxxx Mac requirements regarding
such dwellings or is covered by a waiver confirming that such condominium
20
unit or planned unit development is acceptable to Xxxxxx Mae or Xxxxxxx Mac
or is otherwise "warrantable" with respect thereto. No such residence is a
mobile home or manufactured dwelling;
(xxv) The ratio of the original outstanding principal amount of the
Mortgage Loan to the lesser of the appraised value (or stated value if an
appraisal was not a requirement of the applicable processing style) of the
Mortgaged Property at origination or the purchase price of the Mortgaged
Property securing each Mortgage Loan is not in excess of 95.00%. The
original Loan-to-Value Ratio of each Mortgage Loan was not more than
95.00%, and the excess LTV over 80.00% is insured as to payment defaults by
a Primary Insurance Policy issued by a primary mortgage insurer acceptable
to Xxxxxx Mae or Xxxxxxx Mac. All provisions of such Primary Insurance
Policy have been and are being complied with, such policy is in full force
and effect, and all premiums due thereunder have been paid. Any Mortgage
Loan subject to a Primary Insurance Policy obligates the Mortgagor
thereunder to maintain the Primary Insurance Policy and to pay all premiums
and charges in connection therewith. The Mortgage Interest Rate for the
Mortgage Loan Schedule is net of any such insurance premium;
(xxvi) The Mortgagor has not notified the Company, and the Company has
no knowledge of any relief requested by or provided to the Mortgagor under
the Soldiers' and Sailors' Civil Relief Act of 1940, as amended, or any
similar state law;
(xxvii) The Company is either, and each Mortgage Loan was originated
by, a savings and loan association, savings bank, commercial bank, credit
union, insurance company or similar institution which is supervised and
examined by a federal or State authority, or by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to Section 203 and 211
of the National Housing Act;
(xxviii) The origination, collection and servicing practices with
respect to each Mortgage Note and Mortgage have been in accordance with
Customary Servicing Procedures and legal in all material respects. With
respect to escrow deposits and payments that the Company collects, all such
payments are in the possession of, or under the control of, the Company,
and there exist no deficiencies in connection therewith, for which
customary arrangements for repayment thereof have not been made. All escrow
deposits have been collected in full compliance with state and federal law.
No escrow deposits or other charges or payments due under the Mortgage Note
have been capitalized under any Mortgage or the related Mortgage Note;
(xxix) No fraud or misrepresentation of a material fact with respect
to the origination of a Mortgage Loan has taken place on the part of the
Company and to the best of the Company's knowledge, no fraud or
misrepresentation of a material fact with respect to the origination of a
Mortgage Loan has taken place on the part of any third party, including
without limitation the Mortgagor, connected with the origination of the
Mortgage Loan;
(xxx) As of the date of origination, the Mortgaged Property was
lawfully occupied under applicable law, and to the Company's knowledge, the
Mortgage Property is lawfully occupied as of the related Closing Date;
21
(xxxi) The Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage and the security interest of any applicable security
agreement or chattel mortgage referred to in Paragraph (ii) above;
(xxxii) No Mortgage Loan was made in connection with (i) the
construction or rehabilitation of a Mortgaged Property or (ii) facilitating
the trade-in or exchange of a Mortgaged Property other than a
construction-to-permanent loan which has converted to a permanent Mortgage
Loan;
(xxxiii) No Mortgage Loan is subject to a buydown agreement;
(xxxiv) No Mortgagor was a debtor in any state or federal bankruptcy
or insolvency proceeding at the time the Mortgage Loan was originated and,
to the best of the Company's knowledge, following the date of origination
of the Mortgage Loan, the Mortgagor with respect to the Mortgage Loan was
not a debtor in any state or federal bankruptcy or insolvency proceeding,
and the Mortgaged Property has not been subject to any bankruptcy or
foreclosure proceedings;
(xxxv) To the Company's knowledge, there exist no violation of any
local, state or federal environmental law, rule or regulation. There is no
pending action or proceeding directly involving any Mortgaged Property of
which the Company is aware in which compliance with any environmental law,
rule or regulation is an issue;
(xxxvi) Article XVI, Section 50(a)(6) of the Texas Constitution (a
"Texas Refinance Loan") is not applicable to the Mortgage Loan. If the
Mortgage Loan was originated in Texas it is not a cash-out refinance loan;
(xxxvii) The Mortgagor is one or more natural persons and/or trustees
for an Illinois land trust or a trustee under a "living trust" and such
"living trust" is in compliance with Xxxxxx Mae or Xxxxxxx Mac guidelines.
In the event the Mortgagor is a trustee, the borrower is a natural person;
(xxxviii) No Mortgage Loan is subject to the provisions of the Home
Ownership and Equity Protection Act of 1994, as amended or any comparable
state or local law or regulation;
(xxxix) No Mortgage Loan secured by property located in the
Commonwealth of Kentucky and originated on or after June 24, 2003 had an
original principal amount of $200,000 or less;
(xl) Each Mortgage Loan is a "qualified mortgage" within Section
860G(a)(3) of the Code;
(xli) Each Mortgage Loan is covered by a paid in full, life of loan,
tax service contract;
22
(xlii) No Mortgage Loan is secured by a leasehold interest, mobile
home or manufactured housing unit.
(xliii) No Mortgage Loan provides for prepayment penalties.
Section 3.03 Repurchase and Substitution.
---------------------------
The representations and warranties set forth in Sections 3.01 and 3.02,
shall survive the sale of the Mortgage Loans and shall inure to the benefit of
the Owner, notwithstanding any restrictive or qualified endorsement on any
Mortgage Note or Assignment of Mortgage or the examination of any Mortgage File.
Upon discovery by the Company or an Owner of a breach (including any occurrence,
condition, act or omission that would be a breach in the event that the Company
were to have knowledge thereof) (a "Repurchase Event") of any of the
representations and warranties set forth in Sections 3.01 and 3.02
(notwithstanding the Company's lack of knowledge of such representation and
warranty), which Repurchase Event materially and adversely affects the value of
the Mortgage Loans or the interest of the Owner (or which materially and
adversely affects the interest of the Owner in the related Mortgage Loan in the
case of a representation and warranty relating to a particular Mortgage Loan),
the party discovering such Repurchase Event shall give prompt written notice to
the other. Within ninety (90) days of the earlier of either discovery by or
notice to the Company of any such Repurchase Event, the Company shall use its
best efforts to promptly cure such Repurchase Event in all material respects
and, if such Repurchase Event cannot be cured during such ninety (90) day
period, the Company shall, at the Owner's option, repurchase such Mortgage Loan
at the Repurchase Price. If any such breach shall involve any representation or
warranty set forth in Section 3.01, and such breach cannot be cured within
ninety (90) days of the earlier of either discovery by or notice to the Company
of such breach, all the Mortgage Loans shall, at the Owner's option, be
repurchased by the Company at the Repurchase Price; provided, however, that in
the event of a breach of representation and warranty set forth in Section 3.01
that relates to less than all of the Mortgage Loans, the Company shall
repurchase only the Mortgage Loans to which such breach relates. However, the
Company may, at its option, replace a Mortgage Loan as to which a Repurchase
Event has occurred as described in the foregoing sentences of this Section 3.03
and substitute in its place with a Qualified Substitute Mortgage Loan or Loans,
provided, however, that any such substitution shall be effected not later than
120 days after the related Closing Date. If the Company has no Qualified
Substitute Mortgage Loan, it shall repurchase the deficient Mortgage Loan within
ninety (90) days after the written notice of the Repurchase Event. Any
repurchase of a Mortgage Loan or Loans pursuant to the foregoing provisions of
this Section 3.03 shall be accomplished by deposit in the Custodial Account of
the amount of the Repurchase Price (after deducting therefrom any amounts
received in respect of such repurchased Mortgage Loan or Loans and being held in
the Custodial Account for future distribution).
The Company shall effect any substitution of a Qualified Substitute
Mortgage Loan by delivering to the Owner the documents as are required to be
delivered by Section 2.03, with the Mortgage Note endorsed as required by
Section 2.03. No substitution will be made in any calendar month after the
Determination Date occurring in such month. The Company shall deposit in the
Custodial Account the Monthly Payment less the Servicing Fee due on such
23
Qualified Substitute Mortgage Loan or Loans in the month following the date of
such substitution. Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the month of substitution will be retained by the Company. For
the month of substitution, distributions to the Owner will include the Monthly
Payment due on such Deleted Mortgage Loan in the month of substitution, and the
Company shall thereafter be entitled to retain all amounts subsequently received
by the Company in respect of such Deleted Mortgage Loan. The Company shall give
written notice to the Owner that such substitution has taken place and shall
amend the Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage
Loan from the terms of this Agreement and the substitution of the Qualified
Substitute Mortgage Loan. Upon such substitution, such Qualified Substitute
Mortgage Loan or Loans shall be subject to the terms of this Agreement in all
respects, and the Company shall be deemed to have made with respect to such
Qualified Substitute Mortgage Loan or Loans, as of the date of substitution, the
covenants, representations and warranties set forth in Sections 3.01 and 3.02,
except to the extent a representation contained in Section 3.02 relates to an
expressly specified percentage of the Mortgage Loans.
For any month in which the Company substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Company
will determine the amount (if any) by which the aggregate principal balance of
all such Qualified Substitute Mortgage Loans as of the date of substitution is
less than the aggregate Assumed Principal Balance of all such Deleted Mortgage
Loans (after application of scheduled principal payments due in the month of
substitution). The amount of such shortfall shall be distributed by the Company
in the month of substitution pursuant to Section 5.01. Accordingly, on the date
of such substitution, the Company will deposit from its own funds into the
Custodial Account an amount equal to the amount of such shortfall.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer.
--------------------------
The Company, as independent contract servicer, shall service and administer
the Mortgage Loans for the benefit of the Owner in accordance with the terms of
this Agreement and in conformity with Customary Servicing Procedures and
applicable federal, state and local laws. In performing its obligations
hereunder, the Company shall exercise no less than the same care that it
customarily employs and exercises in servicing and administering mortgage loans
for its own account, but shall perform such obligations without regard to the
Company's obligation to make Servicing Advances or P&I Advances, or to the
Company's right to receive compensation for its services hereunder.
