EXHIBIT 4.3(c)
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CWHEQ, INC.
Depositor
COUNTRYWIDE HOME LOANS, INC.
Sponsor and Master Servicer
CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 200_-_
Trust
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Indenture Trustee
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SALE AND SERVICING AGREEMENT
Dated as of _______, 200_
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REVOLVING HOME EQUITY LOAN ASSET BACKED NOTES,
SERIES 200_-_
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Table of Contents
Page
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ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01 Definitions..............................................................................1
Section 1.02 Other Terms..............................................................................1
Section 1.03 Rules of Construction....................................................................1
Section 1.04 Interest Calculations....................................................................3
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TAX TREATMENT
Section 2.01 Conveyance of Mortgage Loans; Retention of Obligation to Fund Advances Under
Credit Line Agreements.................................................................3
Section 2.02 Acceptance by Indenture Trustee..........................................................8
Section 2.03 Representations, Warranties, and Covenants Regarding the Master Servicer................10
Section 2.04 Representations and Warranties Regarding the Mortgage Loans; Retransfer of
Certain Mortgage Loans................................................................11
Section 2.05 Covenants of the Depositor..............................................................14
Section 2.06 Transfers of Mortgage Loans at Election of the Holder of the Class R-[1]
Certificates..........................................................................14
Section 2.07 Retransfers and Transfer Deficiencies...................................................16
Section 2.08 Tax Reporting...........................................................................17
Section 2.09 Representations and Warranties of the Depositor.........................................17
Section 2.10 Substitution and Repurchase Opinions....................................................17
Section 2.11 Sponsor Loss Coverage Obligation........................................................18
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 The Master Servicer.....................................................................18
Section 3.02 Collection of Certain Mortgage Loan Payments; Establishment of Accounts.................22
Section 3.03 Deposits to Payment Account.............................................................24
Section 3.04 Maintenance of Hazard Insurance; Property Protection Expenses...........................24
Section 3.05 Assumption and Modification Agreements..................................................25
Section 3.06 Realization Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage Loans.........25
Section 3.07 Indenture Trustee to Cooperate..........................................................27
Section 3.08 Servicing Compensation; Payment of Certain Expenses by Master Servicer..................28
Section 3.09 Annual Statement as to Compliance.......................................................29
Section 3.10 Access to Certain Documentation and Information Regarding the Mortgage Loans............29
Section 3.11 Maintenance of Certain Servicing Insurance Policies.....................................30
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01 Servicing Certificate...................................................................30
Section 4.02 Optional Advances of the Master Servicer................................................33
Section 4.03 Statements to Noteholders...............................................................33
ARTICLE V
THE MASTER SERVICER, THE SPONSOR, AND THE DEPOSITOR
Section 5.01 Liability of the Sponsor, the Master Servicer, and the Depositor........................34
Section 5.02 Merger or Consolidation of, or Assumption of the Obligations of, the Master
Servicer or the Depositor.............................................................34
Section 5.03 Limitation on Liability of the Master Servicer and Others...............................34
Section 5.04 Master Servicer Not to Resign...........................................................35
Section 5.05 Delegation of Duties....................................................................36
Section 5.06 Indemnification by the Master Servicer..................................................36
ARTICLE VI
SERVICING TERMINATION
Section 6.01 Events of Servicing Termination.........................................................36
Section 6.02 Indenture Trustee to Act; Appointment of Successor......................................39
Section 6.03 Notification to Noteholders and the Transferor..........................................40
ARTICLE VII
EXCHANGE ACT REPORTING
Section 7.01 Filing Obligations......................................................................40
Section 7.02 Form 10-D Filings.......................................................................40
Section 7.03 Form 8-K Filings........................................................................41
Section 7.04 Form 10-K Filings.......................................................................41
Section 7.05 Xxxxxxxx-Xxxxx Certification............................................................42
Section 7.06 Form 15 Filing..........................................................................43
Section 7.07 Report on Assessment of Compliance and Attestation......................................43
Section 7.08 Use of Subservicers and Subcontractors..................................................44
Section 7.09 Amendments..............................................................................45
ARTICLE VIII
TERMINATION
Section 8.01 Termination.............................................................................46
Section 8.02 Additional Termination Requirements.....................................................47
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01 Amendment...............................................................................48
Section 9.02 Governing Law...........................................................................48
Section 9.03 Notices.................................................................................48
Section 9.04 Severability of Provisions..............................................................50
Section 9.05 Third-Party Beneficiaries...............................................................50
Section 9.06 Counterparts; Electronic Delivery.......................................................50
Section 9.07 Effect of Headings and Table of Contents................................................50
EXHIBIT A - MORTGAGE LOAN SCHEDULE...................................................................A-1
EXHIBIT B - LETTER OF REPRESENTATIONS................................................................B-1
EXHIBIT C - FORM OF REQUEST FOR RELEASE..............................................................C-1
EXHIBIT D - FORM OF TRANSFER DOCUMENT................................................................D-1
EXHIBIT E - MONTHLY STATEMENT........................................................................E-1
EXHIBIT F - FORM OF PERFORMANCE CERTIFICATION........................................................F-1
EXHIBIT G - FORM OF SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE STATEMENT.........G-1
EXHIBIT H - FORM OF XXXXXXXX-XXXXX CERTIFICATION (REPLACEMENT OF MASTER SERVICER)....................H-1
ANNEX 1 DEFINITIONS........................................................................XXX-1-1
ANNEX 2 ADOPTION ANNEX.....................................................................XXX-2-1
This SALE AND SERVICING AGREEMENT, dated as of _______, 200_, among
CWHEQ, INC., as depositor, COUNTRYWIDE HOME LOANS, INC., as sponsor and master
servicer, CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 200_-_, and
________________, as Indenture Trustee,
WITNESSETH THAT:
The parties agree as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01 Definitions.
Unless the context requires a different meaning, capitalized terms are
used in this Agreement as defined in Annex 1.
Section 1.02 Other Terms.
Capitalized terms used in this Agreement that are not otherwise defined
have the meanings given to them in the Indenture. Defined terms that are used
only in one section or only in another definition may be omitted from the list
of defined terms in Annex 1. Defined terms used in this Agreement are
sometimes defined after their first use without a reference such as "(as
hereinafter defined)."
Section 1.03 Rules of Construction.
Except as otherwise expressly provided in this Agreement or unless the
context clearly requires otherwise:
(a) Defined terms include, as appropriate, all genders and the plural as
well as the singular.
(b) References to designated articles, sections, subsections, exhibits,
and other subdivisions of this Agreement, such as "Section 6.12 (a)," refer to
the designated article, section, subsection, exhibit, or other subdivision of
this Agreement as a whole and to all subdivisions of the designated article,
section, subsection, exhibit, or other subdivision. The exhibits and other
attachments to this Agreement are a part of this Agreement. The words
"herein," "hereof," "hereto," "hereunder," and other words of similar import
refer to this Agreement as a whole and not to any particular article, section,
exhibit, or other subdivision of this Agreement.
(c) Any term that relates to a document or a statute, rule, or regulation
includes any amendments, modifications, supplements, or any other changes that
may have occurred since the document, statute, rule, or regulation came into
being, including changes that occur after the date of this Agreement.
References to law are not limited to statutes. References to statutes include
any rules or regulations promulgated under them by a governmental authority
charged
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with the administration of the statute. Any reference to any person includes
references to its successors and assigns.
(d) Any party may execute any of the requirements under this Agreement
either directly or through others, and the right to cause something to be done
rather than doing it directly shall be implicit in every requirement under
this Agreement. Unless a provision is restricted as to time or limited as to
frequency, all provisions under this Agreement are implicitly available from
time to time.
(e) The term "including" and all its variations mean "including but not
limited to." Except when used in conjunction with the word "either," the word
"or" is always used inclusively (for example, the phrase "A or B" means "A or
B or both," not "either A or B but not both").
(f) A reference to "a [thing]" or "any [of a thing]" does not imply the
existence or occurrence of the thing referred to even though not followed by
"if any," and "any [of a thing]" is any and all of it. A reference to the
plural of anything as to which there could be either one or more than one does
not imply the existence of more than one (for instance, the phrase "the
obligors on a note" means "the obligor or obligors on a note"). "Until
[something occurs]" does not imply that it must occur, and will not be
modified by the word "unless." The word "due" and the word "payable" are each
used in the sense that the stated time for payment has passed. The word
"accrued" is used in its accounting sense, i.e., an amount paid is no longer
accrued. In the calculation of amounts of things, differences and sums may
generally result in negative numbers, but when the calculation of the excess
of one thing over another results in zero or a negative number, the
calculation is disregarded and an "excess" does not exist. Portions of things
may be expressed as fractions or percentages interchangeably. The word "shall"
is used in its imperative sense, as for instance meaning a party agrees to
something or something must occur or exist.
(g) All accounting terms used in an accounting context and not otherwise
defined, and accounting terms partly defined in this Agreement, to the extent
not completely defined, shall be construed in accordance with generally
accepted accounting principles in the United States. To the extent that the
definitions of accounting terms in this Agreement are inconsistent with their
meanings under generally accepted accounting principles, the definitions in
this Agreement shall control. Capitalized terms used in this Agreement without
definition that are defined in the Uniform Commercial Code of the relevant
jurisdiction are used in this Agreement as defined in that Uniform Commercial
Code.
(h) In the computation of a period of time from a specified date to a
later specified date or an open-ended period, the words "from" and "beginning"
mean "from and including," the word "after" means "from but excluding," the
words "to" and "until" mean "to but excluding," and the word "through" means
"to and including." Likewise, in setting deadlines or other periods, "by"
means "on or before." The words "preceding," "following," and words of similar
import, mean immediately preceding or following. References to a month or a
year refer to calendar months and calendar years.
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(i) Any reference to the enforceability of any agreement against a party
means that it is enforceable against the party in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, and other
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
Section 1.04 Interest Calculations.
All calculations of interest on the Asset Balance of a Mortgage Loan
under this Agreement are on a daily basis using a 365-day year. All
calculations of interest on the Notes are on the basis of the actual number of
days in an Interest Period and a year of 360 days. The calculation of the
Servicing Fee is on the basis of a 360-day year consisting of twelve 30-day
months. All dollar amounts calculated under this Agreement are rounded to the
nearest cent with one-half of one cent being rounded down.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TAX TREATMENT
Section 2.01 Conveyance of Mortgage Loans; Retention of Obligation to
Fund Advances Under Credit Line Agreements.
(a) Concurrently with the execution and delivery of this Agreement, the
Depositor hereby transfers to the Trust without recourse (subject to Sections
2.02 and 2.04) all of its right, title, and interest in
(1) each Initial Mortgage Loan, including its Asset Balance
(including all Additional Balances), the related Mortgage File, all
property that secures the Mortgage Loan, and all collections received on
it after the Cut-off Date (excluding payments due by the Cut-off Date);
(2) property that secured an Initial Mortgage Loan that is acquired
by foreclosure or deed in lieu of foreclosure;
(3) the Depositor's rights under the Purchase Agreement;
(4) the Depositor's rights under the hazard insurance policies;
(5) all rights under any guaranty executed in connection with a
Mortgage Loan;
(6) all other assets included or to be included in the Trust for the
benefit of the Secured Parties; and
(7) all proceeds of the foregoing.
This transfer to the Trust is to the Owner Trustee, on behalf of the Trust,
and each reference in this Agreement to this transfer shall be construed
accordingly. In addition, by the Closing Date, the Depositor shall cause the
Loan Insurance Policy Provider to deliver the Loan Insurance Policy to the
Indenture Trustee.
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(b) Additional Transfers; Conditions Precedent to Subsequent Additions.
(1) The Depositor may sell to the Trust Additional Home Equity Loans
on any Subsequent Closing Date designated by the Depositor by the Latest
Subsequent Closing Date. The Depositor shall notify the Owner Trustee,
the Indenture Trustee, and each Rating Agency of its designation of a
Subsequent Closing Date at least one Business Day in advance. On each
Subsequent Closing Date the Depositor shall deliver a Transfer Document
to the Owner Trustee and the Officer's Certificate referred to in Section
2.01(b)(ii)(I) to the Owner Trustee and the Indenture Trustee, and the
Indenture Trustee shall pay, on behalf of the Trust, to the order of the
Depositor, from the applicable Additional Loan Account, and set aside in
an account under its control for the benefit of the Depositor for later
delivery to the Depositor, the purchase price in an amount equal to the
Cut-off Date Asset Balance specified in the Transfer Document, up to the
amount of funds remaining in that Additional Loan Account.
Upon delivery of the Transfer Document and payment of the purchase
price, the Depositor hereby transfers to the Trust without recourse
(subject to Sections 2.02 and 2.04) all of its right, title, and interest
in each Additional Home Equity Loan identified in the Transfer Document,
including its Asset Balance (including all Additional Balances) and all
collections received on it after the relevant Subsequent Cut-off Date
(excluding payments due by the Subsequent Cut-off Date) and all proceeds
of the foregoing. This transfer to the Trust is to the Owner Trustee, on
behalf of the Trust, and each reference in this Agreement to this
transfer shall be construed accordingly.
The Depositor shall also deliver to the Owner Trustee and the
Indenture Trustee by the Opinion Delivery Date an opinion of counsel
relating to each Subsequent Closing Date to the effect that a court in a
bankruptcy context addressing the transfer of the Additional Home Equity
Loans would characterize the transfer as a sale rather than as a secured
lending and an opinion of counsel relating to the perfection of security
interest in the Additional Home Equity Loans substantially in the form
delivered on the Closing Date. In addition, the Depositor shall also
deliver to the Owner Trustee and the Indenture Trustee an Opinion of
Counsel to the effect that the purchase of Additional Home Equity Loans
will not result in the imposition of the tax on prohibited transactions
on the Trust or contributions after the Startup Date, as defined in
Sections 860F(a)(2) and 860G(d) of the Code, respectively or cause any
REMIC created under the Trust Agreement to fail to qualify as a REMIC. On
the day the revised Mortgage Loan Schedule and the opinions of counsel
are delivered, the Indenture Trustee shall deliver, on behalf of the
Trust, to the order of the Depositor the funds for the purchase price for
the Additional Home Equity Loans set aside on the relevant Subsequent
Closing Date, and any earnings on those funds since the relevant
Subsequent Closing Date.
(2) The obligation of the Indenture Trustee on behalf of the Trust
to pay the purchase price from the relevant Additional Loan Account for
the benefit of the Depositor and the acceptance by the Owner Trustee of
the transfer of the Additional
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Home Equity Loans and the other property and rights relating to them on
the related Subsequent Closing Date are subject to the satisfaction of
each of the following conditions by the Subsequent Closing Date:
(A) the Depositor shall have delivered to the Owner Trustee a
properly completed and executed Transfer Document;
(B) as of the related Subsequent Closing Date, neither the
Sponsor nor the Depositor is insolvent nor shall either of them be
made insolvent by the transfer of the Additional Home Equity Loans
nor is either of them aware of any pending insolvency;
(C) the addition shall not result in a material adverse federal
tax consequence to the Trust, the Transferor, or the Noteholders;
(D) the Subsequent Closing Date is not after the Latest
Subsequent Closing Date;
(E) neither the Depositor nor the Trust shall have been advised
in writing by any Rating Agency that the transfer of the Additional
Home Equity Loans would result in a reduction or withdrawal of the
Rating Agency's then current rating of the Notes;
(F) the Sponsor represents and warrants that on the Subsequent
Closing Date each of the representations and warranties in Section
2.04(a) by virtue of repetition of Section 3.02(a) of the Purchase
Agreement (excluding clauses (18), (30), (32), (33), and (34) of
Section 3.02(a) of the Purchase Agreement) are true with respect to
the Additional Home Equity Loans;
(G) the Sponsor represents and warrants that the addition of
the Additional Home Equity Loans will not result in a significant
variance as of the Subsequent Closing Date from the Mortgage Loan
pool characteristics covered by the representations and warranties
in Section 3.02(a)(18), (30), (32), (33), and (34) of the Purchase
Agreement after taking into account the addition of the Additional
Home Equity Loans;
(H) as of the relevant Subsequent Closing Date, the Sponsor is
not aware of any mechanics' or similar liens or claims that have
been filed for work, labor, or material affecting the related
Mortgaged Property that are, or may be, liens prior or equal to the
lien of the related mortgage, except liens that are fully insured
against by the title insurance policy referred to in Section
3.02(16) of the Purchase Agreement; and
(I) the Depositor shall have delivered or caused the Sponsor to
deliver to the Owner Trustee and the Indenture Trustee an Officer's
Certificate confirming the satisfaction of each of these conditions
precedent.
Neither the Owner Trustee nor the Indenture Trustee need investigate or
otherwise verify compliance with these conditions, except for its receipt of
the documents specified to be
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delivered to it in Section 2.01(b)(i), and they may rely on the Officer's
Certificate specified in Section 2.01(b)(ii)(I).
(c) Additional Balances; Future Fundings. Additional Balances shall be
part of the Asset Balance and are hereby transferred to the Trust on the
Closing Date for the Initial Mortgage Loans and on the relevant Subsequent
Closing Date for the Additional Home Equity Loans pursuant to this Section
2.01, and therefore are part of the Trust property. Neither the Owner Trustee
nor the Trust nor the Indenture Trustee assumes the obligation under any
Credit Line Agreement that provides for the funding of future advances to the
mortgagor under it, and neither the Trust nor the Owner Trustee nor the
Indenture Trustee may fund these future advances.
(d) Delayed Delivery. In connection with the transfer under Section
2.01(a) by the Depositor, the Depositor shall effect delivery of the Mortgage
Loan Schedule to the Trust and the Indenture Trustee by the Closing Date and
delivery of the Initial Mortgage Files to the Trust, and the Trust shall
deliver them to the Indenture Trustee,
(1) no later than the Closing Date, with respect to no less than 50%
of the Initial Mortgage Loans,
(2) no later than the twentieth day after the Closing Date, with
respect to no less than 40% of the Initial Mortgage Loans in addition to
those delivered on the Closing Date, and
(3) within thirty days following the Closing Date, with respect to
the remaining Initial Mortgage Loans.
In connection with the transfers by the Depositor under Section 2.01(b),
the Depositor shall effect delivery of a revised Mortgage Loan Schedule
reflecting the addition of the Additional Home Equity Loans to the Indenture
Trustee within 15 days following the relevant Subsequent Closing Date and of
the relevant Initial Mortgage Files to the Custodian,
(A) no later than the relevant Subsequent Closing Date, with
respect to no less than 10% of the relevant Additional Home Equity
Loans, and
(B) within twenty days following the relevant Subsequent
Closing Date, with respect to the remaining relevant Additional Home
Equity Loans.
In lieu of delivery of original documentation, the Depositor may deliver
documents that have been imaged optically on delivery of an opinion of counsel
to the Indenture Trustee that the imaged documents are enforceable to the same
extent as the originals and do not impair the enforceability of the transfer
to the Trust of the Mortgage Loans, if the retention of the imaged documents
in the delivered format will not result in a reduction in the then current
rating of the Notes.
(e) Xxxx Records. The Sponsor hereby confirms to the Owner Trustee and
the Indenture Trustee, on behalf of itself and any other Seller, that each
Seller has caused the portions of the Electronic Ledgers relating to the
Initial Mortgage Loans to be clearly and unambiguously marked, and has made
the appropriate entries in its general accounting records,
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to indicate that the Initial Mortgage Loans have been transferred to the Trust
at the direction of the Depositor. The Master Servicer hereby confirms to the
Owner Trustee and the Indenture Trustee that it has clearly and unambiguously
made appropriate entries in its general accounting records indicating that
those Initial Mortgage Loans constitute part of the Trust and are serviced by
it on behalf of the Trust in accordance with this Agreement.
By the relevant Subsequent Closing Date, the Sponsor shall cause the
portions of the Electronic Ledgers relating to the Additional Home Equity
Loans to be clearly and unambiguously marked, and shall make appropriate
entries in its general accounting records, to indicate that those Additional
Home Equity Loans have been transferred to the Trust at the direction of the
Depositor. By the relevant Subsequent Closing Date, the Master Servicer shall
clearly and unambiguously make appropriate entries in its general accounting
records indicating that those Additional Home Equity Loans constitute part of
the Trust and are serviced by it on behalf of the Trust in accordance with
this Agreement.
(f) UCC Filings. The Depositor and the Trust agree (subject to Section
2.01(h)) to effect any actions and execute any documents necessary to perfect
and protect the Trust's, the Indenture Trustee's and the Secured Parties'
interests in each Cut-off Date Asset Balance and Additional Balances and their
proceeds, including filing all necessary Continuation Statements for the UCC1
Financing Statements filed in the State of Delaware (which shall have been
filed by the Closing Date) describing the Cut-off Date Asset Balances and
Additional Balances and naming the Depositor as debtor and the Trust as
secured party or naming the Trust as debtor and the Indenture Trustee as
secured party and any amendments to UCC1 Financing Statements required to
reflect a change in the UCC or in the name or organizational structure of the
Depositor or the Trust or the filing of any additional UCC1 Financing
Statements due to the change in the state of organization of the Depositor or
the Trust (within 30 days of any event necessitating the filing).
(g) Sponsor Rating Downgrade. If either an Event of Servicing Termination
has occurred and not been waived or the long term senior unsecured corporate
debt rating of Countrywide Home Loans, Inc. falls below "[BBB]" by Standard &
Poor's or "[Baa2]" by Xxxxx'x, then as promptly as practicable but in any case
within 90 days of the event, the Master Servicer shall, at its expense, either
(x) request that the Indenture Trustee deliver to it the original
Assignment of Mortgage previously delivered to the Indenture Trustee
pursuant to Section 2.01(d) and then record the Assignment of Mortgage in
favor of the Indenture Trustee (which may be a blanket assignment if
permitted by applicable law) in the appropriate real property or other
records,
(y) deliver to the Indenture Trustee an Opinion of Counsel addressed
to the Indenture Trustee to the effect that recording is not required to
protect the Indenture Trustee's interest in the related Mortgage Loan or,
in case a court should recharacterize the sale of the Mortgage Loans as a
financing, to perfect a first priority Security Interest in favor of the
Indenture Trustee in the related Mortgage Loan, which Opinion of
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Counsel also shall be reasonably acceptable to each of the Rating
Agencies (as evidenced in writing), or
(z) cause the MERS(R) System to indicate (and provide evidence to
the Indenture Trustee that it has done so) that the Mortgage Loans have
been assigned by the Trust to the Indenture Trustee in accordance with
this Agreement for the benefit of the Noteholders by including (or
deleting, in the case of Mortgage Loans that are repurchased in
accordance with this Agreement) in the MERS computer files (a) the
appropriate code that identifies the Indenture Trustee in the field for
identifying the assignee and (b) the appropriate code that has been
assigned to identify the Notes to the MERS(R) System in the field "Pool
Field" identifying the Notes issued in connection with the Mortgage
Loans.
