EXHIBIT 10.1.1
SELLER'S WARRANTIES AND SERVICING AGREEMENT, DATED
AS OF OCTOBER 1, 2001, BETWEEN XXXXXXX XXXXX MORTGAGE COMPANY
AND XXXXX FARGO HOME MORTGAGE, INC.
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XXXXXXX XXXXX MORTGAGE COMPANY
Purchaser
and
XXXXX FARGO HOME MORTGAGE, INC.
Company
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SELLER'S WARRANTIES AND SERVICING AGREEMENT
Dated as of October 1, 2001
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS...................................................................1
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
AND RECORDS; DELIVERY OF DOCUMENTS............................................9
Section 2.01 Conveyance of Mortgage Loans; Possession of Mortgage Files;
Maintenance of Servicing Files................................9
Section 2.02 Books and Records; Transfers of Mortgage Loans...............10
Section 2.03 Delivery of Documents........................................12
Section 2.04 Mortgage Schedule............................................14
Section 2.05 Examination of Mortgage Files................................14
Section 2.06 Representations, Warranties and Agreements of Company........14
Section 2.07 Representation, Warranties and Agreement of Purchaser........15
Section 2.08 Closing......................................................15
Section 2.09 Closing Documents............................................16
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH...........................17
Section 3.01 Company Representations and Warranties.......................17
Section 3.02 Representations and Warranties Regarding Individual
Mortgage Loans...............................................20
Section 3.03 Repurchase...................................................29
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS...............................31
Section 4.01 Company to Act as Servicer...................................31
Section 4.02 Liquidation of Mortgage Loans................................32
Section 4.03 Collection of Mortgage Loan Payments.........................33
Section 4.04 Establishment of and Deposits to Custodial Account...........33
Section 4.05 Permitted Withdrawals From Custodial Account.................35
Section 4.06 Establishment of and Deposits to Escrow Account..............37
Section 4.07 Permitted Withdrawals From Escrow Account....................37
Section 4.08 Payment of Taxes, Insurance and Other Charges................38
Section 4.09 Protection of Accounts.......................................39
Section 4.10 Maintenance of Hazard Insurance..............................39
Section 4.11 Maintenance of Mortgage Impairment Insurance.................40
Section 4.12 Maintenance of Fidelity Bond and Errors and
Omissions Insurance..........................................41
Section 4.13 Inspections..................................................41
Section 4.14 Restoration of Mortgaged Property............................41
Section 4.15 Claims.......................................................42
Section 4.16 Title, Management and Disposition of REO Property............42
Section 4.17 Real Estate Owned Reports....................................44
Section 4.18 Liquidation Reports..........................................44
Section 4.19 Reports of Foreclosures and Abandonments of
Mortgaged Property...........................................44
ARTICLE V
PAYMENTS TO PURCHASER........................................................45
Section 5.01 Remittances..................................................45
Section 5.02 Statements to Purchaser......................................45
Section 5.03 Monthly Advances by Company..................................45
ARTICLE VI
GENERAL SERVICING PROCEDURES.................................................46
Section 6.01 Transfers of Mortgaged Property..............................46
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files......47
Section 6.03 Servicing Compensation.......................................48
Section 6.04 Annual Statement as to Compliance............................48
Section 6.05 Annual Independent Public Accountants' Servicing Report......48
Section 6.06 Right to Examine Company Records.............................49
Section 6.07 Compliance with REMIC Provisions.............................49
ARTICLE VII
COMPANY TO COOPERATE.........................................................49
Section 7.01 Provision of Information.....................................49
Section 7.02 Financial Statements; Servicing Facility.....................50
ARTICLE VIII
THE COMPANY..................................................................50
Section 8.01 Indemnification; Third Party Claims..........................50
Section 8.02 Merger or Consolidation of the Company.......................51
Section 8.03 Limitation on Liability of Company and Others................51
Section 8.04 Limitation on Resignation and Assignment by Company..........52
ARTICLE IX
PASS-THROUGH TRANSFER........................................................53
Section 9.01 Removal of Mortgage Loans from Inclusion Under
this Agreement Upon a Pass-Through Transfer..................53
ARTICLE X
DEFAULT......................................................................55
Section 10.01 Events of Default............................................55
Section 10.02 Waiver of Defaults...........................................57
ARTICLE XI
TERMINATION..................................................................57
Section 11.01 Termination..................................................57
Section 11.02 Termination Without Cause....................................57
Section 11.03 Termination With Cause.......................................57
ARTICLE XII
MISCELLANEOUS PROVISIONS.....................................................58
Section 12.01 Successor to Company.........................................58
Section 12.02 Amendment....................................................59
Section 12.03 Governing Law................................................59
Section 12.04 Duration of Agreement........................................60
Section 12.05 Notices......................................................60
Section 12.07 Relationship of Parties......................................61
Section 12.08 Execution; Successors and Assigns............................61
Section 12.09 Recordation of Assignments of Mortgage.......................62
Section 12.10 Assignment by Purchaser......................................62
Section 12.11 Solicitation of Mortgagor....................................62
DEFAULT REPORTS.............................................................E-2
EXHIBITS
Exhibit A Mortgage Loan Schedule
Exhibit B Contents of Each Mortgage Loan File
Exhibit C Form of Custodial Agreement
Exhibit D Form of Opinion of Counsel
Exhibit E Items to Be Included in Monthly Remittance Advice
Exhibit F Form of Assignment and Assumption Agreement
Exhibit G Form of Seller's Officer's Certificate
Exhibit H Pledged Asset Mortgage Program Policy
This is a Seller's Warranties and Servicing Agreement for various
residential first mortgage loans, dated and effective as of October 1,
2001, and is executed between Xxxxxxx Xxxxx Mortgage Company, as purchaser
(the "Purchaser"), and Xxxxx Fargo Home Mortgage, Inc., as seller and
servicer (the "Company").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Purchaser has agreed to purchase from the Company
and the Company has agreed to sell to the Purchaser certain 5/1 adjustable
rate Mortgage Loans which have an aggregate Scheduled Principal Balance as
of the close of business on the Cut-off Date (as defined below), after
deduction of payments due on or before such date whether or not such
amounts actually were paid, of $161,983,911.55;
WHEREAS, each of the Mortgage Loans is secured by a mortgage,
deed of trust or other security instrument creating a first lien on a
one-to-four family residential dwelling located in the jurisdiction
indicated on the Mortgage Loan Schedule, which is annexed hereto as Exhibit
A; and
WHEREAS, the Purchaser and the Company wish to prescribe the
manner of purchase of the Mortgage Loans and the conveyance, servicing and
control of the Mortgage Loans;
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Purchaser and the
Company agree as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless
the content otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage
Loan, those customary mortgage servicing practices of prudent mortgage
lending institutions which service mortgage loans of the same type as such
Mortgage Loan in the jurisdiction where the related Mortgaged Property is
located.
Agreement: This Seller's Warranties and Servicing Agreement and
all amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor
thereto.
Appraised Value: With respect to any Mortgage Loan, the lesser
of (i) the value set forth on the appraisal made in connection with the
origination of the related Mortgage Loan as the value of the related
Mortgage Property, or (ii) the purchase price paid for the Mortgage
Property, provided, however, in the case of a refinanced Mortgage Loan,
such value shall be based solely on the appraisal made in connection with
the refinance of such Mortgage Loan.
Assignment of Mortgage or Assignment: An assignment of the
Mortgage, notice of transfer or equivalent instrument in recordable form,
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect the sale of the Mortgage to the Purchaser or
its designated assignee.
Business Day: Any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking and savings and loan institutions in the states
where the parties are located are authorized or obligated by law or
executive order to be closed.
Closing Date: October 4, 2001.
Code: The Internal Revenue Code of 1986, as it may be amended
from time to time or any successor statute thereto, and applicable U.S.
Department of the Treasury regulations issued pursuant thereto.
Commitment Letter: The Commitment Letter from the Purchaser to
the Company, dated as of September 18, 2001.
Company: Xxxxx Fargo Home Mortgage, Inc., or its successor in
interest or assigns, or any successor to the Company under this Agreement
appointed as herein provided.
Company Employee: The meaning assigned to such term in Section
4.12.
Condemnation Proceeds: All awards or settlements in respect of
a Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Custodial Account: The separate account or accounts created and
maintained pursuant to Section 4.04.
Custodial Agreement: The agreement governing the retention of
the originals of each Mortgage Note, Mortgage, Assignment of Mortgage and
other Mortgage Loan Documents, a form of which is annexed hereto as Exhibit
C.
Custodian: The custodian under the Custodial Agreement, or its
successor in interest or assigns, or any successor to the Custodian under
the Custodial Agreement as provided therein.
Cut-off Date: October 1, 2001.
Determination Date: The 15th day of every month, or if such day
is not a Business Day, the preceding Business Day.
Due Date: The first day of the month on which the Monthly
Payment is due on a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period
commencing on the second day of the month preceding the month in which such
Remittance Date occurs and ending on (and including) the first day of the
month in which such Remittance Date occurs.
Errors and Omissions Insurance Policy: An errors and omissions
insurance policy to be maintained by the Company pursuant to Section 4.12.
Escrow Account: The separate account or accounts created and
maintained pursuant to Section 4.06.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be
escrowed by the Mortgagor with the mortgagee pursuant to the Mortgage or
any other related document.
Event of Default: Any one of the conditions or circumstances
enumerated in Section 10.01.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
FHLMC: Federal Home Loan Mortgage Corporation and its
successors.
Fidelity Bond: A fidelity bond to be maintained by the Company
pursuant to Section 4.12.
First Remittance Date: September 18, 2001.
FNMA: Federal National Mortgage Association and its successors.
Insurance Proceeds: Proceeds of any mortgage insurance, title
policy, hazard policy or other insurance policy covering a Mortgage Loan,
if any, to the extent such proceeds are not to be applied to the
restoration of the related Mortgaged Property or released to the Mortgagor
in accordance with the procedures that the Company would follow in
servicing mortgage loans held for its own account.
Liquidation Proceeds: Cash (other than Insurance Proceeds or
Condemnation Proceeds) received in connection with the liquidation of a
defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale, sale of REO Property, or
otherwise, or the sale of the related Mortgaged Property if the Mortgaged
Property is acquired in satisfaction of the Mortgage Loan.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the
ratio of the original loan amount of the Mortgage Loan at its origination
or refinancing, as applicable, to the Appraised Value of the Mortgaged
Property.
MERS: The Mortgage Electronic Registration System.
Monthly Advance: The portion of each Monthly Payment that is
delinquent with respect to each Mortgage Loan at the close of business on
the Determination Date required to be advanced by the Company pursuant to
Section 5.03 on the Business Day immediately preceding the Remittance Date
of the related month.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Loan.
Monthly Remittance Advice: The meaning assigned to such term in
Section 5.02.
Mortgage: The mortgage, deed of trust or other instrument and
riders thereto securing a Mortgage Note, which creates a first lien on an
unsubordinated estate in fee simple in real property securing the Mortgage
Note.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit B annexed hereto, and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
Mortgage Interest Rate: The annual rate of interest borne on a
Mortgage Note in accordance with the provisions of the Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the subject
of this Agreement, each Mortgage Loan originally sold and subject to this
Agreement being identified on the Mortgage Loan Schedule, which Mortgage
Loan includes without limitation the Mortgage File, the Monthly Payments,
Principal Prepayments, Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds, REO Disposition Proceeds and all other rights,
benefits, proceeds and obligations arising from or in connection with such
Mortgage Loan.
Mortgage Loan Documents: With respect to a Mortgage Loan, the
original related Mortgage Note with applicable addenda and riders, the
original related security instrument and the originals of any required
addenda and riders, the original related Assignment and any original
intervening related Assignments, the original related title insurance
policy, and the related appraisal report.
Mortgage Loan Remittance Rate: With respect to each Mortgage
Loan, the annual rate of interest remitted to the Purchaser, which shall be
equal to the Mortgage Interest Rate minus the Servicing Fee Rate.
Mortgage Loan Schedule: A schedule of Mortgage Loans annexed
hereto as Exhibit A, such schedule setting forth the following information
with respect to each Mortgage Loan: (1) the Company's Mortgage Loan number;
(2) the address, city, state and zip code of the Mortgaged Property; (3) a
code indicating whether the Mortgaged Property is a single family
residence, two-family residence, three-family residence, four-family
residence or planned unit development; (4) the purpose of the Mortgage
Loan; (5) the current Mortgage Interest Rate; (6) the Mortgage Loan
Remittance Rate; (7) the Servicing Fee Rate; (8) the current Monthly
Payment; (9) the original term to maturity; (10) the scheduled maturity
date (and, if different, the stated maturity date indicated on the Mortgage
Note on its date of origination); (11) the principal balance of the
Mortgage Loan as of the Cut-off Date after deduction of payments of
principal due on or before the Cut-off Date whether or not collected; (12)
the Loan-to-Value Ratio; (13) the due date of the Mortgage Loan; (14)
whether the Mortgage Loan is insured by a Primary Mortgage Insurance
Policy; (15) the CPI twelve month pay string, (16) with respect to each
Adjustable Rate Mortgage Loan, (a) the first Adjustment Date and the
Adjustment Date frequency; (b) the Gross Margin; (c) the Maximum Mortgage
Interest Rate under the terms of the Mortgage Note; (d) the Minimum
Mortgage Interest Rate under the terms of the Mortgage Note; (e) the
Periodic Rate Cap; (f) the first Adjustment Date immediately following the
related Cut-off Date; and (g) the Index.
Mortgage Note: The note or other evidence of the indebtedness
of a Mortgagor secured by a Mortgage and riders thereto.
Mortgaged Property: The real property securing repayment of the
debt evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Officer's Certificate: A certificate signed by the Chairman of
the Board, the Vice Chairman of the Board, the President, a Vice President,
an Assistant Vice President, the Treasurer, the Secretary or one of the
Assistant Treasurers or Assistant Secretaries of the Company, and delivered
to the Purchaser as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Company, reasonably acceptable to the Purchaser.
Pass-Through Transfer: The sale or transfer of some or all of
the Mortgage Loans by the Purchaser to a trust to be formed as part of a
publicly issued or privately placed mortgage-backed securities transaction.
Person: Any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political
subdivision thereof.
Primary Mortgage Insurance Policy: Each policy of primary
mortgage insurance represented to be in effect pursuant to Section
3.02(xxxii), or any replacement policy therefor obtained by the Servicer
pursuant to Section 4.08.
Prime Rate: The prime rate announced to be in effect from time
to time, as published as the average rate in The Wall Street Journal.
Principal Balance: As to each Mortgage Loan, (i) the actual
outstanding principal balance of the Mortgage Loan at the Cut-off Date
after giving effect to payments of principal due on or before such date,
whether or not received, minus (ii) all amounts attributable to principal
collected from or on behalf of the Mortgagor, including the principal
portion of Liquidation Proceeds, Condemnation Proceeds, and Insurance
Proceeds.
Principal Prepayment: Any payment or other recovery of
principal on a Mortgage Loan which is received in advance of its scheduled
Due Date, including any prepayment penalty or premium thereon and which is
not accompanied by an amount of interest representing scheduled interest
due on any date or dates in any month or months subsequent to the month of
prepayment.
Principal Prepayment Period: With respect to each Remittance
Date, the period commencing on the first day of the month preceding the
month in which such Remittance Date occurs, and ending on the last day of
such month.
Purchase Price: The purchase price specified in the Commitment
Letter.
Purchaser: Xxxxxxx Xxxxx Mortgage Company, or its successor in
interest or any successor to the Purchaser under this Agreement as herein
provided.
Qualification Defect: With respect to a Mortgage Loan, (a) a
defective document in the Mortgage File, (b) the absence of a document in
the Mortgage File, or (c) the breach of any representation, warranty or
covenant with respect to the Mortgage Loan made by the Company, but, in
each case, only if the affected Mortgage Loan would cease to qualify as a
"qualified mortgage" for purposes of the REMIC Provisions.
Qualified Depository: A deposit account or accounts maintained
with a federal or state chartered depository institution, the deposits in
which are insured by the FDIC to the applicable limits and the short-term
unsecured debt obligations of which (or, in the case of a depository
institution that is a subsidiary of a holding company, the short-term
unsecured debt obligations of such holding company) are rated A-1 by
Standard & Poor's Ratings Group or Prime-1 by Xxxxx'x Investors Service,
Inc. (or a comparable rating if another rating agency is specified by the
Purchaser by written notice to the Company) at the time any deposits are
held on deposit therein.
Qualified Insurer: A mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by FNMA.
Rating Agency: Xxxxx'x Investors Services, Inc., Standard &
Poor's Ratings Group, Fitch, Inc., or any other nationally recognized
statistical credit rating agency rating any security issued in connection
with any Pass-Through Transfer.
Reconstitution Date: The date on which any or all of the
Mortgage Loans serviced under this Agreement shall be reconstituted as part
of a Pass-Through Transfer or Whole Loan Transfer pursuant to Section 9.01
hereof. The Reconstitution Date shall be such date the Purchaser shall
designate in writing to the Company.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law
relating to a REMIC, which appear at Section 860A through 860G of
Subchapter M of Chapter 1, Subtitle A of the Code, and related provisions,
and regulations, rulings or pronouncements promulgated thereunder, as the
foregoing may be in effect from time to time.
Remittance Advice Date: The 10th Business Day of each month or,
if such 10th day is not a Business Day, the first Business Day immediately
succeeding such day.
Remittance Date: The 18th day (or if such 18th day is not a
Business Day, the first Business Day immediately preceding such date) of
any month, beginning with the First Remittance Date.
REO Disposition: The final sale by the Company of any REO
Property.
REO Disposition Proceeds: All amounts received with respect to
an REO Disposition pursuant to Section 4.16.
REO Property: A Mortgaged Property acquired by the Company on
behalf of the Purchaser through foreclosure or by deed in lieu of
foreclosure, as described in Section 4.16.
Repurchase Price: Unless agreed otherwise by the Purchaser and
the Company (including without limitation as set forth in the Commitment
Letter), a price equal to (i) the Scheduled Principal Balance of the
Mortgage Loan plus (ii) interest on such Scheduled Principal Balance at the
Mortgage Loan Remittance Rate from the date on which interest has last been
paid and distributed to the Purchaser to the last day of the month of
repurchase, less amounts received or advanced in respect of such
repurchased Mortgage Loan which are being held in the Custodial Account for
distribution in the month of repurchase, to the extent such amounts are
actually paid to the Purchaser upon the repurchase of the related Mortgage
Loan.
Scheduled Principal Balance: As to each Mortgage Loan, (i) the
principal balance of the Mortgage Loan at the Cut-off Date after giving
effect to payments of principal due on or before such date, whether or not
received, minus (ii) all amounts previously collected by the Company as
servicer hereunder or advanced and distributed to the Purchaser with
respect to the related Mortgage Loan representing payments or recoveries of
principal or advances made in lieu thereof.
Servicing Advances: All customary, reasonable and necessary
"out of pocket" costs and expenses other than Monthly Advances (including
reasonable attorney's fees and disbursements) incurred in the performance
by the Company of its servicing obligations, including, but not limited to,
the cost of (a) the preservation, restoration and protection of the
Mortgaged Property, (b) any enforcement or judicial proceedings, including
foreclosures, (c) the management and liquidation of any REO Property and
(d) compliance with the obligations under Section 4.08.