Subject to the above-described servicing standards, the specific
requirements and prohibitions of this Agreement and the respective Mortgage
Loans, and the provisions of any Primary Insurance Policy and applicable law,
the Company shall have full power and authority, acting alone, to do any and all
things in connection with such servicing and administration which the Company
may deem necessary or desirable. Without limiting the generality of the
foregoing, the Company shall, and is hereby authorized and empowered to (i)
24
execute and deliver on behalf of itself and the Owner, any and all instruments
of satisfaction or cancellation, or of partial or full release, discharge and
all other comparable instruments, with respect to the Mortgage Loan and with
respect to the Mortgaged Property and (ii) waive, modify or vary any term of any
Mortgage Loan or consent to the postponement of strict compliance with any such
term or in any manner grant indulgence to the related Mortgagor if in the
Company's reasonable and prudent determination such waiver, modification,
postponement or indulgence is not materially adverse to the interests of the
Owner and is not prohibited by a Primary Insurance Policy; provided, however,
that the Company may not, unless it has obtained the consent of the Owner,
permit any modification with respect to any Mortgage Loan that would vary the
Mortgage Interest Rate, defer or forgive the payment of interest or of any
principal, reduce the outstanding principal amount (other than as a result of
its actual receipt of payment of principal on), extend the final maturity date
of such Mortgage Loan, or in the Company's judgment, materially impair the
security for such Mortgage Loan or reduce the likelihood of timely payment of
amounts due thereon or otherwise constitute a "significant modification" within
the meaning of Treasury Regulation 1.860G-2(b). If, with the consent of the
Owner, the Company permits the deferral of interest or principal payments on any
Mortgage Loan, the Company shall include in each remittance for any month in
which any such principal or interest payment has been deferred an amount equal
to the amount that the Company would have been required to advance pursuant to
Section 5.03 if such deferred amounts had been delinquent, and shall be entitled
to reimbursement for such advances only to the same extent as for P&I Advances
made pursuant to Section 5.03. If reasonably required by the Company, the Owner
shall furnish the Company with any powers of attorney and other documents
necessary or appropriate to enable the Company to carry out its servicing and
administrative duties under this Agreement.
Section 4.02 Liquidation of Mortgage Loans; Servicing Advances and Foreclosure.
-----------------------------------------------------------------
If any payment due under any Mortgage Loan and not postponed pursuant to
Section 4.01 is not paid when the same becomes due and payable, or if the
Mortgagor fails to perform any other covenant or obligation under the Mortgage
Loan and such failure continues beyond any applicable grace period, the Company
shall take such action as it shall deem to be in the best interests of the
Owner. If any payment due under any Mortgage Loan and not postponed pursuant to
Section 4.01 remains delinquent for a period of ninety (90) days or more, the
Company shall (a) act in the best interests of the Owner, and such action may
include the commencement of foreclosure proceedings, (b) if the Company
commences foreclosure proceedings, notify the Owner thereof on the monthly
remittance report delivered pursuant to Section 5.02 on the first Remittance
Date following such commencement and (c) respond to reasonable inquiries of the
Owner with respect to the Mortgage Loan or related REO Property. If the Company
has commenced foreclosure proceedings and the Owner wishes to participate in
such proceedings or the disposition of an REO Property upon acquisition thereof,
the Owner shall notify the Company in writing (addressed to "Department Head of
the Foreclosure Department") within fifteen (15) days following the Owner's
receipt of the notice of commencement of foreclosure proceedings described in
clause (c) of the preceding sentence, and upon receipt thereof, the Company
shall thereafter periodically advise the Owner of the status of the foreclosure
proceedings and follow the Owner's instructions in connection therewith. The
Company shall be entitled to compensation for loss mitigation, as permitted by
Xxxxxx Xxx or Xxxxxxx Mac.
25
Whether in connection with the foreclosure of a Mortgage Loan or otherwise,
the Company shall from its own funds make all necessary and proper Servicing
Advances; provided, however, that the Company is not required to make a
Servicing Advance unless the Company determines in the exercise of its good
faith reasonable judgment that such Servicing Advance would ultimately be
recoverable from REO Dispositions, Insurance Proceeds or Condemnation Proceeds
(with respect to each of which the Company shall have the priority described in
Section 4.05 for purposes of withdrawals from the Custodial Account). In the
event that any Servicing Advance or any commitment to pay Servicing Advances in
connection with any Mortgage Loan exceeds $5,000 in the aggregate, the Company
shall secure the written approval of the Owner.
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 Company 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 at the Owner's expense. Upon completion of the inspection, the Company
shall promptly provide the Owner with a written report of the environmental
inspection. In the event (a) the environmental inspection report indicates that
the Mortgaged Property is contaminated by hazardous or toxic substances or
wastes and (b) the Owner directs the Company to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Company shall be reimbursed for
all reasonable costs associated with such foreclosure or acceptance of a deed in
lieu of foreclosure and any related environmental clean up costs, as applicable,
from the related Liquidation Proceeds, or if the Liquidation Proceeds are
insufficient to fully reimburse the Company, the Company shall be entitled to be
reimbursed from amounts in the Custodial Account pursuant to Section 4.05
hereof. In the event the Owner directs the Company not to proceed with
foreclosure or acceptance of a deed in lieu of foreclosure, the Company shall be
reimbursed for all Servicing Advances made with respect to the related Mortgaged
Property from the Custodial Account pursuant to Section 4.05 hereof.
Section 4.03 Collection of Mortgage Loan Payments.
------------------------------------
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, the Company will proceed diligently, in
accordance with this Agreement, to collect all payments due under each of the
Mortgage Loans when the same shall become due and payable, and will take special
care in ascertaining and estimating annual taxes, assessments, fire and hazard
insurance premiums, mortgage insurance premiums, and all other charges that, as
provided in any Mortgage, will become due and payable in order that the
installments payable by the Mortgagors will be sufficient to pay such charges as
and when they become due and payable.
Section 4.04 Establishment of Custodial Account; Deposits in Custodial Account.
-----------------------------------------------------------------
The Company shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan and REO Property separate and apart from any of
its own funds and general assets and shall establish and maintain one or more
Custodial Accounts (collectively, the "Custodial Account"), in the form of
non-interest bearing time deposit or demand accounts. The Custodial Account
shall be established with an Eligible Depository Institution. The creation of
any Custodial Account shall be evidenced by a letter agreement in the form of
26
Exhibit B hereto. A copy of such certification or letter agreement shall be
furnished to any Owner upon request.
The Company shall deposit in a mortgage clearing account on a daily basis
and in the Custodial Account no later than the second Business Day thereafter
and retain therein:
(i) all scheduled payments due after the Cutoff Date on account of
principal, including Principal Prepayments collected after the Cutoff Date,
on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans
(minus the portion of any such payment which is allocable to the
period prior to the Cutoff Date) adjusted to the Mortgage Loan
Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds, including amounts required
to be deposited pursuant to Sections 4.10, 4.11 and 4.18,
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
Customary Servicing Procedures, the Mortgage Loan documents
or applicable law;
(v) all Condemnation Proceeds with respect to any Mortgaged Property which
are not released to the Mortgagor in accordance with Customary Servicing
Procedures, the Mortgage Loan documents or applicable law;
(vi) any amounts payable in connection with the repurchase of any
Mortgage Loan pursuant to Section 3.03 and all amounts required to be
deposited by the Company in connection with shortfalls in principal amount
of Qualified Substitute Mortgage Loans pursuant to Section 3.03 or;
(vii) any amount required to be deposited in the Custodial
Account pursuant to Section 5.04; and
(viii) any amount required to be deposited in the Custodial
Account pursuant to Sections 4.01, 4.14, 5.01, 5.03 and 6.02.
The foregoing requirements for deposit in the Custodial Account shall be
exclusive. Without limiting the generality of the foregoing, payments in the
nature of late payment charges, fees for special services provided to a
Mortgagor and assumption fees need not be deposited by the Company in the
Custodial Account.
The Company may invest the funds in the Custodial Account in Eligible
Investments designated in the name of the Company for the benefit of the Owner,
which shall mature not later than the Business Day next preceding the Remittance
Date next following the date of such investment (except that (i) any investment
in the institution with which the Custodial Account is maintained may mature on
such Remittance Date and (ii) any other investment may mature on such Remittance
Date if the Company shall advance funds on such Remittance Date, pending receipt
thereof to the extent necessary to make distributions to the Owner) and shall
not be sold or disposed of prior to maturity. Notwithstanding anything to the
contrary herein and above, all income and gain realized from any such investment
27
shall be for the benefit of the Company and shall be subject to its withdrawal
or order from time to time. The amount of any losses incurred in respect of any
such investments shall be deposited in the Custodial Account by the Company out
of its own funds immediately as realized. All funds required to be deposited
into the Custodial Account shall be held in trust for the Owner until withdraw
in accordance with Section 4.05.
Section 4.05 Withdrawals From the Custodial Account.
--------------------------------------
The Company shall, from time to time, withdraw funds 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 P&I Advances, the Company's right to
reimburse itself pursuant to this subclause (ii) being limited to amounts
received on the related Mortgage Loan that represent payments of principal
and/or interest respecting which any such P&I Advance was made;
(iii) to reimburse itself first for unreimbursed Servicing Advances,
second for xxxxxxxxxxxx X&X Advances, and third for any unpaid Servicing
Fees, the Company's right to reimburse itself pursuant to this subclause
(iii) with respect to any Mortgage Loan being limited to related
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, REO
Disposition Proceeds and such other amounts as may be collected by the
Company from the Mortgagor or otherwise relating to the Mortgage Loan, it
being understood that, in the case of any such reimbursement, the Company's
right thereto shall be prior to the rights of the Owner unless the Company
is required to repurchase a Mortgage Loan pursuant to Section 3.03 , in
which case the Company's right to such reimbursement shall be subsequent to
the payment to the Owner of the Repurchase Price pursuant to Sections 3.03
and all other amounts required to be paid to the Owner with respect to such
Mortgage Loan;
(iv) to reimburse itself for unreimbursed Servicing Advances and
advances of the Company funds made pursuant to Section 5.03 to the extent
that such amounts are nonrecoverable by the Company pursuant to subclause
(iii) above, provided that the Mortgage Loan for which such advances were
made is not required to be repurchased by the Company pursuant to Section
3.03, in which case the Company's right to such reimbursement shall be
subsequent to the payment to the Owner of the Repurchase Price pursuant to
Section 3.03 and all other amounts required to be paid to the Owner with
respect to such Mortgage Loan, and to reimburse itself for such amounts to
the extent that such amounts are nonrecoverable from the disposition of REO
Property pursuant to Section 4.14 hereof;
(v) Reserved.