(h) Sale Treatment. The transfer of the Mortgage Loans is a sale by each
Seller to the Depositor and by the Depositor to the Trust of all of each
Seller's and then all the Depositor's interest in the Mortgage Loans and other
property described above. From the time the Notes are issued until such time
as all or a portion of the Notes are sold to one or more unaffiliated parties,
each Seller will report the transfer of the Mortgage Loans and the related
Additional Balances to the Depositor as a transfer of assets in exchange for
beneficial interests in the form of asset-backed securities and servicing
rights. If the transfer were to be characterized as a transfer for security
and not as a sale, however, then the Depositor hereby grants to the Trust a
Security Interest in all of the Depositor's right, title, and interest in the
Mortgage Loans whether existing now or in the future, all monies due or to
become due on the Mortgage Loans, and all their proceeds; and this Agreement
shall constitute a Security Agreement under applicable law.
Section 2.02 Acceptance by Indenture Trustee.
(a) On the Closing Date, the Custodian shall execute and deliver to the
Depositor, the Master Servicer, and the Sponsor the Initial Certification
pursuant to the Custodial Agreement. If Mortgage Files with respect to either
Initial Mortgage Loans have been delivered after the Closing Date or
Additional Home Equity Loans have been delivered after the Subsequent Closing
date pursuant to Section 2.01(d), the Custodian shall execute and deliver to
the Depositor, the Master Servicer, and the Sponsor a Delay Delivery
Certification pursuant to the Custodial Agreement within the period specified
in the Custodial Agreement. Within 180 days after the Closing Date, Custodian
shall deliver to the Depositor, the Master Servicer, and the Sponsor a Final
Certification pursuant to the Custodial Agreement. The Sponsor shall correct
any defect noted in the Final Certification within 90 days of its receipt and
in no event later than [270] days after the Closing Date.
Upon the satisfaction of the requirements of Section 2.07, all interest
of the Trust in a Mortgage Loan shall automatically be retransferred no later
than the [270]th day after the Closing Date without recourse, representation,
or warranty to the Sponsor and the Asset Balance of the Mortgage Loan shall be
deducted from the Loan Pool Balance, if
(1) the Indenture Trustee does not receive the Mortgage File for any
Mortgage Loan as required by Section 2.01(d),
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(2) the time to correct any defect in the Mortgage Loan noted on the
Final Certification has expired,
(3) the Trust ever incurs any loss on the Mortgage Loan because any
document in its Mortgage File is defective, or
(4) an Assignment of Mortgage to the Indenture Trustee has not been
recorded in accordance with Section 2.01(g) and the Mortgage Loan is not
registered on the MERS(R) System.
Subject to the prior satisfaction of the requirements of Section 2.07,
the Owner Trustee shall execute any documents of transfer presented by the
Sponsor, without recourse, representation, or warranty, and take any other
actions reasonably requested by the Sponsor to effect the transfer by the
Trust of the Defective Mortgage Loan pursuant to this Section as promptly as
practical.
The sole remedy of the Secured Parties, the Transferor, the Owner
Trustee, and the Indenture Trustee against the Sponsor for the transfer of a
Defective Mortgage Loan to the Trust is the Sponsor's obligation to accept a
transfer of a Defective Mortgage Loan and to convey an Eligible Substitute
Mortgage Loan or to make a deposit of any Transfer Deposit Amount into the
Collection Account in accordance with Section 2.07.
Promptly following the transfer of any Defective Mortgage Loan from the
Trust pursuant to this Section or Section 2.07, the Master Servicer shall
amend the Mortgage Loan Schedule, deliver the amended Mortgage Loan Schedule
to the Indenture Trustee, and make appropriate entries in its general account
records to reflect the transfer. Following the retransfer, the Master Servicer
shall appropriately xxxx its records to indicate that it is no longer
servicing the Mortgage Loan on behalf of the Trust. The Sponsor shall
appropriately xxxx its Electronic Ledger and make appropriate entries in its
general account records to reflect the transfer promptly following the
transfer.
(b) The Sponsor shall deliver to the Indenture Trustee any documents
required to be held by the Indenture Trustee in accordance with Section 2.01
with respect to any Eligible Substitute Mortgage Loans. The Master Servicer
shall determine the Transfer Deposit Amount in any Collection Period during
which the Sponsor substitutes Eligible Substitute Mortgage Loans and the
Sponsor shall deposit that amount in the Collection Account at the time of
substitution. All amounts received on the Eligible Substitute Mortgage Loans
during the Collection Period in which the circumstances giving rise to their
transfer to the Trust occur shall not be a part of the Trust and shall not be
deposited by the Master Servicer in the Collection Account. All amounts
received on a removed Defective Mortgage Loan during the Collection Period in
which the circumstances giving rise to its transfer to the Trust occur shall
be a part of the Trust and shall be deposited by the Master Servicer in the
Collection Account. An Eligible Substitute Mortgage Loan will be subject to
the terms of this Agreement in all respects when transferred to the Trust, and
the Sponsor hereby makes the representations, warranties, and covenants in
Section 2.04 with respect to the Eligible Substitute Mortgage Loan as of the
date of substitution.
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(c) The Custodian shall retain possession of each Mortgage File on behalf
of the Indenture Trustee in accordance with the Custodial Agreement. The
Master Servicer shall promptly deliver to the Indenture Trustee the originals
of any other documents constituting the Mortgage File coming into its
possession on their execution or receipt. Any documents to be delivered to the
Indenture Trustee under this Agreement may be delivered to the Custodian
acting on behalf of the Indenture Trustee.
Section 2.03 Representations, Warranties, and Covenants Regarding the
Master Servicer.
The Master Servicer represents and warrants to the Indenture Trustee that
as of the Closing Date:
(1) The Master Servicer is a New York corporation, validly existing
and in good standing under the laws of the State of New York, and has the
corporate power to own its assets and to transact the business in which
it is currently engaged. The Master Servicer is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction in which the character of its business or any properties
owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or other) of the
Master Servicer.
(2) The Master Servicer has the power and authority to make,
execute, deliver, and perform this Agreement and all of the transactions
contemplated under this Agreement, and has taken all necessary corporate
action to authorize the execution, delivery, and performance of this
Agreement. When executed and delivered, this Agreement will constitute a
valid and legally binding obligation of the Master Servicer enforceable
in accordance with its terms.
(3) The Master Servicer is not required to obtain the consent of any
other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau, or
agency in connection with the execution, delivery, performance, validity,
or enforceability of this Agreement, except for consents, licenses,
approvals or authorizations, or registrations or declarations that have
been obtained or filed, as the case may be, before the Closing Date.
(4) The execution, delivery, and performance of this Agreement by
the Master Servicer will not violate any existing law or regulation or
any order or decree of any court applicable to the Master Servicer or the
certificate of incorporation or bylaws of the Master Servicer, or
constitute a material breach of any mortgage, indenture, contract, or
other agreement to which the Master Servicer is a party or by which the
Master Servicer may be bound.
(5) No litigation or administrative proceeding of or before any
court, tribunal, or governmental body is currently pending, or to the
knowledge of the Master Servicer threatened, against the Master Servicer
or any of its properties or with respect to this Agreement, the
Indenture, or the Notes that in the opinion of the Master Servicer
10
has a reasonable likelihood of resulting in a material adverse effect on
the transactions contemplated by the Transaction Documents.
(6) If any Mortgage Loan has been registered on the MERS(R) System,
the Master Servicer is a member of MERS in good standing.
The Master Servicer covenants that it will fully furnish, in accordance
with the Fair Credit Reporting Act and its implementing regulations, accurate
and complete information (i.e., favorable and unfavorable) on its credit files
for the related Mortgagor for each Mortgage Loan to Equifax, Experian, and
Trans Union Credit Information Company on a monthly basis.
The representations, warranties, and covenants in this Section shall
survive the transfer of the Mortgage Loans to the Trust. Upon discovery of a
breach of any representation, warranty, or covenant that materially and
adversely affects the interests of the Transferor or the Noteholders, the
person discovering the breach shall give prompt notice to the other parties.
The Master Servicer shall cure in all material respects any breach of any
representation, warranty, or covenant within 90 days of becoming aware of it
or, if the Mortgage Loan represents a "qualified mortgage" within the meaning
of Section 860(a)(3) of the Code (but without regard to the rule in Treasury
Regulation ss. 1.860G-2(f)(2) that treats a defective obligation as a
qualified mortgage, or any substantially similar successor provision) and if a
Responsible Officer of the Indenture Trustee consents, any longer period
specified in the consent.
Section 2.04 Representations and Warranties Regarding the Mortgage Loans;
Retransfer of Certain Mortgage Loans.
(a) The Sponsor by this reference repeats and incorporates in this
Agreement each representation and warranty made by it (as a Seller) in Section
3.02(a) of the Purchase Agreement (other than Section 3.02(a)(1) and (2)) to
the Indenture Trustee and the Trust and, in addition, represents and warrants
to the Indenture Trustee and the Trust that as of the Cut-off Date, unless
specifically stated otherwise:
(1) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date with respect to any
Additional Home Equity Loans, or the applicable date of substitution with
respect to any Eligible Substitute Mortgage Loan, this Agreement
constitutes a valid and legally binding obligation of the Sponsor,
enforceable against the Sponsor in accordance with its terms.
(2) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date with respect to any
Additional Home Equity Loans, or the applicable date of substitution with
respect to any Eligible Substitute Mortgage Loan, either
(A) the Purchase Agreement constitutes a valid transfer to the
Depositor of all right, title, and interest of the Sellers in the
applicable Mortgage Loans, all collections received from the
Mortgage Loans after the Cut-off Date (excluding payments due by the
Cut-off Date), all proceeds of the applicable Mortgage Loans, and
any funds from time to time deposited in the Collection Account and
in the Payment Account and all other property
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specified in Section 2.01(a) or (b), as applicable, and this
Agreement constitutes a valid transfer to the Trust of the foregoing
property such that, on execution of this Agreement, it is owned by
the Trust free of all liens and other encumbrances, and is part of
the corpus of the Trust conveyed to the Trust by the Depositor, and
upon payment for the Additional Balances, the Purchase Agreement and
this Agreement will constitute a valid transfer to the Trust of all
right, title, and interest of the Sellers in the Additional
Balances, all monies due or to become due on them, all proceeds of
the Additional Balances, and all other property specified in Section
2.01(a) relating to the Additional Balances free of all liens and
other encumbrances, or
(B) the Purchase Agreement or this Agreement, as appropriate,
constitutes a Grant of a Security Interest to the Owner Trustee on
behalf of the Trust in the property described in clause (A) above
and the Indenture constitutes a Grant of a Security Interest to the
Indenture Trustee in the Collateral. The Indenture Trustee has a
first priority perfected Security Interest in the Collateral,
subject to the effect of Section 9-315 of the UCC with respect to
collections on the Mortgage Loans that are deposited in the
Collection Account in accordance with the next to last paragraph of
Section 3.02(b), and if this Agreement constitutes the Grant of a
Security Interest in the property described in clause (A) above to
the Trust, the Trust has a first priority perfected Security
Interest in the property, subject to the same limitations. This
Security Interest is enforceable as such against creditors of and
purchasers from the Trust, the Depositor, and each Seller.
(b) If the substance of any representation and warranty in this Section
made to the best of the Sponsor's knowledge or as to which the Sponsor has no
knowledge is inaccurate and the inaccuracy materially and adversely affects
the interest of the Trust or the Noteholders in the related Mortgage Loan
then, notwithstanding that the Sponsor did not know the substance of the
representation and warranty was inaccurate at the time the representation or
warranty was made, the inaccuracy shall be a breach of the applicable
representation or warranty.
(c) The representations and warranties in this Section shall survive
delivery of the respective Mortgage Files to the Custodian pursuant to the
Custodial Agreement and the termination of the rights and obligations of the
Master Servicer pursuant to Section 5.04 or 6.02. If the Sponsor, the
Depositor, the Master Servicer, or a Responsible Officer of the Indenture
Trustee discovers a breach of any of the foregoing representations and
warranties, without regard to any limitation concerning the knowledge of the
Sponsor, that materially and adversely affects the interests of the Trust, the
Indenture Trustee under the Indenture, or the Noteholders in the Mortgage
Loan, the party discovering the breach shall give prompt notice to the other
parties.
(d) The Sponsor shall use all reasonable efforts to cure in all material
respects any breach of any of the foregoing representations and warranties
(other than a breach of the representation and warranty in Section 2.04 by
virtue of the repetition of Section 3.02(a)(5) of
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the Purchase Agreement) within 90 days of becoming aware of it or, not later
than the Business Day before the Payment Date in the month following the
Collection Period in which the cure period expired (or any later date that the
Indenture Trustee consent to), all interest of the Trust in the Defective
Mortgage Loan shall, subject to the satisfaction of the requirements of
Section 2.07, automatically be retransferred without recourse, representation,
or warranty to the Sponsor and the Asset Balance of the Mortgage Loan shall be
deducted from the Loan Balance.
The cure for any breach of a representation and warranty relating to the
characteristics of the Mortgage Loans in the aggregate shall be a repurchase
of or substitution for only the Mortgage Loans necessary to cause the
characteristics to comply with the related representation and warranty.
Subject to the prior satisfaction of the requirements of Section 2.07,
the Owner Trustee shall execute any documents of transfer presented by the
Sponsor, without recourse, representation, or warranty, and take any other
actions reasonably requested by the Sponsor to effect the transfer by the
Trust of the Defective Mortgage Loan pursuant to this Section as promptly as
practical.
Promptly following the transfer of any Defective Mortgage Loan from the
Trust pursuant to this Section, the Master Servicer shall amend the Mortgage
Loan Schedule, deliver the amended Mortgage Loan Schedule to the Indenture
Trustee, and make appropriate entries in its general account records to
reflect the transfer. Following the retransfer, the Master Servicer shall
appropriately xxxx its records to indicate that it is no longer servicing the
Mortgage Loan on behalf of the Trust. The Sponsor shall appropriately xxxx its
Electronic Ledger and make appropriate entries in its general account records
to reflect the transfer promptly following the transfer.
(e) The sole remedy of the Secured Parties, the Indenture Trustee on
behalf of Secured Parties, and the Owner Trustee against the Sponsor for the
breach of a representation or warranty (other than the representation and
warranty in Section 2.04(a) by virtue of the repetition of Section 3.02(a)(5)
of the Purchase Agreement) is the Sponsor's obligation to accept a transfer of
a Mortgage Loan as to which a breach has occurred and is continuing and to
make any required deposit in the Collection Account or to substitute an
Eligible Substitute Mortgage Loan.
(f) If the representation and warranty in Section 2.04(a) by virtue of
the repetition of Section 3.02(a)(5) of the Purchase Agreement is breached,
the transfer of the affected Mortgage Loans to the Trust shall be void and the
Sponsor shall pay to the Trust the sum of (i) the amount of the related Asset
Balances, plus accrued interest on each Asset Balance at the applicable Loan
Rate to the date of payment and (ii) the amount of any loss or expense
incurred by the Transferor, the Noteholders or the Trust with respect to the
affected Mortgage Loans. The Indenture Trustee may enforce the Sponsor's
obligations under this Section in its own right or as the owner of the Trust's
right to seek enforcement as the assignee of the Trust's rights under this
Agreement pursuant to the Indenture.
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(g) The Sponsor shall defend and indemnify the Indenture Trustee, the
Owner Trustee, and the Secured Parties against all reasonable costs and
expenses, and all losses, damages, claims, and liabilities, including
reasonable fees and expenses of counsel and the amount of any settlement
entered into with the consent of the Sponsor (this consent not to be
unreasonably withheld), that may be asserted against or incurred by any of
them as a result of any third-party action arising out of any breach of a
representation and warranty.
Section 2.05 Covenants of the Depositor.
The Depositor covenants that:
(a) Security Interests. Except for the transfer under this Agreement, the
Depositor will not transfer any Mortgage Loan to any other person, or create
or suffer to exist any Lien on any Mortgage Loan or any interest in one,
whether existing now or in the future; the Depositor will notify the Indenture
Trustee of the existence of any Lien on any Mortgage Loan immediately on its
discovery; and the Depositor will defend the right, title, and interest of the
Trust in the Mortgage Loans, whether existing now or in the future, against
all claims of third parties claiming through the Depositor. Nothing in this
Section shall prohibit the Depositor from suffering to exist on any Mortgage
Loan any Liens for municipal or other local taxes and other governmental
charges if the taxes or governmental charges are not due at the time or if the
Depositor is contesting their validity in good faith by appropriate
proceedings and has set aside on its books adequate reserves with respect to
them.
(b) Negative Pledge. The Depositor shall not transfer or grant a Security
Interest in the Transferor Certificates except in accordance with Section 3.10
of the Trust Agreement.
(c) Additional Indebtedness. So long as the Notes are outstanding the
Depositor will not incur any debt other than debt that (i) is non-recourse to
the assets of the Depositor other than the mortgage loans specifically pledged
as security for the debt, (ii) is subordinated in right of payment to the
rights of the Noteholders, or (iii) is assigned a rating by each of the Rating
Agencies that is the same as the then current rating of the Notes.
(d) Downgrading. The Depositor will not engage in any activity that would
result in a downgrading of the Notes.
(e) Amendment to Certificate of Incorporation. The Depositor will not
amend its Certificate of Incorporation or state of incorporation without prior
notice to the Rating Agencies and the Indenture Trustee.
Section 2.06 Transfers of Mortgage Loans at Election of the Holder of the
Class R-[1] Certificates.
Subject to the conditions below, the holder of the Class R-[1]
Certificates may require the transfer of Mortgage Loans from the Trust to the
holder of the Class R-[1] Certificates as of the close of business on a
Payment Date (the "Transfer Date") in an amount not in excess of the sum of
the outstanding Net Draws at the time and the excess of the Transferor
Interest over the Overcollateralization Target Amount at the time . In
connection with any transfer, the Net Draws shall be reduced by the aggregate
Asset Balances as of the Transfer Date of the Mortgage Loans transferred, and
the excess, if any, will be applied to reduce the Transferor
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Interest. Not more than 90 days, but not less than 45 days before the Transfer
Date designated in the notice, the holder of the Class R-[1] Certificates
shall give the Owner Trustee, the Indenture Trustee, the Rating Agencies, and
the Master Servicer a notice of the proposed transfer that contains a list of
the Mortgage Loans to be transferred. These transfers of Mortgage Loans shall
be permitted if the following conditions are satisfied:
(1) No Rapid Amortization Event has occurred,
(2) On the Transfer Date
(A) the Transferor Interest (after giving effect to the
removal of the Mortgage Loans proposed to be transferred) exceeds
(B) the Overcollateralization Target Amount.
(3) The transfer of any Mortgage Loans on any Transfer Date during
the Managed Amortization Period shall not, in the reasonable belief of
the holder of the Class R-[1] Certificates, cause a Rapid Amortization
Event to occur or an event that with notice or lapse of time or both
would constitute a Rapid Amortization Event.
(4) The Class R-[1] Certificateholder shall have held the Class
R-1 Certificates for a period of one year preceding the Transfer Date
and not exercised the option to receive Mortgage Loans in accordance
with this Section 2.06 on either of the two Payment Dates immediately
preceding the Transfer Date.
(5) The aggregate principal balance of the Mortgage Loans to be
transferred on a Transfer Date shall be not less than $500,000.
(6) By the Transfer Date, the holder of the Class R-[1]
Certificates shall have delivered to the Indenture Trustee a revised
Mortgage Loan Schedule, reflecting the proposed transfer and the
Transfer Date, and the Master Servicer shall have marked the Electronic
Ledger to show that the Mortgage Loans transferred to the holder of the
Class R-[1] Certificates are no longer owned by the Trust.
(7) The holder of the Class R-[1] Certificates shall represent and
warrant that the Mortgage Loans to be removed from the Trust were
selected randomly.
(8) In connection with each transfer of Mortgage Loans pursuant to
this Section, each Rating Agency shall have received notice of the
proposed transfer of Mortgage Loans and, before the Transfer Date, each
Rating Agency shall have notified in writing the holder of the Class
R-[1] Certificates and the Indenture Trustee that the transfer of
Mortgage Loans would not result in a reduction or withdrawal of its then
current rating of the Notes.
(9) The holder of the Class R-[1] Certificates shall have
delivered to the Owner Trustee and the Indenture Trustee an Officer's
Certificate certifying that the items in subparagraphs (i) through
(viii), inclusive, have been performed or are true, as the case may be.
The Owner Trustee and the Indenture Trustee may conclusively rely the
Officer's Certificate, shall have no duty to make inquiries with regard
to the matters in it, and shall incur no liability in so relying.
(10) On or after the Stepdown Date, the holder of the Class R-[1]
Certificates shall pay the purchase price of any transferred Mortgage
Loan allocated to the Transferor Interest for the benefit of the Class C
Certificates subject to the terms of the Trust Agreement.
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Upon receiving the requisite information from the holder of the Class
R-[1] Certificates, the Master Servicer shall perform in a timely manner those
acts required of it, as specified above. Upon satisfaction of the above
conditions, on the Transfer Date the Indenture Trustee shall effect delivery
to the holder of the Class R-[1] Certificates the Mortgage File for each
Mortgage Loan being so transferred, and the Indenture Trustee shall execute
and deliver to the holder of the Class R-[1] Certificates any other documents
prepared by the holder of the Class R-[1] Certificates reasonably necessary to
transfer the Mortgage Loans to the holder of the Class R-[1] Certificates.
