Xxxxxx Capital, A Division of Xxxxxx Brothers Holdings Inc.,
Purchaser
and
Option One Mortgage Corporation,
Company
/_____________________________________________/
SELLER'S WARRANTIES AND SERVICING AGREEMENT
Dated as of September 30, 1997
/_____________________________________________/
Conventional Residential Adjustable and Fixed Rate Mortgage Loans
Group No. 1997-LB/00
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS AND
RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS
Section 2.01 Conveyance of Mortgage Loans; Possession of Mortgage Files;
Maintenance of Servicing Files . . . . . . . . . . . . . . . . 16
Section 2.02 Books and Records; Transfers of Mortgage Loans . . . . . . 17
Section 2.03 Custodial Agreement; Delivery of Documents . . . . . . . . 18
ARTICLE III
REPRESENTATIONS AND WARRANTIES; REMEDIES AND BREACH
Section 3.01 Company Representations and Warranties . . . . . . . . . . 19
Section 3.02 Representations and Warranties Regarding Individual
Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.03 Purchaser Representations and Warranties . . . . . . . . . 36
Section 3.04 Remedies for Breach of Representations and Warranties. . . 37
Section 3.05 Restrictions and Requirements Applicable in the Event . . . 39
Section 3.06 Repurchase of Mortgage Loans With First Payment Defaults . 42
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer . . . . . . . . . . . . . . . . 43
Section 4.02 Liquidation of Mortgage Loans . . . . . . . . . . . . . . . 45
Section 4.03 Collection of Mortgage Loan Payments . . . . . . . . . . . 46
Section 4.04 Establishment of and Deposits to Custodial Account . . . . 47
Section 4.05 Permitted Withdrawals From Custodial Account . . . . . . . 48
Section 4.06 Establishment of and Deposits to Escrow Account . . . . . . 49
Section 4.07 Permitted Withdrawals From Escrow Account . . . . . . . . . 50
Section 4.08 Payment of Taxes, Insurance and Other Charges . . . . . . . 51
Section 4.09 Protection of Accounts . . . . . . . . . . . . . . . . . . 51
Section 4.10 Maintenance of Hazard Insurance . . . . . . . . . . . . . . 52
Section 4.11 Maintenance of Mortgage Impairment Insurance . . . . . . . 54
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 4.13 Inspections . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 4.14 Restoration of Mortgaged Property . . . . . . . . . . . . . 55
Section 4.15 Title, Management and Disposition of REO Property . . . . . 56
Section 4.16 Real Estate Owned Reports . . . . . . . . . . . . . . . . . 57
Section 4.17 Liquidation Reports . . . . . . . . . . . . . . . . . . . . 58
Section 4.18 Notification of Adjustments . . . . . . . . . . . . . . . . 58
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 4.20 Monthly Advances by Servicer . . . . . . . . . . . . . . . . 58
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 5.02 Statements to Purchaser . . . . . . . . . . . . . . . . . . 59
Section 5.03 Due Dates Other Than the First of the Month . . . . . . . . 60
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.0l Transfers of Mortgaged Property . . . . . . . . . . . . . . 61
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files . . 62
Section 6.03 Servicing Compensation . . . . . . . . . . . . . . . . . . 62
Section 6.04 Annual Statement as to Compliance . . . . . . . . . . . . . 62
Section 6.05 Annual Independent Public Accountants' Servicing Report . . 63
Section 6.06 Right to Examine Company Records . . . . . . . . . . . . . 63
ARTICLE VII
AGENCY TRANSFER; PASS-THROUGH TRANSFER
Section 7.01 Removal of Mortgage Loans from Inclusion Under this
Agreement Upon an Agency Transfer, or a Pass-Through Transfer
on One or More Reconstitution Dates . . . . . . . . . . . . . . 64
Section 7.02 Purchaser's Repurchase and Indemnification Obligations . . 65
Section 7.03 Monthly Advances. . . . . . . . . . . . . . . . . . . . . . 66
Section 7.04 Compensating Interest . . . . . . . . . . . . . . . . . . . 66
ARTICLE VIII
COMPANY TO COOPERATE
Section 8.01 Provision of Information . . . . . . . . . . . . . . . . . 67
Section 8.02 Financial Statements; Servicing Facility . . . . . . . . . 67
ARTICLE IX
THE COMPANY
Section 9.01 Indemnification; Third Party Claims . . . . . . . . . . . . 68
Section 9.02 Merger or Consolidation of the Company . . . . . . . . . . 68
Section 9.03 Limitation on Liability of Company and Others . . . . . . . 69
Section 9.04 Limitation on Resignation and Assignment by Company . . . . 69
ARTICLE X
DEFAULT
Section 10.01 Events of Default . . . . . . . . . . . . . . . . . . . . 71
Section 10.02 Waiver of Defaults . . . . . . . . . . . . . . . . . . . . 72
ARTICLE XI
TERMINATION
Section 11.01 Termination . . . . . . . . . . . . . . . . . . . . . . . 73
Section 11.02 Termination Without Cause . . . . . . . . . . . . . . . . 73
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Company . . . . . . . . . . . . . . . . . . . 75
Section 12.02 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 12.03 Governing Law 76
Section 12.04 Duration of Agreement . . . . . . . . . . . . . . . . . . 76
Section 12.05 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 12.06 Severability of Provisions . . . . . . . . . . . . . . . . 77
Section 12.07 Relationship of Parties . . . . . . . . . . . . . . . . . 77
Section 12.08 Execution; Successors and Assigns . . . . . . . . . . . . 77
Section 12.09 Recordation of Assignments of Mortgage . . . . . . . . . . 77
Section 12.10 Assignment by Purchaser . . . . . . . . . . . . . . . . . 78
Section 12.11 No Personal Solicitation . . . . . . . . . . . . . . . . . 78
EXHIBITS
EXHIBIT A MORTGAGE LOAN SCHEDULE
EXHIBIT A-1 POOL 1 MORTGAGE LOAN SCHEDULE
EXHIBIT A-2 SUB-POOL 1a MORTGAGE LOAN SCHEDULE
EXHIBIT A-3 SUB-POOL 1b MORTGAGE LOAN SCHEDULE
EXHIBIT X-0 XXX-XXXX 0x XXXXXXXX LOAN SCHEDULE
EXHIBIT A-5 POOL 2 MORTGAGE LOAN SCHEDULE
EXHIBIT B CONTENTS OF EACH MORTGAGE FILE
EXHIBIT C-1 MORTGAGE LOAN DOCUMENTS
EXHIBIT C-2 CUSTODIAL AGREEMENT WITH EXHIBITS
EXHIBIT D-1 FORM OF CUSTODIAL ACCOUNT
CERTIFICATION
EXHIBIT D-2 FORM OF CUSTODIAL ACCOUNT
LETTER AGREEMENT
EXHIBIT E-1 FORM OF ESCROW ACCOUNT CERTIFICATION
EXHIBIT E-2 FORM OF ESCROW ACCOUNT
LETTER AGREEMENT
EXHIBIT F FORM OF MONTHLY REMITTANCE ADVICE
EXHIBIT G FORM OF ASSIGNMENT AND ASSUMPTION
EXHIBIT H UNDERWRITING GUIDELINES
EXHIBIT I DELINQUENT LOANS
EXHIBIT J MORTGAGE LOANS WITH ODD DUE DATES
EXHIBIT K BAILEE AGREEMENT
EXHIBIT L SECOND LIEN MORTGAGE LOANS
This is a Seller's Warranties and Servicing Agreement for conventional
adjustable and fixed Rate residential first and second lien mortgage loans,
dated and effective as of September 30, 1997, and is executed between Xxxxxx
Capital, A Division of Xxxxxx Brothers Holdings Inc., as purchaser (the
"Purchaser"), and Option One Mortgage Corporation, as seller and servicer
(the "Company").
W I T N E S S E T H
WHEREAS, the Purchaser has agreed to purchase from the Company and
the Company has agreed to sell to the Purchaser certain Mortgage Loans which
have an aggregate outstanding principal balance as of the close of business
on the Cut-off Date, after deduction of payments due on or before such date
of $385,000,000;
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed
of trust or other security instrument creating a first or second lien on a
residential dwelling located in the jurisdiction indicated on the Mortgage
Loan Schedule, which is annexed hereto as Exhibit A; and
WHEREAS, the Purchaser and the Company wish to prescribe the manner
of purchase of the Mortgage Loans and the management, servicing and control
of the Mortgage Loans.
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Purchaser 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:
Accepted Servicing Practices: With respect to any Mortgage Loan,
those mortgage servicing practices of prudent mortgage lending institutions
which service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.
Agency Transfer: The sale or transfer by Purchaser of some or all
of the Mortgage Loans to FNMA under its Cash Purchase Program or its MBS Swap
Program (Special Servicing Option) or to FHLMC under its Xxxxxxx Xxx Xxxx
Program or Gold PC Program, retaining the Company as "servicer thereunder".
Agreement: This Seller's Warranties and Servicing Agreement and
all amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor
thereto.
Appraised Value: With respect to any Mortgaged Property, the
lesser of (i) the lesser of (a) the value thereof as determined by an
appraisal made for the originator of the Mortgage Loan at the time of
origination of the Mortgage Loan by an appraiser who met the minimum
requirements of FNMA and FHLMC and (b) the value thereof as determined by a
review appraisal conducted by the Company in the event any such review
appraisal determines an appraised value more than ten percent lower than the
value thereof as determined by the appraisal referred to in clause (i)(a)
above, and (ii) the purchase price paid for the related Mortgaged Property by
the Mortgagor with the proceeds of the Mortgage Loan, provided, however, (A)
in the case of a Refinanced Mortgage Loan, such value of the Mortgaged
Property is based solely upon the lesser of (1) the value determined by an
appraisal made for the originator of such Refinanced Mortgage Loan at the
time of origination of such Refinanced Mortgage Loan by an appraiser who met
the minimum requirements of FNMA and FHLMC and (2) the value thereof as
determined by a review appraisal conducted by the Company in the event any
such review appraisal determines an appraised value more than ten percent
lower than the value thereof as determined by the appraisal referred to in
clause (ii)(A)(1) above and (B) in the case of a Mortgage Loan originated in
connection with a "lease-option purchase", such value of the Mortgaged
Property is based on the lower of the value determined by an appraisal made
for the originator of such Mortgage Loan at the time of origination or the
sale price of such Mortgaged Property if the "lease option purchase price"
was set less than 12 months prior to origination, and is based on the value
determined by an appraisal made for the originator of such Mortgage Loan at
the time of origination if the "lease option purchase price" was set 12
months or more prior to origination.
Appropriate Federal Banking Agency: Appropriate Federal Banking
Agency shall have the meaning ascribed to it by Section 1813(q) of Title 12
of the United States Code, as amended from time to time.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the
laws of the jurisdiction wherein the related Mortgaged Property is located to
reflect the sale of the Mortgage to the Purchaser.
BIF: The Bank Insurance Fund, or any successor thereto.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii)
a day on which banking and savings and loan institutions in the State of
California, Pennsylvania or New York are authorized or obligated by law or
executive order to be closed.
Closing Date: October 30, 1997.
CLTA: The California Land Title Association or any successor
thereto.
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.
Company: Option One Mortgage Corporation, or its successor in
interest or assigns, or any successor to the Company under this Agreement
appointed as herein provided.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Credit Grade: As defined in the Underwriting Guidelines.
Custodial Account: The separate account or accounts created and
maintained pursuant to Section 4.04.
Custodial Agreement: The agreement governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents, which is annexed hereto as Exhibit C-2.
Custodian: The Custodian under the Custodial Agreement, or its
successor in interest or assigns or any successor to the Custodian under the
Custodial Agreement as provided therein.
Cut-off Date: September 30, 1997.
Defaulted Mortgage Loan: As defined in Section 3.02 hereof.
Deleted Mortgage Loan: A Mortgage Loan which is repurchased by the
Company in accordance with the terms of this Agreement and which is, in the
case of a substitution pursuant to Section 3.04, replaced or to be replaced
with a Qualified Substitute Mortgage Loan.
Delinquent Mortgage Loan: As defined in Section 11.02 hereof.
Determination Date: The 13th day (or if such 13th day is not a
Business Day, the Business Day immediately preceding such 13th day) of the
month of the related Remittance Date.
Disqualified Organization: An organization defined as such in
Section 860E(e) of the Code.
Due Date: The day of the month on which the Monthly Payment is due
on a Mortgage Loan, exclusive of any days of grace. With respect to the
Mortgage Loans for which payment from the Mortgagor is due on a day other
than the first day of the month, such Mortgage Loans will be treated as if
the Monthly Payment is due on the first day of the month following the actual
Due Date.
Due Period: With respect to each Remittance Date, the period
commencing on the second day of the month preceding the month of the
Remittance Date and ending in the first day of the month of the Remittance
Date.
Eligible Investments: Any one or more of the obligations and
securities listed below which investment provides for a date of maturity not
later than the Determination Date in each month:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States,
Federal Housing Administration debentures, FHLMC senior debt obligations, and
FNMA senior debt obligations, but excluding any of such securities whose
terms do not provide for payment of a fixed dollar amount upon maturity or
call for redemption;
(b) Federal Housing Administration debentures; provided, that any
such investment shall be rated in one of the two highest ratings categories
by each Rating Agency;
(c) FHLMC participation certificates which guaranty timely payment
of principal and interest and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home Loan
Banks;
(e) FNMA mortgage-backed securities (other than stripped mortgage
securities which are valued greater than par on the portion of unpaid
principal) and senior debt obligations;
(f) Federal funds, certificates of deposit time deposits, and
bankers' acceptances (having original maturities of not more than 365 days)
of any domestic bank, the short-term debt obligations of which have been
rated F-1+ or better by Fitch, A-1+ or better by Standard & Poor's and P-1 by
Moody's;
(g) Deposits of any bank or savings and loan association (the
long-term deposit rating of which is Baa3 or better by Moody's and BBB by
each of Standard & Poor's and Fitch) which has combined capital, surplus and
undivided profits of at least $50,000,000 which deposits are insured by the
FDIC and held up to the limits insured by the FDIC;
(h) Investment agreements provided:
1. The agreement is with a bank or insurance company which
has unsecured, uninsured and unguaranteed senior debt obligations rated
Aa2 or better by Moody's and AA or better by each of Standard & Poor's
and Fitch, or is the lead bank of a parent bank holding company with an
uninsured, unsecured and unguaranteed senior debt obligation meeting
such rating requirements;
2. Moneys invested thereunder may be withdrawn without any
penalty, premium or charge upon not more than one day's notice (provided
such notice may be amended or canceled at any time prior to the
withdrawal date);
3. The agreement is not subordinated to any other
obligations of such insurance company or bank;
4. The same guaranteed interest rate will be paid on any
future deposits made pursuant to such agreement; and
5. The Purchaser receives an opinion of counsel (at the
expense of the party requesting the investment) that such agreement is
an enforceable obligation of such insurance company or bank.
(i) Repurchase agreements collateralized by securities described
in (a), (c), or (e) above with any registered broker/dealer subject to the
Securities Investors Protection Corporation's jurisdiction and subject to
applicable limits therein promulgated by Securities Investors Protection
Corporation or any commercial bank, if such broker/dealer or bank has an
uninsured, unsecured and unguaranteed short-term or long-term obligation
rated P-1 or Aa2, respectively, or better by Moody's, A-1+ or AA,
respectively or better by Standard & Poor's and A-1+ or AA, respectively, or
better by Fitch, provided:
a. A master repurchase agreement or specific written
repurchase agreement governs the transaction;
b. The securities are held free and clear of any lien by the
Purchaser or an independent third party acting solely as agent for the
Purchaser, and such third party is (a) a Federal Reserve Bank or (b) a
bank which is a member of the FDIC and which has combined capital,
surplus and undivided profits of not less than $125 million, and the
Purchaser shall have received written confirmation from such third party
that it holds such securities, free and clear of any lien, as agent for
the Purchaser;
c. A perfected first security interest under the Uniform
Commercial Code, or book entry procedures prescribed at 31 CFR 306.1 et
seq. or 31 CFR 350.0 et seq., in such securities is created for the
benefit of the Purchaser;
d. The repurchase agreement has a term of thirty days or
less and the Purchaser will value the collateral securities no less
frequently than monthly and will liquidate the collateral securities if
any deficiency in the required collateral percentage is not restored
within two business days of such valuation; and
e. The fair market value of the collateral securities in
relation to the amount of the repurchase obligation, including principal
and interest, is equal to at least 106%;
(j) Commercial paper (having original maturities of not more than
270 days) rated in the highest short-term rating categories of each Rating
Agency; and
(k) Investments in no load money market funds registered under the
Investment Company Act of 1940, whose shares are registered under the
Securities act and rated Aaa by Moody's, AAAm or AAAm-G by Standard & Poor's
and AAA, if rated by Fitch; provided that no instrument described above shall
evidence either the right to receive (a) only interest with respect to the
obligations underlying such instrument or (b) both principal and interest
payments derived from obligations underlying such instrument and the interest
and principal payments with respect to such instrument provided a yield to
maturity at par greater than 120% of the yield to maturity at par of the
underlying obligations; and provided, further that all instruments described
hereunder shall mature at par on or prior to the next succeeding Payment Date
unless otherwise provided in this Agreement and that no instrument described
hereunder may be purchased at a price greater than par if such instrument may
be prepaid or called at a price less than its purchase price prior to stated
maturity.
Notwithstanding anything herein to the contrary, with respect to
Mortgage Loans subject to an Agency Transfer or a Pass-Through Transfer, in
the event that the applicable Reconstitution Agreement has a more limiting
definition of "Eligible Investments", then the definition contained in such
Reconstitution Agreement shall apply to such Mortgage Loans.
Errors and Omissions Insurance Policy: An errors and omissions
insurance policy to be maintained by the Company pursuant to Section 4.12.
Escrow Account: The separate account or accounts created and
maintained pursuant to Section 4.06.
Escrow Mortgage Loan: The Mortgage Loans for which the Company has
established an escrow account for items constituting Escrow Payments.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed
by the Mortgagor with the mortgagee pursuant to the Mortgage or any other
related document.
Event of Default: Any one of the conditions or circumstances
enumerated in Section 10.01.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
Fidelity Bond: A fidelity bond to be maintained by the Company
pursuant to Section 4.12.
First Remittance Date: November 18, 1997.
FNMA: The Federal National Mortgage Association, or any successor
thereto.
FNMA Guides: The FNMA Sellers' Guide and the FNMA Servicers' Guide
and all amendments or additions thereto.
Gross Margin: With respect to each Pool I Mortgage Loan, the fixed
percentage amount set forth in the related Mortgage Note of not less than 425
basis points (4.25%) and not more than 963 basis points (9.63%), which amount
is added to the Index in accordance with the terms of the related Mortgage
Note to determine, on each Interest Rate Adjustment Date, the Mortgage
Interest Rate for such Mortgage Loan.
Index: The applicable rate, on each Interest Rate Adjustment Date,
which shall be adjusted semi-annually based upon the rate per annum equal to
the average of interbank offered rates for six-month U.S. Dollar Denominated
deposits in the London Market (LIBOR) as published in the Wall Street
Journal.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds
of insurance policies insuring the Mortgage Loan or the related Mortgaged
Property.
Insured Depository Institution: Insured Depository Institution
shall have the meaning ascribed to such term by Section 1813(c)(2) of Title
12 of the United States Code, as amended from time to time.
Interest Rate Adjustment Date: The date on which an adjustment to
the Mortgage Interest Rate on a Mortgage Note becomes effective.