28
(vi) to pay itself with respect to each Mortgage Loan repurchased
pursuant to Section 3.03 all amounts collected in respect of such Mortgage
Loan and remaining on deposit in the Custodial Account as of the date on
which the related Repurchase Price is deposited into the Custodial Account
(other than the amount of such Repurchase Price and amounts otherwise
required to be paid to the Owner pursuant to this Agreement;
(vii) to pay itself with respect to each Mortgage Loan, servicing
compensation pursuant to Section 6.03;
(viii) to reimburse itself for any Nonrecoverable Advances; and
(ix) to clear and terminate the Custodial Account upon the termination
of this Agreement.
On each Remittance Date, the Company shall withdraw all funds from the
Custodial Account except for those amounts which, pursuant to Section
5.01(a)(iv) and (v), the Company is not obligated to remit on such Remittance
Date. The Company may use such withdrawn funds only for the purposes described
in this Section 4.05.
Section 4.06 Establishment of Escrow Account; Deposits in Escrow Account.
-----------------------------------------------------------
The Company 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 (collectively, the "Escrow Account"), in
the form of non-interest bearing time deposit or demand accounts. The Escrow
Account shall be established with an Eligible Depository Institution. The
creation of any Escrow Account shall be evidenced by a letter agreement in the
form of Exhibit C hereto. Upon request, the Company shall provide the Owner with
a copy of a letter agreement evidencing the establishment of each Escrow
Account. Notwithstanding the foregoing, the Company may deposit in the Escrow
Account amounts constituting escrow payments relating to mortgage loans not
subject to this Agreement, provided, however, that all Escrow Payments in the
Escrow Account are insured in a manner which shall provide the maximum available
insurance by the FDIC thereon.
The Company shall deposit in a mortgage clearing account on a daily basis
and no later than the second Business Day thereafter in the Escrow Account and
retain therein: (i) all Escrow Payments held or collected on account of the
Mortgage Loans, for the purpose of effecting timely payment of any such items as
required under the terms of this Agreement, (ii) all Insurance Proceeds or
Condemnation Proceeds that are to be applied to the restoration or repair of any
Mortgaged Property and (iii) all revenues received with respect to the
management, conservation, protection and operation of the REO Properties
pursuant to Section 4.14. The Company shall make withdrawals therefrom only to
effect such payments as are required under this Agreement, and for such other
purposes as shall be set forth in or in accordance with Section 4.07. The
Company shall pay to the Mortgagor interest on escrowed funds to the extent
required by law notwithstanding that the Escrow Account is non-interest bearing.
Section 4.07 Withdrawals From Escrow Account.
-------------------------------
29
Withdrawals from the Escrow Account may be made by the Company only (a) to
effect timely payments of taxes, assessments, Primary Insurance Policy premiums,
fire and hazard insurance premiums or other items constituting Escrow Payments
for the related Mortgage, (b) to reimburse the Company for any Servicing Advance
made by the Company pursuant to Section 4.08 hereof 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, (c) to
refund to any Mortgagor any funds found to be in excess of the amounts required
under the terms of the related Mortgage Loan, (d) upon default of a Mortgagor or
in accordance with the terms of the related Mortgage Loan and if permitted by
applicable law, for transfer to the Custodial Account of such amounts as are to
be applied to the indebtedness of a Mortgage Loan in accordance with the terms
thereof, (e) for application to restoration or repair of the Mortgaged Property,
(f) to deposit into the Custodial Account the funds required to be deposited
therein pursuant to Section 4.14, (g) to pay to itself amounts to which it is
entitled pursuant to Section 4.14, (h) to withdraw any Escrow Payments related
to a Mortgage Loan repurchased by the Company pursuant to Section 3.03, or (i)
to clear and terminate the Escrow Account upon the termination of this
Agreement.
Section 4.08 Payment of Taxes, Insurance and Other Charges.
---------------------------------------------------------
With respect to each Mortgage Loan, the Company shall maintain accurate
records reflecting the status of taxes, assessments, and other charges for which
an escrow is maintained and the status of Primary 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 employing for such purpose deposits of the Mortgagor in
the Escrow Account which shall have been estimated and accumulated by the
Company in amounts sufficient for such purposes, as allowed under the terms of
the Mortgage or applicable law. To the extent that a Mortgage does not provide
for Escrow Payments, or the Company has waived the escrow of Escrow Payments or
the Company is prohibited by applicable state law from requiring the escrow of
Escrow Payments, the Company shall determine that any such payments are made by
the Mortgagor. The Company assumes full responsibility for the timely payment of
all such bills and shall effect timely payments of all such bills irrespective
of each 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 costs incurred by the Company, if any, in effecting the timely
payments of taxes and assessments on the Mortgaged Properties and related
insurance premiums shall not be added to the Assumed Principal Balances of the
related Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so
permit.
Section 4.09 Transfer of Accounts.
--------------------
The Company may from time to time transfer the Custodial Account and the
Escrow Account to any other Eligible Depository Institution. The Company shall
notify the Owner within five (5) Business Days following any such transfer under
this Section 4.09.
Section 4.10 Maintenance of Hazard Insurance.
-------------------------------
30
The Company shall cause to be maintained for each Mortgage Loan, fire and
hazard insurance by an insurer acceptable to Xxxxxx Xxx or Xxxxxxx Mac with
extended coverage customary in the area where the Mortgaged Property is located,
in an amount which is, subject to applicable law, at least equal to the lesser
of (i) the maximum insurable value of the improvements securing the related
Mortgage Loan and (ii) the greater of (a) the outstanding principal balance of
the Mortgage Loan and (b) the minimum amount necessary 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 having special flood hazards (and such flood insurance has been made
available) the Company will cause to be maintained a flood insurance policy
meeting the requirements of the current guidelines of the Federal Insurance
Administration with an insurance carrier generally acceptable to Xxxxxx Mae or
Xxxxxxx Mac, in an amount representing coverage not less than the least of (i)
the outstanding principal balance of the Mortgage Loan, (ii) the full insurable
value of the Mortgaged Property, or (iii) the maximum amount of insurance
available under the National Flood Insurance Act of 1968 and the Flood Disaster
Protection Act of 1973, each as amended. The Company shall also maintain on any
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 National Flood Insurance Act of 1968 and the Flood Disaster
Protection Act of 1973, each as amended, flood insurance in an amount required
above. Any amounts collected by the Company under any such policies (other than
amounts to be deposited in the Escrow Account and applied to the restoration or
repair of the related Mortgaged Property, REO Property, or released to the
Mortgagor in accordance with Customary Servicing Procedures or in accordance
with the terms of the Mortgage Loan or applicable law) shall be deposited in the
Custodial Account, subject to withdrawal pursuant to Section 4.05. It is
understood and agreed that no earthquake or other additional insurance need be
required by the Company of any Mortgagor or maintained on property acquired in
respect of a Mortgage Loan, other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. All policies required hereunder shall be endorsed with
standard mortgagee clauses with loss payable to the Company, its successors and
its assigns, or, upon request of the Owner, to the Owner, and shall provide for
at least thirty (30) days prior written notice to the Company of any
cancellation thereof. The Company shall not accept or obtain any such insurance
policy from an insurance company that does not at that time maintain a General
Policy Rating of B-III or better in Best's Key Rating Guide, or that is not
licensed to do business in the State wherein the related Mortgaged Property is
located. In no event shall a Mortgage Loan be without a hazard insurance policy
at any time, subject only to Section 4.11 hereof.
Section 4.11 Maintenance of Blanket Insurance Policy.
---------------------------------------
If the Company shall obtain and maintain a blanket insurance policy that is
issued by an insurer generally acceptable to Xxxxxx Mae and Xxxxxxx Mac and that
insures against hazard losses on all of the Mortgage Loans, then, to the extent
such policy provides coverage in an amount equal to the coverage required
pursuant to Section 4.10 and otherwise complies with all other requirements of
Section 4.10, the Company shall be deemed to have satisfied its obligations as
set forth in Section 4.10. Such policy may contain a clause providing for a
reasonable deductible, in which case the Company shall, if there shall not have
31
been maintained on the related Mortgaged Property a policy complying with
Section 4.10, and if there shall have been a loss that would have been covered
by such policy, deposit in the Custodial Account the amount not otherwise
payable under the blanket policy because of such deductible clause. The Company
shall prepare and make any claims on the blanket policy as deemed necessary by
the Company in accordance with Customary Servicing Procedures. Any amounts
collected by the Company under any such policy relating to a Mortgage Loan shall
be deposited in the Custodial Account subject to withdrawal pursuant to Section
4.05. Upon request of the Owner, the Company 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 ten (10) days' prior written notice.
Section 4.12 Maintenance of Mortgage Impairment Insurance Policy.
---------------------------------------------------
The Company may satisfy its obligations under Section 4.10 and 4.11
pertaining to physical storage of insurance policies and general policy rating
requirements by maintaining a mortgage impairment or other form of blanket
policy that will protect the Company and/or investor in the event of uninsured
loss, insolvency of an insurance carrier or any other loss normally to be
covered by a mortgage impairment policy. It is agreed that any expense incurred
by the Company in maintaining any such insurance shall be borne by the Company.
This shall be deemed to include any loss or any expense as a result of a
deductible clause in such a policy.
Section 4.13 Fidelity Bond; Errors and Omissions Insurance.
---------------------------------------------
The Company, at its own expense, shall maintain with responsible companies
throughout the term of this Agreement a blanket fidelity bond and an errors and
omissions insurance policy, with broad coverage on all officers, employees and
other individuals acting on behalf of the Company in connection with its
activities under this Agreement. The amount of coverage shall be at least equal
to the coverage that would be required of the Company by Xxxxxx Mae or Xxxxxxx
Mac, if the Company were servicing the Mortgage Loans for Xxxxxx Mae or Xxxxxxx
Mac, and such policy shall be issued by a company that is acceptable to Xxxxxx
Mae or Xxxxxxx Mac. 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 Company against losses caused by such individuals, including losses
from forgery, theft, embezzlement, fraud, errors and omissions and negligent
acts of such individuals. Such Fidelity Bond shall also protect and insure the
Company 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 4.13 requiring such fidelity bond
and errors and omissions insurance shall diminish or relieve the Company from
its duties and obligations as set forth in this Agreement. Upon the request of
the Owner, the Company shall cause to be delivered to the Owner a certificate of
insurance for such Fidelity Bond and errors and omissions insurance policy and a
statement from the surety and the insurer that such Fidelity Bond and errors and
omissions insurance policy shall in no event be terminated or materially
modified without ten (10) days' prior written notice.
Section 4.14 Title, Management and Disposition of REO Property.