This transfer of the Trust's interest in Mortgage Loans shall be without
recourse, representation, or warranty by the Indenture Trustee or the Trust to
the holder of the Class R-[1] Certificates.
Section 2.07 Retransfers and Transfer Deficiencies.
(a) The Indenture Trustee shall determine if reducing the Loan Pool
Balance by the Asset Balance of any retransferred Mortgage Loan pursuant to
Section 2.02(a) or 2.04(d) would cause a Transfer Deficiency. If so, the
Indenture Trustee shall notify the Sponsor of the deficiency, and the Sponsor
shall transfer to the Trust within five Business Days (but only if the
transfer occurs within two years of the Closing Date) Eligible Substitute
Mortgage Loans or deposit into the Collection Account an amount in immediately
available funds equal to the amount of the Transfer Deficiency reduced by the
Asset Balance of any Eligible Substitute Mortgage Loans transferred to the
Trust (the "Transfer Deposit Amount").
(b) The Sponsor shall deliver to the Indenture Trustee any documents
required to be held by the Indenture Trustee in accordance with Section 2.01
with respect to any Eligible Substitute Mortgage Loans.
(c) All amounts received on Eligible Substitute Mortgage Loans during the
Collection Period in which the circumstances giving rise to their transfer to
the Trust occur shall not be a part of the Trust and shall not be deposited by
the Master Servicer in the Collection Account.
All amounts received on a removed Defective Mortgage Loan during the
Collection Period in which the circumstances giving rise to its transfer to
the Trust occur shall be a part of the Trust and shall be deposited by the
Master Servicer in the Collection Account.
(d) An Eligible Substitute Mortgage Loan will be subject to the terms of
this Agreement in all respects when transferred to the Trust, and the Sponsor
hereby makes the representations, warranties, and covenants in Section 2.04
with respect to the Eligible Substitute Mortgage Loan as of the date of its
transfer to the Trust.
(e) Promptly following the transfer of any Eligible Substitute Mortgage
Loan to the Trust pursuant to this Section, the Master Servicer shall amend
the Mortgage Loan Schedule, deliver the amended Mortgage Loan Schedule to the
Indenture Trustee, and make appropriate entries in its general account records
to reflect the transfer. The Sponsor shall appropriately xxxx its Electronic
Ledger and make appropriate entries in its general account records to reflect
the transfer promptly following the transfer.
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Section 2.08 Tax Reporting.
The Administrator pursuant to the Administration Agreement will prepare
and file all tax reports required under this Agreement on behalf of the Trust,
including tax reporting and withholding required by Sections 1445 and 6050J of
the Code with respect to foreclosures and abandonments, the tax reporting
required by Section 6050H of the Code with respect to the receipt of mortgage
interest from individuals, and any tax reporting required by Section 6050P of
the Code with respect to the cancellation of indebtedness by certain financial
entities, by preparing any tax and information returns required and delivering
them to the Owner Trustee for filing.
Section 2.09 Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Indenture Trustee on behalf
of the Noteholders as follows:
(1) This Agreement constitutes a valid and legally binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms.
(2) Immediately before the sale and assignment by the Depositor to
the Trust of each Mortgage Loan, the Depositor was the sole beneficial
owner of each Mortgage Loan (insofar as the title was conveyed to it by
the Sellers) subject to no prior lien, claim, participation interest,
mortgage, Security Interest, pledge, charge, or other encumbrance or
other interest of any nature.
(3) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date with respect to any
Additional Home Equity Loans, or the applicable date of substitution with
respect to any Eligible Substitute Mortgage Loan, the Depositor has
transferred all right, title, and interest in the Eligible Substitute
Mortgage Loan to the Trust.
(4) The Depositor has not transferred the Mortgage Loans to the
Trust with any intent to hinder, delay, or defraud any of its creditors.
Section 2.10 Substitution and Repurchase Opinions.
Notwithstanding any contrary provision of this Agreement, with respect to
any Mortgage Loan that is not in default or as to which default is not
imminent, no repurchase or substitution pursuant to Sections 2.02, 2.03, 2.04,
or 2.06 shall be made unless the party repurchasing or substituting delivers
to the Indenture Trustee an Opinion of Counsel to the effect that the
repurchase or substitution would not result in the imposition of the tax on
prohibited transactions of the Trust or contributions after the Startup Date,
as defined in Sections 860F(a)(2) and 860G(d) of the Code, respectively or
cause the any REMIC created under the Trust Agreement to fail to qualify as a
REMIC at any time that any Notes or Certificates are outstanding. Any Mortgage
Loan whose repurchase or substitution was delayed pursuant to this Section
shall be repurchased or substituted for upon the earlier of the occurrence of
a default or imminent default with respect to the Mortgage Loan and
satisfaction of the requirements of this Section.
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Section 2.11 Sponsor Loss Coverage Obligation.
The Sponsor, for the benefit of the Noteholders, agrees that it will pay
the Sponsor Loss Coverage Obligation for any Payment Date as reflected in the
applicable Servicing Certificate to the Indenture Trustee for deposit in the
Payment Account no later than the Business Day before the Payment Date.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 The Master Servicer.
(a) The Master Servicer shall service and administer the Mortgage Loans
in a manner consistent with the terms of this Agreement and with general
industry practice and shall have full power and authority, acting alone or
through a subservicer,
o to execute and deliver, on behalf of the Secured Parties, the
Trust, and the Indenture Trustee, customary consents or waivers and other
instruments and documents,
o to consent to transfers of any Mortgaged Property and assumptions
of the Mortgage Notes and related Mortgages (but only in the manner
provided in this Agreement),
o to collect any Insurance Proceeds and other Liquidation Proceeds,
and
o to effectuate foreclosure or other conversion of the ownership of
the Mortgaged Property securing any Mortgage Loan.
The Master Servicer shall remain responsible to the parties to this
Agreement for its obligations under this Agreement. Any amounts received by
any subservicer on a Mortgage Loan shall be considered to have been received
by the Master Servicer whether or not actually received by it. Without
limiting the generality of the foregoing, the Master Servicer may execute and
deliver, on behalf of itself, the Noteholders, and the Indenture Trustee, or
any of them, any instruments of satisfaction or cancellation, or of partial or
full release or discharge, and all other comparable instruments, with respect
to the Mortgage Loans and with respect to the Mortgaged Properties, in each
case to the extent not inconsistent with this Agreement. Notwithstanding
anything herein to the contrary, the Master Servicer shall not make or permit
any modification, waiver, or amendment of any term of any Mortgage Loan that
would cause any REMIC created under the Trust Agreement to fail to qualify as
a REMIC or result in the imposition of any tax under Section 860F(a) or
Section 860G of the Code.
At the request of a Servicing Officer, the Indenture Trustee shall
furnish the Master Servicer with any powers of attorney and other documents
appropriate to enable the Master Servicer to carry out its servicing and
administrative duties under this Agreement. The Master Servicer in this
capacity may also consent to the placing of a lien senior to that of any
mortgage on the related Mortgaged Property, if
(1) the new senior lien secures a mortgage loan that refinances an
existing first mortgage loan; and
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(2) either
(A) the Loan-to-Value Ratio of the new mortgage loan (without
taking into account any closing costs that may be financed by the
new mortgage loan) is equal to or less than the Loan-to-Value Ratio
of the first mortgage loan to be replaced (for purposes of
calculating the Loan-to-Value Ratio, the Valuation of the Mortgaged
Property will be measured by the lesser of (A) the Valuation of the
Mortgaged Property as of the Cut-off Date and (B) the Valuation of
the Mortgaged Property as of the date of the refinancing referenced
in clause (i)) or
(B) the Combined Loan-to-Value Ratio of the new mortgage loan
(without taking into account any closing costs that may be financed
by the new mortgage loan) and the existing Mortgage Loan is equal to
less than 70% (for purposes of calculating the Combined
Loan-to-Value Ratio, the Valuation of the Mortgaged Property will be
measured as the lesser of (A) the Valuation of the Mortgage Loan as
of the Cut-off Date and (B) the Valuation of the Mortgage Loan as of
the date of the refinancing referenced in clause (i)).
The aggregate Asset Balance of all the Mortgage Loans with respect to which
the senior lien may be so modified may not exceed 50% of the Original Note
Principal Balance.
The Master Servicer may also, without approval from the Rating Agencies,
increase the Credit Limit on any Mortgage Loan at any time if
(1) a new appraisal is obtained and the Loan-to-Value Ratio of the
Mortgage Loan after giving effect to the increase is less than or equal
to the Loan-to-Value Ratio of the Mortgage Loan as of the Cut-off Date
(2) the increase is consistent with the Master Servicer's
underwriting policies, and
(3) either:
(A) the Credit Line Agreement allows the mortgagee to
unilaterally increase the Credit Limit;
(B) the Credit Limit increase is made within 90 days of the
Cut-off Date, or
(C) the Sponsor purchases the Mortgage Loan from the Trust in
the manner described below for rate reduction loans.
In addition, the Master Servicer may increase the Credit Limits on
Mortgage Loans having aggregate Asset Balances of up to an additional 5.0% of
the Original Note Principal Balance at any time, if
(4) the increase does not cause the Combined Loan-to-Value Ratio of
the Mortgage Loans to exceed 100%,
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(5) the increase in the Credit Limit of a Mortgage Loan does not
cause the Combined Loan-to-Value Ratio of the Mortgage Loan to exceed
100%,
(6) the increase in the Credit Limit of a Mortgage Loan does not
cause the Combined Loan-to-Value Ratio of the Mortgage Loan to increase
by more than 25% (for example, a Combined Loan-to-Value Ratio of 50% can
be increased to 75%, a Combined Loan-to-Value Ratio of 60% can be
increased to 85%, and so forth),
(7) the increase is consistent with the Master Servicer's
underwriting policies, and
(8) either:
(A) the Credit Line Agreement allows the mortgagee to
unilaterally increase the Credit Limit;
(B) the Credit Limit increase is made within 90 days of the
Cut-off Date, or
(C) the Sponsor purchases the Mortgage Loan from the Trust in
the manner described below for rate reduction loans.
Furthermore, the Sponsor, without prior approval from the Rating
Agencies, may solicit mortgagors for a reduction in Loan Rates. The Loan Rates
of Mortgage Loans having Asset Balances at the time of the proposed
modification that aggregate over time not more than 5.0% of the Original Note
Principal Balance may be subject to reduction. If a mortgagor notifies the
Sponsor or the Master Servicer that it wants a reduction in Loan Rate, the
Sponsor shall purchase the Mortgage Loan from the Trust as described below.
Effective immediately on the same Business Day on which the Sponsor delivers
the Purchase Price for the relevant Mortgage Loan to the Master Servicer, all
interest of the Trust in the relevant Mortgage Loan shall automatically be
transferred and assigned to the Sponsor and all benefits and burdens of
ownership of the relevant Mortgage Loan, including the right to accrued
interest on it from the date of purchase and the risk of default on the
Mortgage Loan, shall pass to the Sponsor.
The Master Servicer shall promptly deliver to the Indenture Trustee a
certification signed by a Servicing Officer to the effect that all of the
requirements for a purchase of a Mortgage Loan in connection with a request by
a mortgagor for a reduction in Loan Rate have been satisfied with respect to
the relevant Mortgage Loan. The Sponsor shall deliver the Purchase Price for
the relevant Mortgage Loan to the Master Servicer promptly after a mortgagor
notifies the Sponsor or the Master Servicer that it wants a reduction in Loan
Rate, and the Master Servicer shall deposit the Purchase Price for the
modified Mortgage Loan in the Collection Account pursuant to Section 3.02
within one Business Day after its receipt of the Purchase Price for the
modified Mortgage Loan. Upon receipt by the Indenture Trustee of written
notification of the deposit signed by a Servicing Officer, the Indenture
Trustee shall release to the Sponsor the related Mortgage File and shall
execute and deliver any instruments of transfer or assignment delivered to it
for execution and reasonably acceptable to it, in each case without recourse,
representation, or warranty, necessary to release the Mortgage Loan from the
lien of the Indenture and vest in the Sponsor the Mortgage Loan previously
transferred and
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assigned pursuant to this provision. The certification and written
notification of the deposit each from a Servicing Officer may be delivered to
the Indenture Trustee electronically, and to the extent the transmission
originates on its face from a Servicing Officer, need not be manually signed.
In addition, the Master Servicer may agree to changes in the terms of a
Mortgage Loan (other than changes referred to above in this Section) at the
request of the mortgagor at any time if the changes
o do not materially and adversely affect the interests of the
Secured Parties or the Holders of the Class C Certificates,
o are consistent with prudent and customary business practice as
evidenced by a certificate signed by a Servicing Officer delivered to the
Indenture Trustee,
o do not extend the maturity date of the Mortgage Loan beyond the
final maturity date of the Notes of the related Class, and
o the Master Servicer has received an Opinion of Counsel to the
effect that such action will not cause any REMIC created under the Trust
Agreement to fail to qualify as a REMIC or result in the imposition of
any tax under Section 860F(a) or Section 860G of the Code.
In addition, the Master Servicer may solicit mortgagors to change any
other terms of the related Mortgage Loans at any time if the changes (i) do
not materially and adversely affect the interests of the Noteholders or the
Transferor (ii) are consistent with prudent and customary business practice as
evidenced by a certificate signed by a Servicing Officer delivered to the
Indenture Trustee and (iii) the Master Servicer has received an Opinion of
Counsel to the effect that such action will not cause any REMIC created under
the Trust Agreement to fail to qualify as a REMIC or result in the imposition
of any tax under Section 860F(a) or Section 860G of the Code. Nothing in this
Agreement shall limit the right of the Master Servicer to solicit mortgagors
with respect to new loans (including mortgage loans) that are not Mortgage
Loans.
The Master Servicer may register any Mortgage Loan on the MERS(R) System,
or cause the removal from registration of any Mortgage Loan on the MERS(R)
System, and execute and deliver, on behalf of the Owner Trustee, any
instruments of assignment and other comparable instruments with respect to the
assignment or re-recording of a mortgage in the name of MERS, solely as
nominee for the Owner Trustee and its successors and assigns.
For so long as any Mortgage Loan is registered on the MERS(R) System, the
Master Servicer shall maintain in good standing its membership in MERS and
shall comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Mortgage Loans that are registered with
MERS. If any Mortgage Loans are registered on the MERS(R) System, the Master
Servicer may cause MERS to execute and deliver an assignment of mortgage in
recordable form to transfer any of the Mortgage Loans registered on the
MERS(R) System from MERS to the Owner Trustee. The Master Servicer shall
promptly notify MERS of any transfer of beneficial ownership or release of any
Security Interest in any MOM Loan.
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The relationship of the Master Servicer to the Trust and the Indenture
Trustee under this Agreement is intended by the parties to be that of an
independent contractor and not that of a joint venturer, partner, or agent of
the Trust or the Indenture Trustee.
(b) If the rights and obligations of the Master Servicer are terminated
under this Agreement, any successor to the Master Servicer in its sole
discretion may terminate the existing subservicer arrangements with any
subservicer or assume the terminated Master Servicer's rights under those
subservicing arrangements to the extent permitted by applicable law and the
subservicing agreements.
(c) The Sponsor agrees to indemnify the Trust against any liability for
any prohibited transaction taxes and any related interest, additions, and
penalties imposed on the Trust as a result of any modification of a Mortgage
Loan effected pursuant to this Section, the holding of any Mortgage Loan
modified pursuant to this Section by the Trust, any purchase of a modified
Mortgage Loan by the Sponsor pursuant to this Section, or the removal of any
Mortgage Loan pursuant to Section 2.06 (but such obligation shall not prevent
the Sponsor or any other appropriate person from in good faith contesting any
such tax in appropriate proceedings and shall not prevent the Sponsor from
withholding payment of the tax, if permitted by law, pending the outcome of
the proceedings). The Sponsor shall have no right of reimbursement for any
amount paid pursuant to the foregoing indemnification, except to the extent
that the amount of any tax, interest, and penalties, together with interest
thereon, is refunded to the Trust or the Sponsor.
Section 3.02 Collection of Certain Mortgage Loan Payments; Establishment
of Accounts.
(a) The Master Servicer shall make reasonable efforts to collect all
payments called for under the Mortgage Loans, and shall follow the collection
procedures it follows for mortgage loans in its servicing portfolio comparable
to the Mortgage Loans, to the extent consistent with this Agreement.
Consistent with the foregoing, and without limiting the generality of the
foregoing, the Master Servicer may in its discretion (i) waive any late
payment charge or any assumption fees or other fees that may be collected in
the ordinary course of servicing the Mortgage Loans and (ii) arrange with a
mortgagor a schedule for the payment of interest due and unpaid if the
arrangement is consistent with the Master Servicer's policies with respect to
the mortgage loans it owns or services. Notwithstanding any arrangement, the
Mortgage Loans will be included in the information regarding delinquent
Mortgage Loans in the Servicing Certificate and monthly statement to
Noteholders pursuant to Section 7.04 of the Indenture.
(b) The Master Servicer shall establish and maintain a trust account (the
"Collection Account") with the title specified in the Adoption Annex. The
Collection Account shall be an Eligible Account. The Master Servicer or the
Sponsor, as the case may be, shall deposit or cause to be deposited in the
Collection Account within two Business Days following its receipt the
following payments and collections received or made by it (without
duplication):
(1) all collections on the Mortgage Loans;
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(2) the amounts deposited to the Collection Account pursuant to
Section 4.03;
(3) Net Liquidation Proceeds net of any related Foreclosure Profit;
(4) Insurance Proceeds; and
(5) any amounts required to be deposited pursuant to Section 7.01.
No other amounts are to be deposited to the Collection Account, including
amounts representing Foreclosure Profits, fees (including annual fees) or late
charge penalties payable by mortgagors, or amounts received by the Master
Servicer for the accounts of mortgagors for application towards the payment of
taxes, insurance premiums, assessments, excess pay off amounts, and similar
items. The Master Servicer shall remit all Foreclosure Profits to the Sponsor.
The Master Servicer shall retain, from payments of interest on the Mortgage
Loans in each Collection Period, the Servicing Fee for the Collection Period
and any unreimbursed optional advance made by the Master Servicer pursuant to
Section 4.03.
The Master Servicer may make a net deposit in the Collection Account of
the amounts required by this Section.
On the Business Day before each Payment Date to the extent on deposit in
the Collection Account, the Master Servicer shall withdraw from the Collection
Account and remit to the Indenture Trustee, the amount to be applied on that
Payment Date by the Indenture Trustee pursuant to Section 8.03 of the
Indenture, and the Indenture Trustee will deposit that amount in the Payment
Account pursuant to the Indenture.
The Indenture Trustee shall hold amounts deposited in the Payment Account
as trustee for the Noteholders and the Transferor. In addition, the Master
Servicer shall notify the Indenture Trustee on each Determination Date of the
amount of collections in the Collection Account to be transferred to the
Payment Account and their allocation to Interest Collections and Principal
Collections for the Mortgage Loans for the related Payment Date. Following
this notification, the Master Servicer may withdraw from the Collection
Account and retain any amounts that constitute income realized from the
investment of the collections. The Master Servicer will be entitled to
receive, as additional servicing compensation, income earned on the
collections in the Payment Account.
Amounts on deposit in the Collection Account will be invested in Eligible
Investments maturing no later than the day before the next Payment Date at the
direction of the Master Servicer. All income realized from any investment in
Eligible Investments of funds in the Collection Account shall be the property
of the Master Servicer and may be withdrawn from time to time from the
Collection Account. Any losses incurred on these investments that reduce their
principal amount shall be deposited in the Collection Account by the Master
Servicer out of its own funds immediately as realized.
(c) Upon its receipt of the Officer's Certificate specified in Section
2.01(b)(ii)(I) confirming satisfaction of the conditions precedent to
subsequent additions in Section 2.01(b)(ii) on a Subsequent Closing Date
designated by the Depositor, the Indenture
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Trustee shall withdraw from the applicable Additional Loan Account and set
aside for the benefit of the Depositor for later delivery pursuant to Section
3.02(d) an amount equal to the Cut-off Date Asset Balance in the Transfer
Document to purchase the Additional Home Equity Loans covered by the Transfer
Document.
(d) On the date on which the revised Mortgage Loan Schedule reflecting
the addition of the Additional Home Equity Loans covered by a Transfer
Document is delivered to the Indenture Trustee along with an opinion of
counsel to the effect that a court in a bankruptcy context addressing the
transfer of the Additional Home Equity Loans would characterize the transfer
as a sale rather than as a secured lending, the Indenture Trustee shall
deliver to the order of the Depositor an amount in cash equal to the actual
Cut-off Date Asset Balance of the relevant Additional Home Equity Loans, and
to the Master Servicer any earnings on those funds since the relevant
Subsequent Closing Date. If after that payment any funds remain from the
original set aside with respect to the Transfer Document pursuant to Section
2.01(b), then they shall be returned to the applicable Additional Loan
Account. If on the Latest Subsequent Closing Date any funds remain in the
Indenture Trustee's possession from any set aside under Section 2.01(b), then
they shall be returned to the applicable Additional Loan Account.
Section 3.03 Deposits to Payment Account.
The Master Servicer shall
(1) on the Business Day before each of the first two Payment Dates,
deposit in the Payment Account any shortfall in the amount required to
pay the Note Interest on those Payment Dates for each Class of Notes
resulting solely from the failure of any Mortgage Loans to be fully
indexed and
(2) on the Business Day before the first Payment Date, deposit in
the Payment Account
(A) an amount for equal to the excess of the aggregate amount
payable pursuant to Section 8.03(a)(i) and (ii) of the Indenture on
the first Payment Date over what the aggregate Investor Interest
Collections would be if the Minimum Monthly Payments on the Mortgage
Loans due during the first Collection Period were made on each
Mortgage Loan and
(B) any amounts representing payments on, and any collections
in respect of, the Mortgage Loans received after the Cut-off Date
and before the Closing Date (exclusive of payments of accrued
interest due by the Cut-off Date).