Liquidation Proceeds: Cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or
assignment of such Mortgage Loan, trustee's sale, foreclosure sale or
otherwise, or the sale of the related Mortgaged Property if the Mortgaged
Property is acquired in satisfaction of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
ratio of the outstanding principal balance of the Mortgage Loan as of the
Cut-off Date (unless otherwise indicated) to the lesser of (a) the Appraised
Value of the Mortgaged Property and (b) if the Mortgage Loan was made to
finance the acquisition of the related Mortgaged Property, the purchase price
of the Mortgaged Property, expressed as a percentage.
Monthly Advance: With respect to each Remittance Date and each
Mortgage Loan, an amount equal to the Monthly Payment (with the interest
portion of such Monthly Payment adjusted to the Mortgage Loan Remittance
Rate) which was due on the Mortgage Loan, and (i) which was delinquent at the
close of business on the immediately preceding Determination Date and (ii)
which was not the subject of a previous Monthly Advance.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Loan.
Mortgage: The mortgage, deed of trust or other instrument securing
a Mortgage Note, which creates a first or second lien on an unsubordinated
estate in fee simple in real property securing the Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit B annexed hereto, and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
Mortgage Impairment Insurance Policy: A mortgage impairment or
blanket hazard insurance policy as described in Section 4.11.
Mortgage Interest Rate: The annual rate of interest borne on a
Mortgage Note, as adjusted from time to time in accordance with the
provisions of the Mortgage Note. The Mortgage Interest Rate, as determined
on each Interest Rate Adjustment Date, is equal to the sum of the Index and
the Gross Margin, adjusted, if necessary, to comply with the Mortgage
Interest Rate Cap.
Mortgage Interest Rate Cap: The limit on each Mortgage Interest
Rate adjustment, such that as to each Mortgage Loan on each Interest Rate
Adjustment Date, no change in the Mortgage Interest Rate shall: (i) exceed 1%
above or below the Mortgage Interest Rate in effect immediately prior to the
particular Interest Rate Adjustment Date of the related Mortgage Loan, and
(ii) exceed the maximum Mortgage Interest Rate Cap provided in the related
Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the subject of
this Agreement, each Mortgage Loan originally sold and subject to this
Agreement being identified on the Mortgage Loan Schedule, which Mortgage Loan
includes without limitation the Mortgage File, the Monthly Payments,
Principal Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds, REO Disposition Proceeds and all other rights, benefits, proceeds
and obligations arising from or in connection with such Mortgage Loan.
Mortgage Loan Documents: The documents listed in Exhibit C-1
hereto.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan,
the annual rate of interest remitted to the Purchaser, which shall be equal
to the Mortgage Interest Rate minus the Servicing Fee Rate.
Mortgage Loan Schedule: A schedule of Mortgage Loans annexed
hereto as Exhibit A, such schedule setting forth the following information
with respect to each Mortgage Loan: (1) the Company's Mortgage Loan
identifying number; (2) the Mortgagor's name; (3) the street address of the
Mortgaged Property including the state and the zip code; (4) a code
indicating whether the Mortgaged Property is a single family residence, a 2-4
family residence, a condominium unit, a manufactured home, a townhouse or a
unit in a planned unit development; (5) the original months to maturity or
the remaining months to maturity from the Cut-off Date, in any case based on
the original amortization schedule, and if different, the maturity expressed
in the same manner but based on the actual amortization schedule; (6) the
Loan-to-Value Ratio at origination; (7) the Mortgage Interest Rate as of the
Cut-off Date; (8) the first payment date of the Mortgage Loan; (9) the stated
maturity date; (10) the amount of the Monthly Payment;(11) the next due date
of the Mortgage Loan; (12) the original principal amount of the Mortgage
Loan; (13) the principal balance of the Mortgage Loan as of the close of
business on the Cut-off Date, after deduction of payments of principal
actually collected on or before the Cut-off Date; (14) the Mortgage Loan
Remittance Rate as of the Cut-off Date; (15) the next Interest Rate
Adjustment Date; (16) the Gross Margin; (17) the next Payment Adjustment
Date (18) the maximum Mortgage Interest Rate under the terms of the Mortgage
Note; (19) a code indicating whether the loan is an adjustable or fixed rate
Mortgage Loan; (20) a code indicating whether the loan is a first or a second
lien Mortgage Loan; (21) a code indicating the occupancy status at
origination; (22) a code indicating the loan purpose; (23) the Index; and
(24) the loan documentation type. With respect to the Mortgage Loans in the
aggregate, the Mortgage Loan Schedule shall set forth the following
information, as of the Cut-off Date: (1) the number of Mortgage Loans; (2)
the current aggregate outstanding principal balance of the Mortgage Loans;
(3) the weighted average Mortgage Interest Rate of the Mortgage Loans; and
(4) the weighted average maturity of the Mortgage Loans.
Mortgage Note: The Mortgage Note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage.
Mortgaged Property: The real property securing repayment of the
debt evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Net Margin: With respect to each Pool I Mortgage Loan, an amount
equal to the Gross Margin minus the Servicing Fee Rate.
Non-Escrow Mortgage Loan: Any Mortgage Loan which is not an Escrow
Mortgage Loan.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or the President or a Vice President
or an assistant Vice President and by the Treasurer or the Secretary or one
of the Assistant Treasurers or Assistant Secretaries of the Company, and
delivered to the Purchaser as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Company, reasonably acceptable to the Purchaser, provided
that any Opinion of Counsel relating to (a) qualification of the Mortgage
Loans in a REMIC or (b) compliance with the REMIC Provisions, must be an
opinion of counsel who (i) is in fact independent of the Company and any
master servicer of the Mortgage Loans, (ii) does not have any material direct
or indirect financial interest in the Company or any master servicer of the
Mortgage Loans or in an affiliate of either and (iii) is not connected with
the Company or any master servicer of the Mortgage Loans as an officer,
employee, director or person performing similar functions.
Pass-Through Transfer: The sale or transfer of some or all of the
Mortgage Loans to a trust to be formed as part of a publicly-issued and/or
privately placed, rated or unrated, mortgage pass-through transaction,
retaining the Company as "servicer" (with or without a master servicer)
thereunder.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof.
Pool 1 Mortgage Loans: Adjustable rate Mortgage Loans listed in
Exhibit A-1 hereto.
Pool 2 Mortgage Loans: Fixed rate Mortgage Loans listed in Exhibit
A-5 hereto.
Prepayment Interest Shortfall Amount: With respect to any Mortgage
Loan that was subject to a Principal Prepayment in full during any Due
Period, which Principal Prepayment was applied to such Mortgage Loan prior to
such Mortgage Loan's Due Date in such Due Period, the amount of interest (net
the related Servicing Fee) that would have accrued on the amount of such
Principal Prepayment during the period commencing on the date as of which
such Principal Prepayment was applied to such Mortgage Loan and ending on the
day immediately preceding such Due Date, inclusive.
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 which is not
accompanied by an amount of interest representing scheduled interest due on
any date or dates in any month or months subsequent to the month of
prepayment.
Prime Rate: The prime rate announced to be in effect from time to
time, as published as the average rate in The Wall Street Journal.
Purchaser: Xxxxxx Capital, A Division of Xxxxxx Brothers Holdings
Inc. or its successor in interest or any successor to the Purchaser under
this Agreement as herein provided.
Qualified Depository: A depository the accounts of which are
insured by the FDIC through the BIF or the SAIF and the debt obligations of
which are rated AA or better by Standard & Poor's Corporation.
Qualified Insurer: A mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by FNMA or FHLMC.
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Company for a Deleted Mortgage Loan which must, on the
date of such substitution, (i) have an outstanding principal balance, after
deduction of all scheduled payments due in the month of substitution (or in
the case of a substitution of more than one mortgage loan for a Deleted
Mortgage Loan, an aggregate principal balance), not in excess of the
outstanding principal balance of the Deleted Mortgage Loan; (ii) have a
Mortgage Loan Remittance Rate not less than and not more than 2% greater than
the Mortgage Loan Remittance Rate of the Deleted Mortgage Loan; (iii) have a
remaining term to maturity not greater than and not more than one year less
than that of the Deleted Mortgage Loan; (iv) have a Gross Margin not less
than that of the Deleted Mortgage Loan; (v) have a maximum Mortgage Interest
Rate Cap not less than that of the Deleted Mortgage Loan; (vi) have a maximum
periodic mortgage Interest Rate Cap not less than that of the Deleted
Mortgage Loan; (vii) comply with each representation and warranty set forth
in Sections 3.01 and 3.02; and (viii) be a REMIC Eligible Mortgage Loan.
Rating Agency: Any of Fitch, Xxxxx'x or Standard & Poor's, Duff &
Xxxxxx or their respective successors designed by the Purchaser.
Reconstitution Agreements: The agreement or agreements entered
into by the Purchaser, the Company, FNMA or FHLMC or certain third parties on
the Reconstitution Date(s) with respect to any or all of the Mortgage Loans
serviced hereunder, in connection with a Pass-Through Transfer or an Agency
Transfer as set forth in Section 7.01, including, but not limited to, (i) a
FNMA Mortgage Selling and Servicing Contract, a Pool Purchase Contract, and
any and all servicing agreements and tri-party agreements reasonably required
by FNMA with respect to a FNMA Transfer, (ii) a Purchase Contract and all
purchase documents associated therewith as set forth in the Xxxxxxx Xxx
Xxxxxxx' & Servicers' Guide, and any and all servicing agreements and tri-
party agreements reasonably required by FHLMC with respect to a FHLMC
Transfer, and (iii) a Pooling and Servicing Agreement and/or a
subservicing/master servicing agreement and related custodial/trust agreement
and related documents with respect to a Pass-Through Transfer. Such
agreement or agreements shall prescribe the rights and obligations of the
Company in servicing the related Mortgage Loans and shall provide for
servicing compensation to the Company (calculated on a weighted average basis
for all the related Mortgage Loans as of the Reconstitution Date), net of any
guarantee fees due FNMA or FHLMC, if applicable, at least equal to the
Servicing Fee due the Company in accordance with this Agreement or the
servicing fee required pursuant to the Reconstitution Agreement, whichever is
greater. The form of relevant Reconstitution Agreement to be entered into by
the Purchaser and/or master servicer or trustee and the Company with respect
to Pass-Through Transfers shall be reasonably satisfactory in form and
substance to the Purchaser and the Company (giving due regard to any rating
or master servicing requirements) and the representations and warranties and
servicing provisions contained therein shall be substantially similar to
those contained in this Agreement and shall not contain any obligations
materially more onerous than those contained herein that materially increase
the expenses of the Servicer, unless otherwise mutually agreed by the
parties.
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 an Agency Transfer or a Pass-Through
Transfer pursuant to Section 7.01 hereof. On such date or dates, the
Mortgage Loans transferred shall cease to be covered by this Agreement and
the Company's servicing responsibilities shall cease under this Agreement
with respect to the related transferred Mortgage Loans.
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 the purpose of which is
to refinance an existing mortgage loan.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Documents: The document or documents creating and governing
the administration of a REMIC.
REMIC Eligible Mortgage Loan: A Mortgage Loan held by a REMIC
which satisfies and/or complies with all applicable REMIC Provisions.
REMIC Provisions: Provisions of the federal income tax law
relating to a REMIC, which appear at Section 860A through 86OG 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 (or if such 18th day is not a
Business Day, the first Business Day immediately following) of any month,
beginning with the First Remittance Date.
REO Disposition: The final sale by the Company of any REO
Property.
REO Disposition Proceeds: All amounts received with respect to an
REO Disposition pursuant to Section 4.15.
REO Property: A Mortgaged Property acquired by the Company on
behalf of the Purchaser through foreclosure or by deed in lieu of
foreclosure, as described in Section 4.15.
Repurchase Price: With respect to any Mortgage Loan, a price equal
to (i) the outstanding principal balance of the Mortgage Loan plus (ii)
interest on such outstanding principal balance at the Mortgage Loan
Remittance Rate from the date on which interest has last been paid and
distributed to the Purchaser to the date of repurchase, less amounts received
in respect of such repurchased Mortgage Loan which are being held in the
Custodial Account for distribution in the month of repurchase.
SAIF: The Savings Association Insurance Fund, or any successor
thereto.
Securities Act of 1933 or the 1933 Act: The Securities Act of
1933, as amended.
Servicing Advances: All customary, reasonable and necessary "out
of pocket" costs and expenses other than Monthly Advances (including
reasonable attorneys' fees and disbursements) incurred in the performance by
the Company of its servicing obligations, including, but not limited to, the
cost of (a) the preservation, restoration, protection and inspection of the
Mortgaged Property, (b) any enforcement or judicial proceedings, including
foreclosures, (c) the management and liquidation of any REO Property and (d)
compliance with the obligations under Section 4.08.
Servicing Fee: With respect to each Mortgage Loan, the amount of
the annual fee the Purchaser shall pay to the Company, which shall, for a
period of one full month, be equal to one-twelfth of the product of (a) the
Servicing Fee Rate and (b) the outstanding principal balance of such Mortgage
Loan. Such fee shall be payable monthly, computed on the basis of the same
principal amount and period respecting which any related interest payment on
a Mortgage Loan is computed. The obligation of the Purchaser to pay the
Servicing Fee is limited to, and the Servicing Fee is payable solely from,
the interest portion (including recoveries with respect to interest from
Liquidation Proceeds) of such Monthly Payment collected by the Company.
Servicing Fee Rate: 0.50% per annum.
Servicing File: With respect to each Mortgage Loan, the file
retained by the Company consisting of originals of all documents in the
Mortgage File which are not delivered to the Custodian and copies of the
Mortgage Loan Documents listed in Exhibit C-1 the originals of which are
delivered to the Custodian pursuant to Section 2.01.
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
Purchaser upon request, as such list may from time to time be amended.
Sub-pool 1a Mortgage Loans: Adjustable rate Mortgage Loans listed
in Exhibit A-2 hereto.
Sub-pool 1b Mortgage Loans: Adjustable rate Mortgage Loans listed
in Exhibit A-3 hereto.
Sub-pool 1c Mortgage Loans: Adjustable rate Mortgage Loans listed
in Exhibit A-4 hereto.
Subservicer: Any Subservicer which is subservicing the Mortgage
Loans pursuant to a Subservicing Agreement meeting the qualifications set
forth in Section 4.01.
Subservicing Agreement: An agreement between the Company and a
Subservicer for the servicing of the Mortgage Loans.
Tax Returns: The federal income tax return on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor
forms, to be filed on behalf of any REMIC under the REMIC Provisions,
together with any and all other information, reports or returns that may be
required to be furnished to the certificate holders under a REMIC or filed
with the Internal Revenue Service or any other governmental taxing authority
under any applicable provisions of federal, state or local tax laws.
Underwriting Guidelines: The Seller's underwriting guidelines as
set forth on Exhibit H attached hereto.
Whole Loan Transfer: The sale or transfer of some or all of the
Mortgage Loans to a third party purchaser in a whole loan transaction
pursuant to a seller's warranties and servicing agreement or a participation
and servicing agreement, retaining the Servicer as "servicer" thereunder.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
DELIVERY OF DOCUMENTS
Section 2.01 Conveyance of Mortgage Loans; Possession of
Mortgage Files; Maintenance of Servicing Files.
The Company, simultaneously with the execution and delivery of this
Agreement, does hereby sell, transfer, assign, set over and convey to the
Purchaser, without recourse, but subject to the terms of this Agreement, all
the right, title and interest of the Company in and to the Mortgage Loans.
Pursuant to Section 2.03, the Company has delivered the Mortgage Loan
Documents to the Custodian.
The contents of each Mortgage File not delivered to the Custodian
are and shall be held in trust by the Company for the benefit of the
Purchaser as the owner thereof. The Company shall maintain a Servicing File
consisting of a copy of the contents of each Mortgage File and the originals
of the documents in each Mortgage File not delivered to the Custodian. The
possession of each Servicing File by the Company is at the will of the
Purchaser for the sole purpose of servicing the related Mortgage Loan, and
such retention and possession by the Company is in a custodial capacity only.
Upon the sale of the Mortgage Loans the ownership of each Mortgage Note, the
related Mortgage and the related Mortgage File and Servicing File shall vest
immediately in the Purchaser, 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 vest immediately in the Purchaser and shall
be retained and maintained by the Company, in trust, at the will of the
Purchaser and only in such custodial capacity. Each Servicing File shall be
segregated from the other books and records of the Company and shall be
marked appropriately on the Company's servicing system to reflect clearly the
sale of the related Mortgage Loan to the Purchaser. The Company shall
release its custody of the contents of any Servicing File only in accordance
with written instructions from the Purchaser, 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 pursuant to Section 3.03,
3.05 or 6.02.
Section 2.02 Books and Records; Transfers of Mortgage Loans.
From and after the sale of the Mortgage Loans to the Purchaser all
rights arising out of the Mortgage Loans including but not limited to all
funds received on or in connection with the Mortgage Loans, shall be received
and held by the Company in trust for the benefit of the Purchaser as owner of
the Mortgage Loans, and the Company shall retain record title to the related
Mortgages for the sole purpose of facilitating the servicing and the
supervision of the servicing of the Mortgage Loans.
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 marked clearly to reflect the ownership of each Mortgage Loan by the
Purchaser. In particular, the Company shall maintain in its possession,
available for inspection by the Purchaser, or its designee and shall deliver
to the Purchaser upon demand, evidence of compliance with all federal, state
and local laws, rules and regulations, including but not limited to
documentation as to the method used in determining the applicability of the
provisions of the Flood Disaster Protection Act of 1973, as amended, to the
Mortgaged Property, documentation evidencing insurance coverage and periodic
inspection reports as required by Section 4.13. To the extent that original
documents are not required for purposes of realization of Liquidation
Proceeds or Insurance Proceeds, documents maintained by the Company may be in
the form of microfilm or microfiche or such other reliable means of
recreating original documents, including but not limited to, optical imagery
techniques.
The Company shall maintain with respect to each Mortgage Loan and
shall make available for inspection by any Purchaser or its designee the
related Servicing File during the time the Purchaser retains ownership of a
Mortgage Loan and thereafter in accordance with applicable laws and
regulations.
The Company shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the
Company shall note on its books and records any transfers of Mortgage Loans.
No transfer of a Mortgage Loan may be made unless such transfer is in
compliance with the terms hereof. For the purposes of this Agreement, the
Company shall be under no obligation to deal with any person with respect to
this agreement or the Mortgage Loans unless the books and records show such
person as the owner of the Mortgage Loan. The Purchaser may, subject to the
terms of this Agreement, sell and transfer one or more of the Mortgage Loans,
provided, however, that (i) the transferee will not be deemed to be a
Purchaser hereunder binding upon the Company unless such transferee shall
agree in writing to be bound by the terms of this Agreement and an original
counterpart of the instrument of transfer and an assignment and assumption of
this Agreement in the form of Exhibit G hereto executed by the transferee
shall have been delivered to the Company, and (ii) in no event shall there be
more than five Persons at any given time having the status of "Purchaser"
hereunder. The Purchaser also shall advise the Company of the transfer.
Upon receipt of notice of the transfer, the Company shall xxxx its books and
records to reflect the ownership of the Mortgage Loans of such assignee, and
shall release the previous Purchaser from its obligations hereunder with
respect to the Mortgage Loans sold or transferred.
Section 2.03 Custodial Agreement; Delivery of Documents .
Pursuant to a bailee agreement (the "Bailee Agreement"), dated as
of October 10, 1997, by and between Company and Custodian in the form
attached hereto as Exhibit K, the Company shall use its best efforts to
deliver to the Custodian at least six (6) Business Days prior to the Closing
Date those Mortgage Loan Documents as required by the Custodial Agreement
with respect to each Mortgage Loan a list of which is attached as Exhibit C-1
hereto, provided that, in no event shall the Company deliver such documents
less than two (2) Business Days prior to the Closing Date.