Servicing Fee: With respect to each Mortgage Loan, the amount
of the per annum fee the Purchaser shall pay to the Company, which shall,
for a period of one full month, be equal to one-twelfth of the product of
(a) the Servicing Fee Rate and (b) the Scheduled Principal Balance of such
Mortgage Loan. Such fee shall be payable monthly, computed on the basis of
the same principal amount and same period for which any related interest
payment on a Mortgage Loan is computed. The obligation of the Purchaser to
pay the Servicing Fee is limited to, and the Servicing Fee is payable
solely from, the interest portion (including recoveries with respect to
interest from Liquidation Proceeds, to the extent permitted by Section
4.05) of such Monthly Payment collected by the Company, or as otherwise
provided under Section 4.05.
Servicing Fee Rate: 0.25% per annum for each Mortgage Loan.
Servicing File: With respect to each Mortgage Loan, the file
retained by the Company consisting of originals of all documents in the
Mortgage File which are not delivered to the Custodian and copies of the
Mortgage Loan Documents listed in the Custodial Agreement the originals of
which are delivered to the Custodian pursuant to Section 2.03.
Servicing Officer: Any officer of the Company involved in or
responsible for the administration and servicing of the Mortgage Loans
whose name appears on a list of servicing officers furnished by the Company
to the Purchaser upon request, as such list may from time to time be
amended.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans by the Purchaser to a third party, which sale or transfer is
not a Pass-Through Transfer.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; DELIVERY OF DOCUMENTS
Section 2.01 Conveyance of Mortgage Loans; Possession of Mortgage Files;
Maintenance of Servicing Files.
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The Company, simultaneously with the execution and delivery of
this Agreement, does hereby sell, transfer, assign, set over and convey to
the Purchaser, without recourse, but subject to the terms of this
Agreement, all the right, title and interest of the Company in and to the
Mortgage Loans, including all interest and principal received by the
Company on or with respect to the related Mortgage Loans after the Cut-off
Date (and including Monthly Payments due after the Cut-off Date but
received by the Company on or before the Cut-off Date, but not including
payments of principal and interest due on the Mortgage Loans on or before
the Cut-off Date).
The principal balance of each Mortgage Loan as of the Cut-off
Date shall be determined after application of payments of principal due on
or before the Cut-off Date whether or not collected. Therefore, payments of
scheduled principal and interest prepaid for a Due Date beyond the Cut-off
Date shall not be applied to the principal balance as of the Cut-off Date.
Such prepaid amounts (minus interest at the Servicing Fee Rate) shall be
the property of the Purchaser. The Company shall deposit any such prepaid
amounts into the Custodial Account, which account is established for the
benefit of the Purchaser for subsequent remittance by the Company to the
Purchaser, and shall remit such amounts as provided in Section 5.01.
Pursuant to Section 2.03, the Company has delivered the
Mortgage Loan Documents to the Custodian. The contents of each Mortgage
File not delivered to the Custodian are and shall be held in trust by the
Company for the benefit of the Purchaser as the owner thereof. The Company
shall maintain a Servicing File consisting of a copy of the contents of
each Mortgage File and the originals of the documents in each Mortgage File
not delivered to the Custodian. The possession of each Servicing File by
the Company is at the will of the Purchaser for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by
the Company is in a custodial capacity only. Upon the sale of the Mortgage
Loans the ownership of each Mortgage Note, the related Mortgage and the
related Mortgage File and Servicing File shall vest immediately in the
Purchaser, and the ownership of all records and documents with respect to
the related Mortgage Loan prepared by or which come into the possession of
the Company shall vest immediately in the Purchaser and shall be retained
and maintained by the Company, in trust, at the will of the Purchaser and
only in such custodial capacity. The Company shall release its custody of
the contents of any Servicing File only in accordance with written
instructions from the Purchaser, unless such release is required as
incidental to the Company's servicing of the Mortgage Loans or is in
connection with a repurchase of any Mortgage Loan pursuant to Sections
2.03, 3.03 or 6.02.
Section 2.02 Books and Records; Transfers of Mortgage Loans.
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From and after the sale of the Mortgage Loans to the Purchaser
all rights arising out of the Mortgage Loans including but not limited to
all funds received on or in connection with the Mortgage Loans, shall be
received and held by the Company in trust for the benefit of the Purchaser
as owner of the Mortgage Loans, and the Company shall retain record title
to the related Mortgages for the sole purpose of facilitating the servicing
and the supervision of the servicing of the Mortgage Loans.
The sale of each Mortgage Loan shall be reflected on the
Company's balance sheet and other financial statements as a sale of assets
by the Company. The Company shall be responsible for maintaining, and shall
maintain, a complete set of books and records for each Mortgage Loan which
shall be marked clearly to reflect the ownership of each Mortgage Loan by
the Purchaser. In particular, the Company shall maintain in its possession,
available for inspection by the Purchaser, or its designee, and shall
deliver to the Purchaser upon demand, evidence of compliance with all
federal, state and local laws, rules and regulations, and requirements of
FNMA or FHLMC, including but not limited to documentation as to the method
used in determining the applicability of the provisions of the Flood
Disaster Protection Act of 1973, as amended, to the Mortgaged Property,
documentation evidencing insurance coverage and eligibility of any
condominium project for approval by FNMA or FHLMC, and periodic inspection
reports as required by Section 4.13. To the extent that original documents
are not required for purposes of realization of Liquidation Proceeds or
Insurance Proceeds, documents maintained by the Company may be in the form
of microfilm or microfiche or such other reliable means of recreating
original documents, including but not limited to, optical imagery
techniques so long as the Company complies with the requirements of the
FNMA or FHLMC Selling and Servicing Guide, as amended from time to time.
The Company shall maintain with respect to each Mortgage Loan
and shall make available for inspection by any Purchaser or its designee
the related Servicing File during the time the Purchaser retains ownership
of a Mortgage Loan and thereafter in accordance with applicable laws and
regulations.
The Company shall keep at its servicing office books and
records in which, subject to such reasonable regulations as it may
prescribe, the Company shall note transfers of Mortgage Loans. No transfer
of a Mortgage Loan may be made unless such transfer is in compliance with
the terms hereof. For the purposes of this Agreement, the Company shall be
under no obligation to deal with any person with respect to this Agreement
or the Mortgage Loans unless the books and records show such person as the
owner of the Mortgage Loan. The Purchaser may, subject to the terms of this
Agreement, sell and transfer one or more of the Mortgage Loans, provided,
however, that in no event shall there be more than four Persons at any
given time having the status of "Purchaser" hereunder. The Purchaser also
shall advise the Company of the transfer. Upon receipt of notice of the
transfer, the Company shall xxxx its books and records to reflect the
ownership of the Mortgage Loans of such assignee, and shall release the
previous Purchaser from its obligations hereunder with respect to the
Mortgage Loans sold or transferred. If the Company receives notification of
a transfer less than five (5) Business Days before the monthly
Determination Date, the Company's duties to remit and report to the new
purchaser(s) as required by Section 5 shall begin with the first
Determination Date after the Reconstitution Date.
Section 2.03 Delivery of Documents.
---------------------
Pursuant to the Custodial Agreement delivered to the Purchaser
prior to or contemporaneously with the delivery of this Agreement, the
Company has delivered and released to the Custodian those Mortgage Loan
Documents as required by the Custodial Agreement and by this Agreement with
respect to each Mortgage Loan.
The Custodian has certified its receipt of all such Mortgage
Loan Documents required to be delivered pursuant to the Custodial
Agreement. The Company will be responsible for the Custodian's fees and
expenses with respect to the delivery and certification of those Mortgage
Loan Documents required to be delivered pursuant to the Custodial
Agreement. The Company will be responsible for the fees and expenses
related to the recording of the initial Assignments of Mortgage (including
any fees and expenses related to any preparation and recording of any
intervening or prior assignments of the Mortgage Loans to the Company or to
any prior owners of or mortgagees with respect to the Mortgage Loans). The
Purchaser will be responsible for the Custodian's fees and expenses with
respect to the initial inventory and maintenance of the Mortgage Loans on
or before the Closing Date.
Within 90 days after the Closing Date, the Company shall
deliver to the Custodian each of the documents described in Exhibit B not
delivered pursuant to the Agreement.
The Company shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with Section 4.01 or 6.01 within
one week of their execution, provided, however, that the Company shall
provide the Custodian with a certified true copy of any such document
submitted for recordation within ten (10) days of its execution, and shall
provide the original of any document submitted for recordation or a copy of
such document certified by the appropriate public recording office to be a
true and complete copy of the original within 60 days of its submission for
recordation.
In the event the public recording office is delayed in
returning any original document, the Company shall deliver to the Custodian
within 240 days of its submission for recordation, a copy of such document
and an Officer's Certificate, which shall (i) identify the recorded
document; (ii) state that the recorded document has not been delivered to
the Custodian due solely to a delay by the public recording office, (iii)
state the amount of time generally required by the applicable recording
office to record and return a document submitted for recordation, and (iv)
specify the date the applicable recorded document will be delivered to the
Custodian. The Company will be required to deliver the document to the
Custodian by the date specified in (iv) above. An extension of the date
specified in (iv) above may be requested from the Purchaser, which consent
shall not be unreasonably withheld.
Notwithstanding the foregoing, if the originals or certified
copies required in this Section 2.03 are not delivered as required within
90 days following the Closing Date or as otherwise extended as set forth
above, the related Mortgage Loan shall, upon request of the Purchaser, be
repurchased by the Company in accordance with Section 3.03 hereof;
provided, however, that the foregoing repurchase obligation shall not apply
in the event the Company cannot deliver such items due to a delay caused by
the recording office in the applicable jurisdiction; provided that the
Company shall deliver instead a recording receipt of such recording office
or, if such recording receipt is not available, an Officer's Certificate
from the Company confirming that such documents have been accepted for
recording. Any such document shall be delivered to the Purchaser or its
designee promptly upon receipt thereof from the related recording office.
If the Company, the Purchaser or the Custodian finds any
document or documents constituting a part of a Mortgage File pertaining to
a Mortgage Loan to be defective (or missing) in any material respect, and
such defect or missing document materially and adversely affects the value
of the related Mortgage Loan or the interests of the Purchaser therein, the
party discovering such defect shall promptly so notify the Company. The
Company shall have a period of 90 days after receipt of such written notice
within which to correct or cure any such defect. The Company hereby
covenants and agrees that, if any material defect cannot be corrected or
cured, the Company will, upon the expiration of the applicable cure period
described above, repurchase the related Mortgage Loan in the manner set
forth in Section 3.03; provided, however, that with respect to any Mortgage
Loan, if such defect constitutes a Qualification Defect, any such
repurchase must take place within 75 days of the date such defect is
discovered.
Notwithstanding the foregoing, with respect to a Mortgage Loan,
if, at the end of such 90-day period, the Company delivers an Officer's
Certificate to the Purchaser certifying that the Company is using good
faith efforts to correct or cure such defect and identifying progress made,
then the Purchaser shall grant the Company an extension to correct or cure
such defect. The extension shall not extend beyond (1) the date that is 75
days after the date the defect is discovered, or, (2) if the defect is not
a Qualification Defect (as evidenced by an Opinion of Counsel), the date
that is 30 days beyond the original 90-day cure period. If the defect is
not a Qualification Defect, additional 30-day extensions may be obtained
pursuant to the same procedure, as long as the Company demonstrates
continued progress toward a correction or cure; provided that no extension
shall be granted beyond 180 days from the date on which the Company
received the original notice of the defect.
Notwithstanding the foregoing, with respect to a Mortgage Loan,
the failure of the Purchaser to notify the Company of any defective or
missing document in a Mortgage File within such 90-day period, or the
failure of the Purchaser to require the Company to cure or repurchase the
related Mortgage Loan upon expiration of such 90-day period, shall not
constitute a waiver of its rights hereunder, including the rights with
respect to a Mortgage Loan, to require the Company to repurchase the
affected Mortgage Loan and the right to indemnification pursuant to Section
3.03 hereof.
Notwithstanding the foregoing, the Company shall provide
evidence to the Purchaser that all Mortgage Loans recorded on MERS are
registered in the name of the Purchaser or its designee, and, in lieu of
recording the Assignments with respect to the Mortgage Loans not registered
through MERS and paying for the recordation of such Assignments, the
Company may deposit into an account (the "Reserve Fund") established by the
Company in the name and manner instructed by the Purchaser, the sum of
$2,000. The Reserve Fund shall be an Eligible Account. If at any time (i)
the rating of the Company has been downgraded below "A-" by Fitch, or (ii)
the rating by Fitch on any of the securities issued in connection with a
Pass-Through Transfer has been downgraded, then the Purchaser, or its
successors and assigns, shall have the right to withdraw funds from the
Reserve Fund for purposes of recording the Assignments (using such funds
not only to pay the actual recording fees, but also any related costs, such
as the costs to complete the Assignments and to ship the Assignment to the
appropriate recording offices) or otherwise to direct the Company to use
the funds in the Reserve Fund to promptly record all Assignments.
Within 30 days after recordation of all Assignments related to
the Mortgage Loans, the Company shall have the right to retain for its own
account, and the Purchaser shall release to the Company, any remaining
funds in the Reserve Fund. Moreover, in the event that the funds in the
Reserve Fund are not used to record the Assignments, the Company shall have
the right to retain for its own account, and the Purchaser shall release to
the Company, the funds in the Reserve Fund upon termination of any
securitization trust into which the Mortgage Loans have been deposited.
The Company may invest the amounts on deposit in, or otherwise
to the credit of, the Reserve Fund in Permitted Investments. The Company
shall be permitted to withdraw net investment income in the Reserve Fund
and retain such amounts for its own account on the fifth Business Day of
each month. In the event of any decrease in the amounts on deposit in, or
otherwise to the credit of, the Reserve Fund as a result of a loss on a
Permitted Investment, then the Company shall deposit the amount of such
loss into the Reserve Fund within one Business Day of realization of such
loss.
Section 2.04 Mortgage Schedule.
-----------------
The Company has provided the Purchaser with certain information
constituting a listing of the Mortgage Loans to be purchased under this
Agreement (the "Mortgage Loan Schedule") substantially in the form attached
hereto as Exhibit A. The Mortgage Loan Schedule shall conform to the
definition of "Mortgage Loan Schedule" hereunder.
Section 2.05 Examination of Mortgage Files.
-----------------------------
Prior to the Closing Date, the Company shall (a) deliver to the
Purchaser in escrow, for examination, the Mortgage File for each Mortgage
Loan, including a copy of the Assignment of Mortgage, pertaining to each
Mortgage Loan, or (b) make the Mortgage Files available to the Purchaser
for examination at the Company's offices or such other location as shall
otherwise be agreed upon by the Purchaser and the Company. Such examination
may be made by the Purchaser, or by any prospective purchaser of the
Mortgage Loans from the Purchaser, at any time before or after the Closing
Date upon prior reasonable notice to the Company. The fact that the
Purchaser or any prospective purchaser of the Mortgage Loans has conducted
or has failed to conduct any partial or complete examination of the
Mortgage Files shall not affect the Purchaser's (or any of its successor's)
rights to demand repurchase, substitution or other relief as provided under
this Agreement.
Section 2.06 Representations, Warranties and Agreements of the Company.
---------------------------------------------------------
The Company agrees and acknowledges that it shall, as a
condition to the consummation of the transactions contemplated hereby, make
the representations and warranties specified in Section 3.01 and 3.02 as of
the Closing Date. The Company, without conceding that the Mortgage Loans
are securities, hereby makes the following additional representations,
warranties and agreements which shall be deemed to have been made as of the
Closing Date:
(i) neither the Company nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise
disposed of any Mortgage Loans, any interest in any
Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge
or other disposition of any Mortgage Loans, any interest
in any Mortgage Loans or any other similar security from,
or otherwise approached or negotiated with respect to any
Mortgage Loans, any interest in any Mortgage Loans or any
other similar security with, any person in any manner, or
made any general solicitation by means of general
advertising or in any other manner, or taken any other
action which would constitute a distribution of the
Mortgage Loans under the Securities Act of 1933 (the
"1933 Act") or which would render the disposition of any
Mortgage Loans a violation of Section 5 of the 1933 Act
or require registration pursuant thereto, nor will it
act, nor has it authorized or will it authorize any
person to act, in such manner with respect to the
Mortgage Loans; and
(ii) the Company has not dealt with any broker or agent
or anyone else who might be entitled to a fee or
commission in connection with this transaction other than
the Purchaser.
Section 2.07 Representation, Warranties and Agreement of Purchaser.
------------------------------------------------------
The Purchaser, without conceding that the Mortgage Loans are
securities, hereby makes the following representations, warranties and
agreements, which shall have been deemed to have been made as of the
Closing Date.
(i) the Purchaser understands that the Mortgage Loans
have not been registered under the 1933 Act or the
securities laws of any state;
(ii) the Purchaser is acquiring the Mortgage Loans for its
own account only and not for any other person; and
(iii) the Purchaser considers itself a
substantial, sophisticated
institutional investor having such
knowledge and experience in financial
and business matters that it is capable
of evaluating the merits and risks of
investment in the Mortgage Loans.
Section 2.08 Closing.
-------
The closing for the purchase and sale of the Mortgage Loans
shall take place on the Closing Date. At the Purchaser's option, the
Closing shall be either: by telephone, confirmed by letter or wire as the
parties shall agree; or conducted in person, at such place as the parties
shall agree.
The closing shall be subject to each of the following
conditions:
(i) all of the representations and warranties of the Company
under this Agreement shall be true and correct as of the
Closing Date and no event shall have occurred which, with
notice or the passage of time, would constitute a default
under this Agreement;
(ii) the Purchaser shall have received, or the Purchaser's
attorneys shall have received in escrow, all Closing
Documents as specified in Section 2.09 of this Agreement,
in such forms as are agreed upon and acceptable to the
Purchaser, duly executed by all signatories other than
the Purchaser as required pursuant to the respective
terms thereof;
(iii) the Company shall have delivered and released to the
Custodian all documents required pursuant to this
Agreement and the Custodial Agreement, and
(iv) all other terms and conditions of this Agreement shall
have been complied with.
Subject to the foregoing conditions, the Purchaser shall pay to
the Company on the Closing Date the Purchase Price by wire transfer of
immediately available funds to the account designated by the Company.
Section 2.09 Closing Documents.
-----------------
With respect to the Mortgage Loans, the Closing Documents shall
consist of fully executed originals of the following documents:
(i) this Agreement, dated as of the Cut-off Date, in two
counterparts;
(ii) the Custodial Agreement, dated as of the Cut-off Date, in
three counterparts, in the form attached as Exhibit C to
this Agreement;
(iii) the Mortgage Loan Schedule, one copy to be attached to
each counterpart of this Agreement, and to each
counterpart of the Custodial Agreement, as the Mortgage
Loan Schedule thereto;
(iv) a Receipt and Certification, as required under the
Custodial Agreement;
(v) an officer's certificate of the Seller substantially in
the form of Exhibit F attached hereto; and
(vi) an Opinion of Counsel of the Company, in the form of
Exhibit D hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH
Section 3.01 Company Representations and Warranties.
--------------------------------------
The Company hereby represents and warrants to the Purchaser
that, as of the Closing Date:
(a) Due Organization and Authority.
------------------------------
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of California
and has all licenses necessary to carry on its business as now
being conducted and is licensed, qualified and in good standing
in each state where a Mortgaged Property is located if the laws
of such state require licensing or qualification in order to
conduct business of the type conducted by the Company, and in
any event the Company is in compliance with the laws of any
such state to the extent necessary to ensure the enforceability
of the related Mortgage Loan and the servicing of such Mortgage
Loan in accordance with the terms of this Agreement; the
Company has the full corporate power and authority to execute
and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by the Company and the
consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement evidences the
valid, binding and enforceable obligation of the Company; and
all requisite corporate action has been taken by the Company to
make this Agreement valid and binding upon the Company in
accordance with its terms;
(b) Ordinary Course of Business.