Section 3.04 Maintenance of Hazard Insurance; Property Protection
Expenses.
The Master Servicer shall cause to be maintained for each Mortgage Loan
hazard insurance naming the Master Servicer or the related subservicer as loss
payee under it providing extended coverage in an amount that is at least equal
to the lesser of (i) the maximum insurable value of the improvements securing
the Mortgage Loan from time to time or (ii) the combined principal balance
owing on the Mortgage Loan and any mortgage loan senior to the Mortgage Loan
from time to time. The Master Servicer shall also maintain on property
acquired through
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foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value from time to time of the improvements that are a part of the
property or (ii) the combined principal balance owing on the Mortgage Loan and
any mortgage loan senior to the Mortgage Loan at the time of the foreclosure
or deed in lieu of foreclosure plus accrued interest and the good-faith
estimate of the Master Servicer of related Liquidation Expenses to be
incurred.
Amounts collected by the Master Servicer under these policies shall be
deposited in the Collection Account to the extent called for by Section 3.02.
The hazard insurance to be maintained for the related Mortgage Loan shall
include flood insurance when the Mortgaged Property is located in a federally
designated flood area. The flood insurance shall be in the amount required
under applicable guidelines of the Federal Flood Emergency Act. No other
insurance need be carried on any Mortgaged Properties pursuant to this
Agreement.
Section 3.05 Assumption and Modification Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
mortgagor, the Master Servicer shall exercise its right to accelerate the
maturity of the Mortgage Loan consistent with the then current practice of the
Master Servicer and without regard to the inclusion of the Mortgage Loan in
the Trust. If it elects not to enforce its right to accelerate or if it is
prevented from doing so by applicable law, the Master Servicer (so long as its
action conforms with the underwriting standards generally acceptable in the
industry at the time for new origination) may enter into an assumption and
modification agreement with the person to whom the Mortgaged Property has been
or is about to be conveyed, pursuant to which that person becomes liable under
the Credit Line Agreement and, to the extent permitted by applicable law, the
mortgagor remains liable on it. The Master Servicer shall notify the Indenture
Trustee that any assumption and modification agreement has been completed by
delivering to the Indenture Trustee an Officer's Certificate certifying that
the agreement is in compliance with this Section and by forwarding the
original copy of the assumption and modification agreement to the Indenture
Trustee. Any assumption and modification agreement shall be a part of the
related Mortgage File. No change in the terms of the related Credit Line
Agreement may be made by the Master Servicer in connection with the assumption
to the extent that the change would not be permitted to be made in the
original Credit Line Agreement pursuant to Section 3.01(a). Any fee collected
by the Master Servicer for entering into the assumption and modification
agreement will be retained by the Master Servicer as additional servicing
compensation.
Section 3.06 Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans.
The Master Servicer shall foreclose or otherwise comparably convert to
ownership Mortgaged Properties securing defaulted Mortgage Loans when, in the
opinion of the Master Servicer based on normal and usual practices and
procedures, no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.02. Alternatively, the Master
Servicer may forego foreclosure and charge off a defaulted Mortgage Loan if in
the Master Servicer's opinion the proceeds of foreclosure and liquidation are
likely to produce an amount less than the unpaid principal balance of senior
liens on the Mortgaged Property. If the
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Master Servicer has actual knowledge or reasonably believes that any Mortgaged
Property is affected by hazardous or toxic wastes or substances and that the
acquisition of the Mortgaged Property would not be commercially reasonable,
then the Master Servicer will not cause the Trust to acquire title to the
Mortgaged Property in a foreclosure or similar proceeding. In connection with
foreclosure or other conversion (or a decision to forego foreclosure and
charge off a defaulted Mortgage Loan), the Master Servicer shall follow the
practices and procedures it deems appropriate and that are normal and usual in
its general mortgage servicing activities, including advancing funds to
correct a default on a related senior mortgage loan. However, the Master
Servicer need not expend its own funds in connection with any foreclosure or
towards the correction of any default on a related senior mortgage loan or
restoration of any property unless it determines, in its sole discretion, that
the expenditure will increase Net Liquidation Proceeds.
If title to any Mortgaged Property is acquired in foreclosure or by deed
in lieu of foreclosure, the deed or certificate of sale shall be issued to the
Indenture Trustee, or to its nominee on behalf of Noteholders. The Master
Servicer shall dispose of the Mortgaged Property as soon as practicable in a
manner that maximizes its Liquidation Proceeds.
The Master Servicer, in its sole discretion, may purchase for its own
account from the Trust any Mortgage Loan that is 151 days or more delinquent.
The price for any Mortgage Loan purchased shall be 100% of its Asset Balance
plus accrued interest on it at the applicable Loan Rate from the date through
which interest was last paid by the related mortgagor to the first day of the
month in which the purchase price is to be distributed to the Noteholders. The
purchase price shall be deposited in the Collection Account. The Master
Servicer may only exercise this right on or before the penultimate day of the
month in which the Mortgage Loan became 151 days delinquent. Any delinquent
Mortgage Loan that becomes current but thereafter again becomes 151 days or
more delinquent may be purchased by the Master Servicer pursuant to this
Section.
Upon receipt of a certificate from the Master Servicer in the form of
Exhibit C, the Indenture Trustee shall release to the Master Servicer the
related Mortgage File and shall execute and deliver any instruments of
transfer prepared by the Master Servicer, without recourse, necessary to vest
in the purchaser of the Mortgage Loan any Mortgage Loan released to it and the
Master Servicer shall succeed to all the Trust's interest in the Mortgage Loan
and all related security and documents. This assignment shall be an assignment
outright and not for security. The Master Servicer shall then own the Mortgage
Loan, and all security and documents, free of any further obligation to the
Trust, the Owner Trustee, the Indenture Trustee, the Transferor, or the
Noteholders with respect to it. The certification by the Master Servicer may
be delivered to the Indenture Trustee electronically, and if it is, its form
may differ from Exhibit C so long as it contains the information required by
Exhibit C (that is, the relevant loan number, at least one of the five reasons
for requesting file as found in Exhibit C, and the acknowledgment that the
Mortgage File will be held in accordance with this Agreement and will promptly
be returned to the Indenture Trustee when the need for it by the Master
Servicer no longer exists unless the Mortgage Loan has been liquidated or
retransferred), and to the
26
extent the transmission originates on its face from a Servicing Officer, need
not be manually signed.
If the Trust acquires any Mortgaged Property in connection with a default
or imminent default on a Mortgage Loan, the Master Servicer shall dispose of
the Mortgaged Property as soon as practicable in a manner that maximizes the
liquidation proceeds, but in no event later than three years after its
acquisition by the Trust or, at the expense of the Trust, the Master Servicer
shall request, more than 60 days before the day on which the three-year period
would otherwise expire, an extension of the three-year grace period. If the
Indenture Trustee is supplied with an Opinion of Counsel to the effect that
the Trust's holding the Mortgaged Property after the three-year period will
not result in the imposition of taxes on prohibited transactions of the Trust
as defined in section 860F of the Code or cause any REMIC created under the
Trust Agreement to fail to qualify as a REMIC at any time that any Notes or
Certificates are outstanding, and the Trust may continue to hold the Mortgaged
Property (subject to any conditions in the Opinion of Counsel) after the
expiration of the three-year period. Notwithstanding any other provision of
this Agreement, no Mortgaged Property acquired by the Trust shall be rented
(or allowed to continue to be rented) or otherwise used for the production of
income by or on behalf of the Trust in such a manner or pursuant to any terms
that would cause the Mortgaged Property to fail to qualify as foreclosure
property within the meaning of section 860G(a)(8) of the Code or subject the
Trust to the imposition of any federal, state, or local income taxes on the
income earned from the Mortgaged Property under section 860G(c) of the Code or
otherwise, unless the Master Servicer has agreed to indemnify and hold
harmless the Trust with respect to the imposition of any such taxes.
If a default occurs on a Mortgage Loan one or more of whose obligors is
not a United States Person, as defined in Section 7701(a)(30) of the Code, in
connection with any foreclosure of the Mortgage Loan (including the
acquisition of a deed in lieu of foreclosure), the Master Servicer will cause
compliance with the provisions of Treasury Regulation Section 1.1445-2(d)(3)
(or any successor) necessary to assure that no withholding tax obligation
arises with respect to the proceeds of the foreclosure except to the extent
that proceeds of the foreclosure are required to be remitted to the obligors
on the Mortgage Loan.
Section 3.07 Indenture Trustee to Cooperate.
By each Payment Date, the Master Servicer will notify the Indenture
Trustee whenever the Asset Balance of any Mortgage Loan has been paid in full
during the preceding Collection Period. A Servicing Officer shall certify that
the Mortgage Loan has been paid in full and that all amounts received in
connection with the payment that are required to be deposited in the
Collection Account pursuant to Section 3.02 have been so deposited or
credited. Upon payment in full pursuant to Section 3.01, the Master Servicer
is authorized to execute an instrument of satisfaction regarding the related
mortgage, which instrument of satisfaction shall be recorded by the Master
Servicer if required by applicable law and be delivered to the person entitled
to it.
If the mortgage has been registered on the MERS(R) System, the Master
Servicer shall cause the removal of the mortgage from registration on the
MERS(R) System and execute and deliver, on behalf of the Indenture Trustee and
the Noteholders, any instruments of satisfaction
27
or cancellation or of partial or full release. No expenses incurred in
connection with the instrument of satisfaction or transfer shall be reimbursed
from amounts deposited in the Collection Account or the Payment Account.
As appropriate for the servicing or foreclosure of any Mortgage Loan, or
in connection with the payment in full of the Asset Balance of any Mortgage
Loan, upon request of the Master Servicer and delivery to the Indenture
Trustee of a Request for Release substantially in the form of Exhibit C signed
by a Servicing Officer, the Indenture Trustee shall release the related
Mortgage File to the Master Servicer and the Indenture Trustee shall execute
any documents provided by the Master Servicer necessary to the prosecution of
any proceedings or the taking of other servicing actions. The Request for
Release by a Servicing Officer may be delivered to the Indenture Trustee
electronically, and if it is, its form may differ from Exhibit C so long as it
contains the information required by Exhibit C (that is, the relevant loan
number, at least one of the five reasons for requesting file as found in
Exhibit C, and the acknowledgment that the Mortgage File will be held in
accordance with this Agreement and will promptly be returned to the Indenture
Trustee when the need for it by the Master Servicer no longer exists unless
the Mortgage Loan has been liquidated or retransferred), and to the extent the
transmission originates on its face from a Servicing Officer, need not be
manually signed. The Master Servicer shall return the Mortgage File to the
Indenture Trustee when the need for it by the Master Servicer no longer
exists, unless the Mortgage Loan is liquidated, in which case, upon receipt of
a certificate of a Servicing Officer similar to that specified above, the
Request for Release shall be released by the Indenture Trustee to the Master
Servicer.
To facilitate the foreclosure of the mortgage securing any Mortgage Loan
that is in default following recordation of the assignments of mortgage in
accordance with this Agreement, if so requested by the Master Servicer, the
Indenture Trustee shall execute an appropriate assignment in the form provided
to the Indenture Trustee by the Master Servicer to assign the Mortgage Loan
for the purpose of collection to the Master Servicer or a subservicer. The
assignment shall unambiguously indicate that the assignment is for the purpose
of collection only. The Master Servicer will then bring all required actions
in its own name and otherwise enforce the terms of the Mortgage Loan and
deposit the Net Liquidation Proceeds, exclusive of Foreclosure Profits, in the
Collection Account. If all delinquent payments due under the Mortgage Loan are
paid by the mortgagor and any other defaults are cured, then the Master
Servicer shall promptly reassign the Mortgage Loan to the Indenture Trustee
and return the related Mortgage File to the place where it was being
maintained.
Section 3.08 Servicing Compensation; Payment of Certain Expenses by
Master Servicer.
The Master Servicer may retain the Servicing Fee pursuant to Section 3.02
as compensation for its services in servicing the Mortgage Loans. Moreover,
additional servicing compensation in the form of late payment charges or other
receipts not required to be deposited in the Collection Account (other than
Foreclosure Profits) shall be retained by the Master Servicer. The Master
Servicer must pay all expenses incurred by it in connection with its
activities under this Agreement (including payment of all other fees and
expenses not expressly stated under this Agreement to be for the account of
another person) and shall not be entitled to
28
reimbursement under this Agreement except as specifically provided in this
Agreement. Liquidation Expenses are reimbursable to the Master Servicer
FIRST, from related Liquidation Proceeds and
SECOND, from the Payment Account pursuant to Section 8.03(c)(v) of the
Indenture.
Section 3.09 Annual Statement as to Compliance.
(a) The Master Servicer will deliver to the Indenture Trustee and the
Rating Agencies, by the date in each year specified in the Adoption Annex,
beginning on the date specified in the Adoption Annex, an Officer's
Certificate stating that (i) a review of the activities of the Master Servicer
during the preceding fiscal year (or the applicable shorter period for the
first report) and of its performance under this Agreement has been made under
the officer's supervision and (ii) to the best of the officer's knowledge,
based on the review, the Master Servicer has fulfilled all of its obligations
under this Agreement in all material respects throughout the fiscal year, or,
if there has been a default in the fulfillment of those obligations in any
material respect, specifying each default known to the officer and its nature
and status.
(b) Within five Business Days after obtaining knowledge of it, the Master
Servicer shall notify the Indenture Trustee and each of the Rating Agencies of
any event that with the giving of notice or the lapse of time would become an
Event of Servicing Termination by delivering an Officer's Certificate
describing the event.
(c) The Master Servicer shall cause each subservicer to deliver to the
Depositor and the Indenture Trustee on or before March 15 of each year,
beginning with its 20__ fiscal year, an Officer's Certificate stating, as to
the signing officer, that a review of the activities of the subservicer during
the preceding year and of the performance of the subservicer under the
applicable subservicing agreement or primary servicing agreement has been made
under the signing officer's supervision and to the best of the signing
officer's knowledge, based on such review, the subservicer has fulfilled all
its obligations under the applicable subservicing agreement or primary
servicing agreement in all material respects throughout its fiscal year, or,
if there has been a failure to fulfill any of its obligations in any material
respect, specifying each failure known to the signing officer and its nature
and status.
(d) Copies of the statement shall be provided by the Indenture Trustee to
any Noteholder or Note Owner on request at the Master Servicer's expense.
Section 3.10 Access to Certain Documentation and Information Regarding
the Mortgage Loans.
(a) The Master Servicer shall provide to the Indenture Trustee, any
Noteholders or Note Owners that are federally insured savings and loan
associations, the Office of Thrift Supervision, successor to the Federal Home
Loan Bank Board, the FDIC, and the supervisory agents and examiners of the
Office of Thrift Supervision access to the documentation regarding the
Mortgage Loans required by applicable regulations of the Office of Thrift
Supervision and the FDIC (acting as operator of the Savings Association
Insurance Fund or the Bank Insurance Fund). The Master Servicer will provide
access without charge but only after reasonable notice and during normal
business hours at the offices of the Master Servicer. Nothing in this Section
29
shall derogate from the obligation of the Master Servicer to observe any
applicable law prohibiting disclosure of information regarding the mortgagors
and the failure of the Master Servicer to provide access as provided in this
Section as a result of this obligation shall not constitute a breach of this
Section.
(b) The Master Servicer shall supply the information needed to make
required payments and to furnish required reports to Noteholders and to make
any claim under the Loan Insurance Policy, in the form the Indenture Trustee
reasonably requests, to the Indenture Trustee and any Paying Agent by the
start of the Determination Date preceding the related Payment Date.
Section 3.11 Maintenance of Certain Servicing Insurance Policies.
The Master Servicer shall during the term of its service as master
servicer maintain in force (i) policies of insurance covering errors and
omissions in the performance of its obligations as master servicer under this
Agreement and (ii) a fidelity bond covering its officers, employees, or
agents. Each policy and bond together shall comply with the requirements from
time to time of Xxxxxx Xxx for persons performing servicing for mortgage loans
purchased by Xxxxxx Mae.
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01 Servicing Certificate.
Not later than each Determination Date, the Master Servicer shall deliver
(a) to the Indenture Trustee, the data necessary to prepare the items below
and the statement for Noteholders required to be prepared pursuant to Section
4.04 and (b) to the Indenture Trustee, the Owner Trustee, the Sponsor, the
Depositor, the Paying Agent, and each Rating Agency a Servicing Certificate
(in written form or the form of computer readable media or such other form as
may be agreed to by the Indenture Trustee and the Master Servicer), together
with an Officer's Certificate to the effect that the Servicing Certificate is
correct in all material respects, stating the related Collection Period,
Payment Date, the series number of the Notes, the date of this Agreement, and
(1) the aggregate amount of collections received on the Mortgage
Loans by the Determination Date for the related Collection Period;
(2) the aggregate amount of (a) Interest Collections for the related
Collection Period and (b) Principal Collections for the related
Collection Period;
(3) any accrued Servicing Fees for the Mortgage Loans for previous
Collection Periods and the Servicing Fee for the related Collection
Period;
(4) the Liquidation Loss Amount for the related Collection Period;
30
(5) the aggregate Asset Balance of the Mortgage Loans as of the end
of the preceding Collection Period and as of the end of the second
preceding Collection Period;
(6) the amount of claims made on the Loan Insurance Policy, the
amount of insurance proceeds paid and the amount of insurance claims
denied by the Loan Insurance Policy Provider;
(7) the aggregate amount of Additional Balances created on the
Mortgage Loans during the previous Collection Period;
(8) the number and aggregate Asset Balances of Mortgage Loans (x) as
to which the Minimum Monthly Payment is delinquent for 30-59 days, 60-89
days, and 90 or more days, respectively and (y) that have become REO, in
each case as of the end of the preceding Collection Period;
(9) the Weighted Average Gross Loan Rate for the Mortgage Loans;
(10) the amount of any optional advances pursuant to Section 4.03 by
the Master Servicer remaining unpaid at the end of the Collection Period
preceding the related Collection Period;
(11) the amount of any optional advances pursuant to Section 4.03 by
the Master Servicer made during the related Collection Period and
included in the payment on the Payment Date
(12) the aggregate amount of optional advances pursuant to Section
4.03 by the Master Servicer that will remain outstanding as of the close
of business on the Payment Date;
(13) the number and principal balances of any Mortgage Loans
transferred to the Transferor pursuant to Section 2.06;
(14) with respect to the Collection Account during the Collection
Period related to the Payment Date:
(A) its balance at the beginning of the Collection Period;
(B) deposits of aggregate Transfer Deposit amount for
retransferred Mortgage Loans pursuant to Section 2.06;
(C) deposits of aggregate Purchase Price for delinquent
Mortgage Loans purchased by the Sponsor pursuant to
Section 3.06;
(D) deposits of aggregate Purchase Price made by the Sponsor
in connection with modification of Mortgage Loans pursuant
to Section 3.01;
(E) deposits by the Master Servicer to account for losses
accrued on Eligible Investments;
(F) income accrued on Eligible Investments;
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(G) deposits of the termination purchase price in connection
with termination pursuant to Section 8.01;
(H) other deposits;
(I) withdrawals of investment income on Eligible Investments;
(J) withdrawals for the purchase of Additional Balances;
(K) transfers to the Payment Account;
(L) other withdrawals; and
(M) its balance at the end of the Collection Period;
(15) with respect to the first and second Payment Dates, deposits by
the Master Servicer to account for shortfalls in interest collections
resulting from the failure of the Mortgage Loans to be fully indexed
pursuant to Section 3.03;
(16) with respect to the first Payment Date, deposits by the Master
Servicer to account for shortfalls in interest collections resulting from
the prefunding mechanism and the longer first Interest Period, pursuant
to Section 3.03;
(17) with respect to the first Payment Date, the amount of
collections on the Mortgage Loans for the period between the initial
Cut-off Date and the Closing Date, specifying the interest and principal
portions thereof;
(18) Liquidation Expenses and indemnification payments paid to the
Master Servicer for the related Collection Period;
(19) Liquidation Expenses and indemnification payments payable to
the Master Servicer on the Payment Date from Excess Cashflow pursuant to
Section 8.03(c)(v);
(20) the weighted average remaining term of the Mortgage Loans;
(21) in the Servicing Certificates for the first and second Payment
Dates, the number and Cut-off Date Asset Balance of Mortgage Loans for
which the Mortgage Loan File was not delivered to the Indenture Trustee
within 30 days of the Closing Date;
(22) the number and aggregate Asset Balances of Mortgage Loans as to
which the Minimum Monthly Payment is delinquent for 180 or more days;
(23) the number and aggregate Asset Balances of Mortgage Loans that
are in foreclosure;
(24) the number and aggregate Asset Balances of Mortgage Loans for
which the Master Servicer has received a written notice of the filing of
bankruptcy or insolvency proceedings with respect to the mortgagor.
The Indenture Trustee and the Owner Trustee shall conclusively rely on
the information in a Servicing Certificate for purposes of making
distributions pursuant to Section 8.03 of the
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Indenture or distributions on the Transferor Certificates, shall have no duty
to inquire into this information, and shall have no liability in so relying.
The format and content of the Servicing Certificate may be modified by the
mutual agreement of the Master Servicer and the Indenture Trustee. The Master
Servicer shall give notice of any changes to the Rating Agencies.
Section 4.02 Optional Advances of the Master Servicer.
The Master Servicer, in its sole discretion, may advance the interest
component of any delinquent Minimum Monthly Payment (or any portion of it) by
depositing the amount into the Collection Account by the related Determination
Date.
Section 4.03 Statements to Noteholders.
Concurrently with each payment to Noteholders, the Master Servicer shall
deliver to the Indenture Trustee the data necessary to prepare a statement
(the "Monthly Statement") for each Payment Date with the information in
Exhibit E.