The Custodian has certified its receipt of all such Mortgage Loan
Documents required to be delivered pursuant to the Custodial Agreement, as
evidenced by the Initial Certification of the Custodian in the form annexed
to the Custodial Agreement. The Purchaser shall be responsible for
maintaining the Custodial Agreement and shall pay all fees and expenses of
the Custodian.
The Company shall 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 within one
week of their execution, provided, however, that the Company shall provide
the Custodian with a certified true copy of any such document submitted for
recordation within one week of its execution, and shall provide the original
of any document submitted for recordation or a copy of such document
certified by the appropriate public recording office to be a true and
complete copy of the original within sixty days of its submission for
recordation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES AND BREACH
Section 3.01 Company Representations and Warranties.
The Company represents and warrants to the Purchaser that as of
the Closing Date:
(a) Due Organization and Authority. The Company is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Delaware and has all licenses necessary to carry on its
business as now being conducted and is licensed, qualified and in good
standing in each state where a Mortgaged Property is located if the laws
of such state require licensing or qualification in order to conduct
business of the type conducted by the Company, and in any event the
Company is in compliance with the laws of any such state to the extent
necessary to ensure the enforceability of the related Mortgage Loan and
the servicing of such Mortgage Loan in accordance with the terms of this
Agreement; the Company has the full corporate power and authority to
execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement
(including all instruments of transfer to be delivered pursuant to this
Agreement) by the Company and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this
Agreement evidences the valid, binding and enforceable obligation of the
Company; and all requisite corporate action has been taken by the
Company to make this Agreement valid and binding upon the Company in
accordance with its terms;
(b) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are 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 the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction;
(c) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition of the Mortgage Loans by the Company, the
sale of the Mortgage Loans to the Purchaser or the transactions
contemplated hereby, nor the fulfillment of or compliance with the terms
and conditions of this Agreement, will conflict with or result in a
breach of any of the terms, conditions or provisions of the Company's
charter or by-laws or 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 violation of any law, rule, regulation,
order, judgment or decree to which the Company or its property is
subject, or impair the ability of the Purchaser to realize on the
Mortgage Loans, or impair the value of the Mortgage Loans;
(d) Ability to Service. The Company is an approved servicer of
conventional residential mortgage loans for FNMA, with the facilities,
procedures, and experienced personnel necessary for the sound servicing
of mortgage loans of the same type as the Mortgage Loans. The Company
is in good standing to service mortgage loans for FNMA, and no event has
occurred, including but not limited to a change in insurance coverage,
which would make the Company unable to comply with FNMA eligibility
requirements or which would require notification to FNMA;
(e) Reasonable Servicing Fee. The Company acknowledges and agrees
that the Servicing Fee, as calculated at the Servicing Fee Rate,
represents reasonable compensation for performing such services and that
the entire Servicing Fee shall be treated by the Company, for accounting
and tax purposes, as compensation for the servicing and administration
of the Mortgage Loans pursuant to this Agreement.
(f) Ability to Perform. 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 is not undertaken to hinder, delay or
defraud any of the Company's creditors;
(g) No Litigation Pending. There is no action, suit, proceeding
or investigation pending or, to the Company's knowledge, threatened
against the Company which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Company, or
in any material impairment of the right or ability of the Company to
carry on its business substantially as now conducted, or in any material
liability on the part of the Company, or which would draw into question
the validity of this Agreement or the Mortgage Loans or of any action
taken or to be taken in connection with the obligations of the Company
contemplated herein, or which would be likely to impair materially the
ability of the Company to perform under the terms of this Agreement;
(h) No Consent Required. 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 this Agreement or the sale of the Mortgage Loans as
evidenced by the consummation of the transactions contemplated by this
Agreement, or if required, such approval has been obtained prior to the
Closing Date;
(i) Pool 1 Mortgage Loan Characteristics. The Pool 1 Mortgage
Loans have a maturity from the date of origination of at least 15 years
and no more than 30 years. The Pool 1 Mortgage Loans have a net
weighted average margin of 4.931%. The average weighted periodic
Mortgage Interest Rate cap on the Pool 1 Mortgage Loans as of the Cut-
off Date was 2.81%. The average weighted lifetime Mortgage Interest
Rate cap on the Pool 1 Mortgage Loans as of the Cut-off Date was 16.22%.
The weighted average Interest Rate Adjustment Date as of the Cut-off
Date was July 1, 1999. The average outstanding principal balance of the
Pool 1 Mortgage Loans on the Cut-off Date was $316,844,939. With
respect to Sub-pool 1a Mortgage Loans, the Mortgage Interest Rate
payable by the Mortgagor is subject to adjustment after the initial two
year period. With respect to Sub-pool 1b Mortgage Loans, the Mortgage
Interest Rate payable by the Mortgagor is subject to adjustment after
the initial three year period. The Pool 1 Mortgage Loans have a
weighted average maturity of approximately 358 months. With respect to
the aggregate unpaid principal balance of all the Pool 1 Mortgage Loans,
the Mortgaged Properties are located as follows: (i) 13.2% of the
Mortgaged Properties are located in California; (ii) 9.1% of the
Mortgaged Properties are located in Massachusetts; (iii) 6.7% of the
Mortgaged Properties are located in Illinois; and the remaining
Mortgaged Properties are geographically dispersed. With respect to both
aggregate outstanding principal balance and numerical count of all the
Pool 1 Mortgage Loans, (a) no more than 6.2% are secured by real
property improved by two- to four-family dwellings, (b) no more than
4.5% are secured by real property improved by individual condominium
units, (c) no more than 7.6% are secured by real property improved by an
individual unit in a planned unit development, and (d) at least 81.6%
are secured by real property with a one-family residence erected
thereon. With respect to the aggregate unpaid principal balance of the
Pool 1 Mortgage Loans at the time of origination, (a) no more than 2.8%
of the Mortgaged Properties were owner-occupied second homes, (b) no
more than 5.8% of the Mortgaged Properties were investor properties and
(c) at least 91.4% of the Mortgaged Properties were owner-occupied
primary residences. With respect to the aggregate unpaid principal
balance of the Pool 1 Mortgage Loans, (a) no more than 44.6% are "cash-
out" refinance mortgage loans, (b) no more than 11.2% are rate and term
refinance mortgage loans and (c) at least 44.2% are purchase money
mortgage loans. No Pool 1 Mortgage Loan contains a negative
amortization provision. No Pool 1 Mortgage Loan contains a provision
whereby the Mortgagor can convert his mortgage loan to a fixed rate
instrument.
(j) Credit Grades for Pool 1 Mortgage Loans. With respect to the
aggregate unpaid principal balance of all the Sub-pool 1a Mortgage
Loans, the Mortgage Loans have the following Credit Grades: (i) 22.3%
of the Mortgage Loans are Credit Grade AA; (ii) 31.5% of the Mortgage
Loans are Credit Grade A; (iii) 34.8% of the Mortgage Loans are Credit
Grade B; (iv) 2.8% of the Mortgage Loans are Credit Grade CC; and (v)
8.6% of the Mortgage Loans are Credit Grade C. With respect to the
aggregate unpaid principal balance of all the Sub-pool 1b Mortgage
Loans, the Mortgage Loans have the following Credit Grades: (i) 16.5%
of the Mortgage Loans are Credit Grade AA; (ii) 34.2% of the Mortgage
Loans are Credit Grade A; (iii) 31.6% of the Mortgage Loans are Credit
Grade B; (iv) 8.6% of the Mortgage Loans are Credit Grade CC; and (v)
9.1% of the Mortgage Loans are Credit Grade C. With respect to the
aggregate unpaid principal balance of all the Sub-pool 1c Mortgage
Loans, the Mortgage Loans have the following Credit Grades: (i) 39.6%
of the Mortgage Loans are Credit Grade AA; (ii) 32.8% of the Mortgage
Loans are Credit Grade A; (iii) 22.7% of the Mortgage Loans are Credit
Grade B; (iv) 0.8% of the Mortgage Loans are Credit Grade CC; and (v)
4.4% of the Mortgage Loans are Credit Grade C.
(k) Pool 1 Mortgage Loans prepayment penalties. With respect to
the aggregate unpaid principal balance of all the Sub-pool 1a Mortgage
Loans, the Mortgage Loans have the following prepayment penalty
percentages: (i) 2.8% of the Mortgage Loans have one year prepayment
penalties and (ii) 5.9% of the Mortgage Loans have two year prepayment
penalties. With respect to the aggregate unpaid principal balance of
the Sub-pool 1a Mortgage Loans, the Mortgage Loans have a weighted
average prepayment penalty term of 1.97 years. With respect to the
aggregate unpaid principal balance of all the Sub-pool 1b Mortgage
Loans, the Mortgage Loans have the following prepayment penalty
percentages: (i) 2.8% of the Mortgage Loans have one year prepayment
penalties; (ii) 5.9% of the Mortgage Loans have two year prepayment
penalties; (iii) 26.6% of the Mortgage Loans have three year prepayment
penalties and (iv) 18.4% of the Mortgage Loans have five year prepayment
penalties. With respect to the aggregate unpaid principal balance of
the Sub-pool 1b Mortgage Loans, the Mortgage Loans have a weighted
average prepayment penalty term of 3.47 years. With respect to the
aggregate unpaid principal balance of all the Sub-pool 1c Mortgage
Loans, the Mortgage Loans have the following prepayment penalty
percentages: (i) 17% of the Mortgage Loans have one year prepayment
penalties; (ii) 1.3% of the Mortgage Loans have two year prepayment
penalties; (iii) 22.1% of the Mortgage Loans have three year prepayment
penalties and (iv) 10.1% of the Mortgage Loans have five year prepayment
penalties. With respect to the aggregate unpaid principal balance of
the Sub-pool 1c Mortgage Loans, the Mortgage Loans have a weighted
average prepayment penalty term of 2.95 years.
(l) Pool 2 Mortgage Loan Characteristics. The Pool 2 Mortgage
Loans have a maturity from the date of origination of at least 15 years
and no more than 30 years. The average principal balance of the Pool 2
Mortgage Loans on the Cut-off Date was $83,281,651. The Pool 2 Mortgage
Loans have a weighted average maturity of approximately 280 months.
With respect to the aggregate unpaid principal balance of all the Pool 2
Mortgage Loans, the Mortgage Loans have the following Credit Grades:
(i) 31.9% of the Mortgage Loans are Credit Grade AA; (ii) 35.9% of the
Mortgage Loans are Credit Grade A; (iii) 25.8% of the Mortgage Loans are
Credit Grade B; (iv) 1.5% of the Mortgage Loans are Credit Grade CC; (v)
5% of the Mortgage Loans are Credit Grade C. With respect to the
aggregate unpaid principal balance of all the Pool 2 Mortgage Loans, the
Mortgage Loans have the following prepayment penalty percentages: (i)
9.2% of the Mortgage Loans have one year prepayment penalties; (ii) 6.2%
of the Mortgage Loans have two year prepayment penalties; (iii) 43.8% of
the Mortgage Loans have three year prepayment penalties and (iv) 27.4%
of the Mortgage Loans have five year prepayment penalties. With respect
to the aggregate unpaid principal balance of all the Pool 2 Mortgage
Loans, the Mortgaged Properties are located as follows: (i) 18.2% of
the Mortgaged Properties are located in California; (ii) 14.4% of the
Mortgaged Properties are located in Florida; (iii) 6.7% of the Mortgaged
Properties are located in New York; and the remaining Mortgaged
Properties are geographically dispersed. With respect to both aggregate
outstanding principal balance and numerical count of all the Pool 2
Mortgage Loans, (a) no more than 8.2% are secured by real property
improved by two- to four-family dwellings, (b) no more than 2.3% are
secured by real property improved by individual condominium units, (c)
no more than 6.1% are secured by real property improved by an individual
unit in a planned unit development, and (d) at least 85.7% are secured
by real property with a one-family residence erected thereon. With
respect to the aggregate unpaid principal balance of the Pool 2 Mortgage
Loans at the time of origination, (a) no more than 0.9% of the Mortgaged
Properties were owner-occupied second homes, (b) no more than 7.7% of
the Mortgaged Properties were investor properties and (c) at least 91.4%
of the Mortgaged Properties were owner-occupied primary residences.
With respect to the aggregate unpaid principal balance of the Pool 2
Mortgage Loans, (a) no more than 65.8% are "cash-out" refinance mortgage
loans, (b) no more than 14.8% are rate and term refinance mortgage loans
and (c) at least 19.3% are purchase money mortgage loans.
(m) Sale Treatment. The Company has determined that the
disposition of the Mortgage Loans pursuant to this Agreement will be
afforded sale treatment for accounting and tax purposes;
(n) Financial Statements. The Company has delivered to the
Purchaser (i) audited financial statements as to its last three complete
fiscal years and (ii) unaudited financial statements as to any later
quarter ended more than 60 days prior to the execution of this
Agreement. All such financial statements fairly present the pertinent
results of operations and changes in financial position at the end of
each such period of the Company and its subsidiaries and have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as set
forth in the Mortgage Notes thereto. In addition, the Company has
delivered information as to its loan gain and loss experience for the
immediately preceding three-year period, in each case with respect to
mortgage loans owned by it and such mortgage loans serviced for others
during such period, and all such information so delivered is true and
correct in all material respects. There has been no change in the
business, operations, financial condition, properties or assets of the
Company since the date of the Company's financial statements that would
have a material adverse effect on its ability to perform its obligations
under this Agreement. The Company has completed any forms requested by
the Purchaser in a timely manner and in accordance with the provided
instructions;
(o) No Brokers' Fees. The Company has not dealt with any broker,
investment banker, agent or other person that may be entitled to any
commission or compensation in connection with the sale of the Mortgage
Loans;
(p) Fair Consideration. The consideration received by the Company
upon the sale of the Mortgage Loans under this Agreement constitutes
fair consideration and reasonably equivalent value for the Mortgage
Loans; and
(q) Accuracy of Statements. The information contained in the
Mortgage Loan Schedule and all information provided regarding
delinquencies in the Mortgage Loans are true and correct in all material
respects. Neither the Mortgage Loan Schedule nor the Mortgage File nor
any other document furnished in connection with this transaction
contains any untrue statement of fact by Company or its affiliates, or
omits to state a fact, necessary to make the statements of Company or
its affiliates contained therein not materially misleading.
Section 3.02 Representations and Warranties Regarding Individual
Mortgage Loans.
With respect to each Mortgage Loan, Company represents and warrants
to, and covenants with Purchaser as follows as of the Closing Date on which
such Mortgage Loan is sold:
(a) Title to Mortgage Loans. Company has good title to and is the
sole owner of record and holder of the Mortgage Loan and the
indebtedness evidenced by each Mortgage Note. The Mortgage Loan is not
assigned or pledged, and Company has good, indefeasible and marketable
title thereto, and has full right to transfer and sell the Mortgage
Loans to Purchaser free and clear of any encumbrance, equity interest,
participation interest, lien, pledge, charge, claim or security
interest, and has full right and authority subject to no interest or
participation or, or agreement with, any other party, to sell and assign
each Mortgage Loan pursuant to this Agreement, and following the sale of
each Mortgage Loan, Purchaser will own such Mortgage Loan free and clear
of any encumbrance, equity interest, participation interest, lien,
pledge, charge, claim or security interest.
(b) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents required to
be delivered for the Mortgage Loan by the Company under this Agreement
have been delivered to the Custodian. The Company is in possession of a
complete, true and accurate Mortgage File, except for such documents the
originals of which have been delivered to the Custodian;
(c) Accuracy of the Mortgage Loan Schedule. The Mortgage Loan is
as described in the Mortgage Loan Schedule delivered by Company to
Purchaser, and the information contained in the Mortgage Loan Schedule
is true and correct in all material respects as of the Closing Date.
(d) Payments. Except as set forth in Exhibit I (which Mortgage
Loans shall not exceed 1.5% of the total outstanding principal balance
of the Mortgage Loans as of the Cut-off Date (the "Defaulted Mortgage
Loans")), as of the Closing Date, no Mortgage Loan is 30 or more days
delinquent as to principal and interest payments (determined on a
contractual basis). Except for the Defaulted Mortgage Loans, no
Mortgage Loan will have been 30 or more days delinquent as to principal
and interest payments (determined on a contractual basis) more than once
during the 12 months preceding the Closing Date. The first Monthly
Payment has been made with respect to the Mortgage Loan (except for one
percent (1%) of the total Mortgage Loans as measured against the total
outstanding principal balance of all the Mortgage Loans as of the Cut-
off Date) on its Due Date or within the grace period, all in accordance
with the terms of the related Mortgage Note.
(e) No Outstanding Charges. At origination, all outstanding
taxes, governmental assessments, insurance premiums, water, sewer and
municipal charges, leasehold payments or ground rents previously due and
owing had been paid, or an escrow of funds had been established in an
amount sufficient to pay for every such item which remained unpaid and
which had been assessed but was not yet due and payable. To the best of
Company's knowledge as of the Closing Date, all taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges,
leasehold payments or ground rents which previously became due and owing
have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has
been assessed but is not yet due and payable. Company has not advanced
funds, or induced or solicited or knowingly received any advance of
funds by a party other than the Mortgagor, directly or indirectly, for
the payment of principal or interest required under the Mortgage Loan,
except for interest accruing from the date of the Mortgage Note or date
of disbursement of the Mortgage Loan proceeds, whichever occurred later,
to the day which precedes by one month the Due Date of the first Monthly
Payment.
(f) Original Terms Unmodified. The terms of the Mortgage Note and
the Mortgage have not been impaired, waived, altered or modified in any
respect, except by a written instrument which has been recorded, if
necessary to protect the interests of Purchaser. The substance of any
such waiver, alteration or modification has been approved by the title
insurer, to the extent required by the policy, and its terms are
reflected on the Mortgage Loan Schedule. No Mortgagor has been
released, in whole or in part, except in connection with an assumption
agreement approved by the title insurer, to the extent, required by the
policy, and which assumption agreement is part of the Mortgage Loan
File.
(g) Absence of Defenses. The Mortgage Loan and the Mortgage Note
are not subject to any right of rescission, set-off, counterclaim, or
defense (including the defense of usury), based on the invalidity or
unenforceability of the Mortgage Note and/or Mortgage or on any conduct
of Company or any of its officers, employees, representatives,
Affiliates or assignors in origination or servicing the Mortgage Loan
prior to the Closing Date, nor will the operations of any of the terms
of the Mortgage Loan or the Mortgage Note, or the exercise of any right
thereunder, render the Mortgage Loan or the Mortgage Note unenforceable,
in whole or in part, or subject to any right of rescission, set-off,
counterclaim, or defense with respect thereto. No such right of
recission, set-off, counterclaim or defense has been asserted to Company
or, to Company's knowledge, has been asserted to any other person and,
no Mortgagor was a debtor in any state or federal bankruptcy or
insolvency proceeding at the time the Mortgage Loan was originated. The
making of the Mortgage Loan did not violate any existing court order and
was in compliance with any statutes, rules and regulations.