---------------------------
The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the
Company, which is in the business of selling and servicing
loans, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Company pursuant to
this Agreement are not subject to the bulk transfer or any
similar statutory provisions in effect in any applicable
jurisdiction;
(c) No Conflicts.
------------
Neither the execution and delivery of this Agreement, the
acquisition of the Mortgage Loans by the Company, the sale of
the Mortgage Loans to the Purchaser or the transactions
contemplated hereby, nor the fulfillment of or compliance with
the terms and conditions of this Agreement will conflict with
or result in a breach of any of the terms, articles of
incorporation or by-laws or any legal restriction or any
agreement or instrument to which the Company is now a party or
by which it is bound, or constitute a default or result in the
violation of any law, rule, regulation, order, judgment or
decree to which the Company or its property is subject, or
impair the ability of the Purchaser to realize on the Mortgage
Loans, or impair the value of the Mortgage Loans;
(d) Ability to Service.
------------------
The Company is an approved seller/servicer of residential
mortgage loans for FNMA and FHLMC, with the facilities,
procedures, and experienced personnel necessary for the sound
servicing of mortgage loans of the same type as the Mortgage
Loans. The Company is in good standing to sell mortgage loans
to and service mortgage loans for FNMA and FHLMC, and no event
has occurred, including but not limited to a change in
insurance coverage, which would make the Company unable to
comply with FNMA or FHLMC eligibility requirements or which
would require notification to FNMA or FHLMC;
(e) Reasonable Servicing Fee.
------------------------
The Company acknowledges and agrees that the Servicing Fee
represents reasonable compensation for performing such services
and that the entire Servicing Fee shall be treated by the
Company, for accounting and tax purposes, as compensation for
the servicing and administration of the Mortgage Loans pursuant
to this Agreement;
(f) Ability to Perform.
------------------
The Company does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every
covenant contained in this Agreement. The Company is solvent
and the sale of the Mortgage Loans will not cause the Company
to become insolvent. The sale of the Mortgage Loans is not
undertaken to hinder, delay or defraud any of the Company's
creditors;
(g) No Litigation Pending.
----------------------
There is no action, suit, proceeding or investigation pending
or threatened against the Company which, either in any one
instance or in the aggregate, may result in any material
adverse change in the business, operations, financial
condition, properties or assets of the Company, or in any
material impairment of the right or ability of the Company to
carry on its business substantially as now conducted, or in any
material liability on the part of the Company, or which would
draw into question the validity of this Agreement or the
Mortgage Loans or of any action taken or to be contemplated
herein, or which would be likely to impair materially the
ability of the Company to perform under the terms of this
Agreement;
(h) No Consent Required.
--------------------
No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution,
delivery and performance by the Company of or compliance by the
Company with this Agreement or the sale of the Mortgage Loans
as evidenced by the consummation of the transactions
contemplated by this Agreement, or if required, such approval
has been obtained prior to the Closing Date;
(i) No Untrue Information.
---------------------
Neither this Agreement nor any statement, report or other
document furnished or to be furnished pursuant to this
Agreement or in connection with the transactions contemplated
hereby contains any untrue statement of fact or omits to state
a fact necessary to make the statements contained therein not
misleading;
(j) Sale Treatment.
---------------
The Company has determined that the disposition of the Mortgage
Loans pursuant to this Agreement will be afforded sale
treatment for accounting and tax purposes;
(k) No Material Change.
-------------------
There has been no material adverse change in the business,
operations, financial condition or assets of the Company since
the date of the Company's most recent financial statements; and
(l) No Brokers' Fees.
-----------------
The Company has not dealt with any broker, investment banker,
agent or other Person that may be entitled to any commission or
compensation in the connection with the sale of the Mortgage
Loans.
Section 3.02 Representations and Warranties Regarding
Individual Mortgage Loans.
--------------------------
As to each Mortgage Loan, the Company hereby represents and
warrants to the Purchaser that as of the Closing Date (except as set forth
in (i) below):
(i) Mortgage Loans as Described.
----------------------------
The information set forth in the Mortgage Loan Schedule
attached hereto as Exhibit A is true and correct as of
October 1, 2001.
(ii) Payment History.
----------------
All payments required to be made up to the Cut-off Date for
each Mortgage Loan under the terms of the Mortgage Note
have been made and credited. No payment under any Mortgage
Loan has been 30 days delinquent more than one time within
twelve months prior to the Closing Date;
(iii) No Outstanding Charges.
----------------------
There are no defaults by the Company in complying with the
terms of the Mortgage Note or Mortgage, and all taxes,
governmental assessments, insurance premiums, water, sewer
and municipal charges, which previously became due and
owing have been paid, or an escrow of funds has been
established for every such item which remains unpaid and
which has been assessed but is not yet due and payable;
(iv) Original Terms Unmodified.
--------------------------
The terms of the Mortgage Note and Mortgage have not been
impaired, waived, altered or modified in any respect,
except by a written instrument which has been recorded, if
necessary to protect the interests of the Purchaser, and
which has been delivered to the Purchaser. The substance of
any such waiver, alteration or modification has been
approved by the mortgage insurer, if the Mortgage Loan is
insured, the title insurer, to the extent required by the
policy, and its terms are reflected on the Mortgage Loan
Schedule. No Mortgagor has been released, in whole or in
part.
(v) No Defenses.
-----------
The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including
without limitation the defense of usury, nor will the
operation of any of the terms of the Mortgage Note or the
Mortgage, or the exercise of any right thereunder, render
either the Mortgage Note or the Mortgage unenforceable, in
whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including without
limitation the defense of usury, and no such right of
rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(vi) No Satisfaction of Mortgage.
----------------------------
The Mortgage has not been satisfied, canceled, subordinated
or rescinded, in whole or in part, and the Mortgaged
Property has not been released from the lien of the
Mortgage, in whole or in part, nor has any instrument been
executed that would effect any such satisfaction, release,
cancellation, subordination or rescission;
(vii) Validity of Mortgage Documents.
------------------------------
The Mortgage Note and the Mortgage and related documents
are genuine, and each is the legal, valid and binding
obligation of the maker thereof enforceable in accordance
with its terms. All parties to the Mortgage Note and the
Mortgage had legal capacity to enter into the Mortgage Loan
and to execute and deliver the Mortgage Note and the
Mortgage, and the Mortgage Note and the Mortgage have been
duly and properly executed by such parties;
(viii) No Fraud.
---------
All the documents executed in connection with the Mortgage
Loan including, but not limited to, the Mortgage Note and
the Mortgage are free of fraud and any misrepresentation,
are signed by the persons they purport to be signed by, and
witnessed or, as appropriate, notarized by the persons
whose signatures appear as witnesses or notaries, and each
such document constitutes the valid and binding legal
obligation of the signatories and is enforceable in
accordance with its terms;
(ix) Compliance with Applicable Laws.
--------------------------------
Any and all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending,
real estate settlement procedures, consumer credit
protection, equal credit opportunity or disclosure laws
applicable to the Mortgage Loan have been complied with,
and the Company shall maintain in its possession, available
for the Purchaser's inspection and shall deliver to the
Purchaser upon demand, evidence of compliance with all such
requirements. All inspections, licenses and certificates
required to be made or issued with respect to all occupied
portions of the Mortgaged Property and, with respect to the
use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting
certificates, have been made or obtained from the
appropriate authorities;
(x) Location and Type of Mortgaged Property.
----------------------------------------
The Mortgaged Property is located in the state identified
in the Mortgage Loan Schedule and consists of a single
parcel (or more than one contiguous parcel) of real
property with a detached single family residence erected
thereon, or a two- to four-family dwelling, or an
individual condominium unit in a condominium project, or an
individual unit in a planned unit development or a
townhouse.
(xi) Valid First Lien.
-----------------
The Mortgage is a valid, subsisting and enforceable first
lien on the Mortgaged Property, including all buildings on
the Mortgaged Property and all installations and
mechanical, electrical, plumbing, heating and air
conditioning systems located in or annexed to such
buildings, and all additions, alterations and replacements
made at any time with respect to the foregoing. The lien of
the Mortgage is subject only to:
1. the lien of current real property taxes and
assessments not yet due and payable;
2. covenants, conditions and restrictions,
rights of way, easements and other matters of
the public record as of the date of recording
acceptable to mortgage lending institutions
generally and specifically referred to in the
lender's title insurance policy or attorney's
title opinion delivered to the originator of
the Mortgage Loan and (i) referred to or
otherwise considered in the appraisal made
for the originator of the Mortgage Loan and
(ii) which do not adversely affect the
Appraised Value of the Mortgaged Property set
forth in such appraisal; and
3. other matters to which like properties are
commonly subject which do not materially
interfere with the benefits of the security
intended to be provided by the mortgage or
the use, enjoyment, value or marketability of
the related Mortgaged Property.
Any security agreement, chattel mortgage or
equivalent document related to and delivered
in connection with the Mortgage Loan
establishes and creates a valid, subsisting
and enforceable first lien and first priority
security interest on the property described
therein and the Company has full right to
sell and assign the same to the Purchaser;
(xii) Full Disbursement of Proceeds.
------------------------------
The proceeds of the Mortgage Loan have been fully
disbursed, except for escrows established or created due to
seasonal weather conditions, and there is no requirement
for future advances thereunder. All costs, fees and
expenses incurred in making or closing the Mortgage Loan
and the recording of the Mortgage were paid, and the
Mortgagor is not entitled to any refund of any amounts paid
or due under the Mortgage Note or Mortgage;
(xiii) Ownership.
----------
The Company is the sole owner of record and holder of the
Mortgage Loan and the related Mortgage Note and the
Mortgage are not assigned or pledged, and the Company has
good and marketable title thereto and has full right and
authority to transfer and sell the Mortgage Loan to the
Purchaser. The Company is transferring the Mortgage Loan
free and clear of any and all encumbrances, liens, pledges,
equities, participation interests, claims, charges or
security interests of any nature encumbering such Mortgage
Loan;
(xiv) Origination/Doing Business.
--------------------------
The Mortgage Loan was originated by a savings and loan
association, a savings bank, a commercial bank, a credit
union, an insurance company, or similar institution which
is supervised and examined by a federal or state authority
or by a mortgagee approved by the Secretary of Housing and
Urban Development pursuant to Sections 203 and 211 or the
National Housing Act. All parties which have had any
interest in the Mortgage Loan, whether as mortgagee,
assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) (1)
in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged
Property is located, and any qualification requirements of
FNMA or FHLMC, and (2) organized under the laws of such
state, or (3) qualified to do business in such state, or
(4) federal savings and loan associations or national banks
having principal offices in such state, or (5) not doing
business in such state;
(xv) Title Insurance.
---------------
The Mortgage Loan is covered by an ALTA lender's title
insurance policy or other generally acceptable form of
policy of insurance acceptable to FNMA or FHLMC, issued by
a title insurer acceptable to FNMA or FHLMC and qualified
to do business in the jurisdiction where the Mortgaged
Property is located, insuring the Company, its successors
and assigns, as to the first priority lien of the Mortgage
in the original principal amount of the Mortgage Loan,
subject only to the exceptions contained in clauses (1),
(2) and (3) of paragraph (xi) of this Section 3.02;
provided, however, that in the case of any Mortgage Loan
secured by a Mortgaged Property located in a jurisdiction
where such policies are generally not available, the
Mortgage Loan is the subject of an opinion of counsel of
the type customarily rendered in such jurisdiction in lieu
of title insurance. The Company is the sole insured of such
lender's title insurance policy, and such lender's title
insurance policy is in full force and effect and will be in
force and effect upon the consummation of the transactions
contemplated by this Agreement. No claims have been made
under such lender's title insurance policy, and no prior
holder of the Mortgage, including the Company, has done, by
act or omission, anything which would impair the coverage
of such lender's title insurance policy;
(xvi) No Mechanics' Liens.
-------------------
There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights
are outstanding that under the law could give rise to such
liens) affecting the related Mortgaged Property which are
or may be liens prior to, or equal or coordinate with, the
lien of the related Mortgage which are not insured against
by the title insurance policy referenced in Section (xv)
above;
(xvii) Location of Improvements; No Encroachments.
------------------------------------------
Except as insured against by the title insurance policy
referenced in Section (xv) above, all improvements which
were considered in determining the Appraised Value of the
Mortgaged Property lay wholly within the boundaries and
building restriction lines of the Mortgaged Property and no
improvements on adjoining properties encroach upon the
Mortgaged Property. No improvement located on or being part
of the Mortgaged Property is in violation of any applicable
zoning law or regulation;
(xviii) Customary Provisions.
---------------------
The Mortgage contains customary and enforceable provisions
such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged
Property of the benefits of the security provided thereby,
including, (i) in the case of a Mortgage designated as a
deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure. There is no homestead or other
exemption available to a Mortgagor which would interfere
with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage;
(xix) Occupancy of the Mortgaged Property.
-----------------------------------
As of the date of origination, the Mortgaged Property was
lawfully occupied under applicable law.
(xx) No Additional Collateral.
------------------------
The Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the
lien of the corresponding Mortgage and the security
interest of any applicable security agreement or chattel
mortgage referred to in (xi) above;
(xxi) Deeds of Trust.
---------------
In the event that the Mortgage constitutes a deed of trust,
a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves
and is named in the Mortgage, and no fees or expenses are
or will become payable by the Mortgagee to the trustee
under the deed of trust, except in connection with a
trustee's sale after default by the Mortgagor;
(xxii) Transfer of Mortgage Loans.
---------------------------
The Assignment is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the
Mortgaged Property is located.
(xxiii) Mortgaged Property Undamaged.
---------------------------
The Mortgaged Property is undamaged by water, fire,
earthquake or earth movement, windstorm, flood, tornado or
other casualty so as to affect adversely the value of the
Mortgaged Property as security for the Mortgage Loan or the
use for which the premises were intended;
(xxiv) Collection Practices; Escrow Deposits.
-------------------------------------
The origination and collection practices used with respect
to the Mortgage Loan have been in accordance with
Acceptable Servicing Practices, and have been in all
material respects legal and proper, and in accordance with
the terms of the Mortgage Note and Mortgage. All Escrow
Payments have been collected in full compliance with state
and federal law. An escrow of funds is not prohibited by
applicable law and has been established to pay for every
item that remains unpaid and has been assessed but is not
yet due and payable. No escrow deposits or Escrow Payments
or other charges or payments due the Company have been
capitalized under the Mortgage Note;
(xxv) No Condemnation.
----------------
To the best of Company's knowledge, there is no proceeding
pending or threatened for the total or partial condemnation
of the related Mortgaged Property;
(xxvi) The Appraisal.
--------------
The Mortgage Loan Documents contain an appraisal of the
related Mortgaged Property by an appraiser who had no
interest, direct or indirect, in the Mortgaged Property or
in any loan made on the security thereof; and whose
compensation is not affected by the approval or disapproval
of the Mortgage Loan, and the appraisal and the appraiser
both satisfy the applicable requirements of FNMA or FHLMC;
(xxvii) Insurance.
----------
The Mortgaged Property securing each Mortgage Loan is
insured by an insurer acceptable to FNMA or FHLMC against
loss by fire and such hazards as are covered under a
standard extended coverage endorsement, in an amount which
is not less than the lesser of 100% of the insurable value
of the Mortgaged Property and the outstanding principal
balance of the Mortgage Loan, but in no event less than the
minimum amount necessary to fully compensate for any damage
or loss on a replacement cost basis; if the Mortgaged
Property is a condominium unit, it is included under the
coverage afforded by a blanket policy for the project; the
insurance policy contains a standard clause naming the
originator of such mortgage loan, its successor and
assigns, as insured mortgagee; if upon origination of the
Mortgage Loan, the improvements on the Mortgaged Property
were in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy meeting the requirements
of the current guidelines of the Federal Insurance
Administration is in effect with a generally acceptable
insurance carrier, in an amount representing coverage not
less than the least of (A) the outstanding principal
balance of the Mortgage Loan, (B) the full insurable value
and (C) the maximum amount of insurance which was available
under the Flood Disaster Protection Act of 1983, as
amended; and the Mortgage obligates the mortgagor
thereunder to maintain all such insurance at the
mortgagor's cost and expense and the Company has not acted
or failed to act so as to impair the coverage of any such
insurance policy or the validity, binding effect and
enforceability thereof;
(xxviii) Soldiers' and Sailors' Civil Relief Act.
----------------------------------------
The Mortgagor has not notified the Company, and the Company
has no knowledge of any relief requested or allowed to the
Mortgagor under the Soldiers' and Sailors' Civil Relief Act
of 1940, as amended;
(xxix) Payment Terms.
-------------
The Mortgage Note is payable on the first day of each month
in equal monthly installments of principal and interest,
with interest in arrears, providing for full amortization
by maturity over a scheduled term of no more than 30 years.
No Mortgage Loan has a shared appreciation or other
contingent interest feature, or permits negative
amortization;
(xxx) No Defaults.
------------
Except with respect to delinquencies identified on the
Mortgage Loan Schedule, there is no default, breach,
violation or event of acceleration existing under any
Mortgage or Mortgage Note and no event that, with the
passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach,
violation or event of acceleration, and the Company has not
waived any default, breach, violation or event of
acceleration; and
(xxxi) Loan-to-Value Ratio; Modifications; No Foreclosures.
----------------------------------------------------
The Loan-to-Value Ratio of each Mortgage Loan was less than
125% at the time of its origination or refinancing, as
applicable. No Mortgage Loan is subject to a written
foreclosure agreement or pending foreclosure proceedings.
(xxxii) Primary Mortgage Insurance.
---------------------------
Each Mortgage Loan with an LTV at origination in excess of
80% will be subject to a Primary Mortgage Insurance Policy,
issued by an insurer acceptable to FNMA or FHLMC, in at
least such amounts as are required by FHLMC or FNMA. All
provisions of such Primary Mortgage Insurance Policy have
been and are being complied with, such policy is in full
force and effect, and all premiums due thereunder have been
paid. Any Mortgage subject to any such Primary Mortgage
Insurance Policy obligates the Mortgagor thereunder to
maintain such insurance and to pay all premiums and charges
in connection therewith unless terminable in accordance
with FHLMC standards or applicable law.
(xxxiii) Underwriting Guidelines.
------------------------
The Mortgage Loan was underwritten in accordance with the
Company's underwriting guidelines in effect at the time of
origination with exceptions thereto exercised in a
reasonable manner.
(xxxiv) Adverse Selection.
------------------
The Company used no adverse selection procedures in
selecting the Mortgage Loan from among the outstanding
first-lien residential mortgage loans owned by it which
were available for inclusion in the Mortgage Loans.
(xxxv) No Bankruptcy.
-------------
To the best of the Company's knowledge, no Mortgagor was a
debtor in any state or federal bankruptcy or insolvency
proceeding at the time the Mortgage Loan was originated and
as of the Closing Date, the Company has not received notice
that any Mortgagor is a debtor under any state or federal
bankruptcy or insolvency proceeding.
Section 3.03 Repurchase.
----------
It is understood and agreed that the representations and
warranties set forth in Sections 3.01 and 3.02 shall survive the sale of
the Mortgage Loans to the Purchaser and the delivery of the Mortgage Loan
Documents to the Custodian and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage
Note or Assignment of Mortgage or the examination or failure to examine any
Mortgage File. Upon discovery by either the Company or the Purchaser of a
breach of any of the foregoing representations and warranties which
materially and adversely affects the value of the Mortgage Loans or the
interest of the Purchaser (or which materially and adversely affects the
interests of Purchaser in the related Mortgage Loan in the case of a
representation and warranty relating to a particular Mortgage Loan), the
party discovering such breach shall give prompt written notice to the
other.