-------------------------------------------------
32
If title to a 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 Company or its nominee, in either case as nominee, for the benefit of the
Owner on the date of acquisition of title (the "REO Owner"). In the event the
Company is not authorized or permitted to hold title to real property in the
state in which the REO Property is located, or would be adversely affected under
the "doing business" or tax laws of such state by so holding title, the deed or
certificate of sale shall be taken in the name of such Person or Persons as
shall be consistent with an opinion of counsel obtained by the Company, at
expense of the REO Owner, from an attorney duly licensed to practice law in the
state where the REO Property is located. The Person or Persons holding such
title other than the REO Owner shall acknowledge in writing that such title is
being held as nominee for the REO Owner.
The Company, either itself or through an agent (provided such agent is
approved by the Owner) selected by the Company, shall manage, conserve, protect
and operate each REO Property for the REO Owner solely for the purpose of its
prompt disposition and sale, and in same manner that it would be required to
manage, conserve, protect and operate foreclosed property for its own account
(subject to the condition described in the second paragraph of Section 4.02).
The Company shall attempt to sell the same (and may temporarily rent the same)
on such terms and conditions as the Company deems to be in the best interest of
the REO Owner. Notwithstanding any provision in this Section 4.14, the Owner
shall have the option to manage and operate the REO Property provided the Owner
gives written notice of its intention to do so within sixty (60) days after such
REO Property is acquired in foreclosure or by deed in lieu of foreclosure. The
election by the Owner to manage the REO Property shall not constitute a
termination of any rights of the Company pursuant to section 10.02.
The Company shall cause to be deposited in the Escrow Account, on a daily
basis upon receipt thereof, all revenues received with respect to the
conservation and disposition of the related REO Property and shall withdraw
therefrom funds necessary for the proper operation, management and maintenance
of the related REO Property, including the cost of maintaining any hazard
insurance pursuant to Section 4.10 hereof and the fees of any managing agent
acting on behalf of the Company. If the Company (and not an agent of the
Company) manages the related REO Property, the Company shall be entitled to
receive a management fee in an amount equal to the greater of $1,200 or 1% of
the sales price of the related REO Property (the "REO Disposition Fee"). The
Company shall be entitled to deduct the REO Disposition Fee directly from the
REO Disposition proceeds prior to distribution of the REO Distribution Proceeds
to the REO Owner. Any disbursement in excess of $5,000 shall be made only with
the written approval of the REO Owner. For purposes of the preceding sentence,
any approval give by the Owner shall constitute approval by the REO Owner. If is
hereby understood and agreed by the Company that if requested by the Owner in
connection with a securitization as contemplated under Article XII, the Company
shall waive its right to collect an REO Disposition Fee. On or before each
Determination Date, the Company shall withdraw from the Escrow Account and
deposit into the Custodial Account the net income from the REO Property on
deposit in the Escrow Account less any reserves required to be maintained in the
Escrow Account from time to time to satisfy reasonably anticipated expenses. The
Company shall furnish to the Owner on each Remittance Date, an operating
statement for each REO Property covering the operation of each REO Property for
33
the previous month and the Company's efforts in connection with the sale of that
REO Property. Such statement shall be accompanied by such other information, as
the Owner shall reasonably request.
Each REO Disposition shall be carried out by the Company at such price, and
upon such terms and conditions, as the Company deems to be in the best interests
of the REO Owner. If upon the acquisition of title to the Mortgaged Property by
foreclosure sale or deed in lieu of foreclosure or otherwise, there remain
outstanding xxxxxxxxxxxx X&X Advances pursuant to Section 5.03 with respect to
the Mortgage Loan or if, upon liquidation as provided in this Section 4.14,
there remain outstanding any unreimbursed Servicing Advances with respect to the
Mortgaged Property or the Mortgage Loan, the Company shall be entitled to
reimbursement from the proceeds received in connection with the disposition of
the Mortgaged Property, and from the Owner if such proceeds are insufficient,
for any related unreimbursed Servicing Advances or related xxxxxxxxxxxx X&X
Advances pursuant to Section 5.03. On the Remittance Date immediately following
the Principal Prepayment Period in which REO Disposition Proceeds are received,
the net cash proceeds of such REO Disposition shall be distributed to the REO
Owner. In the event that the Company is billed for expenses related to an REO
Property subsequent to the date on which the net cash proceeds of such REO
Disposition are distributed to the REO Owner, the Company shall pay such
expenses and shall thereupon be entitled to reimburse itself therefor by
withdrawing the amount of such expenses from the Custodial Account.
Section 4.15 Reserved.
-------
Section 4.16 Inspections.
-----------
If any Mortgage Loan is more than sixty (60) days delinquent, the Company
immediately shall inspect the Mortgaged Property and shall conduct subsequent
inspections in accordance with Customary Servicing Procedures or as may be
required by the primary mortgage guaranty insurer. The Company shall keep a
written or electronic report of each such inspection.
Section 4.17 Restoration of Mortgaged Property.
---------------------------------
The Company need not obtain the approval of the Owner prior to releasing
any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be applied
to the restoration or repair of the Mortgaged Property if such release is in
accordance with Customary Servicing Procedures. For claims greater than $15,000,
at a minimum the Company shall comply with the following conditions in
connection with any such release of Insurance Proceeds or Condemnation Proceeds:
(a) the Company shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with respect
thereto;
the Company shall take all steps necessary to preserve the priority of the
lien of the Mortgage, including, but not limited to requiring waivers with
respect to mechanics' and materialmen's liens;
the Company shall verify that the Mortgage Loan is not in default; and
pending repairs or restoration, the Company shall place the Insurance Proceeds
or Condemnation Proceeds in the Escrow Account.
34
If the Owner is named as an additional loss payee, the Company is hereby
empowered to endorse any loss draft issued in respect of such a claim in the
name of the Owner.
Section 4.18 Maintenance of Primary Insurance Policy; Claims.
-----------------------------------------------
If a Mortgage Loan has an original LTV of 80% or greater, the Company
shall, without any cost to the Owner, maintain or cause the Mortgagor to
maintain in full force and effect a Primary Insurance Policy insuring the
portion over 78% until such Primary Insurance Policy may be terminated pursuant
to the Homeowners Protection Act of 1998, 12 USC ss.4901, et seq. In the event
that such Primary Insurance Policy shall be terminated other than as required by
law, the Company shall obtain from another insurer generally acceptable to
Xxxxxx Mae and Xxxxxxx Mac a comparable replacement policy, with a total
coverage equal to the remaining coverage of such terminated Primary Insurance
Policy. If the insurer shall cease to be generally acceptable to Xxxxxx Mae and
Xxxxxxx Mac, the Company shall determine whether recoveries under the Primary
Insurance Policy are jeopardized for reasons related to the financial condition
of such insurer, it being understood that the Company shall in no event have any
responsibility or liability for any failure to recover under the Primary
Insurance Policy for such reason. If the Company determines that recoveries are
so jeopardized, it shall notify the Owner and the Mortgagor, if required, and
obtain from another insurer generally acceptable to Xxxxxx Mae and Xxxxxxx Mac a
replacement insurance policy. The Company shall not take any action which would
result in noncoverage under any applicable Primary Insurance Policy of any loss
which, but for the actions of the Company 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 Company shall promptly notify the
insurer under the related Primary Insurance Policy, if any, of such assumption
or substitution of liability in accordance with the terms of such Primary
Insurance Policy and shall take all actions which may be required by such
insurer as a condition to the continuation of coverage under such Primary
Insurance Policy. If such Primary Insurance Policy is terminated as a result of
such assumption or substitution of liability, the Company shall obtain a
replacement Primary Insurance Policy as provided above.
In connection with its activities as servicer, the Company agrees to
prepare and present, on behalf of itself and the Owner, claims to the insurer
under any Primary Insurance Policy in a timely fashion in accordance with the
terms of such Primary Insurance Policy and, in this regard, to take such action
as shall be necessary to permit recovery under any Primary Insurance Policy
respecting a defaulted Mortgage Loan. Pursuant to Section 4.04, any amounts
collected by the Company under any Primary Insurance Policy shall be deposited
in the Custodial Account, subject to withdrawal pursuant to Section 4.05.
Section 4.19 Real Estate Owned Reports.
-------------------------
Together with the statement furnished pursuant to Section 5.02, the Company
shall furnish to the Owner on or before the Remittance Date each month a
statement with respect to any REO Property covering the operation of such REO
Property for the previous month and the Company's efforts in connection with the
sale of such REO Property and any rental of such REO Property incidental to the
sale thereof for the previous month. That statement shall be accompanied by such
other information, as the Owner shall reasonably request.
35
Section 4.20 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 Company
shall submit to the Owner a liquidation report with respect to such Mortgaged
Property.
Section 4.21 Reports of Foreclosures and Abandonments of Mortgaged
Property.
------------------------------------------------------------
Following the foreclosure sale or abandonment of any Mortgaged Property,
the Company shall report such foreclosure or abandonment as required pursuant to
Section 6050J of the Code. The Company shall file information reports with
respect to the receipt of mortgage interest received in a trade or business and
information returns relating to cancellation of indebtedness income with respect
to any Mortgaged Property as required by the Code. Such reports shall be in form
and substance sufficient to meet the reporting requirements imposed by the Code.
Section 4.22 Disaster Recovery/Business Continuity Plan.
------------------------------------------
The Company shall establish and maintain contingency plans, recovery plans
and proper risk controls to ensure the Company's continued performance under
this Agreement. Such plans shall be in accordance with Customary Servicing
Procedures and in accordance with Xxxxxx Mae requirements. The Company agrees to
make copies or summaries of the plans available to one or more of the regulatory
authorities supervising the Owner upon the Owner's reasonable request.
ARTICLE V
PAYMENTS TO THE OWNER
Section 5.01 Distributions.
-------------
(a) On each Remittance Date, the Company shall remit to the Owner of record
on the preceding Record Date (i) all amounts credited to the Custodial Account
as of the close of business on the preceding Determination Date (net of charges
against or withdrawals from the Custodial Account pursuant to Section
4.05(ii)-(iv)), plus (ii) the aggregate amount of P&I Advances, if any, and
payments pursuant to Section 5.03, if any, that the Company is obligated to make
on such Remittance Date, plus (iii) the aggregate amount of any Prepayment
Interest Shortfall existing as of such Remittance Date and minus (iv) any
amounts that represent early receipts of Monthly Payments due on a Due Date or
Due Dates subsequent to the Due Date occurring in the month of such Remittance
Date (except to the extent that, pursuant to Section 5.03, any funds described
in this clause (iv) are to be remitted to the Owner in lieu of P&I Advances by
the Company out of its own funds).
(b) Each remittance pursuant to this Section 5.01 shall be made by wire
transfer of immediately available funds to, or by other means of transmission or
transfer that causes funds to be immediately available in, the account which
shall have been designated by the Owner.
