EXHIBIT 4.3
SERVICING AGREEMENT
Dated July 15, 2004
among
MID-STATE CAPITAL CORPORATION 2004-1 TRUST
Issuer,
MID-STATE HOMES, INC.,
Servicer
and
THE BANK OF NEW YORK
Indenture Trustee
Relating to the Mortgage Assets Pledged to The Bank of New York,
as Indenture Trustee, as Collateral for the Issuer's
$180,251,000.00 6.005% Asset-Backed Notes, Class A
$48,282,000.00 6.497% Asset-Backed Notes, Class M-1
$34,602,000.00 8.114% Asset-Backed Notes, Class M-2
$31,383,000.00 8.900% Asset-Backed Notes, Class B
in the Aggregate Initial Principal Amount
of $294,518,000 (Approximate)
Table of Contents
Page
ARTICLE ONE
DEFINITIONS
Section 1.01 Defined Terms................................................
Section 1.02 Terms Defined in the Indenture...............................
ARTICLE TWO
ADMINISTRATION AND SERVICING OF MORTGAGE ASSETS
Section 2.01 The Servicer to Act as Servicer..............................
Section 2.02 Sub-Servicing Agreements Between Servicer and
Sub-Servicer................................................
Section 2.03 Successor Sub-Servicers......................................
Section 2.04 Liability of the Servicer....................................
Section 2.05 No Contractual Relationship Between Sub-Servicer and
Indenture Trustee or Issuer.................................
Section 2.06 Assumption of Sub-Servicing Agreement by Successor
Servicer....................................................
Section 2.07 Collection of Mortgage Asset Payments; Holding Account.......
Section 2.08 Collection Account; Servicing Account........................
Section 2.09 Records and Servicing Account Moneys.........................
Section 2.10 Assumption Agreements........................................
Section 2.11 Permitted Withdrawals from the Collection Account............
Section 2.12 Advances for Delinquent Taxes................................
Section 2.13 Maintenance of Insurance; Collection Thereunder..............
Section 2.14 Realization upon Defaulted Mortgage Asset....................
Section 2.15 Release of Mortgage Assets...................................
Section 2.16 Servicing Compensation.......................................
Section 2.17 Establishment of Escrow Accounts; Deposits in Escrow
Accounts....................................................
Section 2.18 Permitted Withdrawals From Escrow Account....................
Section 2.19 Indemnification..............................................
ARTICLE THREE
STATEMENTS, REPORTS AND NOTICES
Section 3.01 Reporting by the Servicer....................................
Section 3.02 Annual Certificate; Mortgage Asset Statement.................
Section 3.03 Annual Accountants' Reports..................................
Section 3.04 Notices......................................................
ARTICLE FOUR
THE SERVICER
Section 4.01 Representations and Warranties of the Servicer...............
Section 4.02 Merger or Consolidation of the Servicer......................
Section 4.03 Performance of Obligations...................................
Section 4.04 Servicer Not to Resign.......................................
Section 4.05 Fidelity Bond................................................
ARTICLE FIVE
DEFAULT
Section 5.01 Events of Default............................................
Section 5.02 No Effect on Other Parties...................................
Section 5.03 Rights Cumulative............................................
ARTICLE SIX
THE MORTGAGE ASSETS
Section 6.01 Representations and Warranties; Mortgage Asset Documents.....
ARTICLE SEVEN
MISCELLANEOUS PROVISIONS
Section 7.01 Termination..................................................
Section 7.02 Amendment....................................................
Section 7.03 Governing Law................................................
Section 7.04 Notices......................................................
Section 7.05 Severability of Provisions...................................
Section 7.06 Inspection and Audit Rights..................................
Section 7.07 Binding Effect...............................................
Section 7.08 Article and Section Headings.................................
Section 7.09 The Owner Trustee............................................
Section 7.10 Distribution of Servicing Procedures and Standards...........
Section 7.11 Property Address.............................................
Section 7.12 Power of Attorney............................................
Section 7.13 Rights Upon Discharge of Indenture...........................
Section 7.14 Non-Petition.................................................
EXHIBITS
Exhibit A Form of Standby Servicing Agreement
Exhibit B Mid-State Capital Corporation 2004-1 Trust Servicer's Certificate
Exhibit C Historical Servicing Standards
THIS SERVICING AGREEMENT is dated July 15, 2004, among Mid-State
Capital Corporation 2004-1 Trust, a Delaware statutory trust (such trust being
herein called, the "Issuer"), Mid-State Homes, Inc., a Florida corporation
(herein, together with its successors and assigns, called the "Servicer") and
The Bank of New York, as Indenture Trustee under the Indenture referred to
below.