Within 90 days of the earlier of either discovery by or notice
to the Company of any breach of a representation or warranty which
materially and adversely affects the value of the Mortgage Loans, (i) the
Company shall use its best efforts promptly to cure such breach in all
material respects and (ii) if such breach cannot be cured, the Company
shall, at the Purchaser's option, repurchase such Mortgage Loan at the
Repurchase Price. In the event that a breach shall involve any
representation or warranty set forth in Section 3.01, and such breach
cannot be cured within 90 days of the earlier of either discovery by or
notice to the Company of such breach, all of the Mortgage Loans shall, at
the Purchaser's option, be repurchased by the Company at the Repurchase
Price. Any repurchase of a Mortgage Loan or Loans pursuant to the foregoing
provisions of this Section 3.03 shall be accomplished by deposit in the
Custodial Account of the amount of the Repurchase Price as required in
Section 4.04, for distribution to Purchaser on the Remittance Date for the
month following the date of the repurchase, after deducting therefrom any
amount received in respect of such repurchased Mortgage Loan or Loans and
being held in the Custodial Account for future distribution for application
in accordance with Section 5.01.
At the time of repurchase, the Purchaser and the Company shall
arrange for the reassignment of the repurchased Mortgage Loan to the
Company and the delivery to the Company of any documents held by the
Custodian relating to the repurchased Mortgage Loan. In the event of a
repurchase, the Company shall, simultaneously with such reassignment, give
written notice to the Purchaser that such repurchase has taken place and
amend the Mortgage Loan Schedule to reflect the withdrawal of the
repurchased Mortgage Loan from this Agreement.
In addition to such repurchase obligation, the Company shall
indemnify the Purchaser and hold it harmless against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and
related costs, judgments, and other costs and expenses resulting from any
claim, demand, defense or assertion based on or grounded upon, or resulting
from, a breach of the Company's representations and warranties contained in
this Agreement. It is understood and agreed that the obligations of the
Company set forth in this Section 3.03 to cure or repurchase a defective
Mortgage Loan and to indemnify the Purchaser as provided in this Section
3.03, constitute the sole remedies of the Purchaser respecting a breach of
the foregoing representations and warranties.
Any cause of action against the Company relating to or arising
out of the breach of any representations and warranties made in Sections
3.01 and 3.02 shall accrue as to any Mortgage Loan upon the earliest of (i)
discovery of such breach by the Company or the Purchaser or notice thereof
by the Purchaser to the Company, (ii) failures by the Company to cure such
breach or repurchase such Mortgage Loan as specified above, and (iii)
demand upon the Company by the Purchaser for compliance with this
Agreement.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer.
--------------------------
The Company, as an independent contractor, shall service and
administer the Mortgage Loans and shall have full power and authority,
acting alone or through the utilization of a third party servicing
provider, to do any and all things in connection with such servicing and
administration which the Company may deem necessary or desirable,
consistent with the terms of this Agreement and with Accepted Servicing
Practices.
Consistent with the terms of this Agreement and subject to the
REMIC Provisions if the Mortgage Loans have been transferred to a REMIC,
the Company may waive, modify or vary any term of any Mortgage Loan or
consent to the postponement of strict compliance with any such term or in
any manner grant indulgence to any Mortgagor if in the Company's reasonable
and prudent determination such waiver, modification, postponement or
indulgence is not materially adverse to the Purchaser. In the event of any
such modification which permits the deferral of interest or principal
payments on any Mortgage Loan, the Company shall, on the Business Day
immediately preceding the Remittance Date in any month in which any such
principal or interest payment has been deferred, deposit in the Custodial
Account from its own funds, in accordance with Section 5.03, the difference
between (a) such month's principal and one month's interest at the Mortgage
Loan Remittance Rate on the unpaid principal balance of such Mortgage Loan
and (b) the amount paid by the Mortgagor. The Company shall be entitled to
reimbursement for such advances to the same extent as for all other
advances made pursuant to Section 5.03. Without limiting the generality of
the foregoing, the Company shall continue, and is hereby authorized and
empowered, to execute and deliver on behalf of itself and the Purchaser,
all instruments of satisfaction or cancellation, or of partial or full
release, discharge and all other comparable instruments, with respect to
the Mortgage Loans and with respect to the Mortgaged Properties. If
reasonably required by the Company, the Purchaser shall furnish the Company
with any powers of attorney and other documents necessary or appropriate to
enable the Company to carry out its servicing and administrative duties
under this Agreement.
In servicing and administering the Mortgage Loans, the Company
shall employ procedures (including collection procedures) and exercise the
same care that it customarily employs and exercises in servicing and
administering mortgage loans for its own account, giving due consideration
to Accepted Servicing Practices where such practices do not conflict with
the requirements of this Agreement, and the Purchaser's reliance on the
Company.
Section 4.02 Liquidation of Mortgage Loans.
-----------------------------
In the event that any payment due under any Mortgage Loan and
not postponed pursuant to Section 4.01 is not paid when the same becomes
due and payable, or in the event the Mortgagor fails to perform any other
covenant or obligation under the Mortgage Loan and such failure continues
beyond any applicable grace period, the Company shall take such action as
(1) the Company would take under similar circumstances with respect to a
similar mortgage loan held for its own account for investment, (2) shall be
consistent with Accepted Servicing Practices, and (3) the Company shall
determine prudently to be in the best interest of Purchaser. In the event
that any payment due under any Mortgage Loan is not postponed pursuant to
Section 4.01 and remains delinquent for a period of 90 days or any other
default continues for a period of 90 days beyond the expiration of any
grace or cure period, the Company shall commence foreclosure proceedings,
the Company shall notify the Purchaser in writing of the Company's
intention to do so, and the Company shall not commence foreclosure
proceedings if the Purchaser objects to such action within three (3)
Business Days of receiving such notice. In the event the Purchaser objects
to such foreclosure action, the Company shall not be required to make
Monthly Advances with respect to such Mortgage Loan, pursuant to Section
5.03, and the Company's obligation to make such Monthly Advances shall
terminate on the 90th day referred to above. In such connection, the
Company shall from its own funds make all necessary and proper Servicing
Advances, provided, however, that the Company shall not be required to
expend its own funds in connection with any foreclosure or towards the
restoration or preservation of any Mortgaged Property, unless it shall
determine (a) that such preservation, restoration and/or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan to Purchaser
after reimbursement to itself for such expenses and (b) that such expenses
will be recoverable by it either through Liquidation Proceeds (respecting
which it shall have priority for purposes of withdrawals from the Custodial
Account pursuant to Section 4.05) or through Insurance Proceeds (respecting
which it shall have similar priority).
Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of
foreclosure, in the event the Company has reasonable cause to believe that
a Mortgaged Property is contaminated by hazardous or toxic substances or
wastes, or if the Purchaser otherwise requests an environmental inspection
or review of such Mortgaged Property, such an inspection or review is to be
conducted by a qualified inspector. The cost for such inspection or review
shall be borne by the Purchaser. Upon completion of the inspection or
review, the Company shall promptly provide the Purchaser with a written
report of the environmental inspection.
After reviewing the environmental inspection report, the
Purchaser shall determine how the Company shall proceed with respect to the
Mortgaged Property. In the event (a) the environmental inspection report
indicates that the Mortgaged Property is contaminated by hazardous or toxic
substances or wastes and (b) the Purchaser directs the Company to proceed
with foreclosure or acceptance of a deed in lieu of foreclosure, the
Company shall be reimbursed for all reasonable costs associated with such
foreclosure or acceptance of a deed in lieu of foreclosure and any related
environmental clean up costs, as applicable, from the related Liquidation
Proceeds, or if the Liquidation Proceeds are insufficient to fully
reimburse the Company, the Company shall be entitled to be reimbursed from
amounts in the Custodial Account pursuant to Section 4.05 hereof. In the
event the Purchaser directs the Company not to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Company shall be
reimbursed for all Servicing Advances made with respect to the related
Mortgaged Property from the Custodial Account pursuant to Section 4.05
hereof.
Section 4.03 Collection of Mortgage Loan Payments.
------------------------------------
Continuously from the date hereof until the principal and
interest on all Mortgage Loans are paid in full, the Company shall proceed
diligently to collect all payments due under each of the Mortgage Loans
when the same shall become due and payable in accordance with Accepted
Servicing Practices and, with regard to Mortgage Loans under the Pledged
Asset Program, in accordance with the Pledged Asset Mortgage Program Policy
attached hereto as Exhibit H, and shall, in accordance with RESPA and
applicable state law, take special care in ascertaining and estimating
Escrow Payments and all other charges that will become due and payable with
respect to the Mortgage Loan and the Mortgaged Property, to the end that
the installments payable by the Mortgagors will be sufficient to pay such
charges as and when they become due and payable.
Section 4.04 Establishment of and Deposits to Custodial Account.
--------------------------------------------------
The Company shall segregate and hold all funds collected and
received pursuant to a Mortgage Loan separate and apart from any of its own
funds and general assets and shall establish and maintain one or more
Custodial Accounts, in the form of time deposit or demand accounts, titled
"Xxxxx Fargo Home Mortgage, Inc., in trust for the Purchaser of Residential
Mortgage Loans serviced under a Seller's Warranties and Servicing
Agreement, dated as of October 1, 2001, and various Mortgagors - P & I", or
as otherwise directed in writing by the Purchaser or its assigns after the
Closing Date in connection with any Whole Loan Transfer or Pass-Through
Transfer. The Custodial Account shall be established with a Qualified
Depository. Upon request of the Purchaser and within ten (10) days thereof,
the Company shall provide the Purchaser with written confirmation of the
existence of such Custodial Account. Any funds deposited in the Custodial
Account shall at all times be insured to the fullest extent allowed by
applicable law. Funds deposited in the Custodial Account may be drawn on by
the Company in accordance with Section 4.05.
The Company shall deposit in the Custodial Account within one
Business Day (or two Business Days in the case of the amounts described in
clauses (iii) through (v) below) of the Company's receipt, and retain
therein, the following collections received by the Company and payments
made by the Company after the Cut-off Date, other than payments of
principal and interest due on or before the Cut-off Date:
(1) all payments on account of principal on the Mortgage
Loans, including all Principal Prepayments;
(2) all payments on account of interest on the Mortgage Loans,
adjusted to the Mortgage Loan Remittance Rate;
(3) all Liquidation Proceeds;
(4) all Insurance Proceeds including amounts required to be
deposited pursuant to Section 4.10 (other than proceeds to
be held in the Escrow Account and applied to the
restoration or repair of the Mortgaged Property or
released to the Mortgagor in accordance with Section
4.14), Section 4.11 and Section 4.15;
(5) all Condemnation Proceeds which are not applied to the
restoration or repair of the Mortgaged Property or
released to the Mortgagor in accordance with Section 4.14;
(6) any amount required to be deposited in the Custodial
Account pursuant to Section 4.01, 5.01, 5.03, 6.01 or
6.02;
(7) any amounts payable in connection with the repurchase of
any Mortgage Loan pursuant to Section 2.03, 3.03 or 6.02;
(8) with respect to each Principal Prepayment an amount (to be
paid by the Company out of its funds) which, when added to
all amounts allocable to interest received in connection
with the Principal Prepayment, equals one month's interest
on the amount of principal so prepaid at the Mortgage Loan
Remittance Rate;
(9) any amounts required to be deposited by the Company
pursuant to Section 4.11 in connection with the deductible
clause in any blanket hazard insurance policy; and
(10) any amounts received with respect to or related to any REO
Property and all REO Disposition Proceeds pursuant to
Section 4.16.
The foregoing requirements for deposit into the Custodial
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late
payment charges and assumption fees, to the extent permitted by Section
6.01, need not be deposited by the Company into the Custodial Account. Any
interest paid on funds deposited in the Custodial Account by the depository
institution shall accrue to the benefit of the Company and the Company
shall be entitled to retain and withdraw such interest from the Custodial
Account pursuant to Section 4.05.
Section 4.05 Permitted Withdrawals From Custodial Account.
--------------------------------------------
The Company shall, from time to time, withdraw funds from the
Custodial Account for the following purposes:
(1) to make payments to the Purchaser in the amounts and in
the manner provided for in Section 5.01;
(2) to reimburse itself for Monthly Advances of the Company's
funds made pursuant to Section 5.03, the Company's right
to reimburse itself pursuant to this subclause (ii) being
limited to amounts received on the related Mortgage Loan
which represent late payments of principal and/or interest
respecting which any such advance was made, it being
understood that, in the case of any such reimbursement,
the Company's right thereto shall be prior to the rights
of Purchaser, except that, where the Company is required
to repurchase a Mortgage Loan pursuant to Section 2.03,
3.03 or 6.02, the Company's right to such reimbursement
shall be subsequent to the payment to the Purchaser of the
Repurchase Price pursuant to such sections and all other
amounts required to be paid to the Purchaser with respect
to such Mortgage Loan;
(3) to reimburse itself for unreimbursed Servicing Advances,
and for any unpaid Servicing Fees, the Company's right to
reimburse itself pursuant to this subclause (iii) with
respect to any Mortgage Loan being limited to related
Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds and such other amounts as may be collected by the
Company from the Mortgagor or otherwise relating to the
Mortgage Loan, it being understood that, in the case of
any such reimbursement, the Company's right thereto shall
be prior to the rights of Purchaser, except that where the
Company is required to repurchase a Mortgage Loan pursuant
to Section 2.03, 3.03 or 6.02, in which case the Company's
right to such reimbursement shall be subsequent to the
payment to the Purchaser of the Repurchase Price pursuant
to such sections and all other amounts required to be paid
to the Purchaser with respect to such Mortgage Loan;
(4) to pay itself as servicing compensation any interest on
funds deposited in the Custodial Account;
(5) to reimburse itself for expenses incurred to the extent
reimbursable pursuant to Section 8.01;
(6) to pay any amount required to be paid pursuant to Section
4.16 related to any REO Property, it being understood
that, in the case of any such expenditure or withdrawal
related to a particular REO Property, the amount of such
expenditure or withdrawal from the Custodial Account shall
be limited to amounts on deposit in the Custodial Account
with respect to the related REO Property;
(7) to reimburse itself for any Servicing Advances or REO
expenses after liquidation of the Mortgaged Property not
otherwise reimbursed above;
(8) to reimburse the trustee with respect to any Pass-Through
Transfer for any unreimbursed Monthly Advances or
Servicing Advances made by the Trustee, as applicable, the
right to reimbursement pursuant to this subclause (viii)
with respect to any Mortgage Loan being limited to related
Liquidation Proceeds, proceeds of REO Dispositions,
Condemnation Proceeds, Insurance Proceeds and such other
amounts as may be collected by the Company from the
Mortgagor or otherwise relating to the Mortgage Loan, it
being understood that, in the case of such reimbursement,
such trustee's right thereto shall be prior to the rights
of the Company to reimbursement under (ii) and (iii), and
prior to the rights of the Purchaser under (i);
(9) to remove funds inadvertently placed in the Custodial
Account by the Company; and
(10) to clear and terminate the Custodial Account upon the
termination of this Agreement.
In the event that the Custodian Account is interest bearing, on
each Remittance Date, the Company shall withdraw all interest earned on
funds on deposit in the Custodial Account. The Company may use such
withdrawn funds only for the purposes described in this Section 4.05.
Section 4.06 Establishment of and Deposits to Escrow Account.
-----------------------------------------------
The Company shall segregate and hold all funds collected and
received pursuant to a Mortgage Loan constituting Escrow Payments separate
and apart from any of its own funds and general assets and shall establish
and maintain one or more Escrow Accounts, in the form of time deposit or
demand accounts, titled, "Xxxxx Fargo Home Mortgage, Inc., in trust for the
Purchaser under the Seller's Warranties and Servicing Agreement dated as of
October 1, 2001 and/or subsequent purchasers of Mortgage Loans, and various
Mortgagors - T & I." The Escrow Accounts shall be established with a
Qualified Depository, in a manner which shall provide maximum available
insurance thereunder. Upon request of the Purchaser and within ten (10)
days thereof, the Company shall provide the Purchaser with written
confirmation of the existence of such Escrow Account. Funds deposited in
the Escrow Account may be drawn on by the Company in accordance with
Section 4.07.
The Company shall deposit in the Escrow Account or Accounts
within two (2) Business Days of the Company's receipt, and retain therein:
(1) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any
such items as required under the terms of this Agreement;
(2) all amounts representing Insurance Proceeds or
Condemnation Proceeds which are to be applied to the
restoration or repair of any Mortgaged Property; and
(3) all amounts representing proceeds of any Primary Mortgage
Insurance Policy.
The Company shall make withdrawals from the Escrow Account only
to effect such payments as are required under this Agreement, as set forth
in Section 4.07. The Company shall be entitled to retain any interest paid
on funds deposited in the Escrow Account by the depository institution,
other than interest on escrowed funds required by law to be paid to the
Mortgagor. To the extent required by law, the Company shall pay interest on
escrowed funds to the Mortgagor notwithstanding that the Escrow Account may
be non-interest bearing or that interest paid thereon is insufficient for
such purposes.
Section 4.07 Permitted Withdrawals From Escrow Account.
-----------------------------------------
Withdrawals from the Escrow Account or Accounts may be made by
the Company only:
(1) to effect timely payments of ground rents, taxes,
assessments, water rates, mortgage insurance premiums,
condominium charges, fire and hazard insurance premiums or
other items constituting Escrow Payments for the related
Mortgage;
(2) to reimburse the Company for any Servicing Advances made
by the Company pursuant to Section 4.08 with respect to a
related Mortgage Loan, but only from amounts received on
the related Mortgage Loan which represent late collections
of Escrow Payments thereunder;
(3) to refund to any Mortgagor any funds found to be in excess
of the amounts required under the terms of the related
Mortgage Loan;
(4) for transfer to the Custodial Account and application to
reduce the principal balance of the Mortgage Loan in
accordance with the terms of the related Mortgage and
Mortgage Note;
(5) for application to restoration or repair of the Mortgaged
Property in accordance with the procedures outlined in
Section 4.14;
(6) to pay to the Company, or any Mortgagor to the extent
required by law, any interest paid on the funds deposited
in the Escrow Account;
(7) to remove funds inadvertently placed in the Escrow Account
by the Company;
(8) to apply the proceeds of Primary Mortgage Insurance as if
such proceeds were payments on, or Liquidation Proceeds
of, the related Mortgage Loan, as the case may be; and
(9) to clear and terminate the Escrow Account on the
termination of this Agreement; and
Section 4.08 Payment of Taxes, Insurance and Other Charges.
--------------------------------------------
With respect to each Mortgage Loan, the Company shall maintain
accurate records reflecting the status of ground rents, taxes, assessments,
water rates, sewer rents, and other charges which are or may become a lien
upon the Mortgaged Property and fire and hazard insurance coverage and
shall obtain, from time to time, all bills for the payment of such charges
(including renewal premiums) and shall effect payment thereof prior to the
applicable penalty or termination date, employing for such purpose deposits
of the Mortgagor in the Escrow Account which shall have been estimated and
accumulated by the Company in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage. The Company assumes full
responsibility for the timely payment of all such bills and shall effect
timely payment of all such charges irrespective of each Mortgagor's
faithful performance in the payment of same of the making of the Escrow
Payments, and the Company shall make advances from its own funds to effect
such payments.
Section 4.09 Protection of Accounts.
-----------------------
The Company may transfer the Custodial Account or the Escrow
Account to a different Qualified Depository from time to time, upon prior
written notice to the Purchaser.
Section 4.10 Maintenance of Hazard Insurance.