(c) With respect to any remittance received by the Owner after the Business
Day on which such payment was due, the Company shall pay to the Owner interest
36
on any such late payment at an annual rate equal to the Prime Rate, adjusted as
of the date of each change, plus two (2) 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 Company 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 Company of any such interest shall not be deemed an extension of time for
payment or a waiver of any Event of Default by the Company.
(d) The Company shall ten (10) days prior to the Remittance Date on which
the final distribution of funds to Owner is to be made hereunder, notify each
Owner of the pendency of such distribution and such distribution shall be made
to each Owner.
Section 5.02 Statements to the Owner.
-----------------------
Not later than the (10th) Business Day of the month of the related
Remittance Date, the Company shall deliver to the Owner a monthly remittance
statement in the form of, and providing the information described in, Exhibit E
hereto and a mutually agreed upon electronic format.
In addition, not more than sixty (60) days after the end of each calendar
year, upon receipt of written request by the Owner, the Company will furnish at
any time during such calendar year, a listing of the principal balances of the
Mortgage Loans outstanding at the end of such calendar year.
The Company shall prepare and file any and all tax returns, information
statements or other filings required to be delivered to any governmental taxing
authority (other than those required to be filed by the Owner) or to the Owner
pursuant to any applicable law with respect to the Mortgage Loans and the
transactions contemplated hereby.
Section 5.03 P&I Advances by the Company.
---------------------------
Not later than the close of business on the Business Day preceding each
Remittance Date, the Company shall from its own funds deposit in the Custodial
Account an amount equal to all Monthly Payments that were due on the related Due
Date and that were delinquent at the close of business on the related
Determination Date, with the interest adjusted to the respective Mortgage Loan
Remittance Rates; provided, however, that to the extent there are funds on
deposit in the Custodial Account that are not otherwise required to be
distributed to the Owner on such Remittance Date, the Company may remit such
funds in lieu of making advances of its own funds; and further provided that any
such funds held for future distribution and so used shall be appropriately
reflected in the Company's records and replaced by the Company by deposit into
the Custodial Account on or before each Remittance Date to the extent that funds
on deposit in the Custodial Account for the related Remittance Date (determined
without regard to P&I Advances required to be made on such Remittance Date)
shall be less than the aggregate amount required to be distributed to the Owner
pursuant to Section 5.01 on such related Remittance Date. For purposes of this
Section 5.03, any Monthly Payment or portion thereof deferred pursuant to
Section 4.01 shall be considered delinquent until paid. The Company's obligation
to make P&I Advances as to any Mortgage Loan shall continue through the earlier
37
to occur of (a) the repurchase of the Mortgage Loan by the Company pursuant to
Section 3.03 and (b) the Remittance Date following acquisition or disposition of
title to the related Mortgaged Property through foreclosure or by delivery of a
deed in lieu of foreclosure; provided, however, that if requested by a Rating
Agency in connection with a securitization as contemplated under Article XII,
the Company shall be obligated to make such advances through the Remittance Date
prior to the date on which cash is received in connection with the liquidation
of REO Property.
Notwithstanding the provisions of this Section 5.03, the Company shall not
be required to make any advance of principal and interest if, in the good faith
judgment of the Company, such advance of principal and interest will not
ultimately be recoverable from the related Mortgagor, from Liquidation Proceeds
or otherwise. In the event that the Company determines that any such advances
are non-recoverable, the Company shall provide the Owner with an Officer's
Certificate.
Section 5.04 Prepayment Interest Shortfalls.
------------------------------
Not later than the close of business on the Business Day preceding each
Remittance Date, the Company shall from its own funds deposit in the Custodial
Account an amount equal to the aggregate Prepayment Interest Shortfall, if any,
existing in respect of the related Principal Prepayment Period.
ARTICLE VI
GENERAL SERVICING PROCEDURE
Section 6.01 Assumption Agreements.
---------------------
The Company shall use its best efforts to enforce any "due-on-sale"
provision contained in each Mortgage or Mortgage Note to the extent permitted by
law and provided that such enforcement would not impair any recovery under any
related Primary Insurance Policy. The Company shall be entitled to retain as
additional servicing compensation any assumption fee collected by the Company
for entering into an assumption agreement. In connection with any such
assumption agreement, none of the Mortgage Interest Rate borne by the related
Mortgage Note, the term of the Mortgage Loan, the outstanding principal amount
of the Mortgage Loan nor any other material terms shall be changed without the
Owner's consent.
To the extent that any Mortgage Loan is assumable, the Company shall
inquire diligently into the credit worthiness of the proposed transferee, and
shall use the underwriting criteria for approving the credit of the proposed
transferee which are used with respect to underwriting mortgage loans of the
same type as the Mortgage Loans. If the credit worthiness of the proposed
transferee does not meet such underwriting criteria, the Company diligently
shall, to the extent permitted by the Mortgage or the Mortgage Note and by
applicable law, accelerate the maturity of the Mortgage Loan.
38
Section 6.02 Release of Mortgage Files; Wrongful Satisfaction of Mortgages.
-------------------------------------------------------------
Upon the payment in full of any Mortgage Loan, the Company will obtain the
portion of the Mortgage File that is in the possession of the Owner, prepare and
process any required satisfaction or release of the Mortgage and notify the
Owner as provided in Section 5.02.
If the Company satisfies or releases the lien of a Mortgage without having
obtained payment in full of the indebtedness secured by the Mortgage, the
Company, upon written demand, shall remit to the Owner the then Assumed
Principal Balance of the related Mortgage Loan, plus accrued interest at the
Mortgage Loan Remittance Rate through the date of release, by deposit thereof in
the Custodial Account. The Company shall maintain the Fidelity Bond as provided
for in Section 4.13 insuring the Company against any loss it may sustain with
respect to any Mortgage Loan not satisfied in accordance with the procedures set
forth herein.
Section 6.03 Servicing Compensation.
----------------------
As compensation for its services hereunder, the Company 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 Company's Servicing Fee. The
obligation of the Owner to pay the Servicing Fee is limited to, and payable
solely from, the interest portion of the Monthly Payments. Additional servicing
compensation in the form of assumption fees, as provided in Section 6.01, and
late payment charges or otherwise shall be retained by the Company. The Company
shall be entitled to request reimbursement for additional services, including:
(a) express and other delivery charges and any other reasonable
out-of-pocket expenses incurred by the Company with respect to a Mortgage Loan
to the extent not ordinary to the servicing function (but not including
salaries, rent and other general operating expenses of Servicer normally
classified as overhead);
(b) preparation and delivery of any special reports, magnetic tapes, disks,
or transmission outside the normal monthly accounting reports; and
(c) to the extent not ordinary to the servicing function, any action taken
by the Company which the Company reasonably determines to be necessary or
appropriate in order to protect the rights of Owner, (including property
preservation), with respect to any Mortgage Loan, not to exceed $5,000.00
without the prior approval of the Owner (with the exception of advances for real
estate taxes and insurance premiums).
Section 6.04 Annual Statement as to Compliance.
---------------------------------
The Company shall deliver to the Owner, on or before February 28 of each
year, beginning February 28, 2004, an Officers' Certificate stating that (i) a
review of the activities of the Company during the preceding calendar year and
of the Company's performance under this Agreement has been made under such
officer's supervision, and (ii) to the best of such officer's knowledge, based
on such review, the Company has fulfilled all of its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
Servicing Officer and the nature and status thereof and the action being taken
by the Company to cure such default.
39
Section 6.05 Annual Independent Public Accountants' Servicing Report.
------------------------------------------------------------
On or before February 28 of each year, beginning February 28, 2004, the
Company, at its expense, shall cause a firm of independent public accountants
that 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 mortgage loans in the
Company's portfolio. On the basis of this examination, the CPA firm will
disclose any exceptions or errors relating to the servicing of mortgage loans,
as required by paragraph four (4) of "The Uniform Single Attestation Program for
Mortgage Bankers."
Section 6.06 Owner's Right to Examine the Company Records.
---------------------------------------------------------
The Owner shall have the right, upon reasonable notice to the Company, to
examine and audit any and all of the books, records or other information of the
Company whether held by the Company or by another on behalf of the Company,
which may be relevant to the performance or observance by the Company of the
terms, covenants or conditions of this Agreement, and to discuss such books,
records or other information with an officer or employee of the Company who is
knowledgeable about the matters contained therein.
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 Company 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 860(a)(2) of the
Code and the tax on "contributions" to a REMIC set forth in Section 860(d) of
the Code) unless the Company 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.
Section 6.08 Fair Credit Reporting Act Compliance.
------------------------------------
The Company shall fully furnish, in accordance with the Fair Credit
Reporting Act and its implementing regulations, accurate and complete
information (i.e., favorable and unfavorable) on its borrower credit files to
Equifax, Experian, and Trans Union Credit Information Company (three of the
credit repositories), on a monthly basis.
ARTICLE VII
REPORTS TO BE PREPARED BY THE COMPANY
Section 7.01 The Company Shall Provide Access and Information as Reasonably
Required.
--------------------------------------------------------------
The Company shall furnish to the Owner upon written request, during the
term of this Agreement, such periodic, special or other reports or information,
40
including but not limited to evidence of origination compliance, whether or not
provided for herein, as shall be necessary, reasonable or appropriate with
respect to the purposes of this Agreement. The Company may negotiate with the
Owner for a reasonable fee for providing such report or information, unless (i)
the Company 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 requirements or with
inquiries from one or more of the regulatory authorities supervising the Owner.
The Company agrees to execute and deliver all such instruments as the Owner,
from time to time, may reasonably request in order to effectuate the purposes
and to carry out the terms of this Agreement.
Section 7.02 Financial Statements.
--------------------
The Company understands that, in connection with marketing the Mortgage
Loans, the Owner may make available to a prospective Owner a consolidated
statement of operations of the Company for the most recently completed five
fiscal years for which such a statement is available as well as a consolidated
statement of condition at the end of the last two fiscal years covered by such
consolidated statement of operations. The Company, if it has not already done
so, agrees to promptly furnish to Owner copies of the statements specified
above.
The Company also agrees to make available upon reasonable notice and during
normal business hours to any prospective Owner a knowledgeable financial or
accounting officer for the purposes of answering questions respecting recent
developments affecting the Company or the financial statements of the Company
and to permit upon reasonable notice and during normal business hours any
prospective Owner to inspect the Company's servicing facilities for the purpose
of satisfying such prospective Owner that the Company has the ability to service
the Mortgage Loans in accordance with this Agreement.