(h) Hazard Insurance. Pursuant to the terms of the Mortgage, all
improvements upon the Mortgaged Property are insured by an insurer
acceptable to FNMA against loss by fire and such other risks as are
usually insured against in the broad form of extended coverage hazard
insurance available from time to time, including flood hazards if upon
origination of the Mortgage Loan, the Mortgaged Property was in an area
identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards (and if flood insurance was
required by federal regulation and such flood insurance has been made
available). All such insurance policies (collectively, the "hazard
insurance policy") meet the requirements of the current guidelines of
the Federal Insurance Administration, conform to the requirements of the
FNMA Servicers' Guide, and are a standard policy of insurance for the
locale where the Mortgaged Property is located. The amount of the
insurance is at least in the amount of the full insurable value of the
Mortgaged Property on a replacement cost basis or the unpaid balance of
the Mortgage Loan, whichever is less. The hazard insurance policy names
(and will name) the Mortgagor as the insured and contains a standard
mortgagee loss payable clause in favor of Company (or Company's
servicer) and it successors and assigns. The Mortgage obligates the
Mortgagor thereunder to maintain the hazard insurance policy at the
Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such
insurance at such Mortgagor's cost and expense, and to seek
reimbursement therefor from the Mortgagor. Where required by state law
or regulation, the Mortgagor has been given an opportunity to choose the
carrier of the required hazard insurance policy, provided that the
policy is not a "master" or "blanket" hazard insurance policy covering a
condominium, or any hazard insurance policy covering the common
facilities of a planned unit development. The hazard insurance policy
is the valid and binding obligation of the insurer. The hazard
insurance policy is in full force and effect, and will be in full force
and effect and inure to the benefit of Purchaser upon the consummation
of the transactions contemplated by this Agreement. Company has not
engaged in, and has no knowledge of the Mortgagor's or any subservicer's
having engaged in, any act or omission which would impair the coverage
of any such policy, the benefits of the endorsements provided for
therein, or the validity and binding effect of either. To the Company's
best knowledge, in connection with the issuance of the hazard insurance
policy, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained
or realized by any attorney, firm or other person or entity. No such
unlawful items have been received, retained or realized by Company.
(i) Compliance with Applicable Laws. Any and all requirements of
any federal, state or local law including, without limitation, usury,
truth-in-lending, real estate closing procedures, consumer credit
protection, equal credit opportunity or disclosure laws applicable to
the Mortgage Loan have been complied with, and the Company shall
maintain in its possession available for the Purchaser's inspection, and
shall deliver to the Purchaser upon demand, evidence of compliance with
all such requirements. The consummation of the transactions
contemplated hereby will not involve the violation of any such laws or
regulations.
(j) No Satisfaction of Mortgage or Mortgage Note. Neither the
Mortgage nor the Mortgage Note has been satisfied, canceled,
subordinated or rescinded, in whole or in part, 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 release, cancellation, subordination or rescission. The Company
has not waived the performance by the Mortgagor of any action, if the
Mortgagor's failure to perform such action would cause the Mortgage Loan
to be in default, nor has the Company waived any default resulting from
any action or inaction by the Mortgagor.
(k) Location and Type of Mortgaged Property. Each of the
Mortgaged Properties is located in the United States and consists of a
single parcel of real property with a single family residence erected
thereon, or a two to four-family dwelling, a townhouse, a manufactured
home, or an individual condominium unit in a high-rise or low-rise
condominium project, or an individual unit in a planned unit
development. Any unit in a planned unit development or condominium
project shall conform with the Company's requirements regarding such
dwellings and no residence or dwelling is a mobile home (the term
"mobile home" shall not include a manufactured dwelling), nor is any
Mortgaged Property used for commercial purposes. The Mortgaged Property
is either a fee simple estate or a long-term residential lease. If the
Mortgage Loan is secured by a long-term residential lease, (A) the terms
of such lease expressly permit the mortgaging of the leasehold estate,
the assignment of the lease without the lessor's consent (or the
lessor's consent has been obtained and such consent is in the Mortgage
File) and the acquisition by the holder of the Mortgage of the rights of
the lessee upon foreclosure or assignment in lieu of foreclosure or
provide the holder of the Mortgage with substantially similar
protection; (B) the terms of such lease do not (i) allow the termination
thereof upon the lessee's default without the holder of the Mortgage
being entitled to receive written notice of, and opportunity to cure,
such default, (ii) allow the termination of the lease in the event of
damage or destruction as long as the Mortgage is in existence or (iii)
prohibit the holder of the Mortgage from being insured under the hazard
insurance policy relating to the Mortgaged Property; (C) the original
term of such lease is not less than 15 years; (D) the term of such lease
does not terminate earlier than five years after the maturity date of
the Mortgage Note; and (E) the Mortgaged Property is located in a
jurisdiction in which the use of leasehold estates for residential
properties is a widely accepted practice.
(l) Valid Lien. Except as set forth on Exhibit L, the Mortgage
for any Mortgage Loan creates a valid, subsisting, enforceable and
perfected first lien on the Mortgaged Property, and includes all
buildings on the Mortgaged Property and all installations and
mechanical, electrical, plumbing, heating and air conditioning systems
located in or annexed to such buildings, and all additions, alterations
and replacements made at any time with respect to the foregoing. The
lien of the Mortgage is subject only to "Permitted Exceptions," which
consists of the following:
(1) the lien of current real property taxes and assessments
not yet due and payable;
(2) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of
recording acceptable to prudent mortgage lending institutions
generally and specifically referred to in the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and referred to or otherwise considered in the appraisal made for
the originator of the Mortgage Loan; 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.
Except as set forth on Exhibit L, any security agreement, chattel
mortgage or equivalent document related to and delivered in connection
with the Mortgage Loan established and created a valid, subsisting,
enforceable and perfected first lien and first priority security
interest on the property described therein, and Company has full right
to sell and assign the same to Purchaser. The Mortgaged Property was
not, as of the date of origination of the Mortgage Loans, subject to a
mortgage, deed of trust, deed to secure debt or other security
instrument creating a lien, subordinate to the lien of the Mortgage.
(a) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and every other agreement, if any, executed and delivered
by the Mortgagor in connection with the Mortgage Loan are genuine,
and each is the legal, valid and binding obligation of the maker
thereof enforceable in accordance with its terms. All parties to
the Mortgage Note, the Mortgage and each other such related
agreement had legal capacity to enter into the Mortgage Loan and to
execute and deliver the Mortgage Note, the Mortgage and each other
such related agreement, and the Mortgage Note, the Mortgage and
each other such related agreement have been duly and properly
executed by the respective Mortgagors. Company has reviewed all of
the documents constituting the Mortgage File and has made such
inquiries as it deems necessary to make and confirm the accuracy of
the representations set forth herein. To the best of Company's
knowledge after reasonable inquiry, the documents, instruments and
agreements submitted for Mortgage Loan underwriting were not
falsified by any party and contain no untrue statement of material
fact or omit to state a material fact required to be stated therein
or necessary to make the information and statements therein not
misleading. To the best of Company's knowledge, no fraud was
committed by any party in connection with the origination of the
Mortgage Loan.
(b) Full Disbursement of Proceeds. The Mortgage Loan has been
closed and the proceeds of the Mortgage Loan 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 improvement 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.
(c) Doing Business. All parties which have had any interest
(other than interests created by this transaction) in the Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are
(or, during the period in which they held and disposed of such
interest, were) (1) in compliance with any and all applicable
licensing requirements of the laws of the state where the Mortgaged
Property is located, except where failure to comply with such
licensing requirements will not adversely affect Purchaser's
interest in the Mortgage Loan, all parties were (2)(a) organized
under the laws of such a state, or (b) qualified to do business in
such state, or (c) federal savings and loan associations, savings
banks, or national banks having principal offices in such state, or
(d) not doing business in such state.
(d) LTV. No Pool 1 Mortgage Loan had at origination a loan to
value ratio in excess of 95%. No Pool 2 Mortgage Loan had at
origination a loan to value ratio in excess of 95%.
(e) Title Insurance. The Mortgage Loan is covered by either (a)
an attorney's opinion of title and abstract of title the form and
substance of which is acceptable to FNMA, or (b) an ALTA lender's
title insurance policy or (c) a CLTA lender's title insurance
policy or other generally acceptable form of policy of insurance
issued by a title insurer qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring
Company, its successors and assigns, as to the first or second
priority lien of the Mortgage in the original principal amount of
the Mortgage Loan subject only to the Permitted Exceptions, and
against any loss by reason of the invalidity or unenforceability of
the lien resulting from the provisions of the Mortgage providing
for adjustment in the Mortgage Interest Rate and Monthly Payment.
Additionally, such lender's title insurance policy affirmatively
insures ingress and egress, and against encroachments by or upon
the Mortgaged Property or any interest therein. Where required by
state law or regulation, the Mortgagor has been given the
opportunity to choose the carrier of such lender's title insurance
policy. Company, its successors and assigns, are the sole insureds
of such lender's title insurance policy, and such lender's title
insurance policy is valid and remains in full force and effect and
will be in full force and effect upon the sale of the Mortgage Loan
to Purchaser. No claims have been made under such lender's title
insurance policy, and no prior holder of the Mortgage, including
Company, has done anything which would impair the coverage of such
lender's title insurance policy. In connection with the issuance
of such lender's title insurance policy, no unlawful fee,
commission, kickback or other unlawful compensation or value of any
kind has been or will be received, retained or realized by any
attorney, firm or other person or entity, and no such unlawful
items have been received, retained or realized by Company.
(f) No Defaults. Except as set forth on Exhibit I, there is no
default, breach, violation or event of acceleration existing under
the Mortgage or the Mortgage Note or related documents and no event
which, with the passage of time or with notice and the expiration
of any applicable grace or cure period, would constitute a default,
breach, violation or event of acceleration, and neither Company nor
its predecessors have waived any default, breach, violation or
event of acceleration.
(g) No Mechanics' Liens. 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 the law could give rise to such
liens) affecting the related Mortgaged Property which are or may be
liens prior to, or equal or coordinate with, the lien of the
related Mortgage.
(h) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the
Mortgaged Property lay wholly within the boundaries and building
restriction lines of the Mortgaged Property, no improvements on
adjoining properties to which value was assigned encroach upon the
Mortgaged Property; further, the value of the Mortgaged Property is
not diminished by any improvements on adjoining properties which
encroach the Mortgaged Property. No improvement located on or
being part of the Mortgaged Property (upon which value was given in
determining the Appraised Value) is in violation of any applicable
zoning law or regulation; provided, that in no event shall a legal
nonconforming use of the Mortgaged Property be considered a
violation of any such zoning law or regulation.
(i) Payment Terms. Except for the Mortgage Loans listed on
Exhibit J, and any balloon Mortgage Loans (i) for Pool 2 Mortgage
Loans, the Mortgage Note is payable on the first day of each month
in equal monthly installments (other than the last payment) of
principal and interest; and (ii) for Pool 1 Mortgage Loans, the
Mortgage Interest Rate is adjusted and the Mortgage Note is payable
on the first day of each month and during an adjustment period or
initial period, in equal monthly installments of principal and
interest. All required notices of interest rate and payment amount
adjustment have been sent to the Mortgagor on a timely basis and
the computations of such adjustments were properly calculated.
Installments of interest are subject to change due to the
adjustments to the Mortgage Interest Rate on each Interest Rate
Adjustment Date, with interest calculated and payable in arrears,
sufficient to amortize the Mortgage Loan fully by the stated
maturity date, over an original term of not more than thirty years
from inception of the Mortgage Loan. All interest rate adjustments
applicable to the Mortgage Loans have been made in strict
compliance with state and federal law and the terms of the related
Mortgage Note. Any interest required to be paid pursuant to state
and local law has been properly paid and credited.
(j) Customary Provisions. The Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of
the holder thereof adequate for the realization against the 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 or nonjudicial foreclosure.
Upon default by an Mortgagor on a Mortgage Loan and foreclosure on,
or trustee's sale of, the Mortgaged Property pursuant to the proper
procedures, the holder of the Mortgage Loan will be able to deliver
good and merchantable title to the Mortgaged Property. There is no
homestead or other exemption available to the Mortgagor which would
interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage subject to
applicable federal and state laws and judicial precedent with
respect to bankruptcy and right of redemption.
(k) Occupancy of the Mortgaged Property. All inspections,
licenses and certificates required to be made or issued with0
respect to all occupied portions of the Mortgaged Property and with
respect to the use and occupancy of the same, including, but not
limited to, certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities unless the failure of the Mortgagor to obtain said
inspections, licenses and certificates would not affect the value
of the Mortgaged Property or affect the enforceability of the
Mortgage. The Mortgaged Properties are lawfully occupied.
(l) No Additional Collateral. The Mortgage Note is not and has
not been secured by any collateral except the lien of the
corresponding Mortgage and the security interest of any applicable
security agreement or chattel mortgage referred to in the "Valid
Lien" representation above.
(m) Deeds of Trust. In the event the Mortgage constitutes a deed
of trust, a trustee, authorized and duly qualified under applicable
law to serve 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 Purchaser to the trustee under the deed of
trust, except in connection with a trustee's sale after default by
the Mortgagor.
(n) Due on Sale. Each Mortgage, together with any such documents
as may be required under applicable law, contains a provision for
the acceleration of the payment of the unpaid principal balance of
the Mortgage Loan in the event that the Mortgaged Property is sold
or transferred without the prior written consent of the mortgagee
thereunder, at the option of the mortgagee. This provision
provides that the mortgagee cannot exercise its option if either
(a) the exercise of such option is prohibited by federal law or
(b)(i) the Mortgagor causes to be submitted to the mortgagee
information required by the mortgagee to evaluate the intended
transferee as if a new Mortgage Loan were being made to such
transferee and (ii) the mortgagee reasonably determines that the
mortgagee's security will not be impaired by the assumption or such
Mortgage Loan by the transferee and that the risk of breach of any
covenant or agreement in the documents evidencing such Mortgage
Loan is acceptable to the mortgagee. To the best of Company's
knowledge, such provision is enforceable.
(o) Transfer of Mortgage Loans. Each of the Mortgage and the
Assignment of Mortgage (upon the insertion of the assignee's name)
is in recordable form and is acceptable for recording under the
laws of the jurisdiction in which the Mortgaged Property is
located, and each Mortgage has been delivered to the appropriate
recorder's office for recording. Each Assignment of Mortgage (upon
the insertion of the assignee's name) shall be sufficient to effect
the transfer of Company's security interest in the corresponding
Mortgaged Property.
(p) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant
to which Monthly Payments are paid or partially paid with funds
deposited in any separate account established by Company, the
Mortgagor or anyone on behalf of the Mortgagor, or paid by any
source other than the Mortgagor, nor does it contain any other
similar provisions currently in effect which may constitute a
"buydown" provision. The Mortgage Loan is not a graduated payment
mortgage and the Mortgage Loan does not have a shared appreciation
or other contingent interest feature.
(q) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the 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
readjustment feature or rate and single repayment term. The lien
of the Mortgage securing the consolidated principal amount is
expressly insured as having first or second 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 Purchaser, FNMA or FHLMC. The consolidated principal
amount does not exceed the original principal amount of the
Mortgage Loan.
(r) Mortgaged Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or threatened for the total or
partial condemnation of the Mortgaged Property for which the
Company has either received service of process or actual notice.
The Mortgaged Property is undamaged by waste, fire, earthquake or
earth movement, windstorm, flood, water, tornado or other casualty
so as to adversely affect the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises
were intended and each Mortgaged Property is in good repair. There
have not been any condemnation proceedings with respect to the
Mortgaged Property and Company has no knowledge of any such
proceedings in the future.
(s) Collection Practices; Escrow Deposits. The origination,
servicing and collection practices used by Company with respect to
the Mortgage Loans have been in accordance with Accepted Servicing
Practices and are in all respects in compliance with all applicable
laws and regulations. With respect to escrow deposits and Escrow
Payments for Escrow Mortgage Loans, all such payments are in
possession of Company or the servicer of such Mortgage Loan and
there exists no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made.
With respect to Escrow Mortgage Loans, all Escrow Payments have
been collected in full compliance with state and federal law. With
respect to Escrow Mortgage Loans, unless prohibited by applicable
law, an escrow of funds has been established in an amount
sufficient to pay for every item which remains unpaid and which has
been assessed but is not yet due and payable. With respect to
Escrow Mortgage Loans, no escrow deposits or Escrow Payments or
other charges or payments due Company have been added to the
outstanding principal balance on the Mortgage Loan Schedule.
(t) Appraisals. Company has delivered to Purchaser an appraisal
of the Mortgaged Property signed prior to the approval of the
Mortgage application by the qualified appraiser, who (i) is
licensed in the state where the Mortgaged Property is located, (ii)
has no interest, direct or indirect, in the Mortgaged Property or
in any Mortgage Loan or the security therefor, and (iii) does not
receive compensation that is affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser
both satisfy the requirements of Title XI of the Federal
Institutions Reform, Recovery, and Enforcement Act of 1989 and the
regulations promulgated thereunder, all as in effect on the date
the Mortgage Loan was originated.
(u) Soldier's and Sailor's Relief Act. The Mortgagor has not
notified Company and Company has no knowledge of any relief
requested or allowed to the Mortgagor under the Soldier's and
Sailor's Civil Relief Act of 1940.
(v) Environmental Matters. To the best of the Company's
knowledge, there exists no violation of any local, state or federal
environmental law, rule or regulation in respect of the Mortgaged
Property which violation has or could have a material adverse
effect on the market value of such Mortgaged Property. Company has
no knowledge of any pending action of proceeding directly or
indirectly involving the related Mortgaged Property in which
compliance with any environmental law, rule or regulation is in
issue; and, to the best of Company's knowledge, nothing further
remains to be done to satisfy in full all requirements of each such
law, rule or regulation constituting a prerequisite to the use and
enjoyment of such Mortgaged Property.
(w) Mortgagor Acknowledgment. The Mortgagor has executed a
statement to the effect that the Mortgagor has received all
disclosure materials required by applicable law with respect to the
making of adjustable rate Mortgage Loans. Company shall maintain
or cause to be maintained such statement in the Mortgage File.
(x) No Construction Mortgage Loans. The Mortgage Loan was not
made in connection with (a) the construction or rehabilitation of a
Mortgaged Property or (b) facilitating the trade-in or exchange of
a Mortgaged Property.
(y) Selection. The Mortgage Loans were not intentionally selected
for inclusion under this Agreement from among Company's mortgage
loan portfolio on any basis which would have an adverse effect on
the interests of Purchaser.
(z) Circumstances Affecting Value, Marketability or Prepayment.
Except as otherwise disclosed to Purchaser in writing, Company has
no knowledge of any circumstances or conditions with respect to the
Mortgage, the Mortgaged Property, or the Mortgagor's credit
standing that could reasonably be expected to adversely affect the
value or the marketability of any Mortgaged Property or Mortgage
Loan, other than the economic and geological conditions generally
and specifically applicable to the area in which the Mortgaged
Property is located, or cause the Mortgage Loan to become
delinquent.
(aa) Xxxxxx Act. Except as disclosed on the Mortgage Loan
Schedule, none of the Mortgage Loans are classified as "high cost"
Mortgage Loans under Section 32 of the Home Ownerships and Equity
Protection Act of 1994.
(bb) REMIC Status. The Mortgage Loan is a qualified mortgage for
inclusion in a "real estate mortgage investment conduit" for
federal income tax purposes.
(cc) Origination. Each of the Mortgage Loans meets the
underwriting standards of Company set forth in Exhibit H to this
Agreement, and were underwritten in strict accordance therewith.
Each Loan was originated in accordance with Section 3(a)(41)(A)(ii)
of the Securities Exchange Act of 1934 by the Company (or if
generated on behalf of Company, by a person other than Company
which is subject to the same standards and procedures used by
Company in originating mortgage loans directly or by a mortgagee
approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act or a savings
and loan association, a savings bank, a commercial bank, a credit
union, an insurance company, or similar institution which is
supervised and examined by a Federal or State authority. The
Mortgage Note, the Mortgage and all other documents contained in
the Mortgage Loan Files are on FNMA or FHLMC uniform instruments or
are on forms acceptable to FNMA or FHLMC or on forms acceptable in
the secondary market. To the best of Company's knowledge after
reasonable inquiry, the documents, instruments and agreements
submitted for loan underwriting were not falsified and contain no
untrue statement of material fact and do not omit to state a
material fact required to be stated therein or necessary to make
the information and statements therein not misleading. Company has
not made any representations to the Mortgagor that are inconsistent
with the mortgage instruments used.