-------------------------------
The Company shall cause to be maintained for each Mortgage Loan
hazard insurance such that all buildings upon the Mortgaged Property are
insured by an insurer acceptable to FNMA or FHLMC, against loss by fire,
hazards of extended coverage and such other hazards as are customary in the
area where the Mortgaged Property is located, in an amount which is at
least equal to the lesser of (i) the maximum insurable value of the
improvements securing such Mortgage Loan and (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan and (b) an amount such
that the proceeds thereof shall be sufficient to prevent the Mortgagor or
the loss payee from becoming a co-insurer. In the event a hazard insurance
policy shall be in danger of being terminated, or in the event the insurer
shall cease to be acceptable to FNMA or FHLMC, the Company shall notify the
Purchaser and the related Mortgagor, and shall use its best efforts, as
permitted by applicable law, to obtain from another Qualified Insurer a
replacement hazard insurance policy substantially and materially similar in
all respects to the original policy. In no event, however, shall a Mortgage
Loan be without a hazard insurance policy at any time, subject only to
Section 4.11 hereof.
If upon origination of the Mortgage Loan, the related Mortgaged
Property was located in an area identified by the Flood Emergency
Management Agency as having special flood hazards (and such flood insurance
has been made available) a flood insurance policy meeting the requirements
of the current guidelines of the Federal Insurance Administration is in
effect with a generally acceptable insurance carrier acceptable to FNMA or
FHLMC, in an amount representing coverage equal to the lesser of (i) the
minimum amount required, under the terms of coverage, to compensate for any
damage or loss on a replacement cost basis (or the unpaid balance of the
mortgage if replacement cost coverage is not available for the type of
building insured) and (ii) the maximum amount of insurance which is
available under the Flood Disaster Protection Act of 1973, as amended.
If a Mortgage is secured by a unit in a condominium project,
the Company shall verify that the coverage required of the owner's
association, including hazard, flood, liability, and fidelity coverage, is
being maintained in accordance with then current FNMA or FHLMC
requirements, secure from the owner's association its agreement to notify
the Company promptly of any change in the insurance coverage or of any
condemnation or casualty loss that may have a material effect on the value
of the Mortgaged Property as security.
In the event that any Purchaser or the Company shall determine
that the Mortgaged Property should be insured against loss or damage by
hazards and risks not covered by the insurance required to be maintained by
the Mortgagor pursuant to the terms of the Mortgage, the Company shall
communicate and consult with the Mortgagor with respect to the need for
such insurance and bring to the Mortgagor's attention the desirability of
protection of the Mortgaged Property.
All policies required hereunder shall name the Company as loss
payee and shall be endorsed with standard or union mortgagee clauses,
without contribution, which shall provide for at least 30 days prior
written notice of any cancellation, reduction in amount or material change
in coverage.
The Company shall not interfere with the Mortgagor's freedom of
choice in selecting either his insurance carrier or agent, provided,
however, that the Company shall not accept any such insurance policies from
insurance companies unless such companies are acceptable to FNMA and FHLMC
and are licensed to do business in the jurisdiction in which the Mortgaged
Property is located. The Company shall determine that such policies provide
sufficient risk coverage and amounts, that they insure the property owner,
and that they properly describe the property address.
Pursuant to Section 4.04, any amounts collected by the Company
under any such policies (other than amounts to be deposited in the Escrow
Account and applied to the restoration or repair of the related Mortgaged
Property, or property acquired in liquidation of the Mortgage Loan, or to
be released to the Mortgagor, in accordance with the Company's normal
servicing procedures as specified in Section 4.14) shall be deposited in
the Custodial Account subject to withdrawal pursuant to Section 4.05.
Section 4.11 Maintenance of Primary Mortgage Insurance Policy; Claims.
--------------------------------------------------------
With respect to each Mortgage Loan with a LTV in excess of 80%,
the Company shall, without any cost to the Purchaser, maintain or cause the
Mortgagor to maintain in full force and effect a Primary Mortgage Insurance
Policy insuring that portion of the Mortgage Loan in excess of a percentage
in conformance with FNMA and FHLMC requirements. The Company shall pay or
shall cause the Mortgagor to pay the premium thereon on a timely basis, at
least until the LTV of such Mortgage Loan is reduced to 80%, or such amount
as required by applicable law, or such other amount as FNMA and FHLMC
permits for cancellation of mortgage insurance. In the event that such
Primary Mortgage Insurance Policy shall be terminated, the Company shall
obtain from another insurer a comparable replacement policy, with a total
coverage equal to the remaining coverage of such terminated Primary
Mortgage Insurance Policy. If the insurer shall cease to be a qualified
insurer, the Company shall determine whether recoveries under the Primary
Mortgage Insurance Policy are jeopardized for reasons related to the
financial condition of such insurer, it being understood that the Company
shall in no event have any responsibility or liability for any failure to
recover under the Primary Mortgage Insurance Policy for such reason. If the
Company determines that recoveries are so jeopardized, it shall notify the
Purchaser and the Mortgagor, if required, and obtain from another qualified
insurer a replacement insurance policy. The Company shall not take any
action which would result in noncoverage under any applicable Primary
Mortgage Insurance Policy of any loss which, but for the actions of the
Company would have been covered thereunder. In connection with any
assumption or substitution agreement entered into or to be entered into
pursuant to Subsection 6.01, the Company shall promptly notify the insurer
under the related Primary Mortgage Insurance Policy, if any, of such
assumption or substitution of liability in accordance with the terms of
such Primary Mortgage Insurance Policy and shall take all actions which may
be required by such insurer as a condition to the continuation of coverage
under such Primary Mortgage Insurance Policy. If such Primary Mortgage
Insurance Policy is terminated as a result of such assumption or
substitution of liability, the Company shall obtain a replacement Primary
Mortgage Insurance Policy as provided above.
In connection with its activities as servicer, the Company
agrees to prepare and present, on behalf of itself and the Purchaser,
claims to the insurer under any Primary Mortgage Insurance Policy in a
timely fashion in accordance with the terms of such Primary Mortgage
Insurance Policy and, in this regard, to take such action as shall be
necessary to permit recovery under any Primary Mortgage Insurance Policy
respecting a defaulted Mortgage Loan. Pursuant to Section 4.06, any amounts
collected by the Company under any Primary Mortgage Insurance Policy shall
be deposited in the Escrow Account, subject to withdrawal pursuant to
Section 4.07.
Section 4.12 Maintenance of Mortgage Impairment Insurance.
--------------------------------------------
In the event that the Company shall obtain and maintain a
blanket policy insuring against losses arising from fire and hazards
covered under extended coverage on all of the Mortgage Loans, then, to the
extent such policy provides coverage in an amount equal to the amount
required pursuant to Section 4.10 and otherwise complies with all other
requirements of Section 4.10, it shall conclusively be deemed to have
satisfied its obligations as set forth in Section 4.10. The Company shall
prepare and make any claims on the blanket policy as deemed necessary by
the Company in accordance with Accepted Servicing Practices. Any amounts
collected by the Company under any such policy relating to a Mortgage Loan
shall be deposited in the Custodial Account subject to withdrawal pursuant
to Section 4.05. Such policy may contain a deductible clause, in which
case, in the event that there shall not have been maintained on the related
Mortgaged Property a policy complying with Section 4.10, and there shall
have been a loss which would have been covered by such policy, the Company
shall deposit in the Custodial Account at the time of such loss the amount
not otherwise payable under the blanket policy because of such deductible
clause, such amount to be deposited from the Company's funds, without
reimbursement therefor. Upon request of any Purchaser, the Company shall
cause to be delivered to such Purchaser a certified true copy of such
policy and a statement from the insurer thereunder that such policy shall
in no event be terminated or materially modified without 30 days' prior
written notice to such Purchaser.
Section 4.13 Maintenance of Fidelity Bond and Errors and Omissions Insurance.
---------------------------------------------------------------
The Company shall maintain with responsible companies, at its
own expense, a blanket Fidelity Bond and an Errors and Omissions Insurance
Policy, with broad coverage on all officers, employees or other persons
acting in any capacity requiring such persons to handle funds, money,
documents or papers relating to the Mortgage Loans ("Company Employees").
Any such Fidelity Bond and Errors and Omissions Insurance Policy shall be
in the form of the Mortgage Banker's Blanket Bond and shall protect and
insure the Company against losses, including forgery, theft, embezzlement,
fraud, errors and omissions and negligent acts of such Company Employees.
Such Fidelity Bond and Errors and Omissions Insurance Policy also shall
protect and insure the Company against losses in connection with the
release or satisfaction of a Mortgage Loan without having obtained payment
in full of the indebtedness secured thereby. No provision of this Section
4.13 requiring such Fidelity Bond and Errors and Omissions Insurance Policy
shall diminish or relieve the Company from its duties and obligations as
set forth in this Agreement. The minimum coverage under any such bond and
insurance policy shall be at least equal to the amounts acceptable to FNMA
or FHLMC. Upon the request of any Purchaser, the Company shall cause to be
delivered to such Purchaser a certified true copy of such fidelity bond and
insurance policy and a statement from the surety and the insurer that such
fidelity bond and insurance policy shall in no event be terminated or
materially modified without 30 days' prior written notice to the Purchaser.
Section 4.14 Inspections.
-----------
If any Mortgage Loan is more than 60 days delinquent, the
Company or its agent immediately shall inspect the Mortgaged Property and
shall conduct subsequent inspections in accordance with Accepted Servicing
Practices or as may be required by the primary mortgage guaranty insurer.
The Company shall keep a written report of each such inspection.
Section 4.15 Restoration of Mortgaged Property.
---------------------------------
The Company need not obtain the approval of the Purchaser prior
to releasing any Insurance Proceeds or Condemnation Proceeds to the
Mortgagor to be applied to the restoration or repair of the Mortgaged
Property if such release is in accordance with Accepted Servicing
Practices. For claims greater than $15,000, at a minimum the Company shall
comply with the following conditions in connection with any such release of
Insurance Proceeds or Condemnation Proceeds:
(i) The Company shall receive satisfactory independent
verification of completion of repairs and issuance of any
required approvals with respect thereto;
(ii) the Company shall take all steps necessary to preserve the
priority of the lien of the Mortgage, including, but not
limited to requiring waivers with respect to mechanics'
and materialmen's liens;
(iii) the Company shall verify that the Mortgage Loan is not in
default; and
(iv) pending repairs or restoration, the Company shall place
the Insurance Proceeds or Condemnation Proceeds in the
Escrow Account.
If the Purchaser is named as an additional loss payee, the
Company is hereby empowered to endorse any loss draft issued in respect of
such a claim in the name of the Purchaser.
Section 4.16 Claims.
------
In connection with its activities as servicer, the Company
agrees to prepare and present, on behalf of itself and the Purchaser,
claims to the insurer in a timely fashion and, in this regard, to take such
action as shall be necessary to permit recovery respecting a defaulted
Mortgage Loan. Pursuant to Section 4.04, any amounts collected by the
Company under any guaranty shall be deposited in the Custodial Account,
subject to withdrawal pursuant to Section 4.05.
Section 4.17 Title, Management and Disposition of REO Property.
-------------------------------------------------
In the event that title to any Mortgaged Property is acquired
in foreclosure or by deed in lieu of foreclosure, the deed or certificate
of sale shall be taken in the name of the Company, or in the event the
Company is not authorized or permitted to hold title to real property in
the state where the REO Property is located, or would be adversely affected
under the "doing business" or tax laws of such state by so holding title,
or the perfection of the ownership or security interest of the Purchaser in
such REO Property would be adversely effected, the deed or certificate of
sale shall be taken in the name of such Person or Persons as shall be
consistent with an Opinion of Counsel obtained by the Company from any
attorney duly licensed to practice law in the state where the REO Property
is located. The Person or Persons holding such title other than the
Purchaser shall acknowledge in writing that such title is being held as
nominee for the Purchaser.
The Company shall manage, conserve, protect and operate each
REO Property for the Purchaser solely for the purpose of its prompt
disposition and sale. The Company, either itself or through an agent
selected by the Company, shall manage, conserve, protect and operate the
REO Property in the same manner that it manages, conserves, protects and
operates other foreclosed property for its own account, and in the same
manner that similar property in the same locality as the REO Property is
managed. The Company shall attempt to sell the same (and may temporarily
rent the same for a period not greater than one year, except as otherwise
provided below) on such terms and conditions as the Company deems to be in
the best interest of the Purchaser.
The Company shall use its best efforts to dispose of the REO
Property as soon as possible and shall sell such REO Property in any event
within one year after title has been taken to such REO Property, unless (i)
a REMIC election has not been made with respect to the arrangement under
which the Mortgage Loans and the REO Property are held, and (ii) the
Company determines, and gives an appropriate notice to the Purchaser to
such effect, that a longer period is necessary for the orderly liquidation
of such REO Property. If a period longer than one year is permitted under
the foregoing sentence and is necessary to sell any REO Property, (i) the
Company shall report monthly to the Purchaser as to the progress being made
in selling such REO Property and (ii) if, with the written consent of the
Purchaser, a purchase money mortgage is taken in connection with such sale,
such purchase money mortgage shall name the Company as mortgagee, and such
purchase money mortgage shall not be held pursuant to this Agreement, but
instead a separate participation agreement among the Company and Purchaser
shall be entered into with respect to such purchase money mortgage.
The Company shall also maintain on each REO Property fire and
hazard insurance with extended coverage in amount which is at least equal
to the maximum insurable value of the improvements which are a part of such
property, liability insurance and, to the extent required and available
under the Flood Disaster Protection Act of 1973, as amended, flood
insurance in the amount required above.
The disposition of REO Property shall be carried out by the
Company at such price, and upon such terms and conditions, as the Company
deems to be in the best interests of the Purchaser. The proceeds of sale of
the REO Property shall be promptly deposited in the Custodial Account. As
soon as practical thereafter the expenses of such sale shall be paid and
the Company shall reimburse itself for any related unreimbursed Servicing
Advances, unpaid Servicing Fees and unreimbursed advances made pursuant to
Section 5.03. On the Remittance Date immediately following the Principal
Prepayment Period in which such sale proceeds are received the net cash
proceeds of such sale remaining in the Custodial Account shall be
distributed to the Purchaser.
The Company shall withdraw the Custodial Account funds
necessary for the proper operation management and maintenance of the REO
Property, including the cost of maintaining any hazard insurance pursuant
to Section 4.10 and the fees of any managing agent of the Company, or the
Company itself. The Company shall make monthly distributions on each
Remittance Date to the Purchaser of the net cash flow from the REO Property
(which shall equal the revenues from such REO Property net of the expenses
described in the Section 4.16 and of any reserves reasonably required from
time to time to be maintained to satisfy anticipated liabilities for such
expenses).
Section 4.18 Real Estate Owned Reports.
-------------------------
Together with the statement furnished pursuant to Section 5.02,
the Company shall furnish to the Purchaser on or before the Remittance Date
each month a statement with respect to any REO Property covering the
operation of such REO Property for the previous month and the Company's
efforts in connection with the sale of such REO Property and any rental of
such REO Property incidental to the sale thereof for the previous month.
That statement shall be accompanied by such other information as the
Purchaser shall reasonably request.
Section 4.19 Liquidation Reports.
-------------------
Upon the foreclosure sale of any Mortgaged Property or the
acquisition thereof by the Purchaser pursuant to a deed in lieu of
foreclosure, the Company shall submit to the Purchaser a liquidation report
with respect to such Mortgaged Property.
Section 4.20 Reports of Foreclosures and Abandonments of Mortgaged Property.
--------------------------------------------------------------
Following the foreclosure sale or abandonment of any Mortgaged
Property, the Company shall report such foreclosure or abandonment as
required pursuant to Section 6050J of the Code. The Company shall file
information reports with respect to the receipt of mortgage interest
received in a trade or business and information returns relating to
cancellation of indebtedness income with respect to any Mortgaged Property
as required by the Code. Such reports shall be in form and substance
sufficient to meet the reporting requirements imposed by the Code.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances.
-----------
On each Remittance Date the Company shall remit by wire
transfer of immediately available funds to the Purchaser (a) all amounts
deposited in the Custodial Account as of the close of business on the
Determination Date (net of charges against or withdrawals from the
Custodial Account pursuant to Section 4.05), plus (b) all amounts, if any,
which the Company is obligated to distribute pursuant to Section 5.03,
minus (c) any amounts attributable to Principal Prepayments received after
the applicable Principal Prepayment Period which amounts shall be remitted
on the following Remittance Date, together with any additional interest
required to be deposited in the Custodial Account in connection with such
Principal Prepayment in accordance with Section 4.04(viii); and minus (d)
any amounts attributable to Monthly Payments collected but due on a Due
Date or Dates subsequent to the first day of the month of the Remittance
Date.
With respect to any remittance received by the Purchaser after
the date on which such payment was due, the Company shall pay to the
Purchaser interest on any such late payment at an annual rate equal to the
Prime Rate, adjusted as of the date of each charge, plus two percentage
points, but in no event greater than the maximum amount permitted by
applicable law. Such interest shall be deposited in the Custodial Account
by the Company on the date such late payment is made and shall cover the
period commencing with the day following such second Business Day and
ending with the Business Day on which such payment is made, both inclusive.
Such interest shall be remitted along with the distribution payable on the
next succeeding Remittance Date. The payment by the Company of any such
interest shall not be deemed an extension of time for payment or a waiver
of any Event of Default by the Company.
Section 5.02 Statements to Purchaser.
-----------------------
Not later than the Remittance Advice Date, the Company shall
furnish to the Purchaser a Monthly Remittance Advice, including the
information set forth in Exhibit E attached hereto, with a trial balance
report attached thereto, as to the preceding remittance and the period
ending on the last day of the preceding month, in a form to be agreed upon
by the Purchaser and the Company.
Section 5.03 Monthly Advances by Company.
---------------------------
On the Business Day immediately preceding each Remittance Date,
the Company shall deposit in the Custodial Account from its own funds or
from amounts held for future distribution an amount equal to all Monthly
Payments (with interest adjusted to the Mortgage Loan Remittance Rate)
which were due on the Mortgage Loans during the applicable Due Period and
which were delinquent at the close of business on the Determination Date
immediately preceding such Remittance Date or which were deferred pursuant
to Section 4.01. Any amounts held for future distribution and so used shall
be replaced by the Company by deposit in the Custodial Account on or before
any future Remittance Date if funds in the Custodial Account on such
Remittance Date shall be less than payments to the Purchaser required to be
made on such Remittance Date. Notwithstanding the foregoing, the Company
shall not be permitted to make any advances from amounts held for future
distribution, and instead shall be required to make all advances from its
own funds, unless the Company, its parent, or their respective successors
hereunder shall have a long-term credit rating of at least "A" by Fitch,
Inc., or the equivalent rating of another Rating Agency. The Company's
obligation to make such Monthly Advances as to any Mortgage Loan will
continue through the last Monthly Payment due prior to the payment in full
of the Mortgage Loan, or through the earlier of: (i) the last Remittance
Date prior to the Remittance Date for the distribution of all Liquidation
Proceeds and other payments or recoveries (including Insurance Proceeds and
Condemnation Proceeds) with respect to the Mortgage Loan and (ii) the
Remittance Date prior to the date the Mortgage Loan is converted to REO
Property, provided however, that if requested by a Rating Agency in
connection with Pass-Through Transfer, the Company shall be obligated to
make such advances through the Remittance Date prior to the date on which
cash is received in connection with the liquidation of REO Property;
provided, however, that such obligation shall cease if the Company
determines, in its sole reasonable opinion, that advances with respect to
such Mortgage Loan are non-recoverable by the Company from Liquidation
Proceeds, Insurance Proceeds, Condemnation Proceeds, or otherwise with
respect to a particular Mortgage Loan. In the event that the Company
determines that any such advances are non-recoverable, the Company shall
provide the Purchaser with a certificate signed by two officers of the
Company evidencing such determination.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Transfers of Mortgaged Property.