Section 7.03 Cooperation with Third-Party Service Providers.
---------------------------------------------------------
The Company shall cooperate with the Owner in servicing the Mortgage Loans
in accordance with the usual and customary requirements of any credit
enhancement, risk management and other service providers and shall otherwise
cooperate with the Owner in connection with such third-party service providers
and the provision of third-party services; provided, however, that such
requirements are reasonably acceptable to the Company and pose no greater risk,
obligation or expense to the Company than otherwise set forth in this Agreement.
Any additional costs and/or expenses will be paid by the requesting party.
ARTICLE VIII
THE COMPANY
Section 8.01 Indemnification; Third Party Claims.
-----------------------------------
The Company agrees to indemnify the Owner and hold them harmless against
any and all claims, losses, penalties, fines, forfeitures, reasonable legal fees
and related costs, judgments, and any other costs, fees and expenses that the
Owner incurs resulting from the failure of the Company to perform its duties and
service the Mortgage Loans in material compliance with the terms of this
41
Agreement. The Company shall immediately notify the Owner if a claim is made by
a third party with respect to this Agreement or any of the Mortgage Loans. The
Company shall follow any written instructions received from the Owner in
connection with such claim and shall 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 the Owner in respect of such claim.
The Company may request reimbursement from the Owner for any expenses incurred
by it in connection with the defense of any such third party claim except when
the claim is in any way related to a breach of the Company's representations and
warranties set forth in the Agreement or the failure of the Company to perform
its duties and service the Mortgage Loans in strict compliance with the terms of
this Agreement or in accordance with applicable law. Such reimbursement will be
made by the Owner within thirty (30) days of notification by the Company.
Section 8.02 Merger or Consolidation of the Company.
-------------------------------------------------------
The Company shall keep in full effect its existence, rights and franchises
as a corporation, and shall 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
the ability of the Company to perform its duties under this Agreement.
Any Person into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Company shall be a party, or any Person succeeding to the business of the
Company hereunder, shall be the successor of the Company hereunder without the
execution or filing of any paper or any further act on the part of either of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person shall be an institution (i) that
is qualified to service mortgage loans on behalf of Xxxxxx Xxx or Xxxxxxx Mac
and (ii) that has a net worth of not less than $15,000,000.
Section 8.03 Company Not to Resign.
---------------------
The Company shall not assign this Agreement (except to any affiliate or
subsidiary of the Company) or resign from the obligations and duties hereby
imposed on it except by mutual consent of the Company 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 Company. Any such
determination permitting the resignation of the Company shall be evidenced by an
Opinion of Counsel to such effect delivered to the Owner. No such resignation
shall become effective until a successor shall have assumed the Company's
responsibilities and obligations hereunder in the manner provided in Section
11.01.
ARTICLE IX
DEFAULT
Section 9.01 Events of Default.
-----------------
Event of Default, whenever used herein, means any one or more of the
following events:
42
(i) any failure by the Company to remit to the Owner any payment required
to be made under the terms of this Agreement that continues unremedied for a
period of three (3) Business Days after the date upon which written notice of
such failure, requiring the same to be remedied, shall have been received by the
Company from the Owner; or
(ii) any failure on the part of the Company duly to observe or perform in
any material respect any other of the covenants or agreements on the part of the
Company set forth in this Agreement, including, but not limited to, breach by
the Company of any one or more of the representations, warranties and covenants
of the Company as set forth in Section 3.01 of this Agreement, that continues
unremedied for a period of sixty (60) days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
received by the Company from the Owner or party acting on behalf of the Owner;
or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a trustee in bankruptcy, conservator,
receiver or liquidator in any bankruptcy, reorganization, insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall have
been entered against the Company and such decree or order shall have remained in
force undischarged or unstayed for a period of sixty (60) days; or
(iv) the Company 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 Company's ability to
perform its obligations hereunder; or
(v) the Company shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Company or
of or relating to all or substantially all of its property; or
(vi) the Company 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 or voluntarily suspend payment of its
obligations or cease its normal business operations for three (3) consecutive
Business Days; or
(vii) the Company attempts to assign its right to servicing compensation
hereunder or to assign this Agreement or the servicing responsibilities
hereunder or to delegate its duties hereunder or any portion thereof in
violation of Section 8.03.
If the Company obtains knowledge of an Event of Default, such party shall
promptly notify the Owner. If an Event of Default shall occur, then so long as
such Event of Default shall not have been remedied, the Owner may, by notice in
writing to the Company, in addition to whatever rights the Owner may have at law
or equity to damages, including injunctive relief and specific performance,
terminate all the rights and obligations of the Company under this Agreement and
43
in and to the Mortgage Loans and the proceeds thereof. On or after the receipt
by the Company of such written notice, all authority and power of the Company
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
11.01. Upon written request from the Owner, the Company shall prepare, execute
and deliver, any and all documents and other instruments, place in such
successor's possession all Mortgage Files, and do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise, at the Company's sole
expense. The Company shall cooperate with the Owner and such successor in
effecting the termination of the Company's responsibilities and rights
hereunder, including, without limitation, the transfer to such successor for
administration by it of all cash amounts (less any amounts due the Company
pursuant to the terms of this Agreement) which shall at the time be credited by
the Company to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Section 9.02 Waiver of Defaults.
------------------
The Owner may in writing waive any past default by the Company in the
performance of its obligations hereunder and the consequences thereof and any
default in remitting to Owner any required distribution in accordance with this
Agreement, including the Company's obligation to make P&I Advances. Subject to
the preceding sentence, upon any waiver of a past default, such default shall be
deemed not to exist and any Event of Default arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement, except as otherwise
stated in such waiver; provided, however, that no such waiver shall extend to
any subsequent or other default or impair any right consequent thereto, except
as otherwise stated in such waiver.
ARTICLE X
TERMINATION
Section 10.01 Termination.
-----------
(a) This Agreement shall terminate upon either: (i) the later of the
distribution to the Owner of final payment or liquidation with respect to the
last Mortgage Loan (or advances of same by the Company), or the disposition of
all property acquired upon foreclosure or deed in lieu of foreclosure with
respect to the last Mortgage Loan and the remittance of all funds due hereunder
or (ii) mutual consent of the Company and the Owner in writing. The
representations and warranties and indemnification provisions contained herein
shall survive the termination of this Agreement.
Section 10.02 Termination Without Cause
-------------------------
The Owner may, at its sole option, terminate any rights the Company may
have hereunder with respect to one or more Mortgage Loan Packages in whole or in
part, without cause, upon thirty (30) days prior written notice. In the event of
such a termination, the Owner agrees to pay a sum, as liquidated damages, in an
amount equal to (i) two percent (2%) of the aggregate Assumed Principal Balance
of the Mortgage Loans as to which the Company's services, rights and obligations
44
hereunder are terminated if such written notice is received by the Company on or
before the Business Day that is five (5) years from the related Closing Date, or
(ii) one percent (1%) of the aggregate Assumed Principal Balance of the Mortgage
Loans as to which the Company's services, rights and obligations hereunder are
terminated if such written notice is received by the Company after the Business
Day that is five (5) years from the related Closing Date (either amount shall be
referred to as "Liquidated Damages"). Any such notice of termination shall be in
writing and delivered to the Company by registered mail as provided in Section
11.07 of this Agreement.
Termination pursuant to this Section 10.02 shall be effective on the date
on which the Company transfers all responsibilities, rights, duties and
obligations under this Agreement to the successor appointed pursuant to Section
11.01.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Successor to the Company.
------------------------
Prior to termination of the Company's responsibilities and duties under
this Agreement pursuant to Section 8.03, 9.01, 10.01(a)(ii) or 10.02 the Owner
shall (i) succeed to and assume all of the Company's responsibilities, rights,
duties and obligations under this Agreement, or (ii) appoint a successor which
shall succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Company under this Agreement prior to the termination of the
Company'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 received
with respect to the Mortgage Loans as it and such successor shall agree. The
Company shall discharge its 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 that it is obligated to
exercise under this Agreement. The resignation or removal of the Company
pursuant to the aforementioned Sections shall not become effective until a
successor shall be appointed pursuant to this Section and shall not relieve the
Company of its obligations under Section 3.03.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Company 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
Company, with like effect as if originally named as a party to this Agreement.
No termination of the Company or this Agreement shall affect any claims that the
Owner may have against the Company arising prior to any such termination or
resignation.
The Company shall timely deliver to its successor the funds in the
Custodial Account and the Escrow Account (less any amounts to which the Company
is entitled pursuant to the terms of this Agreement) and all Mortgage Files and
related documents and statements held by it hereunder and the Company shall
account for all funds. The Company shall execute and deliver such instruments
and do such other things all as may reasonably be required to more fully and
definitely vest and confirm in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Company.
45
Upon a successor's acceptance of appointment as such, the Company shall
notify by mail the Owner of such appointment.
In connection with the termination or resignation of the Company hereunder,
either (i) the successor shall represent and warrant that it is a member of MERS
in good standing and shall agree to comply in all material respects with the
rules and procedures of MERS in connection with the servicing of the Mortgage
Loans that are registered with MERS, in which case the Company shall cooperate
with the successor in causing MERS to revise its records to reflect the transfer
of servicing to the successor as necessary under MERS' rules and regulations, or
(ii) the Company shall cooperate with the successor in causing MERS to execute
and deliver an Assignment of Mortgage in recordable form to transfer the
Mortgage from MERS to the Owner and shall execute and deliver such other
notices, documents and other instruments as may be necessary or desirable to
effect a transfer of such Mortgage Loan or servicing of such Mortgage Loan on
the MERS(R) System to the successor. The Company shall file or cause to be filed
any such Assignment of Mortgage in the appropriate recording office. The Company
shall bear any and all fees of MERS, costs of preparing any Assignments of
Mortgage, and fees and costs of filing any assignments of Mortgage that may be
required under this subsection (b), except in the event that the Owner
terminates the Company under this Agreement in accordance with Section 10.02
hereof. The successor shall cause such Assignment of Mortgage to be delivered to
the Owner promptly upon receipt of the original with evidence of recording
thereon or a copy certified by the public recording office in which such
assignment was recorded.
Section 11.02 Repurchases and Related Assurances.
----------------------------------
In the event the Company repurchases a Mortgage Loan pursuant to Section
3.03, the Owner shall, upon any request of the Company subsequent to the
Remittance Date on which the Repurchase Price has been remitted to the Owner,
take actions reasonably necessary to effect the reconveyance of the Mortgage
Loan.
Section 11.03 Amendment.
---------
This Agreement may be amended only by written agreement signed by the
Company and Owner hereunder.