If the Monthly Statement is not accessible to any of the Noteholders, the
Master Servicer, or either Rating Agency on the Indenture Trustee's internet
website, the Indenture Trustee shall forward a hard copy of it to each
Noteholder, the Master Servicer, and each Rating Agency immediately after the
Indenture Trustee becomes aware that the Monthly Statement is not accessible
to any of them via the Indenture Trustee's internet website. The address of
the Indenture Trustee's internet website where the Monthly Statement will be
accessible is [INDENTURE TRUSTEE'S WEBSITE]. Assistance in using the Indenture
Trustee's internet website may be obtained by calling the Indenture Trustee's
customer service desk at (___) ___-____. The Indenture Trustee shall notify
each Noteholder, the Master Servicer, and each Rating Agency in writing of any
change in the address or means of access to the internet website where the
Monthly Statement is accessible.
Within 60 days after the end of each year, the Master Servicer shall
prepare and forward to the Indenture Trustee the information in clauses (iii)
and (vi) above aggregated for the year. This requirement of the Master
Servicer shall be satisfied if substantially comparable information is
provided by the Master Servicer or a Paying Agent pursuant to any requirements
of the Code.
The Indenture Trustee shall prepare (in a manner consistent with the
treatment of the Notes as indebtedness of the Transferor, or as may be
otherwise required by Section 3.14) Internal Revenue Service Form 1099 (or any
successor form) and any other tax forms required to be filed or furnished to
Noteholders for payments by the Indenture Trustee (or the Paying Agent) on the
Notes and shall file and distribute such forms as required by law.
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ARTICLE V
THE MASTER SERVICER, THE SPONSOR, AND THE DEPOSITOR
Section 5.01 Liability of the Sponsor, the Master Servicer, and the
Depositor.
The Sponsor, the Depositor, and the Master Servicer shall be liable only
for their express agreements under this Agreement.
Section 5.02 Merger or Consolidation of, or Assumption of the Obligations
of, the Master Servicer or the Depositor.
Any corporation into which the Master Servicer or the Depositor may be
merged or consolidated, or any corporation resulting from any merger,
conversion, or consolidation to which the Master Servicer or the Depositor is
a party, or any corporation succeeding to the business of the Master Servicer
or the Depositor, shall be the successor of the Master Servicer or the
Depositor, as the case may be, under this Agreement, without the execution or
filing of any paper or any further act on the part of any of the parties to
this Agreement, notwithstanding anything in this Agreement to the contrary.
As a condition to the effectiveness of any merger or consolidation, at
least 15 days before the effective date of any merger or consolidation of the
Master Servicer, the Master Servicer shall provide written notice to the
Depositor of any successor pursuant to this Section and in writing and in form
and substance reasonably satisfactory to the Depositor, all information
reasonably requested by the Depositor to comply with its reporting obligation
under Item 6.02 of Form 8-K with respect to a replacement Master Servicer.
Section 5.03 Limitation on Liability of the Master Servicer and Others.
Neither the Master Servicer nor any of its directors, officers,
employees, or agents is liable to the Trust, the Owner Trustee, the
Transferor, or the Noteholders for the Master Servicer's taking any action or
refraining from taking any action in good faith pursuant to this Agreement, or
for errors in judgment. This provision shall not protect the Master Servicer
or any of its directors, officers, employees, or agents against any liability
that would otherwise be imposed for misfeasance, bad faith, or gross
negligence in the performance of the duties of the Master Servicer or for
reckless disregard of the obligations of the Master Servicer. The Master
Servicer and any of its directors, officers, employees, or agents may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any person about anything arising under this Agreement.
The Master Servicer and each of its directors, officers, employees, and
agents shall be indemnified by the Trust and held harmless against any loss,
liability, or expense incurred in connection with any legal action relating to
this Agreement, the Transferor Certificates, or the Notes, other than any
loss, liability, or expense related to any specific Mortgage Loan that is
otherwise not reimbursable pursuant to this Agreement and any loss, liability,
or expense incurred due to its willful misfeasance, bad faith, or gross
negligence in the performance of duties under this Agreement or due to its
reckless disregard of its obligations under this Agreement.
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The Master Servicer need not appear in, prosecute, or defend any legal
action that is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement, and that in its opinion may involve it in any
expense or liability. The Master Servicer may in its sole discretion undertake
any action that it deems appropriate with respect to this Agreement and the
interests of the Noteholders. If so, the reasonable legal expenses and costs
of the action and any resulting liability shall be expenses, costs, and
liabilities of the Trust, and the Master Servicer shall only be entitled to be
reimbursed pursuant to Section 8.03(c)(v) of the Indenture. The Master
Servicer's right to indemnity or reimbursement pursuant to this Section shall
survive any resignation or termination of the Master Servicer pursuant to
Section 5.04 or 6.01 with respect to any losses, expenses, costs, or
liabilities arising before its resignation or termination (or arising from
events that occurred before its resignation or termination).
Section 5.04 Master Servicer Not to Resign.
Subject to Section 5.02, the Master Servicer shall not resign as Master
Servicer under this Agreement except
(1) if the performance of its obligations under this Agreement are
no longer permissible under applicable law or due to applicable law are
in material conflict with any other activities carried on by it or its
subsidiaries or Affiliates that are of a type and nature carried on by
the Master Servicer or its subsidiaries or Affiliates at the date of this
Agreement or
(2) if
(a) the Master Servicer has proposed a successor Master
Servicer to the Indenture Trustee and the proposed successor Master
Servicer is reasonably acceptable to the Indenture Trustee; and
(b) each Rating Agency has delivered a letter to the Indenture
Trustee before the appointment of the successor Master Servicer
stating that the proposed appointment of the successor Master
Servicer as Master Servicer under this Agreement will not result in
the reduction or withdrawal of the then current rating of the Notes.
No resignation by the Master Servicer shall become effective unless the
Master Servicer has notified the Depositor at least 15 days before the
effective date of the resignation of the successor pursuant to this Section
and has provided all information reasonably requested by the Depositor to
comply with its reporting obligation under Item 6.02 of Form 8-K with respect
to the resignation of the Master Servicer in form and substance reasonably
satisfactory to the Depositor.
No resignation by the Master Servicer shall become effective until the
Indenture Trustee or successor Master Servicer designated by the Master
Servicer has assumed the Master Servicer's obligations under this Agreement or
the Indenture Trustee has designated a successor Master Servicer in accordance
with Section 6.02. Any resignation shall not relieve the Master Servicer of
responsibility for any of the obligations specified in Sections 6.01 and 6.02
as obligations that survive the resignation or termination of the Master
Servicer. Any determination permitting the resignation of the Master Servicer
pursuant to clause (i) above
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shall be evidenced by an Opinion of Counsel to that effect delivered to the
Indenture Trustee. The Master Servicer shall have no claim (whether by
subrogation or otherwise) or other action against the Transferor or any
Noteholder for any amounts paid by the Master Servicer pursuant to any
provision of this Agreement.
Section 5.05 Delegation of Duties.
In the ordinary course of business, the Master Servicer may delegate any
of its duties under this Agreement at any time to any person who agrees to act
in accordance with standards comparable to those with which the Master
Servicer complies pursuant to Section 3.01, including any of its Affiliates or
any subservicer referred to in Section 3.01. This delegation shall not relieve
the Master Servicer of its obligations under this Agreement and shall not
constitute a resignation within the meaning of Section 5.04.
Section 5.06 Indemnification by the Master Servicer.
The Master Servicer shall indemnify the Trust, the Owner Trustee, and the
Indenture Trustee against any loss, liability, expense, damage, or injury
suffered or sustained due to the Master Servicer's actions or omissions in
servicing or administering the Mortgage Loans that are not in accordance with
this Agreement, including any judgment, award, settlement, reasonable
attorneys' fees, and other costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding, or claim. This
indemnification is not payable from the assets of the Trust. This indemnity
shall run directly to and be enforceable by an injured party subject to any
applicable limitations.
The Indenture Trustee and any director, officer, employee, or agent of
the Indenture Trustee shall be indemnified by the Master Servicer and held
harmless against any loss, liability or expense (i) incurred in connection
with any legal action relating to this Agreement, the Indenture, the Custodial
Agreement, the Administration Agreement, the Notes, or the Transferor
Certificates, or in connection with the performance of any of the Indenture
Trustee's duties thereunder, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of any of the Indenture Trustee's duties under this Agreement, the
Indenture, or the Custodial Agreement or by reason of reckless disregard of
the Indenture Trustee's obligations and duties under this Agreement.
The indemnity provisions of this Section shall survive the termination of
this Agreement or the resignation or removal of the Indenture Trustee under
the Indenture.
ARTICLE VI
SERVICING TERMINATION
Section 6.01 Events of Servicing Termination.
If any one of the following events ("Events of Servicing Termination")
shall occur and be continuing:
(1) any failure by the Master Servicer to deposit in the Collection
Account any deposit required to be made under this Agreement or to remit
to the Indenture
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Trustee amounts required to be deposited to the Payment Account that
continues unremedied either beyond the relevant Payment Date or for five
Business Days after the date when notice of the failure has been given to
the Master Servicer by the Indenture Trustee or to the Master Servicer
and the Indenture Trustee by Holders of Notes representing not less than
25% of the Outstanding Amount of all Classes of Notes; or
(2) failure by the Master Servicer duly to observe or perform in any
material respect any other covenants or agreements of the Master Servicer
in the Notes or in this Agreement (except with respect to a failure
related to a Limited Exchange Act Reporting Obligation) that materially
and adversely affects the interests of the Noteholders and continues
unremedied for 60 days after the date on which notice of the failure,
requiring it to be remedied, and stating that the notice is a "Notice of
Default" under this Agreement, has been given to the Master Servicer by
the Indenture Trustee or to the Master Servicer and the Indenture Trustee
by the Holders of Notes representing not less than 25% of the Outstanding
Amount of all Classes of Notes; or
(3) an Insolvency Event occurs with respect to the Master Servicer;
then, until the Event of Servicing Termination has been remedied by the Master
Servicer, either the Indenture Trustee or the Holders of Notes representing
not less than 51% of the Outstanding Amount of all Classes of Notes by notice
then given to the Master Servicer (and to the Indenture Trustee if given by
the Holders of Notes) may terminate all of the rights and obligations of the
Master Servicer as servicer under this Agreement.
In addition, if during the period that the Depositor is required to file
Exchange Act Reports with respect to the Trust, the Master Servicer fails to
perform any of the obligations that constitute a Limited Exchange Act
Reporting Obligation or the obligations in Section 3.09(a) or Section
7.07(a)(1) and (2), and the failure continues for the lesser of 10 days or the
period in which the applicable Exchange Act Report can be filed timely
(without taking into account any extensions), so long as the failure has not
been remedied, the Indenture Trustee shall, but only at the direction of the
Depositor (who shall designate a successor to the Master Servicer), terminate
all of the rights and obligations of the Master Servicer under this Agreement
and in the Mortgage Loans and their proceeds, other than its rights as a
Certificateholder or Noteholder. The Depositor will not be entitled to
terminate the rights and obligations of the Master Servicer if a failure of
the Master Servicer to identify a Subcontractor "participating in the
servicing function" within the meaning of Item 1122 of Regulation AB was
attributable solely to the role or functions of the Subcontractor with respect
to mortgage loans other than the Mortgage Loans.
Any notice of termination provided to the Master Servicer shall also be
given by the party providing that notice to the Depositor and each Rating
Agency.
Within five Business Days after obtaining knowledge of it, the Master
Servicer shall notify the Indenture Trustee and each Rating Agency of any
event that with the giving of notice or the lapse of time would become an
Event of Servicing Termination by delivering an Officer's Certificate
describing the event.
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From the receipt by the Master Servicer of the notice, all the rights and
obligations of the Master Servicer under this Agreement, whether with respect
to the Notes or the Mortgage Loans or otherwise, shall pass to and be vested
in the Indenture Trustee pursuant to this Section; and the Indenture Trustee
is authorized to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, any documents, and to do anything else
appropriate to effect the purposes of the notice of termination, whether to
complete the transfer and endorsement of each Mortgage Loan and related
documents, or otherwise. The Master Servicer agrees to cooperate with the
Indenture Trustee in effecting the termination of the rights and obligations
of the Master Servicer under this Agreement, including the transfer to the
Indenture Trustee for the administration by it of all cash amounts that are
held by the Master Servicer and are to be deposited by it in the Collection
Account, or that have been deposited by the Master Servicer in the Collection
Account or are subsequently received by the Master Servicer with respect to
the Mortgage Loans. All reasonable costs and expenses (including attorneys'
fees) incurred in connection with transferring the Mortgage Files to the
successor Master Servicer and amending this Agreement to reflect the
succession as Master Servicer pursuant to this Section shall be paid by the
predecessor Master Servicer (or if the predecessor Master Servicer is the
Indenture Trustee, the initial Master Servicer) on presentation of reasonable
documentation of the costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance under
Section 6.01(i) for five or more Business Days or under Section 6.01(ii) for
60 or more days, shall not constitute an Event of Servicing Termination if the
delay or failure could not be prevented by the exercise of reasonable
diligence by the Master Servicer and the delay or failure was caused by an act
of God or the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods, or similar causes. The preceding sentence
shall not relieve the Master Servicer from using its best efforts to perform
its obligations in a timely manner in accordance with the terms of this
Agreement, and the Master Servicer shall provide the Indenture Trustee, the
Depositor, the Transferor, and the Noteholders with an Officers' Certificate
giving prompt notice of its failure or delay, together with a description of
its efforts to perform its obligations. The Master Servicer shall immediately
notify the Indenture Trustee of any Events of Servicing Termination.
In connection with the termination of the Master Servicer if any mortgage
is registered on the MERS(R) System, then, either (i) the successor Master
Servicer, including the Indenture Trustee if the Indenture Trustee is acting
as successor Master Servicer, shall represent and warrant that it is a member
of MERS in good standing and shall agree to comply in all material respects
with the rules and procedures of MERS in connection with the servicing of the
Mortgage Loans that are registered with MERS, or (ii) the predecessor Master
Servicer shall cooperate with the successor Master Servicer in causing MERS to
execute and deliver an assignment of mortgage in recordable form to transfer
all the mortgages registered on the MERS(R) System from MERS to the Indenture
Trustee and to execute and deliver any other notices and documents appropriate
to effect a transfer of those mortgages or the servicing of the Mortgage Loan
on the MERS(R) System to the successor Master Servicer. The predecessor Master
Servicer shall file the assignment in the appropriate recording office. The
successor
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Master Servicer shall deliver the assignment to the Indenture Trustee promptly
upon receipt of the original with evidence of recording on it or a copy
certified by the public recording office in which the assignment was recorded.
If the Master Servicer is terminated, the Indenture Trustee will provide
the Depositor all information, in form and substance reasonably satisfactory
to the Depositor, reasonably requested by the Depositor to comply with its
reporting obligation under Item 6.02 of Form 8-K with respect to a successor
master servicer if the Indenture Trustee succeeds to the duties of the Master
Servicer as provided in this Agreement.
Section 6.02 Indenture Trustee to Act; Appointment of Successor.
(a) From the time the Master Servicer receives a notice of termination
pursuant to Section 6.01 or resigns pursuant to Section 5.04, the Indenture
Trustee shall be the successor in all respects to the Master Servicer in its
capacity as Master Servicer under this Agreement and the transactions
contemplated by this Agreement and shall be subject to all the obligations of
the Master Servicer under this Agreement except (i) the obligation to
repurchase or substitute for any Mortgage Loan, (ii) with respect to any
representation or warranty of the Master Servicer, or (iii) for any act or
omission of either a predecessor or successor Master Servicer other than the
Indenture Trustee. As its compensation under this Agreement, the Indenture
Trustee shall be entitled to the compensation the Master Servicer would have
been entitled to under this Agreement if no notice of termination had been
given. In addition, the Indenture Trustee will be entitled to compensation
with respect to its expenses in connection with conversion of certain
information, documents, and record keeping, as provided in Section 6.01.
Notwithstanding the above, (i) if the Indenture Trustee is unwilling to
act as successor Master Servicer, or (ii) if the Indenture Trustee is legally
unable to so act, the Indenture Trustee may (in the situation described in
clause (i)) or shall (in the situation described in clause (ii)) appoint, or
petition a court of competent jurisdiction to appoint, any established housing
and home finance institution, bank, or other mortgage loan or home equity loan
servicer having a net worth of not less than $15,000,000 as the successor to
the Master Servicer under this Agreement to assume of any obligations of the
Master Servicer under this Agreement. The appointment of the successor Master
Servicer must not result in the qualification, reduction, or withdrawal of the
ratings assigned to the Notes by the Rating Agencies.
No appointment of a successor to the Master Servicer will be effective
unless at least 15 days before the effective date of the appointment, the
Indenture Trustee notifies the Depositor of the successor pursuant to this
Section 6.02 and the successor Master Servicer provides to the Depositor all
information, in form and substance reasonably satisfactory to the Depositor,
reasonably requested by the Depositor to comply with its reporting obligation
under Item 6.02 of Form 8-K with respect to a replacement master servicer.
Pending appointment of a successor to the Master Servicer, unless the
Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act as Master Servicer. In connection with this appointment and
assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Loans in an amount equal to the compensation that the
Master Servicer would otherwise have received pursuant to Section 3.08 (or any
lesser
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compensation the Indenture Trustee and the successor agree to). The Indenture
Trustee and the successor shall take any action, consistent with this
Agreement, necessary to effectuate the succession.
(b) The appointment of a successor Master Servicer shall not affect any
liability of the predecessor Master Servicer that may have arisen under this
Agreement before its termination as Master Servicer (including any deductible
under an insurance policy pursuant to Section 3.04), nor shall any successor
Master Servicer be liable for any acts or omissions of the predecessor Master
Servicer or for any breach by the predecessor Master Servicer of any of its
representations or warranties in this Agreement. Except for any compensation
agreement with the Indenture Trustee, any successor Master Servicer shall be
subject to all the terms of this Agreement from the time that it accepts its
appointment to the same extent as if it were originally named as Master
Servicer.
Section 6.03 Notification to Noteholders and the Transferor.
Upon any termination or appointment of a successor to the Master Servicer
pursuant to this Article or Section 5.04, the Indenture Trustee shall give
prompt notice of it to the Noteholders at their respective addresses appearing
in the Note Register, the Transferor, and each Rating Agency.
ARTICLE VII
EXCHANGE ACT REPORTING
Section 7.01 Filing Obligations.
The Master Servicer, the Indenture Trustee, the Owner Trustee, and each
Seller shall reasonably cooperate with the Depositor in connection with the
satisfaction of the Depositor's reporting requirements under the Exchange Act
with respect to the Trust. In addition to the information specified below, if
so requested by the Depositor to satisfy its reporting obligation under the
Exchange Act, the Master Servicer, the Indenture Trustee, the Owner Trustee,
and each Seller shall (and the Master Servicer shall cause each subservicer
to) provide the Depositor with any information available to such person
without unreasonable effort or expense and within the timeframe reasonably
requested by the Depositor to comply with the Depositor's reporting
obligations under the Exchange Act and (b) to the extent the Master Servicer,
the Indenture Trustee, the Owner Trustee, or a Seller is a party (and the
Depositor is not a party) to any agreement or amendment required to be filed,
copies of the agreement or amendment in XXXXX-compatible form.
Section 7.02 Form 10-D Filings.
(a) The Indenture Trustee shall prepare for filing and file reports on
Form 10-D as required by Section 7.03(a) of the Indenture.
(b) No later than each Payment Date, each of the Master Servicer, the
Indenture Trustee, and the Owner Trustee shall notify (and the Master Servicer
shall cause any subservicer to notify) the Depositor and the Master Servicer
of any Form 10-D Disclosure Item,
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together with a description of the Form 10-D Disclosure Item in form and
substance reasonably acceptable to the Depositor. In addition to the
information the Master Servicer and the Indenture Trustee are obligated to
provide pursuant to other provisions of this Agreement, if so requested by the
Depositor, each of the Master Servicer and the Indenture Trustee shall provide
any information available to it without unreasonable effort or expense
regarding the performance or servicing of the Mortgage Loans (in the case of
the Indenture Trustee, based on the information provided by the Master
Servicer) reasonably required to facilitate preparation of distribution
reports in accordance with Item 1121 of Regulation AB. This information shall
be provided concurrently with the information provided pursuant to Section
4.01 in the case of the Master Servicer and the Monthly Statement in the case
of the Indenture Trustee, beginning with the first report due not less than
five Business Days following the request.
(c) The Indenture Trustee will not have any responsibility to file any
items (other than those generated by it) that have not been received in a
format suitable (or readily convertible into a format suitable) for electronic
filing via the XXXXX system and shall not have any responsibility to convert
any such items to a format suitable (or readily convertible into a format
suitable) for electronic filing via the XXXXX system. The Indenture Trustee
shall have no liability to the Noteholders, the Certificateholders, the Trust,
the Master Servicer, the Depositor, or the Credit Enhancer with respect to any
failure to properly prepare or file any of Form 10-D to the extent that the
failure is not the result of any negligence, bad faith, or willful misconduct
on its part.
Section 7.03 Form 8-K Filings.
(a) The Master Servicer shall prepare and file on behalf of the Trust any
Form 8-K required by the Exchange Act. Each Form 8-K must be signed by the
Master Servicer. Each of the Master Servicer (and the Master Servicer shall
cause any subservicer to promptly notify), the Indenture Trustee, and the
Owner Trustee shall promptly notify the Depositor and the Master Servicer (if
the notifying party is not the Master Servicer), but in no event later than
one Business Day after its occurrence, of any Reportable Event of which it has
actual knowledge. A person has actual knowledge of a Reportable Event to the
extent that it relates to it or any action or failure to act by it.
(b) Concurrently with any sale of Additional Home Equity Loans to the
Trust, the Sponsor shall notify the Depositor and the Master Servicer, if any
material pool characteristic of the actual asset pool at the time of issuance
of the Notes differs by 5% or more (other than as a result of the pool assets
converting into cash in accordance with their terms) from the description of
the asset pool in the Prospectus Supplement.
Section 7.04 Form 10-K Filings.
(a) Before March 30th of each year, beginning in 200_ (or any earlier
date required by the Exchange Act), the Depositor shall prepare and file on
behalf of the Trust a Form 10-K, in form and substance as required by the
Exchange Act. A senior officer in charge of the servicing function of the
Master Servicer shall sign each Form 10-K filed on behalf of the Trust. The
Form 10-K shall include as exhibits each
(1) annual compliance statement described under Section 3.09,
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(2) annual report on assessments of compliance with servicing
criteria described under Section 7.07, and
(3) accountant's report described under Section 7.07.