-------------------------------
The Company shall use its best efforts to enforce any
"due-on-sale" provision contained in any Mortgage or Mortgage Note and to
deny assumption by the person to whom the Mortgaged Property has been or is
about to be sold whether by absolute conveyance or by contract of sale, and
whether or not the Mortgagor remains liable on the Mortgage and the
Mortgage Note. When the Mortgaged Property has been conveyed by the
Mortgagor, the Company shall, to the extent it has knowledge of such
conveyance, exercise its rights to accelerate the maturity of such Mortgage
Loan under the "due-on-sale" clause applicable thereto, provided, however,
that the Company shall not exercise such rights if prohibited by law from
doing so.
If the Company reasonably believes it is unable under
applicable law to enforce such "due-on-sale" clause, the Company shall
enter into (i) an assumption and modification agreement with the person to
whom such property has been conveyed, pursuant to which such person becomes
liable under the Mortgage Note and the original Mortgagor remains liable
thereon or (ii) in the event the Company is unable under applicable law to
require that the original Mortgagor remain liable under the Mortgage Note
and the Company has the prior consent of the primary mortgage guaranty
insurer, a substitution of liability agreement with the purchaser of the
Mortgaged Property pursuant to which the original Mortgagor is released
from liability and the purchaser of the Mortgaged Property is substituted
as Mortgagor and becomes liable under the Mortgage Note. If an assumption
fee is collected by the Company for entering into an assumption agreement
the fee will be retained by the Company as additional servicing
compensation. In connection with any such assumption, neither the Mortgage
Interest Rate borne by the related Mortgage Note, the term of the Mortgage
Loan, the outstanding principal amount of the Mortgage Loan nor any other
material terms shall be changed without Purchaser's consent.
To the extent that any Mortgage Loan is assumable, the Company
shall inquire diligently into the credit worthiness of the proposed
transferee, and shall use the underwriting criteria for approving the
credit of the proposed transferee which are used with respect to
underwriting mortgage loans of the same type as the Mortgage Loans. If the
credit of the proposed transferee does not meet such underwriting criteria,
the Company diligently shall, to the extent permitted by the Mortgage or
the Mortgage Note and by applicable law, accelerate the maturity of the
Mortgage Loan.
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files.
-------------------------------------------------------
Upon the payment in full of any Mortgage Loan, the Company
shall notify the Purchaser in the Monthly Remittance Advice as provided in
Section 5.02, and may request the release of any Mortgage Loan Documents.
If the Company satisfies or releases a Mortgage without first
having obtained payment in full of the indebtedness secured by the Mortgage
or should the Company otherwise prejudice any rights the Purchaser may have
under the mortgage instruments, upon written demand of the Purchaser, the
Company shall repurchase the related Mortgage Loan at the Repurchase Price
by deposit thereof in the Custodial Account within 2 Business Days of
receipt of such demand by the Purchaser. The Company shall maintain the
Fidelity Bond and Errors and Omissions Insurance Policy as provided for in
Section 4.12 insuring the Company against any loss it may sustain with
respect to any Mortgage Loan not satisfied in accordance with the
procedures set forth herein.
Section 6.03 Servicing Compensation.
----------------------
As compensation for its services hereunder, the Company shall
be entitled to withdraw from the Custodial Account or to retain from
interest payments on the Mortgage Loans the amount of its Servicing Fee.
The Servicing Fee shall be payable monthly and shall be computed on the
basis of the same unpaid scheduled principal balance and for the period
respecting which any related interest payment on a Mortgage Loan is
computed. The obligation of the Purchaser to pay the Servicing Fee is
limited to, and payable solely from, the interest portion of such Monthly
Payments.
Additional servicing compensation in the form of assumption
fees, to the extent provided in Section 6.01, and late payment charges
shall be retained by the Company to the extent not required to be deposited
in the Custodial Account. The Company shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder and
shall not be entitled to reimbursement thereof except as specifically
provided for herein.
Section 6.04 Annual Statement as to Compliance.
---------------------------------
The Company shall deliver to the Purchaser on or before April
15 each year, beginning April 15, 2002, an Officer's Certificate, stating
that (i) a review of the activities of the Company during the preceding
calendar year and of performance under this Agreement has been made under
such officer's supervision, and (ii) the Company has complied with the
provisions of this Agreement or similar agreements, and (iii) to the best
of such officer's knowledge, based on such review, the Company has
fulfilled all its obligations under this Agreement or similar agreements
throughout such year, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer and
the nature and status thereof and the action being taken by the Company to
cure such default.
Section 6.05 Annual Independent Public Accountants' Servicing Report.
-------------------------------------------------------
On or before April 15 of each year beginning April 15, 2002,
the Company, at its expense, shall cause a firm of independent public
accountants which is a member of the American Institute of Certified Public
Accountants to furnish a statement to each Purchaser to the effect that
such firm has examined certain documents and records relating to the
requirements of the Uniform Single Attestation Program for Mortgage
Bankers, stating such firm's conclusions relating thereto.
Section 6.06 Right to Examine Company Records.
--------------------------------
The Purchaser, or its designee, shall have the right to examine
and audit any and all of the books, records, or other information of the
Company, whether held by the Company or by another on its behalf, with
respect to or concerning this Agreement or the Mortgage Loans, during
business hours or at such other times as may be reasonable under applicable
circumstances, upon reasonable advance notice. The Purchaser shall pay its
own travel expenses associated with such examination.
Section 6.07 Compliance with REMIC Provisions.
--------------------------------
If a REMIC election has been made with respect to the
arrangement under which the Mortgage Loans and REO Property are held, the
Company shall not take any action, cause the REMIC to take any action or
fail to take (or fail to cause to be taken) any action that, under the
REMIC Provisions, if taken or not taken, as the case may be, could (i)
endanger the status of the REMIC as a REMIC or (ii) result in the
imposition of a tax upon the REMIC (including but not limited to the tax on
"prohibited transactions" as defined Section 860G(a)(2) of the Code and the
tax on "contributions" to a REMIC set forth in Section 860(D) of the Code)
unless the Company has received an Opinion of Counsel (at the expense of
the party seeking to take such action) to the effect that the contemplated
action will not endanger such REMIC status or result in the imposition of
any such tax.
ARTICLE VII
COMPANY TO COOPERATE
Section 7.01 Provision of Information.
------------------------
During the term of this Agreement, the Company shall furnish to
the Purchaser such periodic, special, or other reports or information, and
copies or originals of any documents contained in the Servicing File for
each Mortgage Loan provided for herein. All other special reports or
information not provided for herein as shall be necessary, reasonable, or
appropriate with respect to the Purchaser or any regulatory agency will be
provided at the Purchaser's expense. All such reports, documents or
information shall be provided by and in accordance with all reasonable
instructions and directions which the Purchaser may give.
The Company shall execute and deliver all such instruments and
take all such action as the Purchaser may reasonably request from time to
time, in order to effectuate the purposes and to carry out the terms of
this Agreement.
Section 7.02 Financial Statements; Servicing Facility.
----------------------------------------
In connection with marketing the Mortgage Loans, the Purchaser
may make available to a prospective Purchaser a Consolidated Statement of
Operations of the Company for the most recently completed two fiscal years
for which such a statement is available, as well as a Consolidated
Statement of Condition at the end of the last two fiscal years covered by
such Consolidated Statement of Operations. The Company also shall make
available any comparable interim statements to the extent any such
statements have been prepared by or on behalf of the Company (and are
available upon request to members or stockholders of the Company or to the
public at large).
The Company also shall make available to Purchaser or
prospective Purchaser a knowledgeable financial or accounting officer for
the purpose of answering questions respecting recent developments affecting
the Company or the financial statements of the Company, and to permit any
prospective Purchaser to inspect the Company's servicing facilities for the
purpose of satisfying such prospective Purchaser that the Company has the
ability to service the Mortgage Loans as provided in this Agreement.
ARTICLE VIII
THE COMPANY
Section 8.01 Indemnification; Third Party Claims.
-----------------------------------
The Company shall indemnify the Purchaser and hold it harmless
against any and all claims, losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments, and any
other costs, fees and expenses that the Purchaser may sustain in any way
related to the failure of the Company to perform its duties and service the
Mortgage Loans in strict compliance with the terms of this Agreement. The
Company immediately shall notify the Purchaser if a claim is made by a
third party with respect to this Agreement or the Mortgage Loans, assume
(with the prior written consent of the Purchaser) the defense of any such
claim and pay all expenses in connection therewith, including counsel fees,
and promptly pay, discharge and satisfy any judgment or decree which may be
entered against it or the Purchaser in respect of such claim. The Company
shall follow any written instructions received from the Purchaser in
connection with such claim. The Purchaser promptly shall reimburse the
Company for all costs, fees or expenses advanced by it pursuant to this
paragraph except when the claim in any way results from, relates to or
arises out of any liability, obligation, act or omission of the Company,
including without limitation, the Company's indemnification obligation
under Section 3.03 and this Section 8.01, any repurchase obligation of the
Company hereunder including Sections 2.03, 3.03 and 6.02, or the failure of
the Company to service and administer the Mortgage Loans and otherwise
perform its obligations hereunder in strict compliance with the terms of
this Agreement.
Section 8.02 Merger or Consolidation of the Company.
--------------------------------------
The Company shall keep in full effect its existence, rights and
franchises as a corporation, and shall obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction
in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement or any of the Mortgage Loans
and to perform its duties under this Agreement.
Any person into which the Company may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Company shall be a party, or any Person
succeeding to the business of the Company, shall be the successor of the
Company hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding, provided, however, that the successor or
surviving Person shall be an institution which is a FNMA/FHLMC-approved
company in good standing. Furthermore, in the event the Company transfers
or otherwise disposes of all or substantially all of its assets to an
affiliate of the Company, such affiliate shall satisfy the condition above,
and shall also be fully liable to the Purchaser for all of the Company's
obligations and liabilities hereunder.
Section 8.03 Limitation on Liability of Company and Others.
---------------------------------------------
Neither the Company nor any of the directors, officers,
employees or agents of the Company shall be under any liability to the
Purchaser for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment,
provided, however, that this provision shall not protect the Company or any
such person against any breach of warranties or representations made
herein, or failure to perform its obligations in strict compliance with any
standard of care set forth in this Agreement or any other liability which
would otherwise be imposed under this Agreement. The Company and any
director, officer, employee or agent of the Company may rely in good faith
on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder. The Company shall not
be under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement and which in its opinion may involve it in
any expense or liability, provided, however, that the Company may, with the
consent of the Purchaser, undertake any such action which it may deem
necessary or desirable in respect to this Agreement and the rights and
duties of the parties hereto. In such event, the Company shall be entitled
to reimbursement from the Purchaser of the reasonable legal expenses and
costs of such action.
Section 8.04 Limitation on Resignation and Assignment by Company.
---------------------------------------------------
The Purchaser has entered into this Agreement with the Company
and subsequent Purchasers will purchase the Mortgage Loans in reliance upon
the independent status of the Company, and the representations as to the
adequacy of its servicing facilities, plant, personnel, records and
procedures, its integrity, reputation and financial standing, and the
continuance thereof. Therefore, the Company shall neither assign this
Agreement or the servicing hereunder, nor delegate its rights or duties
hereunder or any portion hereof, nor sell or otherwise dispose of all of
its property or assets without the prior written consent of the Purchaser,
which consent shall not be unreasonably withheld.
The Company shall not resign from the obligations and duties
hereby imposed on it except by mutual consent of the Company and the
Purchaser or upon the determination that its duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by the
Company. Any such determination permitting the resignation of the Company
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Purchaser which Opinion of Counsel shall be in form and substance
acceptable to the Purchaser. No such resignation shall become effective
until a successor shall have assumed the Company's responsibilities and
obligations hereunder in the manner provided in Section 12.01.
Without in any way limiting the generality of this Section
8.04, in the event that the Company either shall assign this Agreement or
the servicing responsibilities hereunder or delegate its duties hereunder
or any portion thereof; or sell or otherwise dispose of all or
substantially all of its property or assets without the prior written
consent of the Purchaser, then the Purchaser shall have the right to
terminate this Agreement upon notice given as set forth in Section 10.01,
without any payment of any penalty or damages and without any liability
whatsoever to the Company or any third party.
ARTICLE IX
PASS-THROUGH TRANSFER
Section 9.01 Removal of Mortgage Loans from Inclusion Under this Agreement
Upon a Pass-Through Transfer.
----------------------------
The Purchaser and the Company agree that with respect to some
or all of the Mortgage Loans, the Purchaser, at its sole option, shall
effect up to four Whole Loan Transfers or Pass-Through Transfers, retaining
the Company as the Servicer thereof or subservicer if a master servicer is
employed, or as applicable the "seller/servicer". From and after the
Reconstitution Date, the Mortgage Loans transferred shall remain covered by
this Agreement, insofar as the Company shall continue to service such
Mortgage Loans on behalf of the Purchaser in accordance with the terms and
provisions of this Agreement.
The Company shall cooperate with the Purchaser in connection
with each Whole Loan Transfer or Pass-Through Transfer in accordance with
this Section 9.01. In connection therewith the Company shall:
(a) make all representations and warranties with respect to the
Mortgage Loans as of the Closing Date and with respect to the
Company itself as of the closing date of each Whole Loan
Transfer or Pass-Through Transfer;
(b) negotiate in good faith and execute any seller/servicer
agreements required by the shelf registrant to effectuate the
foregoing provided such agreements create no greater obligation
or cost on the part of the Company than otherwise set forth in
this Agreement;
(c) provide as applicable:
(i) any and all information and appropriate verification of
information which may be reasonably available to the
Company, whether through letters of its auditors and
counsel or otherwise, as the Purchaser shall request; and
(ii) such additional representations, warranties, covenants,
opinions of counsel, letters from auditors, financial
description of the Company as servicer for inclusion in
any offering memorandum to be distributed to potential
investors in connection with a Pass-Through Transfer with
respect to the Mortgage Loans, and certificates of public
officials or officers of the Company as are reasonably
believed necessary by the trustee, any Rating Agency, the
Purchaser, as the case may be, in connection with such
Whole Loan Transfers or Pass-Through Transfers. The
Purchaser shall pay all third party costs associated with
the preparation of such information. The Company shall
execute any seller/servicer agreements required within a
reasonable period of time after receipt of such
seller/servicer agreements which time shall be sufficient
for the Company and Company's counsel to review such
seller/servicer agreements. Under this Agreement, the
Company shall retain a servicing fee at a rate per annum
equal to no less than 0.25% per Mortgage Loan; and
(d) indemnify the Purchaser for any material misstatements
contained in the information provided pursuant to (c) above.
In the event the Purchaser has elected to have the Company hold
record title to the Mortgages, prior to the Reconstitution Date and after
the Closing Date the Company shall prepare an Assignment in blank or, at
the option of the Purchaser, to the trustee from the Company (to the extent
such Assignment has not been prepared on or before the Closing Date)
acceptable to the trustee for each Mortgage Loan that is part of the Whole
Loan Transfers or Pass-Through Transfers. The Purchaser shall pay all
preparation and recording costs associated therewith. The Company shall
execute each Assignment, track such Assignments to ensure they have been
recorded and deliver them as required by the trustee upon the Company's
receipt thereof. Additionally, the Company shall prepare and execute, at
the direction of the Purchaser, any note endorsements in connection with
any and all seller/servicer agreements.
ARTICLE X
DEFAULT
Section 10.01 Events of Default.
-----------------
Each of the following shall constitute an Event of Default on
the part of the Company:
(i) any failure by the Company to remit to the Purchaser any
payment required to be made under the terms of this
Agreement which continues unremedied for a period of
three Business Days after the date upon which written
notice of such failure, requiring the same to be
remedied, shall have been given to the Company by the
Purchaser; or
(ii) failure by the Company duly to observe or perform in any
material respect any other of the covenants or
agreements on the part of the Company set forth in this
Agreement which continues unremedied for a period of 30
days after the date on which written notice of such
failure, requiring the same to be remedied, shall have
been given to the Company by the Purchaser or by the
Custodian; or
(iii) failure by the Company to maintain its license to do
business in any jurisdiction where the Mortgaged
Property is located if such license is required; or
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, including bankruptcy, marshaling
of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have
been entered against the Company and such degree or
order shall have remained in force undischarged or
unstayed for a period of 60 days; or
(v) the Company shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to the
Company or of or relating to all or substantially all of
its property; or
(vi) the Company shall admit in writing its inability to pay
its debts generally as they become due, file a petition
to take advantage of any applicable insolvency,
bankruptcy or reorganization statute, make an assignment
for the benefit of its creditors, voluntarily suspend
payment of its obligations or cease its normal business
operations for three Business Days; or
(vii) the Company ceases to meet the qualifications of a
FNMA/FHLMC servicer;
(viii) the Company attempts to assign its right to servicing
compensation hereunder or to assign this Agreement or
the servicing responsibilities hereunder or to delegate
its duties hereunder or any portion thereof in violation
of Section 8.04; or
(ix) the taking of any action by the Company, any Company
Employee, any Affiliate or any director or employee
thereof that constitutes fraud or criminal activity in
the performance of its obligations under this Agreement
or the indictment of any of the foregoing Persons for
criminal activity related to the mortgage origination or
servicing activities of the Company, in each case, where
such indictment materially and adversely affects the
ability of the Company to perform its obligations under
this Agreement (subject to the condition that such
indictment is not dismissed within 90 days).
In each and every such case, so long as an Event of Default
shall not have been remedied, in addition to whatever rights the Purchaser
may have at law or equity to damages, including injunctive relief and
specific performance, the Purchaser, by notice in writing to the Company,
may terminate with cause all the rights and obligations of the Company
under this Agreement and in and to the Mortgage Loans and the proceeds
thereof.
Upon receipt by the Company of such written notice, all
authority and power of the Company under this Agreement, whether with
respect to the Mortgage Loans or otherwise, shall pass to and be vested in
the successor appointed pursuant to Section 12.01. Upon written request
from any Purchaser, the Company shall prepare, execute and deliver to the
successor entity designated by the Purchaser any and all documents and
other instruments, place in such successor's possession all Mortgage Files,
and do or cause to be done all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, including
but not limited to the transfer and endorsement or assignment of the
Mortgage Loans and related documents, at the Company's sole expense. The
Company shall cooperate with the Purchaser and such successor in effecting
the termination of the Company's responsibilities and rights hereunder,
including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be
credited by the Company to the Custodial Account or Escrow Account or
thereafter received with respect to the Mortgage Loans.
Section 10.02 Waiver of Defaults.
------------------
By a written notice, the Purchaser may waive any default by the
Company in the performance of its obligations hereunder and its
consequences. Upon any waiver of a past default, such default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver
shall extend to any subsequent or other default or impair any right
consequent thereon except to the extent expressly so waived.
ARTICLE XI
TERMINATION
Section 11.01 Termination.
-----------
This Agreement shall terminate upon any of: (i) the later of
the final payment or other liquidation (or any advance with respect
thereto) of the last Mortgage Loan or the disposition of any REO Property
with respect to the last Mortgage Loan and the remittance of all funds due
hereunder, (ii) mutual consent of the Company and the Purchaser in writing
or (iii) termination pursuant to Section 10.01, 11.02 or 11.03.
Section 11.02 Termination Without Cause.
-------------------------
The Purchaser may terminate, at its sole option, any rights the
Company may have hereunder, without cause, as provided in this Section
11.02. Any such notice of termination shall be in writing and delivered to
the Company and any Rating Agency by registered mail as provided in Section
12.05.
The Company shall be entitled to receive, as such liquidated
damages, upon its termination as servicer hereunder without cause pursuant
to this Section 11.02 an amount equal to 2.50% of the aggregate outstanding
principal amount of the Mortgage Loans as of the termination date paid by
the Purchaser to the Company with respect to all of the Mortgage Loans.