(dd) Genuineness of Signatures. Each of the documents in the
Mortgage Loan File is genuine and contains genuine signatures.
Each document that Purchaser requires to be an original document is
an original document. All certified copies of original documents
are true copies and meet the applicable requirements and
specifications of this Agreement and any other written requirements
that Purchaser has reasonably made of Company.
(ee) Regarding the Mortgagor. 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 the guidelines established by prudent mortgage lending
institutions.
Section 3.03 Purchaser Representations and Warranties
As of the date hereof, and as of the Closing Date, Purchaser
represents and warrants as follows:
(a) Organization. Purchaser is a corporation, duly organized,
validly existing, and in good standing under the laws of the State of
Delaware, and is qualified and authorized to transact business in, and
is in good standing under the laws of , each jurisdiction in which such
qualification is required for Purchaser to do business. Purchaser has
the requisite corporate power and authority to own and operate its
properties, to carry on its business as it is now being conducted, to
execute and deliver this Agreement and to consummate the transactions
contemplated by this Agreement.
(b) Authorization of this Agreement. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the
part of Purchaser are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has
been duly executed and delivered by Purchaser and constitutes a legal,
valid, and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, except that such enforcement may
be affected by bankruptcy, by other insolvency laws, or by general
principle of equity.
(c) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course
of business of the Purchaser.
(d) No Conflict or Violation. The execution and delivery of this
Agreement by Purchaser does not, and the performance of this Agreement
by Purchaser will not, (i) result in a violation of or conflict with any
provisions of the charter or by-laws or equivalent governing instruments
of Purchaser, (ii) violate any law, rule, regulation, code, ordinance,
judgment, injunction, order, writ, decree, or ruling applicable to
Purchaser, or (iii) conflict with or violate any agreement, permit,
concession, grant, franchise, license, or other governmental
authorization or approval necessary for purchase of the Loans by
Purchaser. No regulatory approvals or consents are required with
respect to Purchaser's consummation of the transactions contemplated by
this agreement.
(e) Litigation No action, suit, proceeding, or governmental
investigation or inquiry is currently pending, or to the knowledge of
Purchaser, threatened against Purchaser which, if adversely determined,
would have a material adverse effect on the business, combined assets or
financial condition of Purchaser or on the Loans or would prevent the
consummation of the transactions contemplated by this Agreement.
(f) Financial Condition. Purchaser has previously furnished
Company with Purchaser's most recent unaudited financial statements,
which have been prepared in accordance with generally accepted
accounting principles. Each of the balance sheets included in the
financial statements sets forth Purchaser's financial condition as of
the date thereof, and there have been no material adverse changes in
Purchaser's business or financial conditions since that date.
(g) Ability to Perform; Solvency. Purchaser 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. Purchaser is solvent
and the purchase of the Mortgage Loans will not cause Purchaser to
become insolvent.
(h) No Consent Required. No consent, approval, authorization or
order of any court or governmental agency or body is required for the
execution, delivery and performance by Purchaser of or compliance by
Purchaser with this Agreement or the Mortgage Loans, or the sale of the
Mortgage Loans to the Purchaser or the consummation of the transactions
contemplated by this Agreement, or if required, such approval has been
obtained prior to the Closing Date.
Section 3.04 Remedies for Breach of Representations and
Warranties.
It is understood and agreed that the representations and warranties
set forth in Sections 3.01, 3.02 and 3.03 shall survive the sale of the
Mortgage Loans to the Purchaser and the delivery of the Mortgage Loan
Documents to the Custodian and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note
or Assignment of Mortgage or the examination or failure to examine any
Mortgage File. Upon discovery by either the Company or the Purchaser of a
breach of any of the foregoing representations and warranties which
materially and adversely affects the value of the Mortgage Loans or the
interest of the Purchaser, or which materially and adversely affects the
interests of Purchaser in the related Mortgage Loan in the case of a
representation and warranty relating to a particular Mortgage Loan (in the
case of any of the foregoing, a "Breach"), the party discovering such Breach
shall give prompt written notice to the other.
Within 60 days of the earlier of either discovery by or notice to
the Company of any Breach of a representation or warranty, the Company shall
use its best efforts promptly to cure such Breach in all material respects
and, if such Breach cannot be cured, the Company shall, at the Purchaser's
option and subject to Section 3.05, repurchase such Mortgage Loan at the
Repurchase Price. In the event that a Breach shall involve any
representation or warranty set forth in Sections 3.01, and such Breach cannot
be cured within 60 days of the earlier of either discovery by or notice to
the Company of such Breach, all of the Mortgage Loans shall, at the
Purchaser's option and subject to Section 3.05, be repurchased by the Company
at the Repurchase Price. However, if the Breach shall involve a
representation or warranty set forth in Section 3.02 and the Company
discovers or receives notice of any such Breach within 120 days of the
Closing Date, the Company shall, at the Purchaser's option and provided that
the Company has a Qualified Substitute Mortgage Loan, rather than repurchase
the Mortgage Loan as provided above, remove such Mortgage Loan (a "Deleted
Mortgage Loan") and substitute in its place a Qualified Substitute Mortgage
Loan or Loans, provided that any such substitution shall be effected not
later than 120 days after the Closing Date. If the Company has no Qualified
Substitute Mortgage Loan, it shall repurchase the deficient Mortgage Loan.
Any repurchase of a Mortgage Loan or Loans pursuant to the foregoing
provisions of this Section 3.04 shall be accomplished by deposit in the
Custodial Account of the amount of the Repurchase Price for distribution to
Purchaser on the next scheduled Remittance Date, after deducting therefrom
any amount received in respect of such repurchased Mortgage Loan or Loans and
being held in the Custodial Account for future distribution.
At the time of repurchase or substitution, the Purchaser and the
Company shall arrange for the reassignment of the Deleted Mortgage Loan to
the Company and the delivery to the Company of any documents held by the
Custodian relating to the Deleted Mortgage Loan. In the event of a
repurchase or substitution, the Company shall, simultaneously with such
reassignment, give written notice to the Purchaser that such repurchase or
substitution has taken place, amend the Mortgage Loan Schedule to reflect the
withdrawal of the Deleted Mortgage Loan from this Agreement, and, in the case
of substitution, identify a Qualified Substitute Mortgage Loan and amend the
Mortgage Loan Schedule to reflect the addition of such Qualified Substitute
Mortgage Loan to this Agreement. In connection with any such substitution,
the Company shall be deemed to have made as to such Qualified Substitute
Mortgage Loan the representations and warranties set forth in this Agreement
except that all such representations and warranties set forth in this
Agreement shall be deemed made as of the date of such substitution. The
Company shall effect such substitution by delivering to the Custodian for
such Qualified Substitute Mortgage Loan the documents required by Section
2.03, with the Mortgage Note endorsed in a manner as specified by the
Purchaser. No substitution will be made in any calendar month after the
Determination Date for such month. The Company shall deposit in the
Custodial Account the Monthly Payment less the Servicing Fee due on such
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 shall be retained by
the Company. For the month of substitution, distributions to Purchaser shall
include the Monthly Payment due on any 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.
For any month in which the Company substitutes a Qualified
Substitute Mortgage Loan for a Deleted Mortgage Loan, the Company shall
determine the amount (if any) by which the aggregate principal balance of all
Qualified Substitute Mortgage Loans as of the date of substitution is less
than the aggregate outstanding principal balance of all 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 shall deposit from its own
funds into the Custodial Account an amount equal to the amount of such
shortfall.
In addition to such repurchase or substitution obligation, the
Company shall indemnify the Purchaser and hold it harmless against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary
legal fees and related costs, judgments, and other costs and expenses
resulting from any claim, demand, defense or assertion based on or grounded
upon, or resulting from, a Breach of the Company representations and
warranties contained in this Agreement. It is understood and agreed that the
obligations of the Company set forth in this Section 3.04 to cure, substitute
for or repurchase a defective Mortgage Loan and to indemnify the Purchaser as
provided in this Section 3.04 constitute the sole remedies of the Purchaser
respecting a Breach of the foregoing representations and warranties.
Any cause of action against the Company relating to or arising out
of the Breach of any representations and warranties made in Sections 3.01 and
3.02 shall accrue as to any Mortgage Loan upon (i) discovery of such Breach
by the Purchaser or notice thereof by the Company to the Purchaser, (ii)
failures by the Company to cure such Breach or repurchase such Mortgage Loan
as specified above, and (iii) demand upon the Company by the Purchaser for
compliance with this Agreement.
Section 3.05 Restrictions and Requirements Applicable in the
Event that a Mortgage Loan is Acquired by a REMIC.
In the event that any Mortgage Loan is held by a REMIC,
notwithstanding any contrary provision of this Agreement, the following
provisions shall be applicable to such Mortgage Loan:
(A) Repurchase of Mortgage Loans.
With respect to any Mortgage Loan that is not in default or as to
which no default is imminent, no repurchase or substitution pursuant to
Section 3.05 or 7.02 shall be made, unless, if so required by the applicable
REMIC Documents the Company has obtained an Opinion of Counsel to the effect
that such repurchase will not (i) result in the imposition of taxes on
"prohibited transactions" of such REMIC (as defined in Section 860F of the
Code) or otherwise subject the REMIC to tax, or (ii) cause the REMIC to fail
to qualify as a REMIC at any time.
(B) Tax Returns.
(1) With respect to the Mortgage Loans serviced by the Company
under this Agreement, the Company covenants and agrees that it shall
cooperate and provide any and all information to enable the trustee or other
responsible party to perform all of the following duties: (a) prepare, file
and sign all Tax Returns using a calendar year as the taxable year for the
REMIC and the accrual method of accounting when and as required by the REMIC
Provisions and other applicable federal income tax laws; (b) make an
election, on behalf of the REMIC to be treated as a REMIC on the Tax Returns
of the REMIC for its first taxable year, in accordance with the REMIC
Provisions; (c) prepare and file or cause to be prepared and filed, and
deliver, any and all Tax Returns, information statements or other filings
required to be delivered to any governmental taxing authority, or to any
owner thereunder, pursuant to any applicable federal, state or local tax law
with respect to the REMIC or the certificates issued thereunder and the
transactions contemplated thereby; (d) cause to be provided to the owner
thereunder such data necessary for their original issue discount computations
and market discount computations with respect to the certificates issued
thereunder for federal income tax purposes as the owner thereunder may
reasonably request from time to time; (e) conduct the affairs of the REMIC so
as to maintain the status thereof as a REMIC under the REMIC Provisions; (f)
not knowingly or intentionally take any action or omit to take any action
that would cause the termination of the REMIC status of the REMIC; (g) make
any election required by the REMIC Provisions to treat as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code all property
that the REMIC has acquired or will acquire that may qualify as such
foreclosure property; (h) cause to be provided notice to the holders of any
certificates issued thereunder of the existence of the restrictions on
transfers and exchange provided under the REMIC documents; (i) cause to be
provided information necessary for the computation of tax imposed on the
transfer of a residual certificate issued thereunder to a Disqualified
Organization, or an agent of a Disqualified Organization, provided that the
reasonable cost of computing and furnishing such information may be charged
to the person liable for such tax; and (j) in a timely manner cause to be
paid the amount of any and all federal, state and local taxes imposed on the
REMIC or its respective assets or transactions including, without limitation,
(i) "prohibited transaction" penalty taxes as defined in Section 860F of the
Code, if, when and as the same shall be due and payable, (ii) any tax on
contributions to a REMIC after the closing date of such REMIC imposed under
Section 860G(d) of the Code and (iii) any tax on "net income from foreclosure
property" as defined in Section 860G(c) of the Code.
(2) Within 30 days after the closing date of any REMIC, if so
required by the applicable REMIC Documents, the Company shall cooperate and
provide any and all information necessary or helpful to enable the trustee or
other responsible party to prepare and file with the Internal Revenue Service
Form 8811, "Information Return for Real Estate Mortgage Investment Conduits
(REMIC) and Issuers of Collateralized Debt Obligations" for the REMIC. The
trustee or other responsible party shall sign such returns and is hereby
indemnified and held harmless by the Company with respect to any tax or
liability arising from the trustee's or other responsible party's signing
such information returns to the extent that such tax or liability results
from information provided by or on behalf of the Company or information that
should have been provided by or on behalf of the Company.
(C) General Servicing Obligations.
The Company shall sell any REO Property within two years after its
acquisition by the REMIC unless (i) the Company applies for an extension of
such two-year period from the Internal Revenue Service pursuant to the REMIC
Provisions and Code Section 856(e)(3), in which event such REO Property shall
be sold within the applicable extension period, or (ii) the Company obtains
for the Purchaser an Opinion of Counsel, addressed to the Purchaser and the
Company, to the effect that the holding by the REMIC of such REO Property
subsequent to such two year period will not result in the imposition of taxes
on "prohibited transactions" as defined in Section 860F of the Code or cause
the REMIC to fail to qualify as a REMIC under the REMIC Provisions or
comparable provisions of relevant state laws at any time. The Company shall
manage, conserve, protect and operate each REO Property for the Purchaser
solely for the purpose of its prompt disposition and sale in a manner which
does not cause such REO Property to fail to qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) or result in the receipt by the
REMIC of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" which
is subject to taxation under Section 860G(a)(1) of the Code. Pursuant to its
efforts to sell such REO Property, the Company shall either itself or through
an agent selected by the Company protect and conserve such REO Property in
the same manner and to such extent as is customary in the locality where such
REO Property is located and may, incident to its conservation and protection
of the interests of the Purchaser, rent the same, or any part thereof, as the
Company deems to be in the best interest of the Company and the Purchaser for
the period prior to the sale of such REO Property; provided, however, that
any rent received or accrued with respect to such REO Property qualifies as
"rents from real property" as defined in Section 856(d) of the Code.
(D) Additional Covenants.
In addition to the provision set forth in this Section 3.05(C), if
a REMIC election is made with respect to the arrangement under which any of
the Mortgage Loans or REO Properties are held, then, with respect to such
Mortgage Loans and/or REO Properties, and notwithstanding the terms of this
Agreement, 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 860F(a)(2) of the Code and the tax on
"contributions" to a REMIC set forth in Section 860G(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.
If a REMIC election is made with respect to the arrangement under
which any Mortgage Loans or REO Properties are held, the Company shall amend
this Agreement such that it will meet all Rating Agency requirements.
Section 3.06 Repurchase of Mortgage Loans With First Payment
Defaults.
With respect to any Mortgage Loan, if the related Mortgagor is
delinquent with respect to the Mortgage Loans' first Monthly Payment, the
Company shall repurchase such Mortgage Loan from the Purchaser in accordance
with Section 3.04 hereof, provided however, the Company's obligation to
repurchase any Mortgage Loans pursuant to this Section 3.06 shall be limited
to the amount exceeding 1% of the outstanding original principal balance of
the Mortgage Loans as of the Closing Date.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer.
The Company, as an independent contractor, shall service and
administer the Mortgage Loans and 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, consistent
with the terms of this Agreement and with Accepted Servicing Practices.
Consistent with the terms of this Agreement, the Company may 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
any Mortgagor if in the Company's reasonable and prudent determination such
waiver, modification, postponement or indulgence is not materially adverse to
the Purchasers, provided, however, that the Company shall not make any future
advances with respect to a Mortgage Loan and (unless the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment
of the Company, imminent and the Company has obtained the prior written
consent of the Purchaser) the Company shall not permit any modification with
respect to any Mortgage Loan that would change the Mortgage Interest Rate,
defer or forgive the payment of principal or interest, reduce or increase the
outstanding principal balance (except for actual payments of principal) or
change the final maturity date on such Mortgage Loan. In the event of any
such modification which permits the deferral of interest or principal
payments on any Mortgage Loan, the Company shall, on the Business Day
immediately preceding the Remittance Date in any month in which any such
principal or interest payment has been deferred, deposit in the Custodial
Account from its own funds, in accordance, the difference between (a) such
month's principal and one month's interest at the Mortgage Loan Remittance
Rate on the unpaid principal balance of such Mortgage Loan and (b) the amount
paid by the Mortgagor. Without limiting the generality of the foregoing, the
Company shall continue, and is hereby authorized and empowered, to execute
and deliver on behalf of itself and the Purchasers, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and
all other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties. If reasonably required by the Company,
the Purchaser 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.
In servicing and administering the Mortgage Loans, the Company
shall employ procedures (including collection procedures) and exercise the
same care that it customarily employs and exercises in servicing and
administering mortgage loans for its own account, giving due consideration to
Accepted Servicing Practices where such practices do not conflict with the
requirements of this Agreement, and the Purchaser's reliance on the Company.
If the Company is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by the superior
lien, or has declared or intends to declare a default under the Mortgage or
the Mortgage Note secured thereby, or has filed or intends to file an
election to have the Mortgaged Property sold or foreclosed, the Company shall
immediately notify the Purchaser of any such notice from or action by the
superior lienholder and of the amount necessary to cure the default or
reinstate the superior lien. The Company shall further make recommendations
to the Purchaser so as to best protect the Purchaser's interest in and the
security of the related Mortgage Loan. If the Purchaser directs the Company
to cure a default under or otherwise reinstate a superior lien, the Purchaser
will advance to the Company necessary funds to cure the default or reinstate
the superior lien. The Company shall thereafter take immediate action to
recover from the Mortgagor the amount so advanced. The Purchaser shall
notify the Company in writing of any and all action which it requests the
Company to take.
Under normal circumstances, the Company shall take no action
whatsoever under this Section 4.01 unless the Purchaser provides such
previous written direction to the Company. In the event that the Company
reasonably deems that the factual circumstances require prompt action, the
Company may (but shall not be obligated to) without notice to the Purchaser,
advance the necessary funds to cure the default or reinstate the superior
lien so as to best protect the Purchaser's interest. The Company shall
thereafter notify the Purchaser of the action taken, including the amount of
the advance. The Purchaser shall reimburse the Company for all advances made
pursuant to this paragraph. The Company shall thereafter take immediate
action to recover from the Mortgagor the amount so advanced.
The Mortgage Loans may be subserviced by the Subservicer on behalf
of the Company provided that the Subservicer is a FNMA-approved servicer or a
FHLMC servicer in good standing, and no event has occurred, including but not
limited to a change in insurance coverage, which would make it unable to
comply with the eligibility requirements for lenders imposed by FNMA or for
seller/servicers imposed by FHLMC, or which would require notification to
FNMA or FHLMC. The Company may perform any of its servicing responsibilities
hereunder or may cause the Subservicer to perform any such servicing
responsibilities on its behalf, but the use by the Company of the Subservicer
shall not release the Company from any of its obligations hereunder and the
Company shall remain responsible hereunder for all acts and omissions of the
Subservicer as fully as if such acts and omissions were those of the Company.
The Company shall pay all fees and expenses of the Subservicer from its own
funds, and the Subservicer's fee shall not exceed the Servicing Fee.
At the cost and expense of the Company, without any right of
reimbursement from the Custodial Account, the Company shall be entitled to
terminate the rights and responsibilities of the Subservicer and arrange for
any servicing responsibilities to be performed by a successor Subservicer
meeting the requirements in the preceding paragraph, provided, however, that
nothing contained herein shall be deemed to prevent or prohibit the Company,
at the Company's option, from electing to service the related Mortgage Loans
itself. In the event that the Company's responsibilities and duties under
this Agreement are terminated pursuant to Section 9.04, 10.01 or 11.02, and
if requested to do so by the Purchaser, the Company shall at its own cost and
expense terminate the rights and responsibilities of the Subservicer as soon
as is reasonably possible. The Company shall pay all fees, expenses or
penalties necessary in order to terminate the rights and responsibilities of
the Subservicer from the Company's own funds without reimbursement from the
Purchaser.