Section 11.04 Reserved.
--------
Section 11.05 Duration of Agreement.
---------------------
This Agreement shall continue in existence and effect until terminated as
herein provided. This Agreement shall continue notwithstanding transfers of the
Mortgage Loans by the Owner.
Section 11.06 Governing Law.
-------------
This Agreement shall be construed in accordance with the laws of the State
of New York, except to the extent preempted by federal law but without regard to
principles of conflicts of laws, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
46
Section 11.07 Notices.
-------
Any communications provided for or permitted hereunder shall be in writing
and, unless otherwise expressly provided herein, shall be deemed to have been
duly given if (a) personally delivered, (b) mailed by registered mail, postage
prepaid, return receipt requested, and received by the addressee, (c) sent by
express courier delivery service and received by the addressee, or (d)
transmitted by telex, telecopy or telegraph and confirmed by a writing delivered
by means of (a), (b) or (c), to: (i) in the case of the Company 000 Xxxxxx Xxxx,
Xxxxxxx, XX 00000, Attention: Xxxx Xxxxxxx, Senior Vice President, or such other
address as may hereafter be furnished to the Owner in writing by the Company and
(ii) in the case of the Owner, Banc of America Mortgage Capital Corporation,
Hearst Tower, NC1-027-21-04, 000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxx,
Xxxxx Xxxxxxxx 00000, Attention: Managing Director, Fax: (000) 000-0000, or such
other address or fax as may hereafter be furnished to the Company in writing by
the Owner.
Section 11.08 Severability of Provisions.
--------------------------
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
Section 11.09 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 Company shall be rendered as an independent contractor and not as agent for
the Owner.
Section 11.10 Counterparts.
------------
This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which shall be deemed
to be an original. Such counterparts shall constitute one and the same
agreement.
Section 11.11 Successors and Assigns.
----------------------
Notwithstanding anything to the contrary in this agreement, it is
understood and agreed that the Owner may transfer its interest in this Agreement
and the Mortgage Loans, in whole or in part, in accordance with Article XII of
this Agreement. This Agreement shall inure to the benefit of and be binding upon
the Company, the Owner and their respective successors and assigns permitted
hereunder.
Section 11.12 Intention of the Parties.
------------------------
It is the intention of the parties that the Initial Owner is purchasing,
and the Seller is selling, the Mortgage Loans and not a debt instrument of the
Seller or another security. Accordingly, the parties hereto each intend to treat
47
each of the transactions contemplated hereunder for Federal income tax purposes
as a sale by the Company, and a purchase by the Initial Owner, of the Mortgage
Loans. The Initial Owner shall have the right to review the Mortgage Loans and
the related Mortgage Files to determine the characteristics of the Mortgage
Loans which shall affect the Federal income tax consequences of owning the
Mortgage Loans and the Company shall cooperate with all reasonable requests made
by the Initial Owner in the course of such review.
Section 11.13 Solicitation of Mortgagor.
-------------------------
The Company agrees not to directly solicit the Mortgagor of any Mortgage
Loan for refinancing of any Mortgage Loan or in any way induce, or directly
attempt to induce, the refinancing of any Mortgage Loan or the substitution of
any Mortgage Loan with any other loan. Nothing contained herein shall prohibit
the Company from (i) providing all Mortgagors for which the Company services
mortgage loans with any general advertising including information brochures,
coupon books, monthly statements or other similar documentation which indicates
services the Company offers, including refinances or (ii) providing financing of
home equity loans to Mortgagors at the Mortgagor's request.
Section 11.14 Further Agreements.
-----------------
The Owner and the Company each agree to execute and deliver to the other
such additional documents, instruments or agreements as may be necessary or
appropriate to effectuate the purposes of this Agreement.
Section 11.15 Confidential Information.
------------------------
(a) The Company shall keep confidential and shall not divulge to any party,
without the Owner's prior written consent, the price paid by the Owner for the
Mortgage Loans, except to the extent that it is reasonable and necessary for the
Company to do so in working with legal counsel, auditors, taxing authorities or
other governmental agencies.
(b) The Owner and the Company agree they (i) shall comply with all
applicable laws and regulations regarding the privacy or security of Consumer
Information, (ii) shall not collect, create, use, store, access, disclose or
otherwise handle Consumer Information in any manner inconsistent with any
applicable laws or regulations regarding the privacy or security of Consumer
Information, (iii) shall not disclose Consumer Information to any affiliated or
non-affiliated third party except to enforce or preserve its rights, as
otherwise permitted or required by applicable law (or by regulatory authorities
having jurisdiction in the premises) or, in the case of the Company, at the
specific written direction of the Owner, (iv) shall maintain appropriate
administrative, technical and physical safeguards to protect the security,
confidentiality and integrity of Consumer Information, including maintaining
security measures designed to meet the Interagency Guidelines Establishing
Standards for Safeguarding Consumer Information published in final form on
February 1, 2001, 66 Fed. Reg. 8616, and the rules promulgated thereunder and
(v) shall promptly notify the other party in writing upon becoming aware of any
actual breach and of any suspected breach of this section. The Company shall
promptly provide the Owner's regulators information regarding such security
measures upon the reasonable request of the Owner, which information shall
include, but not be limited to, any SAS 70 or similar independent audit reports,
48
summaries of test results or equivalent measures taken by the Company with
respect to its security measures, as agreed upon by the parties. Each party
shall indemnify and defend the other party against, and shall hold the other
party harmless from, any cost, expense, loss, claim or other liability that such
other party may suffer as a result of or in connection with its failure to
comply with or perform the obligations set forth in this section. The
restrictions set forth herein shall survive the termination of this Agreement.
Section 11.16 Exhibits.
--------
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
Section 11.17 General Interpretive Principles.
-------------------------------
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires: (a) the terms defined in this Agreement
have the meanings assigned to them in this Agreement and include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs, Clauses and other
subdivisions of this Agreement;
(d) 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, Clauses, and
other subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular provision;
and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
ARTICLE XII
WHOLE LOAN TRANSFER; PASS-THROUGH TRANSFER
Section 12.01 Removal of Mortgage Loans from Inclusion under this Agreement
upon a Whole Loan Transfer or a
Pass-Through Transfer on One or More Reconstitution Dates
-------------------------------------------------------------
(a) The Company acknowledges and the Owner agrees that with respect to some
or all of the Mortgage Loans, the Owner may effect one or more Whole Loan
49
Transfers or Pass-Through Transfers; provided, however, that the aggregate
number of such transfers by the Owner shall not exceed four (4).
(b) The Company shall cooperate with the Owner in connection with any Whole
Loan Transfer or Pass-Through Transfer contemplated by the Owner pursuant to
this Section. In connection therewith, the Owner shall deliver any
Reconstitution Agreement or other document related to the Whole Loan Transfer or
Pass Through Transfer to the Company at least fifteen (15) days prior to such
transfer, and the Company shall execute any Reconstitution Agreement which
contains servicing provisions substantially similar to those herein or otherwise
reasonably acceptable to the Owner and the Company and which restates the
representations and warranties contained in Section 3.01 as of the
Reconstitution Date (except to the extent any such representation or warranty is
not accurate on such date) and Section 3.02 herein as of the related Closing
Date. The Owner hereby agrees to reimburse the Company for reasonable "out of
pocket" expenses incurred by the Company related to such Whole Loan Transfer or
Pass-Through Transfer, including reimbursement for the amount which reasonably
reflects time and effort expended by the Company in connection therewith.
(c) With respect to any Mortgage Loans that are subject to a Pass-Through
Transfer, unless otherwise provided in the related pooling and servicing
agreement or similar agreement, the Company shall (1) cause the servicing
officer in charge of servicing for the Company to execute and deliver a
certification (the "SEC Certification") in the format attached hereto as Exhibit
G which at the Owner's option shall be (A) attached to any Form 10-K's filed
with the Securities and Exchange Commission ("SEC") in connection with the
related securitization trust (or similar transaction) or (B) provided to the
Owner and such other Persons as are specified in the pooling and servicing
agreement or similar agreement, and (2) indemnify the Owner and such other
Persons as are specified in the pooling and servicing agreement or similar
agreement for losses in connection with or relating to the inaccuracy of the SEC
Certification provided by the Company.
(d) All Mortgage Loans not sold or transferred pursuant to a Whole Loan
Transfer or Pass-Through Transfer shall be subject to this Agreement and shall
continue to be serviced in accordance with the terms of this Agreement and with
respect thereto this Agreement shall remain in full force and effect.
[Remainder of page intentionally blank - signatures follow.]
50
IN WITNESS WHEREOF, the Company and the Initial Owner have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
GMAC MORTGAGE CORPORATION,
as Company
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxxxx X. Xxxxxx
----------------------------------------
Title: Vice President
----------------------------------------
BANC OF AMERICA MORTGAGE CAPITAL CORPORATION,
as Initial Owner
By: /s/ Xxxxx X. Good
------------------------------------------
Name: Xxxxx X. Good
----------------------------------------
Title: Vice President
---------------------------------------
51
COMMONWEALTH OF PENNSYLVANIA )
) SS.
COUNTY OF XXXXXXXXXX )
On the 28th day of August before me, a Notary Public in and for said
Commonwealth, personally appeared Xxxxxxxx X. Xxxxxx known to me to be Vice
President of GMAC Mortgage Corporation, that executed the within instrument and
also known to me to be the person who executed it on behalf of said association,
and acknowledged to me that such association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my official seal
the day and year in this certificate first above written.
/s/ Xxxxxxxx Xxxxxxxx
----------------------------------------------
Notary Public
My Commission expires March 19, 2006.
2
STATE OF NORTH CAROLINA )
) SS.
COUNTY OF MECKLENBURG )
On the 26th day of August before me, a Notary Public in and for said state,
personally appeared Xxxxx X. Good known to me to be a Vice President of Banc of
America Mortgage Capital Corporation, the company that executed the within
instrument and also known to me to be the person who executed it on behalf of
said company, and acknowledged to me that such company executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my official seal
the day and year in this certificate first above written.
/s/ Xxxxxxxxx X. Seejha
------------------------------------------------
Notary Public
My Commission expires September 15, 2007.