Section 11.03 Termination With Cause.
----------------------
Notwithstanding any other provision hereof to the contrary, the
Purchaser, at its option, may terminate this Agreement, and any rights the
Company may have hereunder, with cause upon ten (10) Business Days' prior
written notice. For all purposes of determining "cause" with respect to
termination of this Agreement or the rights of the Company hereunder, such
term shall mean, without limitation, termination upon the occurrence of any
Event of Default hereunder which is not cured within any applicable cure
period. In the event of a termination of the Company for cause under this
Section 11.03, no liquidated damages shall be payable to the Company
pursuant to Section 11.02.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Company.
--------------------
Prior to termination of the Company's responsibilities and
duties under this Agreement pursuant to Sections 8.04, 10.01 or 11.01, the
Purchaser shall, (i) succeed to and assume all of the Company's
responsibilities, rights, duties and obligations under this Agreement, or
(ii) appoint a successor having the characteristics set forth in Section
8.02 and which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Company under this
Agreement prior to the termination of Company's responsibilities, duties
and liabilities under this Agreement. In connection with such appointment
and assumption, the Purchaser may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and
such successor shall agree. In the event that the Company's duties,
responsibilities and liabilities under this Agreement should be terminated
pursuant to the aforementioned sections, the Company shall discharge such
duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the
same degree of diligence and prudence which it is obligated to exercise
under this Agreement, and shall take no action whatsoever that might impair
or prejudice the rights or financial condition of its successor. The
resignation or removal of the Company pursuant to the aforementioned
sections shall not become effective until a successor shall be appointed
pursuant to this Section 12.01 and shall in no event relieve the Company of
the representations and warranties made pursuant to Sections 3.01 and 3.02
and the remedies available to the Purchaser under Sections 2.03, 3.03 and
6.02, it being understood and agreed that the provisions of such Sections
2.03, 3.01, 3.02, 3.03 and 6.01 shall be applicable to the Company
notwithstanding any such sale, assignment, resignation or termination of
the Company, or the termination of this Agreement.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Company and to the Purchaser an instrument
accepting such appointment, wherein the successor shall make the
representations and warranties set forth in Section 3.01, except for the
portion of subsection (h) relating to sale of the mortgage loans and all of
subsections (j) and (l) thereof, whereupon such successor shall become
fully vested with all the rights, powers, duties, responsibilities,
obligations and liabilities of the Company, with like effect as if
originally named as a party to this Agreement. Any termination or
resignation of the Company or termination of this Agreement pursuant to
Section 8.04, 10.01, 11.01, 11.02 or 11.03 shall not affect any claims that
any Purchaser may have against the Company arising out of the Company's
actions or failure to act prior to any such termination or resignation.
The Company shall deliver promptly to the successor servicer
the funds in the Custodial Account and Escrow Account and all Mortgage
Files and related documents and statements held by it hereunder and the
Company shall account for all funds and shall execute and deliver such
instruments and do such other things as may reasonably be required to more
fully and definitively vest in the successor all such rights, powers,
duties, responsibilities, obligations and liabilities of the Company.
Upon a successor's acceptance of appointment as such, the
Company shall notify by mail the Purchaser of such appointment in
accordance with the procedures set forth in Section 12.05.
Section 12.02 Amendment.
---------
This Agreement may be amended from time to time by the Company
and by written agreement signed by the Company and the Purchaser.
Section 12.03 Governing Law.
-------------
This Agreement shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Each of the Company and the Purchaser hereby knowingly,
voluntarily and intentionally waives any and all rights it may have to a
trial by jury in respect or any litigation based on, or arising out of,
under, or in connection with, this Agreement, or any other documents and
instruments executed in connection herewith, or any course of conduct,
course of dealing, statements (whether oral or written), or actions of the
Company or the Purchaser. This provision is a material inducement for the
Purchaser to enter into this Agreement.
Section 12.04 Duration of Agreement.
---------------------
This Agreement shall continue in existence and effect until
terminated as herein provided. This Agreement shall continue
notwithstanding transfers of the Mortgage Loans by the Purchaser.
Section 12.05 Notices.
-------
All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered
at or mailed by registered mail, postage prepaid, addressed as follows:
(i) if to the Company:
Xxxxx Fargo Home Mortgage, Inc.
1 Home Campus
MAC #X2401-064
Xxx Xxxxxx, Xxxx 00000-0000
Attention: Loan Administration
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxx Fargo Home Mortgage, Inc.
1 Home Campus
MAC #X2401-06T
Xxx Xxxxxx, Xxxx 00000-0000
Attention: General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
or such other address as may hereafter be furnished to the
Purchaser in writing by the Company;
(ii) if to Purchaser:
Xxxxxxx Xxxxx Mortgage Company
000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000 Xxxxx
Xx. Xxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxx Mortgage Company
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
or such other address as may hereafter be furnished to the
Company in writing by the Purchaser.
Section 12.06 Severability of Provisions.
--------------------------
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be held invalid for any reason whatsoever,
then such covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or terms of
this Agreement and shall in no way affect the validity or enforceability of
the other provisions of this Agreement.
Section 12.07 Relationship of Parties.
-----------------------
Nothing herein contained shall be deemed or construed to create
a partnership or joint venture between the parties hereto and the services
of the Company shall be rendered as an independent contractor and not as
agent for the Purchaser.
Section 12.08 Execution; Successors and Assigns.
---------------------------------
This Agreement may be executed in one or more counterparts and
by the different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed to be an original; such counterparts,
together, shall constitute one and the same agreement. Subject to Section
8.04, this Agreement shall inure to the benefit of and be binding upon, and
shall be enforceable by, the Company and the Purchaser and their respective
successors and assigns, including without limitation, any trustee appointed
by the Purchaser with respect to any Whole Loan Transfer or Pass-Through
Transfer.
Section 12.09 Recordation of Assignments of Mortgage.
--------------------------------------
To the extent permitted by applicable law, each of the
Assignments of Mortgage is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated,
and in any other appropriate public recording office or elsewhere, which
recordation shall have been effected at the Company's expense in the event
recordation is either necessary under applicable law or requested by the
Purchaser at its sole option.
Section 12.10 Assignment by Purchaser.
-----------------------
The Purchaser shall have the right, without the consent of the
Company but subject to the limit set forth in Section 2.02 hereof, to
assign, in whole or in part, its interest under this Agreement with respect
to some or all of the Mortgage Loans, and designate any person to exercise
any rights of the Purchaser hereunder, by executing an Assignment and
Assumption Agreement substantially in the form of Exhibit F hereto and the
assignee or designee shall accede to the rights and obligations hereunder
of the Purchaser with respect to such Mortgage Loans. All references to the
Purchaser in this Agreement shall be deemed to include its assignee or
designee.
Section 12.11 Solicitation of Mortgagor.
-------------------------
The Purchaser, its affiliates, successors or assigns shall not,
without the prior written consent of the Company, take any action to
solicit or make direct contact with the Mortgagor under any Mortgage Loan
except to the extent required by the Company's breach of this Agreement or
as required under applicable law or regulatory authority. Notwithstanding
any provision of this Agreement to the contrary, in the event the
Purchaser, its affiliates, successors or assigns fails to obtain such
written consent, the Company shall be entitled, in its sole discretion, to
terminate its obligations and duties under this Agreement. Upon termination
without cause of the servicing rights and obligations under this Agreement
and the transfer of such rights and obligations to the Purchaser or
Purchaser's designee, the Company shall be entitled to receive damages as
provided in Section 11.02.
The Company agrees that, after the Closing Date, it will not take
any action to solicit the refinancing of any Mortgage Loan. It is
understood and agreed that promotions undertaken by the Company or any
affiliate of the Company which are directed to the general public at large,
including, without limitation, mass mailings based upon commercially
acquired mailing lists, newspaper, radio, television advertisements or from
servicing the refinancing needs of a Mortgagor who, without solicitation,
contacts Company in connection with the refinance of such Mortgage or
Mortgage Loan, shall not constitute solicitation under this Section.
Notwithstanding anything to the contrary, this Section shall not prohibit
the Company from soliciting any Mortgagor to provide other services
including but not limited to credit cards, insurance investments and
banking related services.
IN WITNESS WHEREOF, the Company and the Purchaser have caused
their names to be signed hereto by their respective duly authorized
officers as of the day and year first above written.
XXXXXXX XXXXX MORTGAGE COMPANY
By: Xxxxxxx Sachs Real Estate
Funding Corp., its General Partner
By: /s/ Xxxxx X. Xxxx
______________________________
Name: Xxxxx X. Xxxx
Title: Vice President
XXXXX FARGO HOME MORTGAGE INC,
As seller and servicer
By: /s/ Xxxxxx Xxxx
______________________________
Name: Xxxxxx Xxxx
Title: Vice President
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 4th day of October, 2001 before me, a Notary Public in and
for said State, personally appeared Xxxxx X. Xxxx, known to me to be the
Vice President of Xxxxxxx Xxxxx Real Estate Funding Corp., the general
partner of Xxxxxxx Sachs Mortgage Company, the partnership that executed
the within instrument and also known to me to be the person who executed it
on behalf of said partnership, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office
seal the day and year in this certificate first above written.
/s/ Onyx S. Wellington
_______________________________
Notary Public
My Commission expires April 10, 0000
XXXXX XX XXXXXXXX )
) ss:
COUNTY OF WASHINGTON )
On the 4th day of October, 2001 before me, a Notary Public in and
for said State, personally appeared Xxxxxx Xxxx, known to me to be the V.P.
of Xxxxx Fargo Home Mortgage, Inc., the corporation that executed the
within instrument and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office
seal the day and year in this certificate first above written.
/s/ Xxxxxxxxx Xxxxxx
-----------------------------------
Notary Public
My Commission expires 2/10/02
EXHIBIT A
MORTGAGE LOAN SCHEDULE
See attached
EXHIBIT B
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall
include each of the following items, which shall be available for
inspection by the Purchaser and any prospective Purchaser, and which shall
be retained by the Company in the Servicing File or delivered to the
Custodian pursuant to Sections 2.01 and 2.03 of the Seller's Warranties and
the Servicing Agreement to which this Exhibit is attached (the
"Agreement"):
1. The original Mortgage Note bearing all intervening
endorsements, endorsed "Pay to the order of
______________, without recourse" and signed in the name
of the Company by an authorized officer (in the event
that the Mortgage Loan was acquired by the Company in a
merger, the signature must be in the following form:
"[Company], successor by merger to [name of
predecessor]"; and in the event that the Mortgage Loan
was acquired or originated by the Company while doing
business under another name, the signature must be in the
following form: "[Company], formerly know as [previous
name]").
2. The original of any personal endorsement, surety and/or
guaranty agreement executed in connection with the
Mortgage Note, if any.
3. The original Mortgage, with evidence of recording thereon
or a certified true and correct copy of the Mortgage sent
for recordation. If in connection with any Mortgage Loan,
the Company cannot deliver or cause to be delivered the
original Mortgage with evidence of recording thereon on
or prior to the Closing Date because of a delay caused by
the public recording office where such Mortgage has been
delivered for recordation or because such Mortgage has
been lost or because such public recording office retains
the original recorded Mortgage, the Company shall deliver
or cause to be delivered to the Custodian, a photocopy of
such Mortgage, together with (i) in the case of a delay
caused by the public recording office, an Officer's
Certificate of the Company stating that such Mortgage has
been dispatched to the appropriate public recording
office for recordation and that the original recorded
Mortgage or a copy of such Mortgage certified by such
public recording office to be a true and complete copy of
the original recorded Mortgage will be promptly delivered
to the Custodian upon receipt thereof by the Company; or
(ii) in the case of a Mortgage where a public recording
office retains the original recorded Mortgage or in the
case where a Mortgage is lost after recordation in a
public recording office, a copy of such Mortgage
certified by such public recording office or by the title
insurance company that issued the title policy to be a
true and complete copy of the original recorded Mortgage.
4. The originals or certified true copies of all assumption,
modification, consolidation or extension agreements, with
evidence of recording noted thereon if recordation is
required to maintain the lien of the mortgage or is
otherwise required, or, if recordation is not so
required, an original or copy of any such assumption,
modification, consolidation or extension agreements.
5. The original Assignment of Mortgage for each Mortgage
Loan, in form and substance acceptable for recording,
from the Company to "______________" or as otherwise
directed by the Purchaser. If the Mortgage Loan was
acquired by the Company in a merger, the Assignment of
Mortgage must be made by "[Company], successor by merger
to [name of predecessor]." If the Mortgage Loan was
acquired or originated by the Company while doing
business under another name, the Assignment of Mortgage
must be by "[Company], formerly know as [previous name]."
Subject to the foregoing and where permitted under the
applicable laws of the jurisdiction wherein the Mortgaged
property is located, such Assignments of Mortgage may be
made by blanket assignments for Mortgage Loans secured by
the Mortgaged Properties located in the same county.
6. Originals or certified true copies of all intervening
assignments of the Mortgage necessary to show a complete
chain of title from the original mortgagee to the Seller,
with evidence of recording thereon, or if any such
intervening assignment has not been returned from the
applicable recording office or has been lost or if such
public recording office retains the original recorded
assignments of mortgage, the Company shall deliver or
cause to be delivered to the Custodian, a photocopy of
such intervening assignment, together with (i) in the
case of a delay caused by the public recording office, an
Officer's Certificate of the Company stating that such
intervening assignment of mortgage has been dispatched to
the appropriate public recording office for recordation
and that such original recorded intervening assignment of
mortgage or a copy of such intervening assignment of
mortgage certified by the appropriate public recording
office or by the title insurance company that issued the
title policy to be a true and complete copy of the
original recorded intervening assignment of mortgage will
be promptly delivered to the Custodian upon receipt
thereof by the Company; or (ii) in the case of an
intervening assignment where a public recording office
retains the original recorded intervening assignment or
in the case where an intervening assignment is lost after
recordation in a public recording office, a copy of such
intervening assignment certified by such public recording
office to be a true and complete copy of the original
recorded intervening assignment.
7. The original mortgage policy of title insurance or
evidence of title.
8. Any security agreement, chattel mortgage or equivalent
executed in connection with the Mortgage.
With respect to each Mortgage Loan, the Mortgage File shall
include each of the following items to the extent in the
possession of the Company or in the possession of the Company's
agent(s):
9. Verification of Mortgage Insurance.
10. The original hazard insurance policy and, if required by
law, flood insurance policy, in accordance with Section
4.10 of the Agreement.
11. Residential loan application.
12. Mortgage Loan closing statement.
13. Verification of employment and income, unless originated
under the Company's Limited Documentation program, FNMA
Timesaver Plus.
14. Verification of acceptable evidence of source and amount
of down payment.
15. Credit report on the Mortgagor, if available.
16. Residential appraisal report.
17. Photograph of the Mortgaged Property.
18. Survey of the Mortgaged Property, if required by the title
company or applicable law.
19. Copy of each instrument necessary to complete
identification of any exception set forth in the exception
schedule in the title policy, i.e. map or plat,
restrictions, easements, sewer agreements, home
association declarations, etc.
20. All required disclosure statements.
21. If available, termite report, structural engineer's
report, water potability and septic certification.
22. Sales contract, if applicable.
23. Evidence of payment of taxes and insurance premiums,
insurance claim files, correspondence, current and
historical computerized data files, and all other
processing, underwriting and closing papers and records
which are customarily contained in a mortgage loan file
and which are required to document the Mortgage Loan or to
service the Mortgage Loan.
24. Amortization schedule, if available.
25. Original power of attorney, if applicable.
In the event an Officer's Certificate of the Company is delivered
to the Custodian because of a delay caused by the public recording office
in returning any recorded document, the Company shall deliver to the
Custodian, within 240 days of the Closing Date, an Officer's Certificate
which shall (i) identify the recorded document, (ii) state that the
recorded document has not been delivered to the Custodian due solely to a
delay caused by the public recording office, (iii) state the amount of time
generally required by the applicable recording office to record and return
a document submitted for recordation, and (iv) specify the date the
applicable recorded document will be delivered to the Custodian. The
Company shall be required to deliver to the Custodian the applicable
recorded document by the date specified in (iv) above. An extension of the
date specified in (iv) above may be requested form the Purchaser, which
consent shall not be unreasonably withheld.
EXHIBIT C
FORM OF CUSTODIAL AGREEMENT
See attached
EXHIBIT D
FORM OF OPINION OF COUNSEL
Re: Xxxxx Fargo Home Mortgage, Inc.
Mortgage Loan Series ___
Dear Sir/Madam:
I am _____ of Xxxxx Fargo Home Mortgage, Inc. and have acted as
counsel to Xxxxx Fargo Home Mortgage, Inc. (the "Company"),
with respect to certain matters in connection with the sale by
the Company of the mortgage loans (the "Mortgage Loans")
pursuant to that certain Seller's Warranties and Servicing
Agreement designated as Mortgage Loan Series [ ] (the "Seller's
Warranties and Servicing Agreement") by and between the Company
and Xxxxxxx Sachs Mortgage Company (the "Purchaser"), dated as
of July 1, 2001, which sale is in the form of whole Mortgage
Loans. The Mortgage Loans are listed on Schedule A to the
Seller's Warranties and Servicing Agreement. Capitalized terms
not otherwise defined herein have the meanings set forth in the
Seller's Warranties and Servicing Agreement.
I have examined the following documents:
1. the Seller's Warranties and Servicing Agreement;
2. the Custodial Agreement;
3. the form of endorsement of the Mortgage Notes; and
4. such other documents, records and papers as I have deemed
necessary and relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied
upon the representations and warranties of the Company
contained in the Seller's Warranties and Servicing Agreement. I
have assumed the authenticity of all documents submitted to me
as originals, the genuineness of all signatures, the legal
capacity of natural persons and the conformity to the originals
of all documents.
Based upon the foregoing, it is my opinion that;
1. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state
of California.
2. The Company has the power to engage in the transactions
contemplated by the Seller's Warranties and Servicing
Agreement, the Custodial Agreement and all requisite
power, authority and legal right to execute and deliver
the Seller's Warranties and Servicing Agreement, the
Custodial Agreement and the Mortgage Loans, and to perform
and observe the terms and conditions of such instruments.
3. Each person who, as an officer or attorney-in-fact of the
Company, signed (a) the Seller's Warranties and Servicing
Agreement, (b) the Custodial Agreement, and (c) any other
document delivered prior hereto or on the date hereof in
connection with the sale and servicing of the Mortgage
Loans in accordance with the Seller's Warranties and
Servicing Agreement and the person was, at the respective
times of such signing and delivery, and is, as of the date
hereof, duly elected or appointed, qualified and acting
and as such officer or attorney-in-fact, and the
signatures of such persons appearing on such documents are
their genuine signatures.
4. Each of the Seller's Warranties and Servicing Agreement,
the Custodial Agreement and the Mortgage Loans, has been
duly authorized, executed and delivered by the Company and
is a legal, valid and binding agreement enforceable in
accordance with its terms, subject to bankruptcy laws and
other similar laws of general application affecting rights
of creditors and subject to the application of the rules
of equity, including those respecting the availability of
specific performance, none of which will materially
interfere with the realization of the benefits provided
thereunder or with the Purchaser's ownership of the
Mortgage Loans.
5. The Company has been duly authorized to allow any of its
officers to execute any and all documents by original
signature in order to complete the transactions
contemplated by the Seller's Warranties and Servicing
Agreement and the Custodial Agreement, and by original or
facsimile signature in order to execute the endorsements
to the Mortgage Notes and the assignments of the
Mortgages, and the original or facsimile signature of the
officer at the Company executing the endorsements to the
Mortgage Notes and the assignments of the Mortgages
represents the legal and valid signature of said officer
of the Company.