Notwithstanding any of the provisions of this Agreement relating to
agreements or arrangements between the Company and the Subservicer or any
reference herein to actions taken through the Subservicer or otherwise, the
Company shall not be relieved of its obligations to the Purchaser and shall
be obligated to the same extent and under the same terms and conditions as if
it alone were servicing and administering the Mortgage Loans. The Company
shall be entitled to enter into an agreement with the Subservicer for
indemnification of the Company by the Subservicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
Any Subservicing Agreement and any other transactions or services
relating to the Mortgage Loans involving the Subservicer shall be deemed to
be between the Subservicer and Company alone, and the Purchaser shall have no
obligations, duties or liabilities with respect to the Subservicer including
no obligation, duty or liability of Purchaser to pay the Subservicer's fees
and expenses. For purposes of distributions and advances by the Company
pursuant to this Agreement, the Company shall be deemed to have received a
payment on a Mortgage Loan when the Subservicer has received such payment.
Section 4.02 Liquidation of Mortgage Loans.
In the event that 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 in the event 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 (1) the
Company would take under similar circumstances with respect to a similar
mortgage loan held for its own account for investment, (2) shall be
consistent with Accepted Servicing Practices and (3) the Company shall
determine prudently to be in the best interest of Purchaser. In the event
that any payment due under any Mortgage Loan is not postponed pursuant to
Section 4.01 and remains delinquent for a period of 90 days or any other
default continues for a period of 90 days beyond the expiration of any grace
or cure period, the Company shall commence foreclosure proceedings and
provide notice thereof to the Purchaser in writing. In such connection, the
Company shall from its own funds make all necessary and proper Servicing
Advances, provided, however, that the Company shall not be required to expend
its own funds in connection with any foreclosure or towards the restoration
or preservation of any Mortgaged Property, unless in its good faith business
judgment, the Company reasonably believes (a) that such preservation,
restoration and/or foreclosure will increase the proceeds of liquidation of
the Mortgage Loan to Purchaser after reimbursement to itself for such
expenses and (b) that such expenses will be recoverable by it either through
Liquidation Proceeds (respecting which it shall have priority for purposes of
withdrawals from the Custodial Account pursuant to Section 4.05) or through
Insurance Proceeds (respecting which it shall have similar priority). If the
Company determines not to make a Servicing Advance pursuant to the preceding
sentence, then the Company shall deliver an Officer's Certificate setting
forth the reasons for such determination.
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 Purchaser otherwise requests an environmental inspection or review of
such Mortgaged Property to be conducted by a qualified inspector, the Company
shall cause such inspection to occur. Upon completion of the inspection,
the Company shall promptly provide the Purchaser with a written report of the
environmental inspection.
After reviewing the environmental inspection report, the Purchaser
shall determine how the Company shall proceed with respect to the Mortgaged
Property. 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 Purchaser 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 Purchaser 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 shall proceed diligently
to collect all payments due under each of the Mortgage Loans when the same
shall become due and payable and with respect to Escrow Mortgage Loans only,
shall take special care in ascertaining and estimating Escrow Payments and
all other charges that will become due and payable with respect to the
Mortgage Loan and the Mortgaged Property, to the end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable.
Section 4.04 Establishment of and Deposits to Custodial Account.
The Company shall segregate and hold all funds collected and
received pursuant to a Mortgage Loan separate and apart from any of its own
funds and general assets and shall establish and maintain one or more
Custodial Accounts, in the form of time deposit or demand accounts, titled
"Option One Mortgage Corporation in trust for the Purchaser of Conventional
Residential Adjustable and Fixed Rate Mortgage Loans, Group No. 1997-LB/00".
The Custodial Account shall be established with a Qualified Depository
acceptable to the Purchaser. Any funds deposited in the Custodial Account
shall at all times be fully insured to the full extent permitted under
applicable law. Funds deposited in the Custodial Account may be drawn on by
the Company in accordance with Section 4.05. The creation of any Custodial
Account shall be evidenced by a certification in the form of Exhibit D-1
hereto, in the case of an account established with the Company, or by a
letter agreement in the form of Exhibit D-2 hereto, in the case of an account
held by a depository other than the Company. A copy of such certification or
letter agreement shall be furnished to the Purchaser and, upon request, to
any subsequent Purchaser.
The Company shall deposit in the Custodial Account on a daily
basis, and retain therein, the following collections received by the Company:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
(ii) any principal prepayment penalties received in connection with
the Mortgage Loans;
(iii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate;
(iv) all Liquidation Proceeds;
(v) all Insurance Proceeds including amounts required to be
deposited pursuant to Section 4.10 (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 Section 4.14),
Section 4.11 and Section 4.14;
(vi) all Condemnation Proceeds which are not applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor
in accordance with Section 4.14;
(vii) any amount required to be deposited in the Custodial
Account pursuant to Section 4.01, 4.09, 6.01 or 6.02;
(viii) any amounts payable in connection with the repurchase of
any Mortgage Loan pursuant to Section 3.04, or 3.06 and all amounts required
to be deposited by the Company in connection with a shortfall in principal
amount of any Qualified Substitute Mortgage Loan pursuant to Section 3.03;
(ix) any amounts required to be deposited by the Company pursuant
to Section 4.11 in connection with the deductible clause in any blanket
hazard insurance policy; and
(x) any amounts received with respect to or related to any REO
Property and all REO Disposition Proceeds pursuant to Section 4.15.
The foregoing requirements for deposit into the Custodial Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of (x) late payment
charges, (y) assumption fees and (z) Servicing Fees and ancillary income
which are payable solely from the interest portion of Monthly Payments,
insurance proceeds, condemnation proceeds or Liquidation Proceeds need not be
deposited by the Company into the Custodial Account. Any interest paid on
funds deposited in the Custodial Account by the depository institution shall
accrue to the benefit of the Company and the Company shall be entitled to
retain and withdraw such interest from the Custodial Account pursuant to
Section 4.05.
Section 4.05 Permitted Withdrawals From 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 Purchaser in the amounts and in the
manner provided for in Section 5.01;
(ii) to reimburse itself for unreimbursed Servicing Advances,
the Company's right to reimburse itself pursuant to this subclause (ii) with
respect to any Mortgage Loan (a) being limited to related Liquidation
Proceeds, Condemnation Proceeds, Insurance Proceeds and such other amounts as
may be collected by the Company from the Mortgagor or otherwise relating to
the Mortgage Loan and (b) if, after the liquidation of such Mortgage Loan,
such payments are insufficient to satisfy such unreimbursed Servicing
Advances then the Company may seek reimbursement from other amounts in the
Custodial Account, it being understood that, in the case of any such
reimbursement, the Company's right thereto shall be prior to the rights of
Purchaser except where the Company is required to repurchase a Mortgage Loan
pursuant to Section 3.04, 3.05 or 6.02, in which case the Company's right to
such reimbursement shall be subsequent to the payment to the Purchasers of
the Repurchase Price pursuant to such Sections and all other amounts required
to be paid to the Purchasers with respect to such Mortgage Loan;
(iii) to pay itself interest on funds deposited in the
Custodial Account;
(iv) to reimburse itself for expenses incurred and
reimbursable to it pursuant to Section 9.01;
(v) to pay any amount required to be paid pursuant to Section 4.15
related to any REO Property, it being understood that in the case of any such
expenditure or withdrawal related to a particular REO Property, the amount of
such expenditure or withdrawal from the Custodial Account shall be limited to
amounts on deposit in the Custodial Account with respect to the related REO
Property;
(vi) to clear and terminate the Custodial Account upon the
termination of this Agreement; and
(vii) to withdraw funds deposited in error.
In the event that the Custodial Account is interest bearing, on
each Remittance Date, the Company shall withdraw all funds from the Custodial
Account except for those amounts which, pursuant to Section 5.01, 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 and Deposits to Escrow Account.
The Company shall segregate and hold all funds collected and
received pursuant to a Mortgage Loan constituting Escrow Payments separate
and apart from any of its own funds and general assets and shall establish
and maintain one or more Escrow Accounts, in the form of time deposit or
demand accounts, titled, "Option One Mortgage Corporation, in trust for the
Purchaser of Conventional Residential Adjustable and Fixed Rate Mortgage
Loans, Group No. 1997-LB/00, and various Mortgagors". The Escrow Accounts
shall be established with a Qualified Depository, in a manner which shall
provide maximum available insurance thereunder. Funds deposited in the
Escrow Account may be drawn on by the Company in accordance with Section
4.07. The creation of any Escrow Account shall be evidenced by a
certification in the form of Exhibit E-1 hereto, in the case of an account
established with the Company, or by a letter agreement in the form of Exhibit
E-2 hereto, in the case of an account held by a depository other than the
Company. A copy of such certification shall be furnished to the Purchaser
and, upon request, to any subsequent Purchaser.
The Company shall deposit in the Escrow Account or Accounts on a
daily basis, and retain therein:
(i) all Escrow Payments 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; and
(ii) all amounts representing Insurance Proceeds or
Condemnation Proceeds which are to be applied to the restoration or repair of
any Mortgaged Property.
The Company shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 4.07. The Company shall be entitled to retain any interest paid on
funds deposited in the Escrow Account by the depository institution, other
than interest on escrowed funds required by law to be paid to the Mortgagor.
To the extent required by law, the Company shall pay interest on escrowed
funds to the Mortgagor notwithstanding that the Escrow Account may be non-
interest bearing or that interest paid thereon is insufficient for such
purposes.
Section 4.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the
Company only:
(i) to effect timely payments of ground rents, taxes, assessments,
water rates, mortgage insurance premiums, condominium charges, fire and
hazard insurance premiums or other items constituting Escrow Payments for the
related Mortgage;
(ii) to reimburse the Company for any Servicing Advances made
by the Company pursuant to Section 4.08 with respect to a related Mortgage
Loan, but only from amounts received on the related Mortgage Loan which
represent late collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in
excess of the amounts required under the terms of the related Mortgage Loan;
(iv) for transfer to the Custodial Account and application to
reduce the principal balance of the Mortgage Loan in accordance with the
terms of the related Mortgage and Mortgage Note;
(v) for application to restoration or repair of the Mortgaged
Property in accordance with the procedures outlined in Section 4.14;
(vi) to pay to the Company, or any Mortgagor to the extent
required by law, any interest paid on the funds deposited in the Escrow
Account;
(vii) to clear and terminate the Escrow Account on the
termination of this Agreement; and
(viii) to withdraw funds deposited in error.
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 ground rents, taxes, assessments,
water rates, sewer rents, and other charges which are or may become a lien
upon the Mortgaged Property and fire and hazard insurance coverage and shall
obtain, from time to time, all bills for the payment of such charges
(including renewal premiums) and shall effect payment thereof prior to the
applicable penalty or termination date, 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. To the extent that a Mortgage does
not provide for Escrow Payments, the Company shall use commercially
reasonable efforts consistent with Accepted Servicing Practices to determine
that any such payments are made by the Mortgagor at the time they first
become due. The Company assumes full responsibility for the timely payment
of all such bills and (a) with regard to Escrow Mortgage Loans, shall effect
timely payment of all such charges irrespective of each Mortgagor's faithful
performance in the payment of same or the making of the Escrow Payments, and
the Company shall make advances from its own funds to effect such payments,
and (b) with regard to Non-Escrow Mortgage Loans, the Company shall make
advances from its own funds to effect any such delinquent payments to avoid
the lapse of insurance coverage on the Mortgaged Property or to avoid the
imposition of a tax lien; provided, however, that notwithstanding anything
contained herein to the contrary, if a tax lien is imposed on any Mortgaged
Property and the taxing authority forecloses on such Mortgaged Property, the
Company shall repurchase the related Mortgage Loan pursuant to the procedures
set forth in Section 3.04.
Section 4.09 Protection of Accounts.
The Company may transfer the Custodial Account or the Escrow
Account to a different Qualified Depository from time to time. Such transfer
shall be made only upon obtaining the consent of the Purchaser, which consent
shall not be withheld unreasonably, provided, however, if the Purchaser does
not respond within 30 days after receipt of request for consent, the
Purchaser shall have been deemed to consent to such transfer.
The Company shall bear any expenses, losses or damages sustained by
the Purchaser because the Custodial Account and/or the Escrow Account are not
demand deposit accounts.
Amounts on deposit in the Custodial Account and the Escrow Account
may at the option of the Company be invested in Eligible Investments;
provided that in the event that amounts on deposit in the Custodial Account
or the Escrow Account exceed the amount fully insured by the FDIC (the
"Insured Amount") the Company shall be obligated to invest the excess amount
over the Insured Amount in Eligible Investments on the same Business Day as
such excess amount becomes present in the Custodial Account or the Escrow
Account. Any such Eligible Investment shall mature no later than the
Determination Date next following the date of such Eligible Investment,
provided, however, that if such Eligible Investment is an obligation of a
Qualified Depository (other than the Company) that maintains the Custodial
Account or the Escrow Account, then such Eligible Investment may mature on
such Remittance Date. Any such Eligible Investment shall be made in the name
of the Company in trust for the benefit of the Purchaser. All income on or
gain realized from any such Eligible Investment shall be for the benefit of
the Company and may be withdrawn at any time by the Company. Any losses
incurred in respect of any such investment shall be deposited in the
Custodial Account or the Escrow Account, by the Company out of its own funds
immediately as realized.
Section 4.10 Maintenance of Hazard Insurance.
The Company shall cause to be maintained for each Mortgage Loan
hazard insurance such that all buildings upon the Mortgaged Property are
insured by a generally acceptable insurer rated B:III or better in the
current Best's Key Rating Guide ("Best's") against loss by fire, hazards of
extended coverage and such other hazards as are customary in the area where
the Mortgaged Property is located, in an amount which is at least equal to
the lesser of (i) the maximum insurable value of the improvements securing
such Mortgage Loan and (ii) the greater of (a) the outstanding principal
balance of the Mortgage Loan and (b) an amount such that the proceeds thereof
shall be sufficient to prevent the Mortgagor or the loss payee from becoming
a co-insurer.
If upon origination of the Mortgage Loan, the related Mortgaged
Property was located in an area identified in the Federal Register by the
Flood Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance
Administration is in effect with a generally acceptable insurance carrier
rated B:III or better in Best's in an amount representing coverage equal to
the lesser of (i) the minimum amount required, under the terms of coverage,
to compensate for any damage or loss on a replacement cost basis (or the
unpaid balance of the mortgage if replacement cost coverage is not available
for the type of building insured) and (ii) the maximum amount of insurance
which is available under the Flood Disaster Protection Act of 1973, as
amended. If at any time during the term of the Mortgage Loan, the Company
determines in accordance with applicable law and pursuant to the FNMA Guides
that a Mortgaged Property is located in a special flood hazard area and is
not covered by flood insurance or is covered in an amount less than the
amount required by the Flood Disaster Protection Act of 1973, as amended, the
Company shall notify the related Mortgagor that the Mortgagor must obtain
such flood insurance coverage, and if said Mortgagor fails to obtain the
required flood insurance coverage within forty-five (45) days after such
notification, the Company shall immediately force place the required flood
insurance on the Mortgagor's behalf.
If a Mortgage is secured by a unit in a condominium project, the
Company shall verify that the coverage required of the owner's association,
including hazard, flood, liability, and fidelity coverage, is being
maintained in accordance with then current FNMA requirements, and secure from
the owner's association its agreement to notify the Company promptly of any
change in the insurance coverage or of any condemnation or casualty loss that
may have a material effect on the value of the Mortgaged Property as
security.
The Company shall cause to be maintained on each Mortgaged Property
earthquake or such other or additional insurance as may be required pursuant
to such applicable laws and regulations as shall at any time be in force and
as shall require such additional insurance, or pursuant to the requirements
of any private mortgage guaranty insurer, or as may be required to conform
with Accepted Servicing Practices.
In the event that any Purchaser or the Company shall determine that
the Mortgaged Property should be insured against loss or damage by hazards
and risks not covered by the insurance required to be maintained by the
Mortgagor pursuant to the terms of the Mortgage, the Company shall, at its
discretion, communicate with the Mortgagor with respect to the need for such
insurance and bring to the Mortgagor's attention the desirability of
protection of the Mortgaged Property.
All policies required hereunder shall name the Company as loss
payee and shall be endorsed with standard or union mortgagee clauses, without
contribution, which shall provide for at least 30 days prior written notice
of any cancellation, reduction in amount or material change in coverage.
The Company shall not interfere with the Mortgagor's freedom of
choice in selecting either his insurance carrier or agent, provided, however,
that the Company shall not accept any such insurance policies from insurance
companies unless such companies are rated B:III or better in Best's and are
licensed to do business in the jurisdiction in which the Mortgaged Property
is located. The Company shall determine that such policies provide
sufficient risk coverage and amounts, that they insure the property owner,
and that they properly describe the property address. The Company shall
furnish to the Mortgagor a formal notice of expiration of any such insurance
in sufficient time for the Mortgagor to arrange for renewal coverage by the
expiration date.
Pursuant to Section 4.04, 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, or property acquired in liquidation of the Mortgage Loan, or to be
released to the Mortgagor, in accordance with the Company's normal servicing
procedures as specified in Section 4.14) shall be deposited in the Custodial
Account subject to withdrawal pursuant to Section 4.05.
Section 4.11 Maintenance of Mortgage Impairment Insurance.
In the event that the Company shall obtain and maintain a blanket
policy insuring against losses arising from fire and hazards covered under
extended coverage on all of the Mortgage Loans, then, to the extent such
policy provides coverage in an amount equal to the amount required pursuant
to Section 4.10 and otherwise complies with all other requirements of Section
4.10, it shall conclusively be deemed to have satisfied its obligations as
set forth in Section 4.10. Any amounts collected by the Company under any
such policy relating to a Mortgage Loan shall be deposited in the Custodial
Account or Escrow Account subject to withdrawal pursuant to Sections 4.05 or
4.14. Such policy may contain a deductible clause, in which case, in the
event that there shall not have been maintained on the related Mortgaged
Property a policy complying with Section 4.10, and there shall have been a
loss which would have been covered by such policy, the Company shall deposit
in the Custodial Account at the time of such loss the amount not otherwise
payable under the blanket policy because of such deductible clause, such
amount to deposited from the Company's funds, without reimbursement therefor.
Upon request of any Purchaser, the Company shall cause to be delivered to
such Purchaser a certified true copy of such policy and a statement from the
insurer thereunder that such policy shall in no event be terminated or
materially modified without 30 days' prior written notice to such Purchaser.
Section 4.12 Maintenance of Fidelity Bond and Errors and
Omissions Insurance.
The Company shall maintain with responsible companies, at its own
expense, a blanket Fidelity Bond and an Errors and Omissions Insurance
Policy, with broad coverage on all officers, employees or other persons
acting in any capacity requiring such persons to handle funds, money,
documents or papers relating to the Mortgage Loans ("Company Employees").
Any such Fidelity Bond and Errors and Omissions Insurance Policy shall be in
the form of the Mortgage Banker's Blanket Bond and shall protect and insure
the Company against losses, including forgery, theft, embezzlement, fraud,
errors and omissions and negligent acts of such Company Employees. Such
Fidelity Bond and Errors and Omissions Insurance Policy also shall protect
and insure the Company against losses in connection with the release or
satisfaction of a Mortgage Loan without having obtained payment in full of
the indebtedness secured thereby. No provision of this Section 4.12
requiring such Fidelity Bond and Errors and Omissions Insurance Policy shall
diminish or relieve the Company from its duties and obligations as set forth
in this Agreement. The minimum coverage under any such bond and insurance
policy shall be at least equal to the corresponding amounts required by FNMA
in the FNMA Mortgage-Backed Securities Selling and Servicing Guide or by
FHLMC in the FHLMC Sellers' & Servicers' Guide. Upon the request of any
Purchaser, the Company shall cause to be delivered to such Purchaser a
certified true copy of such fidelity bond and insurance policy and a
statement from the surety and the insurer that such fidelity bond and
insurance policy shall in no event be terminated or materially modified
without 30 days' prior written notice to the Purchaser.