3
EXHIBIT A
CONTENTS OF MORTGAGE FILES
With respect to each Mortgage Loan, the Mortgage File shall include each of
the following items (except the items delivered to the Owner or its designee
pursuant to Section 2.03), all of which shall be available for inspection by the
Owner and which may be retained in microfilm, microfiche, optical storage or
magnetic media in lieu of hard copy:
1. A copy of the Mortgage Note endorsed, "Pay to the order of
___________________, without recourse" and signed in the name of the
Company by an authorized officer. Such signature may be an original
signature or a facsimile signature of such officer. If the Mortgage
Loan was acquired by the Company in a merger, the endorsement must be
by "GMAC Mortgage Corporation, successor by merger to [name of
predecessor]"; and if the Mortgage Loan was acquired or originated by
the Company while doing business under another name, the endorsement
must be by "GMAC Mortgage Corporation, formerly known as [previous
name]". The Mortgage Note shall include all intervening endorsements
showing a complete chain of title from the originator to the Company.
2. The original of any guarantee executed in connection with the Mortgage
Note (if any).
3. The original Mortgage, or a copy of the Mortgage, with evidence of
recording thereon certified by the appropriate recording office to be
a true copy of the recorded Mortgage, or, if the original Mortgage has
not yet been returned from the recording office, a copy of the
original Mortgage together with a certificate of a duly authorized
representative of the Company (which certificate may consist of
stamped text appearing on such copy of the Mortgage), the closing
attorney or an officer of the title insurer which issued the related
title insurance policy, certifying that the copy is a true copy of the
original of the Mortgage which has been transmitted for recording in
the appropriate recording office of the jurisdiction in which the
Mortgaged Property is located.
4. Unless the Mortgage Loan is registered on the MERS System, the
Assignment of Mortgage, executed in blank, but otherwise in form and
substance acceptable for recording; provided, however, that certain
recording information will not be available if, as of the related
Closing Date, the Company has not received the related Mortgage from
the appropriate recording office. If the Mortgage Loan was acquired by
the Company in a merger, the assignment must be by "GMAC Mortgage
Corporation, successor by merger to [name of predecessor]"; and if the
Mortgage Loan was acquired or originated by the Company while doing
business under another name, the assignment must be by "GMAC Mortgage
Corporation, formerly known as [previous name]".
5. Originals or certified true copies from the appropriate recording
offices of all assumption, modification, consolidation and extension
agreements, if any or if the original has not yet been returned from
the recording office, a copy of such original certified by the
Company.
6. Originals, or certified true copies from the appropriate recording
offices, of any intervening assignments of the Mortgage with evidence
of recording thereon, or, if the original intervening assignment has
not yet been returned from the recording office, a certified copy of
such assignment.
7. A certified copy of any power of attorney.
8. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
9. For each Mortgage Loan which is secured by a residential long-term
lease, if any, a copy of the lease with evidence of recording
indicated thereon, or, if the lease is in the process of being
recorded, a photocopy of the lease, certified by an officer of the
respective prior owner of such Mortgage Loan or by the applicable
title insurance company, closing/settlement/escrow agent or company or
closing attorney to be a true and correct copy of the lease
transmitted for recordation.
10. The original policy of title insurance or, if such insurance is in
force but the original policy of title insurance has not been
delivered to the Company by the issuing title insurer, the report of
title insurance or other evidence of title insurance generally
acceptable to Xxxxxx Xxx or Xxxxxxx Mac or, if the Mortgage Loan is
the subject of a Xxxxxx Mae or Xxxxxxx Mac approved master title
insurance policy, a certified copy of the certificate of title
insurance issued thereunder.
11. The original Primary Insurance Policy, if any, or, if the Primary
Insurance Policy has been issued but the original thereof has not been
delivered to the Company by the issuer thereof, a copy of the Primary
Insurance Policy certified by a duly authorized officer of the Company
to be a true, complete and correct copy of the original, which
certification may be in the form of a blanket certification relating
to more than one Mortgage Loan.
12. Original hazard insurance policy or a binder evidencing such coverage
and, if required by law, flood insurance policy, with extended
coverage of the hazard insurance policy, unless the Mortgage Loan is
the subject of a blanket mortgage impairment insurance policy meeting
the requirements of Section 4.11 of the Agreement.
13. Mortgage Loan closing statement (Form HUD-1 or HUD-1A).
14. Residential loan application.
15. Credit report on the Mortgagor.
16. Residential appraisal report, if applicable.
17. Photograph of the property, if applicable.
EXHIBIT B
CUSTODIAL ACCOUNT LETTER AGREEMENT
To:
---------------------------------------
---------------------------------------
---------------------------------------
(the "Depository")
As servicer under the Master Flow Sale and Servicing Agreement, dated as of
August 1, 2003 Mortgage Loans, Group No. ______ (the "Agreement"), GMAC Mortgage
Corporation (the "Company") hereby authorizes and requests you to establish an
account, as a Custodial Account pursuant to Section 4.04 of the Agreement, to be
designated as "GMAC Mortgage Corporation, in trust for the Owner -______________
Mortgage Loans - Group No. ______ and various Mortgagors." All deposits in the
account shall be subject to withdrawal therefrom by order signed by the Company.
This letter is submitted to you in duplicate. Please execute and return one
original to us.
GMAC Mortgage Corporation
By__________________________
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 amount deposited at any time in the account
will be insured by the Federal Deposit Insurance Corporation to the extent
available under applicable law.
-----------------------------
(name of Depository)
By_________________________
EXHIBIT C
ESCROW ACCOUNT LETTER AGREEMENT
To:
---------------------------------------
---------------------------------------
---------------------------------------
(the "Depository")
As servicer under the Master Flow Sale and Servicing Agreement, dated as of
August 1, 2003 Mortgage Loans, Group No. ______ (the "Agreement"), GMAC Mortgage
Corporation (the "Company") hereby authorizes and requests you to certify that
an account exists titled "GMAC Mortgage Corporation, in trust for the Owner as
indicated on GMAC Mortgage Corporation's records and various mortgagors." All
deposits in the account shall be subject to withdrawal therefrom by order signed
by the Company. This letter is submitted to you in duplicate. Please execute and
return one original to us.
GMAC Mortgage Corporation
By__________________________
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 amount deposited at any time in the account
will be insured by the Federal Deposit Insurance Corporation to the extent
available under applicable law.
-----------------------------
(name of Depository)
By_________________________
EXHIBIT D
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
To:
RE: The Master Flow Sale and Servicing Agreement, Group
2003-NCFX8, dated as of August 1, 2003.
In connection with the administration of the pool of Mortgage Loans held by
you as Owner, we request the release, and acknowledge receipt, of the
(Collateral File/[specify documents]) for the Mortgage Loan described below, for
the reason indicated.
Mortgagor's Name, Address & Zip Code:
Mortgage Loan Number:
Reason for Requesting Documents (check one)
1. Mortgage Loan Paid in Full (Company hereby certifies that all amounts
received in connection therewith have been credited to the Custodial
Account as provided in the Master Flow Sale and Servicing Agreement.)
2. Mortgage Loan Repurchased Pursuant to Section 3.03 of the Master Flow
Sale and Servicing Agreement (the Company hereby certifies that the
repurchase price has been credited to the Custodial Account as
provided in the Master Flow Sale and Servicing Agreement.)
3. Mortgage Loan Liquidated By (the Company hereby certifies that all
proceeds of foreclosure, insurance or other liquidation have been
finally received and credited to the Custodial Account pursuant to the
Master Flow Sale and Servicing Agreement.
4. Mortgage Loan in Foreclosure
5. Other (explain) .
If box 1, 2, 3 or 4 above is checked, and if all or part of the Collateral
File was previously released to us, please release to us, any additional
documents in your possession relating to the above specified Mortgage Loan.
If box 5 above is checked, upon our return of all of the above documents to
you as Owner, please acknowledge your receipt by signing in the space indicated
below, and returning this form.
GMAC MORTGAGE CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
----------------------------------
Date:
----------------------------------
Documents returned to Owner:
--------------------------------------------
Owner
By:
------------------------------------------------
Date:
----------------------------------------------
EXHIBIT E
FORM OF MONTHLY REMITTANCE STATEMENT
EXHIBIT F
UNDERWRITING STANDARDS
EXHIBIT G
SEC CERTIFICATION
I, [identify the senior officer in charge of servicing], certify [to [name
of depositor] (the "Depositor"), and its officers, directors and affiliates, and
with the knowledge and intent that they will rely upon this certification,]
that:
(b) I have reviewed the information required to be delivered to the trustee
by the servicer pursuant to the pooling and servicing agreement (the "Servicing
Information");
(c) Based on my knowledge, the Servicing Information, taken as a whole,
does not contain erroneous or incomplete information required to be provided to
the trustee by the servicer under the pooling and servicing agreement;
(d) Based on my knowledge, the Servicing Information required to be
provided to the trustee by the servicer under the pooling and servicing
agreement has been provided to the trustee;
(e) I am responsible for reviewing the activities performed by the servicer
under the pooling and servicing agreement and based upon the review required
under the pooling and servicing agreement, and except as disclosed in the
report, the servicer has fulfilled its obligations under the pooling and
servicing agreement; and
(f) I have disclosed to [the Depositor's certificate public
accountants][the servicer's certified public accountants] 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 pooling and servicing agreement.
Date:
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[Signature]
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[Title]
EXHIBIT H
FORM OF ASSIGNMENT AND CONVEYANCE
On this [___] day of [ ], 2003, GMAC Mortgage Corporation, as the Company,
under that certain Master Flow Mortgage Loan Sale and Servicing Agreement, dated
as of August 1, 2003 (the "Agreement") does hereby sell, transfer, assign, set
over and convey to [ ], as Initial Owner under the Agreement all of the right,
title and interest of the Company in and to the Mortgage Loans listed on the
Mortgage Loan Schedule attached hereto as Exhibit A, together with the related
Mortgage Files and all rights and obligations arising under the documents
contained therein. Pursuant to Section 2.03 of the Agreement, the Company has
delivered to the Custodian the documents for each Mortgage Loan to be purchased
as set forth in the Agreement. The ownership of each Mortgage Note, Mortgage,
and the contents of each Mortgage File is vested in the Initial Owner and the
ownership of all records and documents with respect to the related Mortgage Loan
prepared by or which come into the possession of the Company shall immediately
vest in the Initial Owner and shall be retained and maintained, in trust, by the
Company at the will of the Initial Owner in such custodial capacity only; and
upon request by the Initial Owner shall be delivered promptly by the Company to
the Initial Owner.
The Company confirms to the Initial Owner that the representations and
warranties set forth in Section 3.02 of the Agreement with respect to the
Mortgage Loans listed on the Mortgage Loan Schedule attached hereto, and the
representations and warranties in Section 3.01 of the Agreement with respect to
the Company are true and correct as of the date hereof.
All other terms and conditions of this transaction shall be governed by the
Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Agreement.
GMAC MORTGAGE CORPORATION
By:
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Name:
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Title:
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