Each Form 10-K shall also include any Xxxxxxxx-Xxxxx Certification
required to be included with it, as described in Section 7.05.
(b) If the Item 1119 Parties have changed since the Closing Date, by no
later than March 1 of each year, the Master Servicer shall provide each of the
Indenture Trustee and the Owner Trustee with an updated list of the Item 1119
Parties.
(c) No later than March 15 of each year, beginning in 200_, the Master
Servicer, the Indenture Trustee, and the Owner Trustee shall notify (and the
Master Servicer shall cause any subservicer to notify) the Depositor and the
Master Servicer of any Form 10-K Disclosure Item, together with a description
of it in form and substance reasonably acceptable to the Depositor.
Additionally, each of the Master Servicer, the Indenture Trustee, and the
Owner Trustee shall provide, and shall cause each Reporting Subcontractor
retained by the Master Servicer or the Indenture Trustee, and in the case of
the Master Servicer shall cause each subservicer, to provide the following
information no later than March 15 of each year in which a Form 10-K is
required to be filed on behalf of the Trust:
(1) if the report on assessment of compliance with servicing
criteria described under Section 7.07 or related registered public
accounting firm attestation report described under Section 7.07 relating
to the relevant person identifies any material instance of noncompliance,
notification of the instance of noncompliance and
(2) if the report on assessment of compliance with servicing
criteria or related registered public accounting firm attestation report
relating to the relevant person is not provided to be filed as an exhibit
to the Form 10-K, information detailing the explanation why the report is
not included.
Section 7.05 Xxxxxxxx-Xxxxx Certification.
(a) Each Form 10-K shall include a Xxxxxxxx-Xxxxx Certification. No later
than March 15 of each year, beginning in 200_, the Master Servicer and the
Indenture Trustee shall (unless it is the Certifying Person), and the Master
Servicer shall cause each subservicer and Reporting Subcontractor and the
Indenture Trustee shall cause each Reporting Subcontractor to, provide to the
Certifying Person a Performance Certification on which the Certification
Parties may reasonably rely.
(b) The senior officer in charge of the servicing function of the Master
Servicer shall serve as the Certifying Person on behalf of the Trust. Neither
the Master Servicer nor the Depositor will request delivery of a certification
under this Section unless the Depositor is required under the Exchange Act to
file an annual report on Form 10-K with respect to the Trust. If before the
filing date of the Form 10-K in March of each year, the Indenture Trustee or
the Depositor has actual knowledge of information material to the
Xxxxxxxx-Xxxxx Certification, the Indenture Trustee or the Depositor, as the
case may be, shall promptly notify the Master Servicer and the Depositor. The
respective parties to this Agreement agree to cooperate with all
42
reasonable requests made by any Certifying Person or Certification Party in
connection with the Certifying Person's or Certification Party's attempt to
conduct any due diligence that it reasonably believes to be appropriate to
allow it to deliver any Xxxxxxxx-Xxxxx Certification with respect to the
Trust.
Section 7.06 Form 15 Filing.
Before January 30 of the first year in which the Depositor is able to do
so under applicable law, the Indenture Trustee, on behalf of the Depositor,
shall file a Form 15 relating to the automatic suspension of reporting in
respect of the Trust under the Exchange Act.
Section 7.07 Report on Assessment of Compliance and Attestation.
(a) On or before March 15 of each year, beginning in 200_:
(1) Each of the Master Servicer and the Indenture Trustee shall
deliver to the Depositor and the Master Servicer a Servicing Criteria
Compliance Assessment Report for the pervious year so long as a Servicing
Criteria Compliance Assessment Report is required by Regulation AB. The
Servicing Criteria Compliance Assessment Report shall be signed by an
authorized officer of the Master Servicer or the Indenture Trustee, as
applicable, and shall address each of the Servicing Criteria specified on
a certification substantially in the form of Exhibit H delivered to the
Depositor concurrently with the execution of this Agreement. To the
extent any of the Servicing Criteria are not applicable to the Master
Servicer or the Indenture Trustee, as applicable, with respect to
asset-backed securities transactions taken as a whole involving it and
that are backed by the same asset type backing the Notes, the report
shall include a statement to that effect. The Depositor and the Master
Servicer, and each of their respective officers and directors, will be
entitled to rely on each Servicing Criteria Compliance Assessment Report.
(2) Each of the Master Servicer and the Indenture Trustee shall
deliver to the Depositor and the Master Servicer an Accountant's
Attestation with respect to the Servicing Criteria Compliance Assessment
Report furnished by Master Servicer or the Indenture Trustee, as
applicable. To the extent any of the Servicing Criteria are not
applicable to the Master Servicer or the Indenture Trustee, as
applicable, with respect to asset-backed securities transactions taken as
a whole involving it and that are backed by the same asset type backing
the Notes, the Accountant's Attestation shall include a statement that
that effect.
(3) The Master Servicer shall cause each subservicer and each
Reporting Subcontractor to deliver to the Depositor a Servicing Criteria
Compliance Assessment Report and an Accountant's Attestation as and when
provided in Section 7.07(a)(i) and (ii).
(4) The Indenture Trustee shall cause each Reporting Subcontractor
to deliver to the Depositor and the Master Servicer a Servicing Criteria
Compliance Assessment Report and an Accountant's Attestation as and when
provided in Section 7.07 (a)(i) and (ii).
43
(5) The Master Servicer and the Indenture Trustee shall execute (and
the Master Servicer shall cause each subservicer to execute, and the
Master Servicer and the Indenture Trustee shall cause each Reporting
Subcontractor to execute) a reliance certificate to enable the
Certification Parties to rely on each
(A) annual compliance statement provided pursuant to Section
3.09,
(B) Servicing Criteria Compliance Assessment Report provided
pursuant to this Section 7.07, and
(C) Accountant's Attestation provided pursuant to this Section
7.07,
and shall include a certification that each Servicing Criteria Compliance
Assessment Report discloses any deficiencies or defaults described to the
applicable registered public accountants to enable them to render the
Accountant's Attestation provided for in this Section 7.07.
(b) If the Master Servicer, any subservicer, the Indenture Trustee, or
any Reporting Subcontractor is terminated or resigns during the term of this
Agreement, that person shall provide documents and information required by
this Section 7.07 with respect to the period it was subject to this Agreement
or provided services with respect to the Trust, the Notes, or the Mortgage
Loans.
(c) Each Servicing Criteria Compliance Assessment Report provided by a
subservicer pursuant to Section 7.07(a)(iii) shall address each of the
Servicing Criteria specified on a certification substantially in the form of
Exhibit G delivered to the Depositor concurrently with the execution of this
Agreement or, in the case of a subservicer subsequently appointed as such, on
or before the date of its appointment. An assessment of compliance provided by
a Subcontractor pursuant to Section 7.07(a)(iii) or (iv) need not address any
elements of the Servicing Criteria other than those specified by the Master
Servicer or the Indenture Trustee, as applicable, pursuant to Section
7.07(a)(i).
Section 7.08 Use of Subservicers and Subcontractors.
(a) The Master Servicer shall cause any subservicer used by the Master
Servicer (or by any subservicer) for the benefit of the Depositor to comply
with the provisions of Section 3.09(b) and this Article VII to the same extent
as if it were the Master Servicer (except with respect to the Master
Servicer's duties with respect to preparing and filing any Exchange Act
Reports or as the Certifying Person). The Master Servicer shall be responsible
for obtaining from each subservicer and delivering to the Depositor any
servicer compliance statement required to be delivered by the subservicer
under Section 3.09, any a Servicing Criteria Compliance Assessment Report and
Accountant's Attestation required to be delivered by the subservicer under
Section 7.07, and any certification required to be delivered to the Certifying
Person under Section 7.05 as and when required to be delivered.
No person may become a successor subservicer in connection with this
Agreement (whether by merger or consolidation with an existing subservicer or
by appointment as a
44
successor to any subservicer) unless the Master Servicer has notified the
Depositor at least 15 days before the effective date of the succession or
appointment of the successor and has provided all information reasonably
requested by the Depositor to comply with its reporting obligation under Item
6.02 of Form 8-K with respect to the succession or appointment of the
successor subservicer in form and substance reasonably satisfactory to the
Depositor.
(b) It shall not be necessary for the Master Servicer, any subservicer,
or the Indenture Trustee to seek the consent of the Depositor or any other
party to the use of any Subcontractor. The Master Servicer or the Indenture
Trustee, as applicable, shall promptly on request provide to the Depositor (or
any designee of the Depositor, such as the Master Servicer or administrator) a
description (in form and substance satisfactory to the Depositor) of the role
and function of each Subcontractor used by the Master Servicer or the
Indenture Trustee (or in the case of the Master Servicer, any Subservicer).
The description shall specify for each Subcontractor
(1) its identity,
(2) whether it is "participating in the servicing function" within
the meaning of Item 1122 of Regulation AB, and
(3) which elements of the Servicing Criteria will be addressed in
Servicing Criteria Compliance Assessment Reports provided by it if it is
"participating in the servicing function" within the meaning of Item 1122
of Regulation AB.
(c) Neither the Master Servicer nor the Indenture Trustee shall use
Subcontractor (or in the case of the Master Servicer, any subservicer) that
would be a Reporting Subcontractor unless the Subcontractor (or subservicer)
agrees for the benefit of the Depositor to comply with Sections 7.07 and 7.09
to the same extent as if the Subcontractor (or subservicer) were the Master
Servicer (except with respect to the Master Servicer's duties with respect to
preparing and filing any Exchange Act Reports or as the Certifying Person) or
the Indenture Trustee, as applicable. The Master Servicer or the Indenture
Trustee, as applicable, shall be responsible for obtaining from each
Subcontractor and delivering to the Depositor and the Master Servicer any
Servicing Criteria Compliance Assessment Report and Accountant's Attestation
required to be delivered by the Subcontractor under Section 7.05 and Section
7.07, in each case as and when required to be delivered.
Section 7.09 Amendments.
(a) If the parties to this Agreement desire to further clarify or amend
any provision of this Article VII, this Agreement shall be amended to reflect
the new agreement between the parties covering matters in this Article VII
pursuant to Section 7.01, which amendment shall not require any Opinion of
Counsel or the satisfaction of the Rating Agency Condition or the consent of
any Noteholder.
(b) The Depositor shall assume the obligations and responsibilities of
the Master Servicer in this Article VII with respect to the preparation and
filing of the Exchange Act Reports and acting as the Certifying Person if
45
(1) during the period that the Depositor is required to file
Exchange Act Reports with respect to the Trust, the Master Servicer is no
longer an Affiliate of the Depositor,
(2) the successor Master Servicer has agreed to provide a
Xxxxxxxx-Xxxxx Certification to the Depositor substantially in the form
of Exhibit I,
(3) the successor Master Servicer has agreed to provide the
Servicing Criteria Compliance Assessment Reports and Accountant's
Attestations as provided in Section 7.07(a)(i) and (ii) and the reliance
certificate as provided in Section 7.07(a)(v),
(4) the successor Master Servicer has agreed to cause each
subservicer and each Reporting Subcontractor used by it to provide the
Servicing Criteria Compliance Assessment Reports and Accountant's
Attestations as provided in Section 7.07(a)(iii), and
(5) the Depositor has received indemnity from the successor Master
Servicer satisfactory to the Depositor.
ARTICLE VIII
TERMINATION
Section 8.01 Termination.
(a) The respective obligations and responsibilities of the Sponsor, the
Master Servicer, the Depositor, the Trust, and the Indenture Trustee created
by this Agreement (other than the obligation of the Master Servicer to send
certain notices) shall terminate on the earlier of
(1) the transfer of all the Mortgage Loans pursuant to Section
7.01(b),
(2) the termination of the Trust Agreement or the Indenture, and
(3) the final payment or other liquidation of the last Mortgage Loan
remaining in the Trust or the disposition of all property acquired in
foreclosure or by deed in lieu of foreclosure of any Mortgage Loan.
Upon termination in accordance with this Section, the Indenture Trustee
shall execute any documents and instruments of transfer presented by the
Transferor, in each case without recourse, representation, or warranty, and
take any other actions the Transferor reasonably requests to effect the
transfer of the Mortgage Loans to the Transferor. Notwithstanding the
termination of this Agreement, the Master Servicer shall comply with this
Agreement in winding up activities under this Agreement after termination if
necessary.
(b) The Master Servicer may effect the transfer of all the Mortgage Loans
at their termination purchase price on any Payment Date from the Payment Date
immediately before which the aggregate Note Principal Balance of the Principal
Amount Notes is less than or equal to 10% of the aggregate Original Note
Principal Balance of the Principal Amount Notes and
46
require the Trust to redeem the Notes pursuant to Section 10.01 of the
Indenture with the proceeds. The termination purchase price is the sum of:
(1) the aggregate Note Principal Balance for the Principal Amount
Notes,
(2) accrued aggregate Note Interest through the day preceding the
final Payment Date, and
(3) interest accrued on any aggregate Unpaid Investor Interest
Shortfall, to the extent legally permissible.
(c) The Master Servicer must notify the Trust and the Indenture Trustee
of any election to effect the transfer of the Mortgage Loans pursuant to
Section 7.01(b) no later than the first day of the month before the month in
which the transfer is to occur. The proceeds from the purchase of the Mortgage
Loans, for purposes of payments on the Notes, shall be considered to have been
received in the Collection Period before the Collection Period in which the
Payment Date on which the purchase takes place occurs.
Section 8.02 Additional Termination Requirements.
(a) If the Master Servicer exercises its redemption option in Section
7.01(b), the Mortgage Loans then remaining in the Trust shall be liquidated in
accordance with the following additional requirements, unless the Indenture
Trustee has been supplied with an Opinion of Counsel to the effect that the
failure to comply with the requirements of this Section will not result in the
imposition of taxes on prohibited transactions on any REMIC as defined in
Section 860F of the Code, or cause any REMIC created under the Trust Agreement
to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(b) Within 90 days before the final Payment Date in the notice given by
the Indenture Trustee under Section 10.01(b) of the Indenture, the Master
Servicer shall prepare and the Indenture Trustee, at the expense of the tax
matters person, shall adopt a plan of complete liquidation within the meaning
of Section 860F(a)(4) of the Code that, as evidenced by an Opinion of Counsel,
meets the requirements of a qualified liquidation; and
(c) Within 90 days after the time of adoption of a plan of complete
liquidation, the Issuer shall sell all of the assets of the Trust to the
Master Servicer for cash greater than or equal to the sum of:
(1) 100% of the principal balance of each Mortgage Loan plus one
month's accrued interest thereon at the applicable Loan Rate,
(2) for each such property, the lesser of the appraised value of any
Mortgaged Property that has been acquired by the Trust in foreclosure or
by deed in lieu of foreclosure as determined by the higher of two
appraisals completed by two independent appraisers selected by the Master
Servicer at the expense of the Master Servicer and the principal balance
of the related Mortgage Loan, and
(3) any remaining unpaid costs and damages incurred by the Trust
that arise out of an actual violation of any predatory or abusive lending
law that also
47
constitutes an actual breach of a representation and warranty in Section
2.04, in all cases plus accrued and unpaid interest thereon at the
applicable Loan Rate.
The Indenture Trustee as agent for any REMIC created under the Trust
Agreement shall adopt and sign such a plan of complete liquidation upon the
written request of the Master Servicer and the receipt of the Opinion of
Counsel referred to in Section 7.02(a) and take any other action in connection
therewith reasonably requested by the Master Servicer.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01 Amendment.
This Agreement may be amended from time to time by the Sponsor, the
Master Servicer, the Depositor, the Owner Trustee, and the Indenture Trustee,
if the Rating Agency Condition is satisfied. However, no amendment that
significantly changes the permitted activities of the Trust may be promulgated
without the consent of a majority of the aggregate Outstanding Amount of the
Notes. For this purpose no Notes owned by the Sponsor or any of its affiliates
may vote, nor shall their Notes be considered outstanding. This Agreement may
also be amended from time to time by the Sponsor, the Master Servicer, the
Depositor, the Owner Trustee, and the Indenture Trustee, with the consent of
Holders of not less than 66(2)/3% of the aggregate Outstanding Amount of the
Notes.
The Indenture Trustee may enter into any amendment of this Agreement as
to which the Rating Agency Condition is satisfied, and when so requested by an
Issuer Request, the Indenture Trustee shall enter into any amendment of this
Agreement
(1) that does not impose further obligations or liabilities on the
Indenture Trustee, and
(2) as to which either the Rating Agency Condition is satisfied or
Holders of not less than 66(2)/3% of the aggregate Outstanding Amount of
the Notes have consented.
Before the execution of the amendment, the party to this Agreement
requesting the amendment shall notify each Rating Agency of the substance of
the amendment.
Section 9.02 Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS THAT WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Section 9.03 Notices.
All notices, demands, instructions, consents, and other
communications required or permitted under this Agreement shall be in writing
and signed by the party giving the same and shall be personally delivered or
sent by first class or express mail (postage prepaid), national overnight
courier service, or by facsimile transmission or other electronic
communication
48
device capable of transmitting or creating a written record (confirmed by
first class mail) and shall be considered to be given for purposes of this
Agreement on the day that the writing is delivered when personally delivered
or sent by facsimile or overnight courier or three Business Days after it was
sent to its intended recipient if sent by first class mail. A facsimile has
been delivered when the sending machine issues an electronic confirmation of
transmission. Unless otherwise specified in a notice sent or delivered in
accordance with the provisions of this Section, notices, demands,
instructions, consents, and other communications in writing shall be given to
or made on the respective parties at their respective addresses indicated
below:
if to the Trust at:
CWHEQ Revolving Home Equity Loan Trust, Series 200_-_
________________
________________
________________
________________
Attention: ________________
Telecopy: (___) ___-____
if to the Depositor at:
CWHEQ, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
Telecopy: (000) 000-0000
if to the Master Servicer at:
Countrywide Home Loans, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department,
Telecopy: (000) 000-0000
if to the Indenture Trustee at:
the Corporate Trust Office
Telecopy: (___) ___-____
if to [Xxxxx'x] at:
[Residential Loan Monitoring Group, 4th Floor
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000]
and if to [Standard & Poor's] at:
[55 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000]
49
Section 9.04 Severability of Provisions.
Any provisions of this Agreement that are held invalid for any reason or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of the invalidity or unenforceability without
invalidating the remaining provisions of this Agreement, and the prohibition
or unenforceability in a jurisdiction shall not invalidate or render
unenforceable that provision in any other jurisdiction.
Section 9.05 Third-Party Beneficiaries.
This Agreement will be binding on the parties to this Agreement, and
inure to the benefit of the parties to this Agreement, the Noteholders, the
Transferor, the Note Owners, and the Owner Trustee and their respective
successors and permitted assigns. No other person will have any rights under
this Agreement.
Section 9.06 Counterparts; Electronic Delivery.
This Agreement may be executed in any number of copies, and by the
different parties on the same or separate counterparts, each of which shall be
considered to be an original instrument. Any signature page to this Agreement
containing a manual signature may be delivered by facsimile transmission or
other electronic communication device capable of transmitting or creating a
printable written record, and when so delivered shall have the effect of
delivery of an original manually signed signature page.
Section 9.07 Effect of Headings and Table of Contents.
The Article and Section headings in this Agreement and the Table of
Contents are for convenience only and shall not affect the construction of
this Agreement.
50
IN WITNESS WHEREOF, the Depositor, the Sponsor and Master Servicer, the
Trust, and the Indenture Trustee have caused this Agreement to be duly
executed by their respective officers all as of the day and year first above
written.
CWHEQ, INC.
Depositor
By:______________________________
Name:
Title:
COUNTRYWIDE HOME LOANS, INC.
Sponsor and Master Servicer
By:______________________________
Name:
Title:
__________________,
Indenture Trustee
By:______________________________
Name:
Title:
51
CWHEQ REVOLVING HOME EQUITY LOAN
TRUST, SERIES 200_-_
By: ________________, not in its individual
capacity but solely as Owner Trustee
By:______________________________
Name:
Title:
52
State of __________________ )
) ss.:
County of _________________ )
On the ____ day of _______, 200_ before me, a notary public in and for
the State of ________________, personally appeared _________, known to me who,
being by me duly sworn, did depose and say that he resides at ___________,
________; that he is the _________ of CWHEQ, Inc. a Delaware corporation, one
of the parties that executed the foregoing instrument; that he signed his name
thereto by order of the Board of Directors of said corporation.
____________________
Notary Public
____________________
Commission # ________________
Notary Public - ________________
________________ County
My Comm. Expires _______, 200_.
1
State of __________________ )
) ss.:
County of _________________ )
On the ____ day of _______, 200_ before me, a notary public in and for
the State of ________________, personally appeared ________________, known to
me who, being by me duly sworn, did depose and say that he resides at
________________, ________________; that he is the ________________ of
Countrywide Home Loans, Inc., a New York corporation, one of the parties that
executed the foregoing instrument; and that he signed his name thereto by
order of the Board of Directors of said corporation.
____________________
Notary Public
____________________
Commission # ________________
Notary Public - ________________
________________ County
My Comm. Expires _______, 200_.
2
State of __________________ )
) ss.:
County of _________________ )
On the ____ day of _______, 200_ before me, a notary public in and for
the State of ________________, personally appeared ________________, known to
me who, being by me duly sworn, did depose and say that he resides at
________________, ________________; that he is the ________________ of
________________, a ________________, one of the parties that executed the
foregoing instrument; that he signed his name thereto by order of the Board of
Directors of said corporation.
____________________
Notary Public
OFFICIAL SEAL
________________
Notary Public, State of ________________
My Commission Expires: ________________
3
State of __________________ )
) ss.:
County of _________________ )
On the ____ day of _______, 200_ before me, a notary public in and for
the State of ________________, personally appeared ________________, known to
me who, being by me duly sworn, did depose and say that she resides at
________________, ________________; that she is a ________________of
________________, not in its individual capacity but in its capacity as Owner
Trustee of CWHEQ Revolving Home Equity Loan Trust, Series 200_-_, one of the
parties that executed the foregoing instrument; that she signed her name
thereto by order of the Board of Directors of said corporation.