Section 4.13 Inspections.
The Company shall inspect the Mortgaged Property as often as deemed
necessary by the Company to assure itself that the value of the Mortgaged
Property is being preserved. In addition, if any Mortgage Loan is more than
60 days delinquent, the Company immediately shall inspect the Mortgaged
Property and shall conduct subsequent inspections in accordance with Accepted
Servicing Practices. The Company shall keep a written report of each such
inspection.
Section 4.14 Restoration of Mortgaged Property.
The Company need not obtain the approval of the Purchaser 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 Accepted Servicing Practices. At a minimum,
with respect to claims of $5000 or more, the Company shall comply with the
following conditions in connection with any such release of Insurance
Proceeds or Condemnation Proceeds:
(i) the Company shall receive satisfactory independent
verification of completion of repairs and issuance of any required approvals
with respect thereto;
(ii) 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;
(iii) the Company shall verify that the Mortgage Loan is not 60
or more days delinquent; and
(vi) pending repairs or restoration, the Company shall place
the Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
With respect to claims of less than $5000, the Company shall comply
with the following conditions in connection with any such release of
Insurance Proceeds or Condemnation Proceeds:
(i) the related Mortgagor shall provide an affidavit
verifying the completion of repairs and issuance of any required approvals
with respect thereto;
(ii) the Company shall verify the total amount of the claim
with the applicable insurance company; and
(iii) pending repairs or restoration, the Company shall place
the Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
If the Purchaser 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 Purchaser.
Section 4.15 Title, Management and Disposition of REO
Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of
sale shall be taken in the name of the Purchaser, or in the event the
Purchaser is not authorized or permitted to hold title to real property in
the state where 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 from any 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 Purchaser shall acknowledge in writing that such title is being held
as nominee for the Purchaser.
The Company shall manage, conserve, protect and operate each REO
Property for the Purchaser solely for the purpose of its prompt disposition
and sale. The Company, either itself or through an agent selected by the
Company, shall manage, conserve, protect and operate the REO Property in the
same manner that it manages, conserves, protects and operates other
foreclosed property for its own account, and in the same manner that similar
property in the same locality as the REO Property is managed. The Company
shall attempt to sell the same (and may temporarily rent the same for a
period not greater than one year, except as otherwise provided below) on such
terms and conditions as the Company deems to be in the best interest of the
Purchaser.
The Company shall use its best efforts to dispose of the REO
Property as soon as possible and shall sell such REO Property in any event
within two years after title has been taken to such REO Property, unless (i)
(A) a REMIC election has not been made with respect to the arrangement under
which the Mortgage Loans and the REO Property are held, and (ii) the Company
determines, and gives an appropriate notice to the Purchaser to such effect,
that a longer period is necessary for the orderly liquidation of such REO
Property. If a period longer than one year is permitted under the foregoing
sentence and is necessary to sell any REO Property, (i) the Company shall
report monthly to the Purchaser as to the progress being made in selling such
REO Property and (ii) if, with the written consent of the Purchaser, a
purchase money mortgage is taken in connection with such sale, such purchase
money mortgage shall name the Company as mortgagee, and such purchase money
mortgage shall not be held pursuant to this Agreement, but instead a separate
participation agreement among the Company and Purchaser shall be entered into
with respect to such purchase money mortgage.
The Company shall also maintain on each REO Property fire and
hazard insurance with extended coverage in an amount which is at least equal
to the maximum insurable value of the improvements which are a part of such
property, liability insurance and, to the extent required and available under
the Flood Disaster Protection Act of 1973, as amended, flood insurance in the
amount required above.
The disposition of REO Property 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 Purchaser. The proceeds of sale of the REO
Property shall be promptly deposited in the Custodial Account. As soon as
practical thereafter the expenses of such sale shall be paid and the Company
shall reimburse itself for any related unreimbursed Servicing Advances,
unpaid Servicing Fees, and on the Remittance Date immediately following the
date on which such sale proceeds are received the net cash proceeds of such
sale remaining in the Custodial Account shall be distributed to the
Purchaser.
The Company shall advance funds necessary for the proper operation,
management and maintenance of the REO Property, including the cost of
maintaining any hazard insurance pursuant to Section 4.10 and the fees of any
managing agent of the Company, a Subservicer, or the Company itself which
advances shall be deemed "Servicing Advances" for the purposes hereunder.
The REO management fee shall be an amount that is reasonable and customary in
the area where the Mortgaged Property is located. The Company shall make
monthly distributions on each Remittance Date to the Purchasers of the net
cash flow from the REO Property (which shall equal the revenues from such REO
Property net of the expenses described in the Section 4.15 and of any
reserves reasonably required from time to time to be maintained to satisfy
anticipated liabilities for such expenses).
Notwithstanding the foregoing, at any time and from time to time,
the Purchaser may at its election terminate this Agreement with respect to
one or more REO Properties as provided by Section 11.02.
Section 4.16 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 5.02, the
Company shall furnish to the Purchaser 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 Purchaser
shall reasonably request.
Section 4.17 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the
acquisition thereof by the Purchaser pursuant to a deed in lieu of
foreclosure, the Company shall submit to the Purchaser a liquidation report
with respect to such Mortgaged Property.
Section 4.18 Notification of Adjustments.
With respect to each Pool I Mortgage Loan, the Company shall adjust
the Mortgage Interest Rate on the related Interest Rate Adjustment Date in
compliance with the requirements of applicable law and the related Mortgage
and Mortgage Note. The Company shall execute and deliver any and all
necessary notices required under applicable law and the terms of the related
Mortgage Note and Mortgage regarding the Mortgage Interest Rate adjustments.
The Company shall promptly, upon written request therefor, deliver to the
Purchaser such notifications and any additional applicable data regarding
such adjustments and the methods used to calculate and implement such
adjustments. Upon the discovery by the Company or the receipt of notice from
the Purchaser that the Company has failed to adjust a Mortgage Interest Rate
in accordance with the terms of the related Mortgage Note, the Company shall
immediately deposit in the Custodial Account from its own funds the amount of
any interest loss or deferral caused the Purchaser thereby.
Section 4.19 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.
Section 4.20 Monthly Advances by Servicer.
Subject to Section 7.03, the Servicer shall have no obligation to
advance any amounts constituting delinquent principal and interest payments
with respect to the Mortgage Loans.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances.
On each Remittance Date the Company shall remit by wire transfer of
immediately available funds to the Purchaser all amounts deposited in the
Custodial Account as of the close of business on the Determination Date (net
of charges against or withdrawals from the Custodial Account pursuant to
Section 4.05).
With respect to any remittance received by the Purchaser after the
second Business Day following the Business Day on which such payment was due,
the Company shall pay to the Purchaser interest on any such late payment at
an annual rate equal to the Prime Rate, adjusted as of the date of each
change, plus three 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 second
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 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.
Section 5.02 Statements to Purchaser.
Not later than the Remittance Date, the Company shall furnish to
the Purchaser a Monthly Remittance Advice, with a trial balance report
attached thereto, in the form of Exhibit F annexed hereto in hard copy and
electronic medium mutually acceptable to the parties as to the preceding
remittance and the period ending on the preceding Determination Date.
In addition, not more than 60 days after the end of each calendar
year, the Company shall furnish to each Person who was a Purchaser at any
time during such calendar year an annual statement in accordance with the
requirements of applicable federal income tax law as to the aggregate of
remittances for the applicable portion of such year.
Such obligation of the Company shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Company pursuant to any requirements of the Internal Revenue
Code as from time to time are in force.
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 or to any Purchaser pursuant to any applicable
law with respect to the Mortgage Loans and the transactions contemplated
hereby. In addition, the Company shall provide each Purchaser with such
information concerning the Mortgage Loans as is necessary for such Purchaser
to prepare its federal income tax return as any Purchaser may reasonably
request from time to time.
Section 5.03 Due Dates Other Than the First of the Month.
Mortgage Loans having Due Dates other than the first day of a
month, including Mortgage Loans permitting semi-annual amortization of
principal, shall be accounted for as described in this Section 5.03. Any
payment due on a day other than the first day of each month shall be
considered due on the first day of the month in which that payment is due as
if such payment were due on the first day of said month. For example, a
payment due on August 15 shall be considered to be due on August 1 of said
month. With respect to a Mortgage Note permitting semi-annual amortization
of principal, the Company shall be required to remit monthly scheduled
principal and interest based on a monthly amortization schedule. Any payment
collected on a Mortgage Loan after the Cut-off Date shall be deposited in the
Custodial Account. For Mortgage Loans with Due Dates on the first day of a
month, deposits to the Custodial Account begin with the payment due on the
first of the month following the Cut-off Date.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.0l Transfers of Mortgaged Property.
The Company shall use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note and to deny assumption
by the person to whom the Mortgaged Property has been or is about to be sold
whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains liable on the Mortgage and the Mortgage Note; provided
that, if in the Company's prudent business judgment, it determines that an
assumption of the Mortgage Loan is in the best interests of the Purchaser, it
shall deliver notice of such determination to the Purchaser and may permit
such assumption if approved by the Purchaser. When the Mortgaged Property
has been conveyed by the Mortgagor, the Company shall, to the extent it has
knowledge of such conveyance or the Purchaser's consent otherwise in
accordance with the preceding sentence, exercise its rights to accelerate the
maturity of such Mortgage Loan under the "due-on-sale" clause applicable
thereto, provided, however, that the Company shall not exercise such rights
if prohibited by law from doing so.
If the Company reasonably believes it is unable under applicable
law to enforce such "due-on-sale" clause or if the Purchaser approves such
assumption pursuant to the preceding paragraph, the Company shall enter into
(i) an assumption and modification agreement with the person to whom such
property has been conveyed, pursuant to which such person becomes liable
under the Mortgage Note and the original Mortgagor remains liable thereon or
(ii) in the event the Company is unable under applicable law to require that
the original Mortgagor remain liable under the Mortgage Note and the Company
has the prior consent of the primary mortgage guaranty insurer, a
substitution of liability agreement with the purchaser of the Mortgaged
Property pursuant to which the original Mortgagor is released from liability
and the purchaser of the Mortgaged Property is substituted as Mortgagor and
becomes liable under the Mortgage Note. If an assumption fee is collected by
the Company for entering into an assumption agreement, such assumption fee
shall be retained by the Company. In connection with any such assumption,
neither the Mortgage Interest Rate borne by the related Mortgage Note, the
term of the Mortgage Loan nor the outstanding principal amount of the
Mortgage Loan shall be changed.
To the extent that any Mortgage Loan is assumable, the Company
shall inquire diligently into the creditworthiness of the proposed
transferee, and shall use the underwriting criteria for approving the credit
of the proposed transferee which are used by the Company with respect to
underwriting mortgage loans of the same type as the Mortgage Loans. If the
credit 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.
Section 6.02 Satisfaction of Mortgages and Release of Mortgage
Files.
Upon the payment in full of any Mortgage Loan the Company shall
notify the Purchaser in the Monthly Remittance Advice as provided in Section
5.02, and may request the release of any Mortgage Loan Documents.
If the Company satisfies or releases a Mortgage without first
having obtained payment in full of the indebtedness secured by the Mortgage
or should the Company otherwise prejudice any rights the Purchaser may have
under the mortgage instruments, upon written demand of the Purchaser, the
Company shall repurchase the related Mortgage Loan at the Repurchase Price by
deposit thereof in the Custodial Account within 2 Business Days of receipt of
such demand by the Purchaser. The Company shall maintain the Fidelity Bond
and Errors and Omissions Insurance Policy as provided for in Section 4.12
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 amount of its Servicing Fee. The
Servicing Fee shall be payable monthly and shall be computed on the basis of
the same unpaid principal balance and for the period respecting which any
related interest payment on a Mortgage Loan is computed. The Servicing Fee
shall be payable only at the time of and with respect to those Mortgage Loans
for which payment is in fact made of the entire amount of the Monthly Payment
(except for any de minimus amount which shall not exceed $15.00 which is
advanced by the Company, except as provided in Section 11.02 herein). The
obligation of the Purchaser to pay the Servicing Fee is limited to, and
payable solely from, the interest portion of such Monthly Payments collected
by the Company. For defaulted Mortgage Loans, the Company shall be entitled
to the Servicing Fee from Liquidation Proceeds in respect to such Mortgage
Loan.
Additional servicing compensation in the form of assumption fees,
late payment charges and other ancillary fees shall be retained by the
Company to the extent not required to be deposited in the Custodial Account.
The Company shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled
to reimbursement thereof except as specifically provided for herein.
Section 6.04 Annual Statement as to Compliance.
The Company shall deliver to the Purchaser, on or before July 31
each year beginning July 31, 1998, an Officer's Certificate, stating that (i)
a review of the activities of the Company during the preceding calendar year
and of performance under this Agreement has been made under such officer's
supervision, and (ii) the Company has complied fully with the provisions of
Article II and Article IV, and (iii) to the best of such officer's knowledge,
based on such review, the Company has fulfilled all 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 officer and the nature and status thereof and the action being taken by
the Company to cure such default.
Section 6.05 Annual Independent Public Accountants' Servicing
Report.
On or before July 31st of each year beginning July 31, 1998, the
Company, at its expense, shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants
to furnish a statement to each Purchaser stating that (i) it has obtained a
letter of representation regarding certain matters from the management of the
Company which includes an assertion that the Company has complied with
certain minimum residential mortgage loan servicing standards, identified in
the Uniform Single Attestation Program for Mortgage Bankers established by
the Mortgage Bankers Association of America, with respect to the servicing of
residential mortgage loans during the most recently completed fiscal year and
(ii) on the basis of an examination conducted by such firm in accordance with
standards established by the American Institute of Certified Public
Accountants, such representation is fairly stated in all material respects,
subject to the exception and other qualifications that may be appropriate.
On or before July 31st of each year beginning July 31, 1998, at the
Purchaser's request the Company, at the Purchaser's expense, shall cause a
firm of independent public accountants which is a member of the American
Institute of Certified Public Accountants to furnish a statement to each
Purchaser to the effect that such firm has examined certain documents and
records relating to the servicing of the Mortgage Loans and this Agreement
and that such firm is of the opinion that the provisions of Article II and
Article IV have been complied with, and that, on the basis of such
examination, nothing has come to their attention which would indicate that
such servicing has not been conducted in compliance therewith, except for (i)
such exceptions as such firm shall believe to be immaterial, and (ii) such
other exceptions as shall be set forth in such statement.
Section 6.06 Right to Examine Company Records.
The Purchaser shall have the right 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 its behalf, with respect to or concerning this
Agreement or the Mortgage Loans, during business hours or at such other times
as may be reasonable under applicable circumstances, upon reasonable advance
notice.
ARTICLE VII
AGENCY TRANSFER; PASS-THROUGH TRANSFER
Section 7.01 Removal of Mortgage Loans from Inclusion Under this
Agreement Upon an Agency Transfer, or a Pass-Through
Transfer on One or More Reconstitution Dates.
The Purchaser and the Company agree that with respect to some or
all of the Mortgage Loans, from time to time (but not more than five (5)
times) the Purchaser shall:
(1) Effect an Agency Transfer, and/or
(2) Effect a Pass-Through Transfer, in each case retaining the
Company as the servicer thereof, or as applicable the "seller/servicer". On
the related Reconstitution Date, the Mortgage Loans transferred shall cease
to be covered by this Agreement.
The Company shall reasonably cooperate with the Purchaser in
connection with any Agency Transfer or Pass-Through Transfer contemplated by
the Purchaser pursuant to this Section 7.01. In that connection, the Company
shall (a) execute any Reconstitution Agreement within a reasonable period of
time after receipt of any Reconstitution Agreement which time shall be
sufficient for the Company and Company's counsel to review such
Reconstitution Agreement, but such time shall not exceed ten (10) Business
Days after such receipt, and (b) provide to FNMA, FHLMC, the trustee or a
third party purchaser, as the case may be, subject to any Reconstitution
Agreement and/or the Purchaser: (i) any and all information and appropriate
verification of information which may be reasonably available to the Company,
whether through letters of its auditors (the reasonable out-of-pocket cost of
which will be borne by the Purchaser) and counsel or otherwise, as the
Purchaser shall reasonably request; (ii) to bring each of the Mortgage Loan
representations and warranties current (except for items (a), (c), (r), (v)
and (cc) of Section 3.02 and the Company shall only make the representation
and warranty contained in Section 3.02(v) current if the related
Reconstitution Date occurs within 90 days after the Closing Date) as of the
date the Mortgage Loans are being transferred pursuant to a Pass-through
Transfer or Agency Transfer, provided that, such Mortgage Loan
representations and warranties shall be revised, to the extent allowed or
required by the rating agencies and the certificate insurer and acceptable to
the Purchaser, to reflect the actual pool of Mortgage Loans being
securitized; notwithstanding the foregoing, Company shall, at the time of
securitization, be entitled to state certain exceptions to the Mortgage Loan
representations and warranties necessary to make same true and correct as of
the time of the Pass-through Transfer or Agency Transfer and (iii) such
additional representations, warranties, covenants, opinions of counsel,
letters from auditors, and certificates of public officials or officers of
the Company as are reasonably believed necessary by FNMA, FHLMC, the trustee,
such third party purchaser, any master servicer, any rating agency or the
Purchaser, as the case may be, in connection with such transactions;
provided, however, that these items shall not be more onerous than such
similar items set forth herein.
In the event the Purchaser has elected to have the Company hold
record title to the Mortgages, prior to a Reconstitution Date the Company or
its designee shall prepare an Assignment of Mortgage in blank from the
Company, acceptable to FNMA, FHLMC, the trustee or such third party, as the
case may be, for each Mortgage Loan that is part of an Agency Transfer, or
Pass-Through Transfer and shall pay all preparation and recording costs
associated therewith. The Company shall execute each Assignment of Mortgage,
track such Assignments of Mortgage to ensure they have been recorded and
deliver them as required by FNMA, FHLMC, the trustee or such third party, as
the case may be, upon the Company's receipt thereof. Additionally, the
Company shall prepare and execute, at the direction of the Purchaser, any
Mortgage Note endorsements in connection with any and all Reconstitution
Agreements.
All Mortgage Loans not sold or transferred pursuant to an Agency
Transfer or Pass-Through Transfer and any Mortgage Loans repurchased by the
Purchaser pursuant to Section 7.02 hereof, 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.
Section 7.02 Purchaser's Repurchase and Indemnification
Obligations.
Upon receipt by the Company of notice from FNMA, FHLMC or the
trustee of a breach of any Purchaser representation or warranty contained in
any Reconstitution Agreement or a request by FNMA, FHLMC or the trustee, as
the case may be, for the repurchase of any Mortgage Loan transferred to FNMA
or FHLMC pursuant to an Agency Transfer or to a trustee pursuant to a Pass-
Through Transfer, the Company shall promptly notify the Purchaser of same and
shall, at the direction of the Purchaser, use its best efforts to cure and
correct any such breach and to satisfy the requests or concerns of FNMA,
FHLMC, or the trustee related to such deficiencies of the related Mortgage
Loans transferred to FNMA, FHLMC, or the trustee.