6. Either (i) no consent, approval, authorization or order of
any court or governmental agency or body is required for
the execution, delivery and performance by the Company of
or compliance by the Company with the Seller's Warranties
and Servicing Agreement, the Custodial Agreement or the
sale and delivery of the Mortgage Loans or the
consummation of the transactions contemplated by the
Seller's Warranties and Servicing Agreement, and the
Custodial Agreement; or (ii) any required consent,
approval, authorization or order has been obtained by the
Company.
7. Neither the consummation of the transactions contemplated
by, nor the fulfillment of the terms of the Seller's
Warranties and Servicing Agreement and the Custodial
Agreement, will conflict with or results in or will result
in a breach of or constitutes or will constitute a default
under the charter or by-laws of the Company, the terms of
any indenture or other agreement or instrument to which
the Company is a party or by which it is bound or to which
it is subject, or violates any statute or order, rule,
regulations, writ, injunction or decree of any court,
governmental authority or regulatory body to which the
Company is subject or by which it is bound.
8. There is no action, suit, proceeding or investigation
pending or, to the best of my knowledge, threatened
against the Company which, in my opinion, either in any
one instance or in the aggregate, may result in any
material adverse change in the business, operations,
financial condition, properties or assets of the Company
or in any material impairment of the right or ability of
the Company to carry on its business substantially as now
conducted or in any material liability on the part of the
Company or which would draw into question the validity of
the Seller's Warranties and Servicing Agreement, and the
Custodial Agreement, or of any action taken or to be taken
in connection with the transactions contemplated thereby,
or which would be likely to impair materially the ability
of the Company to perform under the terms of the Seller's
Warranties and Servicing Agreement and the Custodial
Agreement.
9. For purposes of the foregoing, I have not regarded any
legal or governmental actions, investigations or
proceedings to be "threatened" unless the potential
litigant or governmental authority has manifested to the
legal department of the Company or an employee of the
Company responsible for the receipt of process a present
intention to initiate such proceedings; nor have I
regarded any legal or governmental actions, investigations
or proceedings as including those that are conducted by
state or federal authorities in connection with their
routine regulatory activities. The sale of each Mortgage
Note and Mortgage as and in the manner contemplated by the
Seller's Warranties and Servicing Agreement is sufficient
fully to transfer all right, title and interest of the
Company thereto as noteholder and mortgagee, apart from
the rights to service the Mortgage Loans pursuant to the
Seller's Warranties and Servicing Agreement.
10. The form of endorsement that is to be used with respect to
the Mortgage Loans is legally valid and sufficient to duly
endorse the Mortgage Notes to the Purchaser. Upon the
completion of the endorsement of the Mortgage Notes and
the completion of the assignments of the Mortgages, and
the recording thereof, the endorsement of the Mortgage
Notes, the delivery to the Custodian of the completed
assignments of the Mortgages, and the delivery of the
original endorsed Mortgage Notes to the Custodian would be
sufficient to permit the entity to which such Mortgage
Note is initially endorsed at the Purchaser's direction,
and to whom such assignment of Mortgages is initially
assigned at the Purchaser's direction, to avail itself of
all protection available under applicable law against the
claims of any present or future creditors of the Company,
and would be sufficient to prevent any other sale,
transfer, assignment, pledge or hypothecation of the
Mortgages and the Mortgage Notes by the Company from being
enforceable, such that in a properly presented and argued
case under title 11, United States Code (the "Bankruptcy
Code"), in which the Company were the debtor, a bankruptcy
court having jurisdiction over the Company would consider
the transfer of the Mortgage Loans from the Company to the
Purchaser to be a true sale of the Mortgage Loans from the
Company to the Purchaser and not a secured loan by the
Purchaser to the Company and, accordingly, the Mortgage
Loans and the payments and other collections thereon
(other than those at any given time that may be commingled
with unrelated funds held by the Company) and the proceeds
thereof transferred to the Purchaser by the Company in
accordance with the Company's Warranties and Servicing
Agreement would not be deemed property of the Company's
estate for purposes of Section 541 of the Bankruptcy Code
or be subject to the automatic stay provisions of Section
362 of the Bankruptcy Code.
This opinion is given to you for your sole benefit, and no
other person or entity is entitled to rely hereon except that
the purchaser or purchasers to which you initially and directly
resell the Mortgage Loans may rely on this opinion as if it
were addressed to them as of its date.
Sincerely,
EXHIBIT E
ITEMS TO BE INCLUDED IN MONTHLY REMITTANCE ADVICE
INVESTOR REPORTS
Monthly Cutoffs:
Scheduled Remittance:
P139 Trial Balance by Investor
T62A Loan Activity Report
T62C Monthly Accounting Report
T62D Reconciliation of Principal and Calculation
of Minimum Cash Required
T62E Liquidation Report
S50Y Private Pool Detail Report
S21H Participant Summary of Curtailments Made Remittance Report
S21J Participant Summary of Paid In Full Remittance Report
S21K Participant Consolidation of Remittance Report
Company agrees to provide, if so requested, electronic
reports, in lieu of hard copy reports, in a mutually
agreed upon format to The Chase Manhattan Bank or any
other trustee appointed in connection with any Whole Loan
transfer or Pass Through Transfer.
Electronic Loan Level Reports:
Monthly Salomon 500 format tape including loan level
Corporate and Escrow Advance Balances, on a 3480
Cartridge tape in ASCII format.
Company agrees to provide file to Purchaser containing
loan data as of October 1, 2001 at no charge. Subsequent
files will be produced at a cost to Purchaser of $250 for
each file.
DEFAULT REPORTS
Delinquents:
Monthly Summary Delinquent Reports
-By Type of Delinquency
-By Loan Type
-By Investor Type
P4DL List of Delinquent Accounts by Investor and Investor
Loan Number(Includes Collector Contact Information)
P183 Dollar Volume and Delinquency Report by Investor, State
(this will be run on request only)
Foreclosure:
S5FT Foreclosure Trial Balance Report
S58J Loans in Foreclosure by Processor, State
S5L3 Report of First Legal Action (upon request
this report can be tailored to select any critical
date in Foreclosure Process)
Bankruptcy:
S2T5 Bankruptcy Trial Balance Report
S2B6 Bankruptcy Post Petition Delinquency Report
S2B3 Bankruptcies With Expected Discharge Dates Less
Than Current Date
S2B4 Motion for Relief Follow-Up Report
EXHIBIT F
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT made this
_____ day of __________________, 200_, among Xxxxx Fargo Home Mortgage,
Inc., a __________________________ (the "Servicer"),
_________________________ a ________________________ (the "Assignee"), and
_____________________________, a _______________________ (the "Assignor).
WHEREAS, Xxxxxxx Sachs Mortgage Company and the Servicer have
entered into a certain Seller's Warranties and Servicing Agreement dated as
of [ ], 2001 (the "Servicing Agreement"), pursuant to which the Servicer
sold certain mortgage loans listed on the mortgage loan schedule attached
as an exhibit to the Servicing Agreement;
WHEREAS, the Assignee has agreed on certain terms and
conditions to purchase from the Assignor certain mortgage loans (the
"Mortgage Loans"), which Mortgage Loans are subject to the provisions of
the Servicing Agreement and are listed on the mortgage loan schedule
attached as Exhibit 1 hereto (the "Mortgage Loan Schedule");
WHEREAS, pursuant to a Trust Agreement, dated as of [_____],
2001 (the "Trust Agreement"), between GS Mortgage Securities Corp., as
Depositor, and [______], as Trustee (the "Trustee"), the Assignee will
transfer the Mortgage Loans to the Trustee, together with the Assignee's
rights in the Sale and Servicing Agreement;
NOW THEREFORE, in consideration of the mutual promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Assignment and Assumption.
-------------------------
(a) The Assignor hereby assigns to the Assignee all of its
right, title and interest in and to the Mortgage Loans and Servicing
Agreement, to the extent relating to the Mortgage Loans (other than the
rights of the Assignor to indemnification thereunder), and the Assignee
hereby assumes all of the Assignor's obligations under the Servicing
Agreement, to the extent relating to the Mortgage Loans from and after the
date hereof, and the Servicer hereby acknowledges such assignment and
assumption and hereby agrees to the release of the Assignor from any
obligations under the Servicing Agreement from and after the date hereof,
to the extent relating to the Mortgage Loans. Notwithstanding the
foregoing, it is understood that the Assignor is not released from
liability for any breaches of the representations and warranties made in
Section 3.06 of the Servicing Agreement, and the Assignee is not
undertaking any such liability hereunder.
(b) The Assignor represents and warrants to the Assignee that
the Assignor has not taken any action which would serve to impair or
encumber the Assignor's ownership interest in the Mortgage Loans since the
date of the Servicing Agreement.
(c) The Servicer and the Assignor shall have the right to
amend, modify or terminate the Servicing Agreement without the joinder of
the Assignee with respect to mortgage loans not conveyed to the Assignee
hereunder, provided, however, that such amendment, modification or
termination shall not affect or be binding on the Assignee.
2. Accuracy of Servicing Agreement.
-------------------------------
The Servicer and the Assignor represent and warrant to the
Assignee that (i) attached hereto as Exhibit 2 is a true, accurate and
complete copy of the Servicing Agreement, (ii) the Servicing Agreement is
in full force and effect as of the date hereof, (iii) the Servicing
Agreement has not been amended or modified in any respect and (iv) no
notice of termination has been given to the Servicer under the Servicing
Agreement.
3. Recognition of Purchaser.
-----------------------
From and after the date hereof, the Servicer shall note the
transfer of the Mortgage Loans to the Assignee in its books and records,
shall recognize the Assignee as the owner of the Mortgage Loans and shall
service the Mortgage Loans for the benefit of the Assignee pursuant to the
Servicing Agreement, the terms of which are incorporated herein by
reference. It is the intention of the Assignor, Servicer and Assignee that
the Servicing Agreement shall be binding upon and inure to the benefit of
the Servicer and the Assignee and their successors and assigns.
4. Representations and Warranties.
------------------------------
(a) Decision to Purchase. The Assignee represents and warrants
that it is a sophisticated investor able to evaluate the risks and merits
of the transactions contemplated hereby, and that it has not relied in
connection therewith upon any statements or representations of the Assignor
or the Servicer other than those contained in the Servicing Agreement or
this Agreement.
(b) Authority. The Assignee hereto represents and warrants that
it is duly and legally authorized to enter into this Agreement and to
perform its obligations hereunder and under the Servicing Agreement.
(c) Enforceability. The Assignee hereto represents and warrants
that this Agreement has been duly authorized, executed and delivered by it
and (assuming due authorization, execution and delivery thereof by each of
the other parties hereto) constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles (regardless of whether such enforcement
is considered in a proceeding in equity or at law).
5. Representations and Warranties of the Assignor.
----------------------------------------------
The Assignor hereby represents and warrants to the Assignee as
follows:
(a) The Assignor has been duly organized and is validly
existing as a limited partnership in good standing under the laws of the
State of New York with full power and authority (corporate and other) to
enter into and perform its obligations under the Servicing Agreement and
this Assignment Agreement.
(b) This Assignment Agreement has been duly executed and
delivered by the Assignor, and, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a legal, valid,
and binding agreement of the Assignor, enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium, or other similar laws affecting creditors' rights generally and
to general principles of equity regardless of whether enforcement is sought
in a proceeding in equity or at law.
(c) The execution, delivery and performance by the Assignor of
this Assignment Agreement and the consummation of the transactions
contemplated thereby do not require the consent or approval of, the giving
of notice to, the registration with, or the taking of any other action in
respect of, any state, federal or other governmental authority or agency,
except such as has been obtained, given, effected or taken prior to the
date thereof.
(d) The execution and delivery of this Assignment Agreement
have been duly authorized by all necessary corporate action on the part of
the Assignor; neither the execution and delivery by the Assignor of this
Assignment Agreement, nor the consummation by the Assignor of the
transactions therein contemplated, nor compliance by the Assignor with the
provisions thereof, will conflict with or result in a breach of, or
constitute a default under, any of the provisions of the governing
documents of the Assignor or any law, governmental rule or regulation or
any material judgment, decree or order binding on the Assignor or any of
its properties, or any of the provisions of any material indenture,
mortgage, deed of trust, contract or other instrument to which the Assignor
is a party or by which it is bound.
(e) There are no actions, suits or proceedings pending or, to
the knowledge of the Assignor, threatened, before or by any court,
administrative agency, arbitrator or governmental body (A) with respect to
any of the transactions contemplated by this Assignment Agreement or (B)
with respect to any other matter that in the judgment of the Assignor will
be determined adversely to the Assignor and will if determined adversely to
the Assignor materially adversely affect its ability to perform its
obligations under this Assignment Agreement.
(f) Except for the sale to the Assignee, the Assignor has not
assigned or pledged any Mortgage Note or the related Mortgage or any
interest or participation therein.
(g) The Assignor has not satisfied, canceled, or subordinated
in whole or in part, or rescinded the Mortgage, and the Assignor has not
released the Mortgaged Property from the lien of the Mortgage, in whole or
in part, nor has the Assignor executed an instrument that would effect any
such release, cancellation, subordination, or rescission. The Assignor has
not released any Mortgagor, in whole or in part, except in connection with
an assumption agreement or other agreement approved by the related Federal
Insurer, to the extent such approval was required.
It is understood and agreed that the representations and
warranties set forth in this Section 5 shall survive delivery of the
respective Mortgage Files to the Custodian and shall inure to the benefit
of the Assignee and its assigns notwithstanding any restrictive or
qualified endorsement or assignment. Upon the discovery by the Assignor or
the Assignee and its assigns of a breach of the foregoing representations
and warranties, the party discovering such breach shall give prompt written
notice to the other parties to this Assignment Agreement, and in no event
later than two (2) Business Days from the date of such discovery. It is
understood and agreed that the obligations of the Assignor set forth in
Section 6 to repurchase a Mortgage Loan constitute the sole remedies
available to the Assignee and its assigns on their behalf respecting a
breach of the representations and warranties contained in this Section 5.
It is further understood and agreed that the Assignor shall be deemed not
to have made the representations and warranties in this Section 5 with
respect to, and to the extent of, representations and warranties made, as
to the matters covered in this Section 5, by the Servicer in the Servicing
Agreement (or any officer's certificate delivered pursuant thereto).
It is understood and agreed that the Assignor has made no
representations or warranties to the Assignee other than those contained in
this Section 5, and no other affiliate of the Assignor has made any
representations or warranties of any kind to the Assignee.
6. Repurchase of Mortgage Loans.
----------------------------
Upon discovery or notice of any breach by the Assignor of any
representation, warranty, or covenant under this Assignment Agreement that
materially and adversely affects the value of any Mortgage Loan or the
interest of the Assignee therein (it being understood that any such defect
or breach shall be deemed to have materially and adversely affected the
value of the related Mortgage Loan or the interest of the Assignee therein
if the Assignee incurs a loss as a result of such defect or breach), the
Assignee promptly shall request that the Assignor cure such breach and, if
the Assignor does not cure such breach in all material respects within 60
days from the date on which it is notified of the breach, the Assignee may
enforce the Assignor's obligation hereunder to purchase such Mortgage Loan
from the Assignee. Notwithstanding the foregoing, however, if such breach
is a Qualification Defect, such cure or repurchase must take place within
75 days of the Defect Discovery Date.
In the event the Servicer has breached a representation or
warranty under the Servicing Agreement that is substantially identical to a
representation or warranty breached by the Assignor hereunder, the Assignee
shall first proceed against the Servicer. If the Servicer does not within
60 days after notification of the breach, take steps to cure such breach
(which may include certifying to progress made and requesting an extension
of the time to cure such breach, as permitted under the Servicing
Agreement) or purchase, or substitute for the Mortgage Loan, the Trustee
shall be entitled to enforce the obligations of the Assignor hereunder to
cure such breach or to purchase the Mortgage Loan from the Trust. In such
event, the Assignor shall succeed to the rights of the Assignee to enforce
the obligations of the Servicer to cure such breach or repurchase such
Mortgage Loan under the terms of the related Servicing Agreement with
respect to such Mortgage Loan
Except as specifically set forth herein, the Assignee shall
have no responsibility to enforce any provision of this Assignment
Agreement, to oversee compliance hereof, or to take notice of any breach or
default thereof.
7. Continuing Effect.
-----------------
Except as contemplated hereby, the Servicing Agreement shall
remain in full force and effect in accordance with its terms.
8. Governing Law.
-------------
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS HEREUNDER SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK (WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS).
9. Notices.
-------
Any notices or other communications permitted or required
hereunder or under the Servicing Agreement shall be in writing and shall be
deemed conclusively to have been given if personally delivered at or mailed
by registered mail, postage prepaid, and return receipt requested or
transmitted by telex, telegraph or telecopier and confirmed by a similar
mailed writing, to: (i) in the case of the Servicer,
[______________________, _____________________] or such address as may
hereafter be furnished by the Servicer; (ii) in the case of the Assignee,
_________________, _________________, Attention: ________________________,
or such other address as may hereafter be furnished by the Assignee, and
(iii) in the case of the Assignor, __________________, Attention:
_________________, or such other address as may hereafter be furnished by
the Assignor.
10. Counterparts.
-----------
This Agreement may be executed in counterparts, each of which
when so executed shall be deemed to be an original and all of which when
taken together shall constitute one and the same instrument.
11. Definitions.
-----------
Any capitalized term used but not defined in this Agreement has
the same meaning as in the Servicing Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
ASSIGNEE:
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
ASSIGNOR:
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
Acknowledged by:
SERVICER:
By:
--------------------------------------------
Name:
--------------------------------------------
Title:
--------------------------------------------
EXHIBIT G
FORM OF SELLER'S OFFICER'S CERTIFICATE
I, ______________________, hereby certify that I am a duly
elected [Vice President] of _____________________________, a corporation
organized under the laws of the State of _________ (the "Company") and
further as follows:
1. Attached hereto as Exhibit 1 is a true, correct and complete
copy of the Articles of Incorporation of the Company which is in full force
and effect on the date hereof.
2. Attached hereto as Exhibit 2 is a true, correct and complete
copy of the by-laws of the Company which are in effect on the date hereof.
3. The execution and delivery by the Company of the Seller's
Warranties and Servicing Agreement, dated as of [ ], 2001 (the "Sale and
Servicing Agreement") and the Custodial Agreement, dated as of [ ], 2001
(the "Custodial Agreement" and, together with the Sale and Servicing
Agreement, the "Agreements") are in the ordinary course of business of the
Company.
4. A true and correct copy of the resolutions of the board of
directors of the Company that approve, authorize and direct the Company to
enter into the Agreements are attached hereto as Exhibit 3.
5. Each person who, as an officer or representative of the
Company, signed (a) the Sale and Servicing Agreement, or (b) any other
document delivered prior hereto or on the date hereof in connection with
any transaction described in the Agreements was, at the respective times of
such signing and delivery a duly elected or appointed, qualified and acting
officer or representative of the Company, who holds the office set forth
opposite his or her name on Exhibit 4, and the signatures of such persons
appearing on such documents are their genuine signatures.
No proceedings for dissolution, merger, consolidation,
liquidation, conservatorship or receivership of the Company or for the sale
of all or substantially all of its assets is pending, or to my knowledge
threatened, and no such proceeding is contemplated by the Company.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed
the seal of the Company.
Dated: By: __________________
____________
Title: Vice President
I, __________________ the Secretary of _____________________,
hereby certify that _______________________ is a duly elected and acting
Vice President of the Company and that the signature appearing above is his
genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: By: __________________
____________
Title: Secretary
EXHIBIT H
Pledged Asset Mortgage Program Policy
See attached