____________________
Notary Public
________________
Notary Public - State of ________________
My Commission Expires _______, 200_
4
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[Delivered to Indenture Trustee Only]
A-1
EXHIBIT B
FORM OF LETTER OF REPRESENTATIONS
B-1
EXHIBIT C
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
[DATE]
__________________________
as Indenture Trustee
_________________
_________________
_________________
_________________
Attention: ________________
Re: CWHEQ, Inc. Revolving Home Equity Loan
Asset Backed Notes, Series 200_-_
---------------------------------
Gentlemen:
In connection with the administration of the Mortgage Loans held by you
as Indenture Trustee under the Sale and Servicing Agreement, dated as of
_______, 200_, among CWHEQ, Inc. as Depositor, Countrywide Home Loans, Inc.,
as Sponsor and Master Servicer, CWHEQ Revolving Home Equity Loan Trust, Series
200_-_ and you, as Indenture Trustee (the "Agreement"), we hereby request a
release of the Mortgage File held by you as Indenture Trustee with respect to
the following described Mortgage Loan for the reason indicated below.
Loan No.:
-------
[MIN No.]
-------
Reason for requesting file:
--------------------------
__________ 1. Mortgage Loan paid in full. (The Master Servicer hereby
certifies that all amounts received in connection with the
payment in full of the Mortgage Loan which are required to
be deposited in the Collection Account pursuant to Section
3.02 of the Agreement have been so deposited).
__________ 2. Retransfer of Mortgage Loan. (The Master Servicer hereby
certifies that the Transfer Deposit Amount has been
deposited in the Collection Account pursuant to the
Agreement).
__________ 3. The Mortgage Loan is being foreclosed.
__________ 4. The Mortgage Loan is being re-financed by another
depository institution. (The Master Servicer hereby
certifies that all amounts received in connection with the
payment in full of the Mortgage Loan which are required to
be deposited in the Collection Account pursuant to Section
3.02 of the Agreement have been so deposited).
__________ 5. Other (Describe).
The undersigned acknowledges that the above Mortgage File will be held by
the undersigned in accordance with the provisions of the Agreement and will
promptly be returned
C-1
to the Indenture Trustee when the need therefor by the Master Servicer no
longer exists unless the Mortgage Loan has been liquidated or retransferred.
Capitalized terms used herein shall have the meanings ascribed to them in
the Agreement.
COUNTRYWIDE HOME LOANS, INC.
By:_______________________________
Name:
Title: Servicing Officer
C-2
EXHIBIT D
FORM OF TRANSFER DOCUMENT
The Sponsor hereby transfers to the Depositor, and the Depositor hereby
transfers to the Owner Trustee for the benefit of CWHEQ Revolving Home Equity
Loan Trust, Series 200_-_ the below identified Additional Home Equity Loans.
Subsequent Closing Date: _________________
Subsequent Cut-off Date: __________________
Cut-off Date Asset Balance: $ ______________
Additional Home Equity Loans:
[Each of the Sponsor's funded Mortgage Loans owned by it for
securitization on the above referenced Subsequent Cut-off Date sequentially by
date beginning with the earliest date on which any of them were funded, and
within a date alphabetically, are hereby transferred to the Trust until either
their aggregate Cut-off Date Asset Balance is as close as possible to equal to
the Cut-off Date Asset Balance indicated above without exceeding it or all of
the loans through the Subsequent Cut-off Date have been transferred.]
This Transfer Document is delivered pursuant to the Purchase Agreement
and the Sale and Servicing Agreement, dated as of _______, 200_, among CWHEQ,
Inc., Countrywide Home Loans, Inc., CWHEQ Revolving Home Equity Loan Trust,
Series 200_-_, and ________________, and the capitalized terms used in this
document have the meanings given to them in those agreements.
Dated: __________ , 200_.
COUNTRYWIDE HOME LOANS, INC. CWHEQ, INC.
By : ___________________ By : ________________________
Name: Name:
Title: Title:
D-1
EXHIBIT E
MONTHLY STATEMENT
The following information is required in each Monthly Statement. The
format of the Monthly Statement is on file with the Indenture Trustee.
(1) the Investor Floating Allocation Percentage for the related
Collection Period;
(2) the Investor Interest Collections and Investor Principal Collections
for the related Collection Period;
(3) the Interest Collections that are not Investor Interest Collections,
the Net Draws Principal Payment, and Interest Collections allocated to the Net
Draws, and Transferor Principal Collections for the related Collection Period;
(4) the aggregate amount to be paid to the related Classes of Notes;
(5) the amount of Note Interest for each Class of Notes for the related
Interest Period, and the Note Rate for each Class of Notes for the related
Interest Period;
(6) the amount of the Note Interest that is not payable to the Holders of
each Class of Notes on the Payment Date because of insufficient Investor
Interest Collections and Subordinated Transferor Collections;
(7) the amount of any Unpaid Investor Interest Shortfall for each Class
of Notes for the Payment Date and the amount of interest on the shortfall at
the applicable Note Rate for each Class of Notes applicable from time to time
(separately stated) to be paid on the Payment Date;
(8) the amount of the remaining Unpaid Investor Interest Shortfall for
each Class of Notes after giving effect to the payment;
(9) the amount of principal in the payment, separately stating its
components;
(10) the amount of the Investor Loss Amounts for the Payment Date and the
amount of Investor Loss Amounts that will be reimbursed in the payment;
(11) the amount of the aggregate of unreimbursed Investor Loss Amounts
after giving effect to the payment;
(12) the amount of any Basis Risk Carryforward for each Class of Notes in
the payment;
(13) the amount of the remaining Basis Risk Carryforward for each Class
of Notes giving effect to the payment;
(14) the Accelerated Principal Payment Amount and the portion of it that
will be distributed as principal on each Class of Notes pursuant to Section
8.03(c)(i) of the Indenture on the Payment Date;
(15) the amount of any Transfer Deposit Amount paid by the Sponsor or the
Depositor during the related Collection Period in connection with retransfer
of Mortgage Loans pursuant to Section 2.07;
(16) the Servicing Fee for the Payment Date;
E-1
(17) the amount of the Sponsor Loss Coverage Obligation, the amount
expected to be received from the Sponsor for the payment under such
obligation, and the remaining coverage under Sponsor Loss Coverage Obligation
after the payment on the Payment Date;
(18) the Note Principal Balance or Notional Balance of each Class of
Notes and the factor to seven decimal places obtained by dividing the Note
Principal Balance of each Class of Principal Balance Notes for the Payment
Date by the Original Note Principal Balance of the that Class of Principal
Amount Notes after giving effect to the payment on the Payment Date and to any
reduction in the Note Principal Balance with respect to Investor Loss Amount;
(19) the Transferor Interest after giving effect to the payment and to
any reduction in with respect to Investor Loss Amount on the Payment Date;
(20) whether a Rapid Amortization Event has occurred since the prior
Determination Date, specifying the Rapid Amortization Event if one has
occurred;
(21) whether an Event of Servicing Termination has occurred since the
prior Determination Date, specifying the Event of Servicing Termination if one
has occurred;
(22) whether the Stepdown Date has occurred since the prior Determination
Date;
(23) whether a Trigger Event has occurred since the prior Determination
Date, specifying whether a Stepdown Delinquency Trigger Event is in effect
with respect to that Payment Date or a Stepdown Cumulative Loss Trigger Event
is in effect with respect to that Payment Date;
(24) the amount to be distributed on the Mortgage Loans to the Issuer
pursuant to Section 8.03(c)(vi) of the Indenture;
(25) the amount to be paid to the Master Servicer from Investor Interest
Collections pursuant to Section 8.03(v) of the Indenture;
(26) the Maximum Rate for the related Collection Period and the Weighted
Average Net Loan Rate for the Mortgage Loans for the related Collection
Period;
(27) Loan Pool Balance as of the end of the preceding Collection Period;
(28) the number and aggregate Asset Balances of Mortgage Loans as to
which the Minimum Monthly Payment is delinquent for 30-59 days, 60-89 days,
and 90 or more days, respectively, as of the end of the preceding Collection
Period;
(29) the book value (within the meaning of 12 C.F.R. ss. 571.13 or
comparable provision) of any reaL estate acquired through foreclosure or grant
of a deed in lieu of foreclosure;
(30) the amount of any optional advances on the Mortgage Loans pursuant
to Section 4.03 by the Master Servicer included in the payment on the Payment
Date and the aggregate amount of optional advances pursuant to Section 4.03 on
Mortgage Loans by the Master Servicer outstanding as of the close of business
on the Payment Date;
(31) the number and principal balances of any Mortgage Loans
retransferred to the Transferor pursuant to each of Section 2.04 and Section
2.06;
(32) the amount of Subordinated Transferor Collections included in the
payment;
E-2
(33) for the first Payment Date, the number and Cut-off Date Asset
Balance of Mortgage Loans for which the Mortgage Loan File was not delivered
to the Indenture Trustee within 30 days of the Closing Date or Subsequent
Closing Date, as applicable;
(34) the amount being paid to the Class R-[1] Certificates,
(35) the Net Draws for the Payment Date;
(36) the Net Draws Principal Payment for the Payment Date;
(37) the Record Date for that Payment Date;
(38) the Determination Date;
(39) the Payment Date;
(40) the amount of funds received into any of the Collection Account,
Payment Account, and any other account or fund established under the
Transaction Documents, and the sources of the funds;
(41) fees paid to any party under the Transaction Documents, other than
the Servicing Fee;
(42) any insurance premiums and other payments to the Loan Insurance
Policy Provider and the purpose of the payments;
(43) the applicable Mortgage Rate;
(44) the beginning and ending balance of any of the Collection Account,
Payment Account, and any other account or fund established under the
Transaction Documents;
(45) the number and principal balance of the Mortgage Loans at the
beginning and the end applicable period, and the following information for the
Mortgage Loans: the weighted average Mortgage Rate, the weighted average
remaining term to maturity, and the weighted average loan age;
(46) the pool factor;
(47) amount of prepayments;
(48) amount of prepayment charges;
(49) delinquency and loss information for the Mortgage Loans;
(50) any material modifications, extensions, or waiver to any Mortgage
Loan's terms during the applicable period;
(51) any material breaches by any party to the Transaction Documents of
any representation, warranty, or covenant;
(52) any repurchase or substitution of a Mortgage Loan; and
(53) any material changes to the underwriting, originating, acquisition
or pool selection criteria of any Seller.
The amounts furnished pursuant to clauses (4), (5) (for Note Interest),
(7), (8), (9), (10), and (11) above shall be expressed as a dollar amount per
$1,000 increment of Notes.
E-3
EXHIBIT F-1
FORM OF PERFORMANCE CERTIFICATION
(Subservicer)
[on file with Master Servicer]
F-1-1
EXHIBIT F-2
FORM OF PERFORMANCE CERTIFICATION
(Indenture Trustee)
[on file with Indenture Trustee]
F-2-1
EXHIBIT G
FORM OF SERVICING CRITERIA TO BE ADDRESSED IN
ASSESSMENT OF COMPLIANCE STATEMENT
Each assessment of compliance to be delivered shall address, at a
minimum, the criteria identified as below as "Applicable Servicing Criteria":
------------------------------------------------------------------------------------------ ----------------------
Applicable
Servicing Criteria Servicing Criteria
------------------------------------------------------------------------------------------ ----------------------
Reference Criteria
-------------------- --------------------------------------------------------------------- ----------------------
General Servicing Considerations
-------------------- ----------------------
Policies and procedures are instituted to monitor any
performance or other triggers and events of default in
1122(d)(1)(i) accordance with the transaction agreements.
-------------------- ----------------------
If any material servicing activities are outsourced to
third parties, policies and procedures are instituted to
monitor the third party's performance and compliance with
1122(d)(1)(ii) such servicing activities.
-------------------- ----------------------
Any requirements in the transaction agreements to
maintain a back-up servicer for the mortgage loans are
1122(d)(1)(iii) maintained.
-------------------- ----------------------
A fidelity bond and errors and omissions policy is in
effect on the party participating in the servicing
function throughout the reporting period in the amount of
coverage required by and otherwise in accordance with the
1122(d)(1)(iv) terms of the transaction agreements.
-------------------- ----------------------
Cash Collection and Administration
-------------------- ----------------------
Payments on mortgage loans are deposited into the
appropriate custodial bank accounts and related bank
clearing accounts no more than two business days
following receipt, or such other number of days specified
1122(d)(2)(i) in the transaction agreements.
-------------------- ----------------------
Disbursements made via wire transfer on behalf of an
obligor or to an investor are made only by authorized
1122(d)(2)(ii) personnel.
-------------------- ----------------------
Advances of funds or guarantees regarding collections,
cash flows or distributions, and any interest or other
fees charged for such advances, are made, reviewed and
1122(d)(2)(iii) approved as specified in the transaction agreements.
-------------------- ----------------------
The related accounts for the transaction, such as cash
reserve accounts or accounts established as a form of
overcollateralization, are separately maintained (e.g.,
with respect to commingling of cash) as set forth in the
1122(d)(2)(iv) transaction agreements.
-------------------- ----------------------
Each custodial account is maintained at a federally
insured depository institution as set forth in the
transaction agreements. For purposes of this criterion,
"federally insured depository institution" with respect
1122(d)(2)(v) to a foreign
-------------------- ----------------------
G-1
------------------------------------------------------------------------------------------ ----------------------
Applicable
Servicing Criteria Servicing Criteria
------------------------------------------------------------------------------------------ ----------------------
Reference Criteria
-------------------- --------------------------------------------------------------------- ----------------------
financial institution means a foreign financial institution
that meets the requirements of Rule 13k-1(b)(1) of the
Exchange Act.
-------------------- ----------------------
Unissued checks are safeguarded so as to prevent
1122(d)(2)(vi) unauthorized access.
-------------------- ----------------------
Reconciliations are prepared on a monthly basis for all
asset-backed securities related bank accounts, including
custodial accounts and related bank clearing accounts.
These reconciliations are (A) mathematically accurate;
(B) prepared within 30 calendar days after the bank
statement cutoff date, or such other number of days
specified in the transaction agreements; (C) reviewed and
approved by someone other than the person who prepared
the reconciliation; and (D) contain explanations for
reconciling items. These reconciling items are resolved
within 90 calendar days of their original identification,
or such other number of days specified in the transaction
1122(d)(2)(vii) agreements.
-------------------- ----------------------
Investor Remittances and Reporting
-------------------- ----------------------
Reports to investors, including those to be filed with
the Commission, are maintained in accordance with the
transaction agreements and applicable Commission
requirements. Specifically, such reports (A) are prepared
in accordance with timeframes and other terms set forth
in the transaction agreements; (B) provide information
calculated in accordance with the terms specified in the
transaction agreements; (C) are filed with the Commission
as required by its rules and regulations; and (D) agree
with investors' or the trustee's records as to the total
unpaid principal balance and number of mortgage loans
1122(d)(3)(i) serviced by the Servicer.
-------------------- ----------------------
Amounts due to investors are allocated and remitted in
accordance with timeframes, distribution priority and
1122(d)(3)(ii) other terms set forth in the transaction agreements.
-------------------- ----------------------
Disbursements made to an investor are posted within two
business days to the Servicer's investor records, or such
other number of days specified in the transaction
1122(d)(3)(iii) agreements.
-------------------- ----------------------
Amounts remitted to investors per the investor reports
agree with cancelled checks, or other form of payment, or
1122(d)(3)(iv) custodial bank statements.
-------------------- ----------------------
Pool Asset Administration
-------------------- ----------------------
Collateral or security on mortgage loans is maintained as
required by the transaction agreements or related
1122(d)(4)(i) mortgage loan documents.
-------------------- ----------------------
Mortgage loan and related documents are safeguarded as
1122(d)(4)(ii) required by the transaction agreements.
-------------------- ----------------------
G-2
------------------------------------------------------------------------------------------ ----------------------
Applicable
Servicing Criteria Servicing Criteria
------------------------------------------------------------------------------------------ ----------------------
Reference Criteria
-------------------- --------------------------------------------------------------------- ----------------------
Any additions, removals or substitutions to the asset
pool are made, reviewed and approved in accordance with
any conditions or requirements in the transaction
1122(d)(4)(iii) agreements.
-------------------- ----------------------
Payments on mortgage loans, including any payoffs, made
in accordance with the related mortgage loan documents
are posted to the Servicer's obligor records maintained
no more than two business days after receipt, or such
other number of days specified in the transaction
agreements, and allocated to principal, interest or other
items (e.g., escrow) in accordance with the related
1122(d)(4)(iv) mortgage loan documents.
-------------------- ----------------------
The Servicer's records regarding the mortgage loans agree
with the Servicer's records with respect to an obligor's
1122(d)(4)(v) unpaid principal balance.
-------------------- ----------------------
Changes with respect to the terms or status of an
obligor's mortgage loans (e.g., loan modifications or
re-agings) are made, reviewed and approved by authorized
personnel in accordance with the transaction agreements
1122(d)(4)(vi) and related pool asset documents.
-------------------- ----------------------
Loss mitigation or recovery actions (e.g., forbearance
plans, modifications and deeds in lieu of foreclosure,
foreclosures and repossessions, as applicable) are
initiated, conducted and concluded in accordance with the
timeframes or other requirements established by the
1122(d)(4)(vii) transaction agreements.
-------------------- ----------------------
Records documenting collection efforts are maintained
during the period a mortgage loan is delinquent in
accordance with the transaction agreements. Such records
are maintained on at least a monthly basis, or such other
period specified in the transaction agreements, and
describe the entity's activities in monitoring delinquent
mortgage loans including, for example, phone calls,
letters and payment rescheduling plans in cases where
delinquency is deemed temporary (e.g., illness or
1122(d)(4)(viii) unemployment).
-------------------- ----------------------
Adjustments to interest rates or rates of return for
mortgage loans with variable rates are computed based on
1122(d)(4)(ix) the related mortgage loan documents.
-------------------- ----------------------
Regarding any funds held in trust for an obligor (such as
escrow accounts): (A) such funds are analyzed, in
accordance with the obligor's mortgage loan documents, on
at least an annual basis, or such other period specified
in the transaction agreements; (B) interest on such funds
is paid, or credited, to obligors in accordance with
applicable mortgage loan documents and state laws; and
(C) such funds are returned to the obligor within 30
calendar days of full repayment of the related mortgage
loans, or such other number of days specified in the
1122(d)(4)(x) transaction agreements.
-------------------- ----------------------
G-3
------------------------------------------------------------------------------------------ ----------------------
Applicable
Servicing Criteria Servicing Criteria
------------------------------------------------------------------------------------------ ----------------------
Reference Criteria
-------------------- --------------------------------------------------------------------- ----------------------
Payments made on behalf of an obligor (such as tax or
insurance payments) are made on or before the related
penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments, provided
that such support has been received by the servicer at
least 30 calendar days prior to these dates, or such
other number of days specified in the transaction
1122(d)(4)(xi) agreements.
-------------------- ----------------------
Any late payment penalties in connection with any payment
to be made on behalf of an obligor are paid from the
servicer's funds and not charged to the obligor, unless
the late payment was due to the obligor's error or
1122(d)(4)(xii) omission.
-------------------- ----------------------
Disbursements made on behalf of an obligor are posted
within two business days to the obligor's records
maintained by the servicer, or such other number of days
1122(d)(4)(xiii) specified in the transaction agreements.
-------------------- ----------------------
Delinquencies, charge-offs and uncollectible accounts are
recognized and recorded in accordance with the
1122(d)(4)(xiv) transaction agreements.
-------------------- ----------------------
Any external enhancement or other support, identified in
Item 1114(a)(1) through (3) or Item 1115 of Regulation
AB, is maintained as set forth in the transaction
1122(d)(4)(xv) agreements.
-------------------- --------------------------------------------------------------------- ----------------------
-------------------- --------------------------------------------------------------------- ----------------------
[NAME OF MASTER SERVICER] [NAME OF
TRUSTEE] [NAME OF SUBSERVICER]
Date: _________________________
By: ________________________________
Name:
Title:
G-4
EXHIBIT H
XXXXXXXX-XXXXX CERTIFICATION
(Replacement of Master Servicer)
H-1
ANNEX 1
DEFINITIONS
"Accountant's Attestation" as to any person means a report of a
registered public accounting firm reasonably acceptable to the Depositor that
attests to, and reports on, the Servicing Criteria Compliance Assessment
Report made by the person. The attestation shall be in accordance with Rules
1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the
Exchange Act, including that if an overall opinion cannot be expressed, the
registered public accounting firm shall state in the report why it was unable
to express an overall opinion. The report must be available for general use
and not contain restricted use language.
"Adoption Annex" means Annex 2 to this Agreement.
"Affiliate" of any person means any other person controlling, controlled
by or under common control with the person. For purposes of this definition,
"control" means the power to direct the management and policies of a person,
directly or indirectly, whether through ownership of voting securities, by
contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Agreement" means this Sale and Servicing Agreement.
"Appraised Value" for any Mortgaged Property means the value established
by any of the following: (i) with respect to Credit Line Agreements with
Credit Limits greater than $100,000, by a full appraisal, (ii) with respect to
Credit Line Agreements with Credit Limits equal to or less than $100,000, by
either a drive by inspection or electronic appraisal of the Mortgaged Property
made to establish compliance with the underwriting criteria then in effect in
connection with the application for the Mortgage Loan secured by the Mortgaged
Property, and (iii) with respect to any Mortgage Loan as to which the Servicer
consents to a new senior lien pursuant to Section 3.01(a), in compliance with
the underwriting criteria then in effect in connection with the application
for the related senior mortgage loan.
"Certification Party" means the entity for which a Certifying Person acts
as an officer, the Certifying Person, and each of the entity's officers,
directors, and Affiliates.
"Certifying Person" means the person who signs a Xxxxxxxx-Xxxxx
Certification.