The Purchaser shall repurchase from the Company any Mortgage Loan
transferred to FNMA or FHLMC pursuant to an Agency Transfer or to a trustee
pursuant to a Pass-Through Transfer with respect to which the Company has
been required by FNMA, FHLMC, or the trustee to repurchase due to a breach of
a representation or warranty made by the Purchaser with respect to the
Mortgage Loans, or the servicing thereof prior to the transfer date to FNMA,
FHLMC, or the trustee in any Reconstitution Agreement and not due to a breach
of the Company's representations or obligations thereunder or pursuant to
this Agreement. The repurchase price to be paid by the Purchaser to the
Company shall equal that repurchase price paid by the Company to FNMA, FHLMC,
or the third party purchaser plus all reasonable costs and expenses borne by
the Company in connection with the cure of said breach of a representation or
warranty made by the Purchaser and in connection with the repurchase of such
Mortgage Loan from FNMA, FHLMC, or the trustee, including, but not limited
to, reasonable and necessary attorneys' fees.
At the time of repurchase, the Custodian and the Company shall
arrange for the reassignment of the repurchased Mortgage Loan to the
Purchaser according to the Purchaser's instructions and the delivery to the
Custodian of any documents held by FNMA, FHLMC, or the trustee with respect
to the repurchased Mortgage Loan pursuant to the related Reconstitution
Agreement. In the event of a repurchase, the Company shall, simultaneously
with such reassignment, give written notice to the Purchaser that such
repurchase has taken place, and amend the Mortgage Loan Schedule to reflect
the addition of the repurchased Mortgage Loan to this Agreement.
Section 7.03 Monthly Advances.
Notwithstanding anything contained herein to the contrary, in
connection with (a) a Pass-Through Transfer, the Servicer shall make Monthly
Advances through the Remittance Date immediately preceding the distribution
of all Liquidation Proceeds and other payments or recoveries (including
Insurance Proceeds and Condemnation Proceeds) with respect to the related
Mortgage Loans or such earlier time period as set forth in the related
Reconstitution Agreement, (b) an Agency Transfer, the Servicer shall make
Monthly Advances as required by FNMA or FHLMC as applicable, and (c) a Whole
Loan Transfer, the Servicer shall make Monthly Advances through the
Remittance Date immediately preceding the date that such Mortgage Loan
becomes REO Property.
Section 7.04 Compensating Interest.
Notwithstanding anything contained herein to the contrary, in
connection with (a) a Pass-Through Transfer, or (b) an Agency Transfer, or
(c) a Whole Loan Transfer, the Company shall deposit in the Custodial Account
on a daily basis, and retain therein with respect to each Principal
Prepayment in full, the Prepayment Interest Shortfall Amount, if any, for the
month of distribution. Such deposit shall be made from the Company's own
funds, without reimbursement therefor up to a maximum amount per month of the
Servicing Fee actually received for such month for the Mortgage Loans.
ARTICLE VIII
COMPANY TO COOPERATE
Section 8.01 Provision of Information.
During the term of this Agreement, the Company shall furnish to the
Purchaser such periodic, special, or other reports or information and copies
or originals of any documents contained in the Servicing File for each
Mortgage Loan, whether or not provided for herein, as shall be necessary,
reasonable, or appropriate with respect to the Purchaser, any regulatory
requirement pertaining to the Purchaser or the purposes of this Agreement.
All such reports, documents or information shall be provided by and in
accordance with all reasonable instructions and directions which the
Purchaser may give.
The Company shall execute and deliver all such instruments and take
all such action as the Purchaser may reasonably request from time to time, in
order to effectuate the purposes and to carry out the terms of this
Agreement.
Section 8.02 Financial Statements; Servicing Facility.
In connection with marketing the Mortgage Loans, the Company will
make available to a prospective Purchaser 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 also shall make available
any comparable interim statements to the extent any such statements have been
prepared by or on behalf of the Company (and are available upon request to
members or stockholders of the Company or to the public at large). If it has
not already done so, the Company shall furnish promptly to the Purchaser
copies of the statement specified above.
Upon prior notice and during normal business hours, the Company
also shall make available to Purchaser or prospective Purchaser a
knowledgeable financial or accounting officer for the purpose of answering
questions respecting recent developments affecting the Company or the
financial statements of the Company, and to permit any prospective Purchaser
to inspect the Company's servicing facilities or those of any Subservicer for
the purpose of satisfying such prospective Purchaser that the Company and any
Subservicer have the ability to service the Mortgage Loans as provided in
this Agreement.
ARTICLE IX
THE COMPANY
Section 9.01 Indemnification; Third Party Claims.
The Company shall indemnify the Purchaser and hold it harmless
against any and all claims, losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments, and any
other costs, fees and expenses that the Purchaser may sustain in any way
related to the failure of the Company to perform its duties and service the
Mortgage Loans in strict compliance with the terms of this Agreement or any
Reconstitution Agreement entered into pursuant to Section 7.01. The Company
immediately shall notify the Purchaser if a claim is made by a third party
with respect to this Agreement or any Reconstitution Agreement or the
Mortgage Loans, shall promptly notify FNMA, FHLMC, or the trustee with
respect to any claim made by a third party with respect to any Reconstitution
Agreement, assume (with the prior written consent of the Purchaser) the
defense of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any judgment
or decree which may be entered against it or the Purchaser in respect of such
claim. The Company shall follow any written instructions received from the
Purchaser in connection with such claim. The Purchaser promptly shall
reimburse the Company for all amounts advanced by it pursuant to the
preceding sentence except when the claim is in any way related to the
Company's indemnification pursuant to Section 3.03, or the failure of the
Company to service and administer the Mortgage Loans in strict compliance
with the terms of this Agreement or any Reconstitution Agreement.
Section 9.02 Merger or Consolidation of the Company.
The Company shall keep in full effect its existence, rights and
franchises as a corporation, and shall obtain and preserve its qualification
to do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform
its duties under this Agreement.
Any person into which the 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, shall be the successor of the Company hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding, provided,
however, that the successor or surviving Person shall be an institution (i)
having a net worth of not less than $15,000,000, and (ii) which is a FNMA-
approved company in good standing.
Section 9.03 Limitation on Liability of Company and Others.
Neither the Company nor any of the directors, officers, employees
or agents of the Company shall be under any liability to the Purchaser for
any action taken or for refraining from the taking of any action in good
faith pursuant to this Agreement, or for errors in judgment, provided,
however, that this provision shall not protect the Company or any such person
against any Breach of warranties or representations made herein, or failure
to perform its obligations in strict compliance with any standard of care set
forth in this Agreement, or any liability which would otherwise be imposed by
reason of any breach of the terms and conditions of this Agreement. The
Company and any director, officer, employee or agent of the Company may rely
in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The
Company shall not be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its duties to service the
Mortgage Loans in accordance with this Agreement and which in its opinion may
involve it in any expense or liability, provided, however, that the Company
may, with the consent of the Purchaser, undertake any such action which it
may deem necessary or desirable in respect to this Agreement and the rights
and duties of the parties hereto. In such event, the Company shall be
entitled to reimbursement from the Purchaser of the reasonable legal expenses
and costs of such action.
Section 9.04 Limitation on Resignation and Assignment by Company.
The Purchaser has entered into this Agreement with the Company and
subsequent Purchasers will purchase the Mortgage Loans in reliance upon the
independent status of the Company, and the representations as to the adequacy
of its servicing facilities, plant, personnel, records and procedures, its
integrity, reputation and financial standing, and the continuance thereof.
Therefore, the Company shall neither assign this Agreement or the servicing
hereunder or delegate its rights or duties hereunder or any portion hereof
(to other than a Subservicer or to a third party in the case of outsourcing
routine tasks such as taxes, insurance and property inspection, in which case
the Company shall be fully liable for such tasks as if the Company performed
them itself) or sell or otherwise dispose of all or substantially all of its
property or assets without the prior written consent of the Purchaser, which
consent shall be granted or withheld in the reasonable discretion of the
Purchaser.
The Company shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Company and the Purchaser 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 Purchaser
which Opinion of Counsel shall be in form and substance acceptable to the
Purchaser. 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 12.01.
Without in any way limiting the generality of this Section 9.04, in
the event that the Company either shall assign this Agreement or the
servicing responsibilities hereunder or delegate its duties hereunder or any
portion thereof (to other than a Subservicer or to a third party in the case
of outsourcing routine tasks such as taxes, insurance and property
inspection, in which case the Company shall be fully liable for such tasks as
if the Company performed them itself) or sell or otherwise dispose of all or
substantially all of its property or assets, without the prior written
consent of the Purchaser, then the Purchaser shall have the right to
terminate this Agreement upon notice given as set forth in Section 10.01,
without any payment of any penalty or damages and without any liability
whatsoever to the Company or any third party.
ARTICLE X
DEFAULT
Section 10.01 Events of Default.
Each of the following shall constitute an Event of Default on the
part of the Company:
(a) any failure by the Company to remit to the Purchaser any
payment required to be made under the terms of this Agreement which
continues unremedied for a period of five days after the date upon which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Company by the Purchaser; or
(b) failure by 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 or in the Custodial Agreement
which continues unremedied for a period of 30 days after the date on
which written notice of such failure, requiring the same to be remedied,
shall have been given to the Company by the Purchaser; or
(c) failure by the Company to maintain its license to do business
in any jurisdiction where the Mortgaged Property is located; or
(d) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
including bankruptcy, marshaling 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 60 days;
or
(e) the Company shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt,
marshaling 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
(f) 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, voluntarily suspend payment
of its obligations or cease its normal business operations for three
Business Days; or
(g) the Company ceases to meet the qualifications of a FNMA
servicer; or
(h) the Company fails to maintain a minimum net worth of
$15,000,000; or
(i) the Company attempts to assign its right to servicing
compensation hereunder or the Company attempts, without the consent of
the Purchaser, to sell or otherwise dispose of all or substantially all
of its property or assets or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or any
portion thereof (to other than a Subservicer or to a third party in the
case of outsourcing routine tasks such as taxes, insurance and property
inspection, in which case the Company shall be fully liable for such
tasks as if the Company performed them itself) in violation of Section
9.04.
In each and every such case, so long as an Event of Default shall
not have been remedied, in addition to whatsoever rights the Purchaser may
have at law or equity to damages, including injunctive relief and specific
performance, the Purchaser, by notice in writing to the Company, may
terminate all the rights and obligations of the Company under this Agreement
and in and to the Mortgage Loans and the proceeds thereof.
Upon 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 12.01. Upon written request from any
Purchaser, the Company shall prepare, execute and deliver to the successor
entity designated by the Purchaser any and all documents and other
instruments, place in such successor's possession all Mortgage Files, and do
or cause to be done all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, including but not limited
to the transfer and endorsement or assignment of the Mortgage Loans and
related documents, at the Company's sole expense. The Company shall
cooperate with the Purchaser 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 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 10.02 Waiver of Defaults.
By a written notice, the Purchaser may waive any default by the
Company in the performance of its obligations hereunder and its consequences.
Upon any waiver of a past default, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to
the extent expressly so waived.
ARTICLE XI
TERMINATION
Section 11.01 Termination.
This Agreement shall terminate upon either: (i) the later of the
final payment or other liquidation (or any advance with respect thereto) of
the last Mortgage Loan or the disposition of any REO Property with respect to
the last Mortgage Loan and the remittance of all funds due hereunder; or (ii)
mutual consent of the Company and the Purchaser in writing.
Section 11.02 Termination Without Cause.
The Purchaser may terminate, at its sole option, this Agreement,
without cause, as provided in this Section 11.02. Any such notice of
termination shall be in writing and delivered to the Company by registered
mail as provided in Section 12.05. The termination fee for the termination
of servicing without cause pursuant to this Section 11.02 shall be 1.25% of
the outstanding principal balance of the Mortgage Loans for which servicing
is being terminated.
On the second Business Day of each month, the Company shall orally
inform the Purchase of which Mortgage Loans have become delinquent for a
period of 61 days or more (each, a "Delinquent Mortgage Loan") and shall send
a written listing of such Delinquent Mortgage Loans to the Purchaser. By the
tenth day of each month (or if such tenth day is not a Business Day then the
next Business Day following such tenth day), the Purchaser shall provide the
Company with a certification (the "Transfer Notice") listing the Delinquent
Mortgage Loans which the Company desires to transfer the servicing by month
end to its designee (such designee, the "Special Servicer"). By the
fifteenth day of each month (and no later than the thirteenth day in February)
the Company shall mail to the Mortgagor of each Mortgage Loan listed in a
Transfer Notice a letter advising each such Mortgagor of the transfer of the
servicing of the related Mortgage Loan to the Special Servicer; in accordance
with the Xxxxxxxx Xxxxxxxx National Affordable Housing Act of 1990 provided,
however, the content and format of the letter shall have the prior approval
of the Special Servicer. The Company shall promptly provide the Special
Servicer with copies of all such notices. At least five (5) Business Days
prior to the end of each month, the Company shall deliver, with respect to
the Delinquent Mortgage Loans listed on the related Transfer Notice, all
Servicing Files, a loan level tape in form reasonably acceptable to the
Purchaser and the Special Servicer, and supporting documentation, reasonably
acceptable to the Purchaser and the Special Servicer and commensurate with
generally acceptable industry standards, detailing the amount of any
unreimbursed Servicing Advances and accrued and unpaid Servicing Fees on a
loan level basis. Should the Purchaser and Special Servicer desire a loan
level tape containing information which is not readily extractable from the
Company's servicing system, the Company shall diligently cooperate to make
such loan level tape available to the Purchaser and Special Servicer. Upon
the successful completion of the transfer of servicing for Delinquent
Mortgage Loans, the Company shall cause the Special Servicer to reimburse the
Company for any unreimbursed Servicing Advances and accrued and unpaid
Servicing Fees with respect to such Delinquent Mortgage Loans which have been
properly documented. Notwithstanding anything herein to the contrary, the
transfer of servicing for Delinquent Mortgage Loans shall not require the
payment of a termination fee therefor.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Company.
Prior to termination of the Company's responsibilities and duties
under this Agreement pursuant to Sections 9.04, 10.01, 11.01 (ii) or pursuant
to Section 11.02 after the 90 day period has expired, the Purchaser shall,
(i) succeed to and assume all of the Company's responsibilities, rights,
duties and obligations under this Agreement, or (ii) appoint a successor
having the characteristics set forth in clauses (i) through (iii) of Section
9.02 and 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 Company's responsibilities, duties and
liabilities under this Agreement. In connection with such appointment and
assumption, the Purchaser may make such arrangements for the compensation of
such successor out of payments on Mortgage Loans as it and such successor
shall agree. In the event that the Company's duties, responsibilities and
liabilities under this Agreement should be terminated pursuant to the
aforementioned sections, the Company shall discharge such duties and
responsibilities during the period from the date it acquires knowledge of
such termination until the effective date thereof with the same degree of
diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or
removal of the Company pursuant to the aforementioned sections shall not
become effective until a successor shall be appointed pursuant to this
Section 12.01 and shall in no event relieve the Company of the
representations and warranties made pursuant to Sections 3.01 and 3.02 and
the remedies available to the Purchaser under Sections 3.04 and 3.05, it
being understood and agreed that the provisions of such Sections 3.01, 3.02,
3.03 and 3.05 shall be applicable to the Company notwithstanding any such
sale, assignment, resignation or termination of the Company, or the
termination of this Agreement.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Company and to the Purchaser an instrument
accepting such appointment, wherein the successor shall make the
representations and warranties set forth in Xxxxxxx 0.00, xxxxxx xxx
xxxxxxxxxxx (x), (x), (x), (x) and (p) thereof, 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. Any termination
or resignation of the Company or termination of this Agreement pursuant to
Section 9.04, 10.01, 11.01 or 11.02 shall not affect any claims that any
Purchaser may have against the Company arising out of the Company's actions
or failure to act prior to any such termination or resignation.
The Company shall deliver promptly to the successor servicer the
funds in the Custodial Account and Escrow Account and all Mortgage Files and
related documents and statements held by it hereunder and the Company shall
account for all funds and shall execute and deliver such instruments and do
such other things as may reasonably be required to more fully and
definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Company.
Upon a successor's acceptance of appointment as such, the Company
shall notify by mail the Purchaser of such appointment in accordance with the
procedures set forth in Section 12.05.
Section 12.02 Amendment.
This Agreement may be amended from time to time by the Company and
the Purchaser by written agreement signed by the Company and the Purchaser.
Section 12.03 Governing Law.
This Agreement shall be construed in accordance with the laws of
the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 12.04 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 Purchaser.
Section 12.05 Notices.
All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered
at or mailed by registered mail, postage prepaid, addressed as follows:
(i) if to the Company:
Option One Mortgage Corporation
0000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
Attention: Mr. Xxxx Xxxxx
or such other address as may hereafter be furnished to the Purchaser in
writing by the Company;
(ii) if to Purchaser:
Xxxxxx Capital, A Division of
Xxxxxx Brothers Holdings Inc.
3 World Financial Center
12th Floor
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Contract Finance
Section 12.06 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 12.07 Relationship of Parties.
Nothing herein contained shall be deemed or construed to create a
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 Purchaser.
Section 12.08 Execution; Successors and Assigns.
This Agreement may be executed in one or more counterparts and by
the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together,
shall constitute one and the same agreement. This Agreement shall inure to
the benefit of and be binding upon the Company and the Purchaser and their
respective successors and assigns.
Section 12.09 Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the Assignments
of Mortgage is subject to recordation in all appropriate public offices for
real property records in all the counties or other comparable jurisdictions
in which any or all of the Mortgaged Properties are situated, and in any
other appropriate public recording office or elsewhere, such recordation to
be effected at the Purchaser's expense in the event recordation is either
necessary under applicable law or requested by the Purchaser at its sole
option.
Section 12.10 Assignment by Purchaser.
The Purchaser shall have the right, without the consent of the
Company but subject to the limit set forth in Section 2.02 hereof, to assign,
in whole or in part, its interest under this Agreement with respect to some
or all of the Mortgage Loans, and designate any person to exercise any rights
of the Purchaser hereunder, by executing an Assignment and Assumption
Agreement substantially in the form of Exhibit G hereto. Upon such
assignment of rights and assumption of obligations, the assignee or designee
shall accede to the rights and obligations hereunder of the Purchaser with
respect to such Mortgage Loans and the Purchaser as assignor shall be
released from all obligations hereunder with respect to such Mortgage Loans
from and after the date of such Assignment and Assumption. All references to
the Purchaser in this Agreement shall be deemed to include its assignee or
designee.
Section 12.11 No Personal Solicitation.
From and after the Closing Date, the Company hereby agrees that it
will not take any action or permit or cause any action to be taken by any of
its agents or affiliates, or by any independent contractors on the Company's
behalf, to personally, by telephone or mail, solicit the borrower or obligor
under any Mortgage Loan for the purpose of refinancing a Mortgage Loan,
without the prior written consent of the Purchaser. It is understood and
agreed that all rights and benefits relating to the solicitation of any
Mortgagors and the attendant rights, title and interest in and to the list of
such Mortgagors and data relating to their Mortgages (including insurance
renewal dates) shall be transferred to the Purchaser pursuant hereto on
Closing Date and the Company shall take no action to undermine these rights
and benefits. Notwithstanding the foregoing, it is understood and agreed
that and promotions for (a) optional insurance products or (b) promotions
undertaken by the Company or any affiliate of the Company which are directed
to the general public at large, including, without limitation, mass mailing
based on commercially acquired mailing lists, newspaper, radio and television
advertisements shall not constitute solicitation under this Section 12.11.
In addition, it is understood and agreed that: (i) upon the receipt of a
verification of mortgage; (ii) a request for demand for payoff or (iii) a
Mortgagor initiated written or verbal communication indicating a desire to
prepay the related Mortgage Loan, contact from the Company shall not
constitute solicitation under this Section 12.11.
IN WITNESS WHEREOF, the Company and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
XXXXXX CAPITAL, A DIVISION OF XXXXXX
BROTHERS HOLDINGS INC.
By:
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Name:
--------------------------------
Title:
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OPTION ONE MORTGAGE CORPORATION
By:
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Name:
--------------------------------
Title:
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