"Collection Account" means the Eligible Account or Eligible Accounts
created and maintained for the benefit of the Transferor and the Secured
Parties pursuant to Section 3.02(b).
"Combined Loan-to-Value Ratio" for any Mortgage Loan as of any date means
a fraction
o whose numerator is the sum of (i) the Credit Limit and (ii) the
outstanding principal balance as of the date of execution of the related
original Credit Line Agreement (or any subsequent date as of which the
outstanding principal balance may be determined in connection with an
increase in the Credit Limit for the Mortgage Loan) of any mortgage loans
that are senior or equal in priority to the Mortgage Loan and that are
secured by the same Mortgaged Property and
Xxx-1-1
o whose denominator is the Valuation of the related Mortgaged
Property.
"Credit Limit Utilization Rate" for any Mortgage Loan means a fraction
whose numerator is the Cut-off Date Asset Balance for the Mortgage Loan and
whose denominator is the related Credit Limit.
"Cut-off Date Loan Balance" means the Loan Balance calculated as of the
Cut-off Date.
"Defective Mortgage Loan" means a Mortgage Loan subject to retransfer
pursuant to Section 2.02(a) or 2.04(d).
"Delay Delivery Certification" has the meaning given to it in the
Custodial Agreement.
"Depositor" means CWHEQ, Inc., a Delaware corporation, or its successor
in interest.
"Due Date" for any Mortgage Loan means the fifteenth day of the month.
"XXXXX" means the Securities and Exchange Commission's Electronic Data
Gathering, Analysis and Retrieval system.
"Electronic Ledger" means the electronic master record of home equity
credit line mortgage loans maintained by the Master Servicer or by the
Sponsor, as appropriate.
"Eligible Substitute Mortgage Loan" means a Mortgage Loan transferred to
the Trust by the Sponsor in connection with the retransfer of a Defective
Mortgage Loan that must, on the date of its transfer to the Trust,
(1) have an outstanding Asset Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective Mortgage
Loan, an aggregate Asset Balance) not greater than the Transfer
Deficiency relating to the Defective Mortgage Loan;
(2) have a Loan Rate not less than the Loan Rate of the Defective
Mortgage Loan and not more than 1.000% in excess of the Loan Rate of the
Defective Mortgage Loan;
(3) have a Loan Rate based on the same Index with adjustments to the
Loan Rate made on the same Interest Rate Adjustment Date as that of the
Defective Mortgage Loan;
(4) have a FICO score not less than the FICO score of the Defective
Mortgage Loan and not more than 50 points higher than the Defective
Mortgage Loan;
(5) have a Gross Margin that is not less than the Gross Margin of
the Defective Mortgage Loan and not more than 100 basis points higher
than the Gross Margin for the Defective Mortgage Loan;
(6) have a mortgage of the same or higher level of priority as the
mortgage relating to the Defective Mortgage Loan at the time the mortgage
was transferred to the Trust;
Xxx-1-2
(7) have a remaining term to maturity not more than six months
earlier than the remaining term to maturity of the Defective Mortgage
Loan, not later than the maturity date of the Principal Amount Notes, and
not more than 60 months later than the remaining term to maturity of the
Defective Mortgage Loan;
(8) comply with each representation and warranty in Section 2.04 (to
be made as of the date of transfer to the Trust); and
(9) have an original Combined Loan-to-Value Ratio not greater than
that of the Defective Mortgage Loan.
More than one Eligible Substitute Mortgage Loan may be substituted for a
Defective Mortgage Loan if the Eligible Substitute Mortgage Loans meet the
foregoing attributes in the aggregate. The procedures applied by the Sponsor
in selecting each Eligible Substitute Mortgage Loan shall not be materially
adverse to the interests of the Indenture Trustee, the Transferor, or the
Noteholders.
"Event of Servicing Termination" has the meaning given to it in Section
6.01.
"Exchange Act" means the Securities Exchange Act of 1934.
"Exchange Act Reports" means any reports on form 10-D, Form 8-K, and Form
10-K required to be filed by the Depositor with respect to the Trust under the
Exchange Act.
"FDIC" means the Federal Deposit Insurance Corporation or any successor
to it.
"Foreclosure Profit" on a Liquidated Mortgage Loan means the excess of
(i) the aggregate of its Net Liquidation Proceeds over
(ii) the related Asset Balance (plus accrued and unpaid interest on
it at the applicable Loan Rate from the date interest was last paid to
the end of the Collection Period during which the Mortgage Loan became a
Liquidated Mortgage Loan) of the Liquidated Mortgage Loan immediately
before the final recovery of its Liquidation Proceeds.
"Form 10-D Disclosure Item" for any person means any material litigation
or governmental proceedings pending against it, or against any of the Trust,
the Depositor, the Indenture Trustee, the Owner Trustee, or the Master
Servicer or any subservicer, if it has actual knowledge thereof.
"Form 10-K Disclosure Item" for any person means each Form 10-D
Disclosure Item and any affiliations or relationships between it and any Item
1119 Party.
"Gross Margin" for any Mortgage Loan means the percentage shown as the
"Gross Margin" for the Mortgage Loan on Exhibit A.
"Indenture" means the indenture of even date with this Agreement between
the Trust and the Indenture Trustee.
"Indenture Trustee Fee" means a fee that is separately agreed to between
the Master Servicer and the Indenture Trustee.
Xxx-1-3
"Indenture Trustee Fee Rate" means the per annum rate at which the
Indenture Trustee Fee is calculated.
"Index" for each Interest Rate Adjustment Date for a Mortgage Loan means
the highest "prime rate" as published in the "Money Rates" table of The Wall
Street Journal as of the first business day of the month.
"Initial Mortgage Loans" means the Mortgage Loans acquired by the Trust
on the Closing Date identified on Exhibit A.
"Insurance Proceeds" means proceeds paid by any insurer (other than the
Loan Insurance Policy Provider under the Loan Insurance Policy) pursuant to
any insurance policy covering a Mortgage Loan net of any amount (i) covering
any expenses of the Master Servicer in connection with obtaining the proceeds,
(ii) applied to the restoration or repair of the related Mortgaged Property,
(iii) released to the mortgagor in accordance with the Master Servicer's
normal servicing procedures, or (iv) required to be paid to any holder of a
mortgage senior to the Mortgage Loan.
"Interest Rate Adjustment Date" for each Mortgage Loan means any date on
which the Loan Rate is adjusted in accordance with the related Credit Line
Agreement.
"Item 1119 Party" means the Depositor, any Seller, the Master Servicer,
the Indenture Trustee, the Owner Trustee, any subservicer, any originator
identified in the Prospectus Supplement, and any other material transaction
party that the Master Servicer notified each of the Indenture Trustee and the
Owner Trustee about.
"Latest Subsequent Closing Date" means the date specified in the Adoption
Annex.
"Lien" means any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance,
lien (statutory or other), preference, priority right, or interest or other
Security Agreement or preferential arrangement of any kind or nature
whatsoever, including any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as any of
the foregoing, and the filing of any Financing Statement under the UCC (other
than any Financing Statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing except
that any assignment pursuant to Section 5.02 is not a Lien.
"Lifetime Rate Cap" for each Mortgage Loan whose related Mortgage Note
provides for a lifetime rate cap means the maximum Loan Rate permitted over
the life of the Mortgage Loan under the terms of the related Credit Line
Agreement, as shown on the Mortgage Loan Schedule.
"Limited Exchange Act Reporting Obligations" means the obligations of the
Master Servicer under Section 3.09(b), Section 5.02, and Section 5.04 with
respect to notice and information to be provided to the Depositor and Article
VII (except Section 7.07(a)(i) and (ii)).
"Liquidated Mortgage Loan" for any Payment Date means any Mortgage Loan
in respect of which the Master Servicer has determined, in accordance with the
servicing procedures specified in this Agreement, as of the end of the related
Collection Period, that all
Xxx-1-4
Liquidation Proceeds which it expects to recover with respect to the
disposition of the Mortgage Loan or the related REO have been recovered.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of
overhead) that are incurred by the Master Servicer in connection with the
liquidation of any Mortgage Loan and not recovered under any insurance policy,
including legal fees and expenses, any unreimbursed amount expended pursuant
to Section 3.06 (including amounts advanced to correct defaults on any
mortgage loan which is senior to the Mortgage Loan and amounts advanced to
keep current or pay off a mortgage loan that is senior to the Mortgage Loan)
respecting the related Mortgage Loan and any related and unreimbursed
expenditures with respect to real estate property taxes, water or sewer taxes,
condominium association dues, property restoration or preservation or
insurance against casualty, loss or damage.
"Liquidation Proceeds" means proceeds (including Insurance Proceeds but
not including amounts under the Loan Insurance Policy) received in connection
with the liquidation of any Mortgage Loan or related REO, whether through
trustee's sale, foreclosure sale, or otherwise.
"Loan Rate Cap" for each Mortgage Loan means the lesser of (i) the
Lifetime Rate Cap or (ii) the applicable state usury ceiling.
"Loan-to-Value Ratio" for any date of determination for any mortgage loan
means a fraction whose numerator is the outstanding principal balance of the
mortgage loan as of the date of determination and whose denominator is the
Valuation of the related Mortgaged Property.
"Master Servicer" means Countrywide Home Loans, Inc., a New York
corporation and any successor to it and any successor under this Agreement.
"Minimum Monthly Payment" for any Mortgage Loan and any month means the
minimum amount required to be paid by the related mortgagor in that month.
"Net Liquidation Proceeds" for any Liquidated Mortgage Loan means
Liquidation Proceeds net of Liquidation Expenses.
"Officer's Certificate" means a certificate
o signed by the Chairman of the Board, the Vice Chairman of the
Board, the President, a Managing Director, a Vice President (however
denominated), an Assistant Vice President, the Treasurer, the Secretary,
or one of the Assistant Treasurers or Assistant Secretaries of the
Depositor, the Sponsor, the Transferor, or the Master Servicer, or
o if provided for in this Agreement, signed by a Servicing Officer,
or
o for in any person, signed by an authorized officer of the person.
"Opinion Delivery Date" means the date specified in the Adoption Annex.
"Opinion of Counsel" means a written opinion of counsel acceptable to the
Indenture Trustee, who may be in-house counsel for the Depositor, the Sponsor,
the Master Servicer, or the Transferor (except that any opinion pursuant to
Section 5.04 or relating to taxation must be an opinion of independent outside
counsel) and who, in the case of opinions delivered to the
Xxx-1-5
Rating Agency, is reasonably acceptable to it. In connection with any opinion
of counsel concerning the interpretation or application of the REMIC
Provisions, the counsel must in fact be independent of the Depositor and the
Master Servicer, not have any direct financial interest in the Depositor or
the Master Servicer or in any affiliate of either, and not be connected with
the Depositor or the Master Servicer as an officer, employee, promoter,
underwriter, trustee, partner, director, or person performing similar
functions.
"Performance Certification" means a certification in the form of Exhibit
F-1 (in the case of any Reporting Subcontractor of the Master Servicer or a
subservicer) and the Owner Trustee) and Exhibit F-2 (in the case of the
Indenture Trustee or any Reporting Subcontractor of the Indenture Trustee).
"Purchase Price" with respect to any Mortgage Loan required to be
purchased by the Sponsor pursuant to Section 2.03 or 2.04 or purchased at the
option of the Master Servicer pursuant to Section 3.01 or 3.06 means an amount
equal to the sum of
(i) 100% of the unpaid principal balance of the Mortgage Loan on the
date of such purchase,
(ii) accrued interest on the Mortgage Loan at the applicable
Mortgage Rate (or at the applicable Adjusted Mortgage Rate if (x) the
purchaser is the Master Servicer or (y) if the purchaser is Countrywide
and Countrywide is an affiliate of the Master Servicer) from the date
through which interest was last paid by the Mortgagor to the Due Date in
the month in which the Purchase Price is to be distributed to
Noteholders, and
(iii) in the case of any Mortgage Loan required to be purchased by
the Sponsor because of, or that arises out of, a violation of any
predatory or abusive lending law with respect to the related Mortgage
Loan, any costs and damages incurred by the Trust relating to such
violation of any predatory or abusive lending law with respect to the
related Mortgage Loan.
"Regulation AB" means Subpart 229.1100-Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, and subject to any
clarification and interpretation provided by the Securities and Exchange
Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff
of the Securities and Exchange Commission, or as may be provided by the
Securities and Exchange Commission or its staff from time to time.
"REMIC Provisions" means sections 860A through 860G of the Code and
related provisions, and regulations and rulings promulgated under those
sections.
"REO" means a Mortgaged Property that is acquired by the Trust in
foreclosure or by deed in lieu of foreclosure.
"Reportable Event" means any event required to be reported on Form 8-K,
and in any case, the following:
Xxx-1-6
o entry into a definitive agreement related to the Trust, the Notes,
or the Mortgage Loans, or an amendment to a Transaction Document, even if
the Depositor is not a party to the agreement (e.g., a servicing
agreement with a servicer contemplated by Item 1108(a)(3) of Regulation
AB);
o termination of a Transaction Document (other than by expiration of
the agreement on its stated termination date or as a result of all
parties completing their obligations under the agreement), even if the
Depositor is not a party to the agreement (e.g., a servicing agreement
with a servicer contemplated by Item 1108(a)(3) of Regulation AB);
o with respect to the Master Servicer only, if the Master Servicer
becomes aware of any bankruptcy or receivership with respect to the
Sponsor, the Depositor, the Master Servicer, any subservicer, the
Indenture Trustee, the Owner Trustee, the Loan Insurance Policy Provider,
any enhancement or support provider contemplated by Items 1114(b) or 1115
of Regulation AB, or any other material party contemplated by Item
1101(d)(1) of Regulation AB;
o with respect to the Indenture Trustee, the Master Servicer, and
the Depositor only, the occurrence of an early amortization, performance
trigger, or other event, including an Event of Default under this
Agreement;
o the resignation, removal, replacement, or substitution of the
Master Servicer, any subservicer, the Indenture Trustee, or the Owner
Trustee;
o with respect to the Master Servicer only, if the Master Servicer
becomes aware that (i) any material enhancement or support specified in
Item 1114(a)(1) through (3) of Regulation AB or Item 1115 of Regulation
AB that was previously applicable regarding one or more Classes of the
Notes has terminated other than by expiration of the contract on its
stated termination date or as a result of all parties completing their
obligations under the agreement; (ii) any material enhancement specified
in Item 1114(a)(1) through (3) of Regulation AB or Item 1115 of
Regulation AB has been added with respect to one or more Classes of the
Notes; or (iii) any existing material enhancement or support specified in
Item 1114(a)(1) through (3) of Regulation AB or Item 1115 of Regulation
AB with respect to one or more Classes of the Notes has been materially
amended or modified; and
o with respect to the Indenture Trustee, the Master Servicer, and
the Depositor only, a required distribution to Noteholders is not made as
of the required Payment Date under the Indenture.
"Reporting Subcontractor" with respect to the Master Servicer or the
Indenture Trustee means any Subcontractor determined by the Master Servicer or
the Indenture Trustee pursuant to section 9.08(b) to be "participating in the
servicing function" within the meaning of Item 1122 of Regulation AB.
References to a Reporting Subcontractor shall refer only to the Subcontractor
of the Master Servicer or the Indenture Trustee and shall not refer to
Subcontractors generally.
"Xxxxxxxx-Xxxxx Certification" means the certification required by Rules
13a-14(d) and 15d-14(d) under the Exchange Act (pursuant to Section 302 of the
Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations of the Securities and
Exchange Commission promulgated
Xxx-1-7
thereunder (including any interpretations thereof by the staff of the
Securities and Exchange Commission)).
"Seller" means any Seller of Mortgage Loans pursuant to the Purchase
Agreement.
"Servicing Certificate" means a certificate completed and executed by a
Servicing Officer in accordance with Section 4.01.
"Servicing Criteria" means the "servicing criteria" in Item 1122(d) of
Regulation AB.
"Servicing Criteria Compliance Assessment Report" for any person means a
report (in form and substance reasonably satisfactory to the Depositor)
regarding the person's assessment of compliance with the Servicing Criteria
during the preceding year, as required under Rules 13a-18 and 15d-18 of the
Exchange Act and Item 1122 of Regulation AB.
"Servicing Officer" means any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans
whose name and specimen signature appear on a list of servicing officers
furnished to the Indenture Trustee by the Master Servicer on the Closing Date,
as the list may be amended from time to time.
"Sponsor" means Countrywide Home Loans, Inc., a New York corporation and
any successor to it.
"Sponsor Loss Coverage Amount" means initially the amount specified in
the Adoption Annex, and thereafter as reduced by the amount of all previous
payments of the Sponsor Loss Coverage Obligation.
"Sponsor Loss Coverage Obligation" for any Payment Date means the lesser
of (i) the remaining Sponsor Loss Coverage Amount before payment of the
Sponsor Loss Coverage Obligation for that Payment Date and (ii) an amount
equal to the losses realized on the Mortgage Loans covered by the Insurance
Policy with respect to which a claim for payment was denied by the Loan
Insurer due to an exclusion in the Loan Insurance Policy minus any such amount
previously paid to the Indenture Trustee as Sponsor Loss Coverage Obligation.
A claim for Liquidation Loss Amount on a Mortgage Loan covered by the Loan
Insurance Policy that is denied payment by the Loan Insurer for any other
reason or that is not of the insured perils covered by the Loan Insurance
Policy will not be a Sponsor Loss Coverage Obligation and will not be payable
by the Sponsor.
"Subcontractor" means any vendor, subcontractor, or other person that is
not responsible for the overall servicing (as "servicing" is commonly
understood by participants in the mortgaged-backed securities market) of
Mortgage Loans but performs one or more discrete functions identified in Item
1122(d) of Regulation AB with respect to the Mortgage Loans under the
direction or authority of the Master Servicer or the Indenture Trustee or any
subservicer, as the case may be.
"Subsequent Closing Date" means any date designated by the Depositor on
which the Trust acquires Additional Home Equity Loans pursuant to Section
2.01(b).
Xxx-1-8
"Subsequent Cut-off Date" means the cut-off date designated by the
Depositor in a Transfer Document in connection with the acquisition of
Additional Home Equity Loans by the Trust pursuant to Section 2.01(b).
"Transfer Date" has the meaning given to it in Section 2.06.
"Transfer Deficiency" means that the excess of the Loan Pool Balance over
the aggregate Note Principal Balance of all of the Principal Amount Notes
after a retransfer of a Mortgage Loan pursuant to Section 2.02(a) or 2.04(d)
would be less than the Overcollateralization Target Amount.
The amount of any Transfer Deficiency is the lesser of
o the Asset Balance of the Defective Mortgage Loan and
o the excess of
o the Overcollateralization Target Amount over
o the Transferor Interest.
In any computation involving a Mortgage Loan required to be purchased by
the Sponsor because of, or arising out of, a violation of any predatory or
abusive lending law with respect to the Mortgage Loan, the Transferor Interest
shall be reduced for any costs and damages incurred by the Trust relating to
the violation of any predatory or abusive lending law with respect to the
Mortgage Loan.
"Transfer Deposit Amount" has the meaning given to it in Section 2.07.
"Transfer Document" means a document substantially in the form of Exhibit
D.
"Transfer Notice Date" has the meaning given to it in Section 2.06.
"Valuation" of any Mortgaged Property means the lesser of (i) the
Appraised Value of the Mortgaged Property and (ii) in the case of a Mortgaged
Property purchased within one year of the origination of the related Mortgage
Loan, the purchase price of the Mortgaged Property.
Xxx-1-9
The following have the meanings given to them in the Indenture:
Accelerated Principal Payment Amount
Additional Balance
Additional Home Equity Loans
Additional Loan Account
Asset Balance
Assignment of Mortgage
Available Transferor Subordinated Amount
Basis Risk Carryforward
Business Day
Class R-[1] Certificates
Class C Certificates
Closing Date
Code
Collection Period
Corporate Trust Office
Credit Limit
Credit Line Agreement
Custodial Agreement
Cut-off Date
Cut-off Date Asset Balance
Determination Date
Eligible Account
Eligible Investments
Indenture Trustee
Initial Mortgage File
Insolvency Event
Interest Collections
Interest Formula Rate
Interest Period
Investor Floating Allocation Percentage
Investor Interest Collections
Investor Loss Amount
Investor Loss Reduction Amount
Investor Principal Collections
Issuer Request
Loan Insurance Policy
Loan Insurance Policy Provider
Loan Pool Balance
Loan Rate
Managed Amortization Period
Maximum Rate
MERS
MERS(R) System
MIN
MOM Loan
Xxxxx'x
Mortgage File
Mortgage Loan
Mortgage Loan Schedule
Mortgage Note
Mortgaged Property
Net Draws
Net Draws Principal Payment
Note
Note Rate
Note Interest
Note Principal Balance
Noteholder or Holder
Note Owner
Note Register and Note Registrar
Original Note Principal Balance
Outstanding Amount
Overcollateralization Target Amount
Paying Agent
Payment Date
Principal Collections
Purchase Agreement
Rapid Amortization Event
Rating Agency
Rating Agency Condition
Responsible Officer
Secured Parties
Servicing Fee
Standard & Poor's
Stepdown Date
Transferor
Transferor Certificates
Transferor Interest
Transferor Principal Collections
Trigger Event
Trust
Trust Agreement
UCC
Unpaid Investor Interest Shortfall
Weighted Average Net Loan Rate
Xxx-1-10
ANNEX 2
ADOPTION ANNEX
The initial Note Principal Balance of the Notes is $________________.
The title of the Collection Account is "________________, as Indenture
Trustee, Collection Account in trust for the registered holders of Revolving
Home Equity Loan Asset Backed Notes, Series 200_-_."
The date on which the Master Servicer delivers the Officer's Certificate
in each year is March 15, and the first Officer's Certificate pursuant to
Section 3.09 is _______, 200_.
The Sponsor Loss Coverage Amount initially is _.__% of aggregate Original
Note Principal Balance.
The Latest Subsequent Closing Date is the earlier of _______, 200_ and
the date the amount in the Additional Loan Account is less than $________.
The Opinion Delivery Date is _______, 200_.
Xxx-2-1