PRELIMINARY STATEMENT
The Issuer is a statutory trust created by a trust agreement dated
July 13, 2004 (as amended, restated, supplemented or otherwise modified from
time to time, the "Trust Agreement"), between Wilmington Trust Company (in its
capacity as Trustee thereunder, the "Owner Trustee") and Mid-State Capital
Corporation, as Grantor. The Issuer will act at all times through the Owner
Trustee. The Issuer has entered into an indenture (the "Indenture"), dated as of
the date of this Agreement, with The Bank of New York, as Indenture Trustee (the
"Indenture Trustee"), pursuant to which the Issuer intends to issue its
$180,251,000.00 6.005% Asset-Backed Notes, Class A, $48,282,000.00 6.497%
Asset-Backed Notes, Class M-1, $34,602,000.00 8.114% Asset-Backed Notes, Class
M-2, and $31,383,000.00 8.900% Asset-Backed Notes, Class B (the "Notes").
Pursuant to the Indenture, as security for the Notes, the Issuer is Granting to
the Indenture Trustee a security interest in, among other things, certain
Mortgage Assets, its rights under this Agreement, the Collection Account, the
Holding Account and the Hazard Insurance Policies (as such terms are hereinafter
defined).
The parties desire to enter into this Agreement to provide, among
other things, for the servicing of the Mortgage Assets by the Servicer. The
Servicer acknowledges that, in order further to secure the Notes, the Issuer is
Granting to the Indenture Trustee a security interest in, among other things,
its rights under this Agreement, and the Servicer agrees that all covenants and
agreements made by the Servicer herein with respect to the Mortgage Assets shall
also be for the benefit and security of the Indenture Trustee and Holders of the
Notes. For its services hereunder, the Servicer will receive a Servicing Fee
with respect to each Mortgage Asset serviced hereunder as provided herein.
ARTICLE ONE
DEFINITIONS
Section 1.01 Defined Terms.
Except as otherwise specified or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Agreement, and the definitions of such terms are applicable
to the singular as well as to the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms:
"Agreement": This Servicing Agreement as originally executed and as
amended or supplemented from time to time in accordance with the terms hereof
and of the Indenture.
"Bankruptcy Code": Title 11 of the United States Code.
"Collection Period": With respect to any Payment Date, the one-month
period ending on the close of business on the last day of the month preceding
the month in which the related Payment Date occurs.
"Custodial Agreement": Initially, the Custodial Agreement, dated
July 15, 2004, among the Issuer, the Servicer, the Indenture Trustee and the
Document Custodian and thereafter any custodial agreement entered into pursuant
to Section 6.16 of the Indenture.
"Custodian": As defined in the Holding Account Agreement, dated July
15, 2004, among the Servicer, the Indenture Trustee, the Issuer and Wachovia
Bank, National Association.
"Default": Any occurrence or circumstance that, with notice or lapse
of time or both, would be an Event of Default.
"Document Custodian": Initially, Wachovia Bank, National
Association, and thereafter the Document Custodian, if any, hereafter appointed
by the Indenture Trustee pursuant to Section 6.16 of the Indenture. The Document
Custodian may (but need not) be the Indenture Trustee or any Person directly or
indirectly controlling or controlled by or under common control of the Indenture
Trustee. None of the Issuer, the Servicer or any Person directly or indirectly
controlling or controlled by or under common control with the Issuer or the
Servicer may be appointed Document Custodian.
"Escrow Account": The account or accounts created and maintained
pursuant to Section 2.17.
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, mortgage insurance premiums, fire and hazard insurance
premiums and other payments required to be escrowed by the Obligor pursuant to
any Mortgage Loan.
"Event of Default": Any of the occurrences or circumstances
enumerated in Section 5.01.
"Holding Account": A custodial account established by the Servicer
pursuant to the Holding Account Agreement, in the name of the Custodian, as
custodian for the Indenture Trustee and Servicer, entitled the "Mid-State 2004-1
Holding Account", maintained at a depository institution (i) the deposits in
which are fully insured by the Federal Deposit Insurance Corporation through
either the Bank Insurance Fund or the Savings Association Insurance Fund and
(ii) the commercial paper or other short term obligations of which (or, in the
case of a depository institution which is the principal subsidiary of a holding
company the commercial paper or other short-term debt obligations of such
holding company) have a credit rating of at least "A-1" and "P-1" from S&P and
Xxxxx'x, respectively.
"Holding Account Agreement": The Holding Account Agreement, dated
July 15, 2004, among Wachovia Bank, National Association, as custodian for the
Indenture Trustee, the Indenture Trustee, the Servicer and the Issuer.
"Homes": Xxx Xxxxxx Homes, Inc., a Florida corporation.
"Indenture": The Indenture, dated July 15, 2004, between the Issuer
and The Bank of New York, as Indenture Trustee, as such Indenture may be amended
or supplemented from time to time in accordance with its terms.
"Monthly Cut-Off Date": The last day of any Collection Period.
"Remittance Date": The first Remittance Date shall be the Closing
Date and thereafter the first Business Day of each week.
"REO Property": Property acquired by the Issuer by foreclosure or
deed in lieu of foreclosure.
"Reporting Date": With respect to any Collection Period, the 10th
day of the month following such Collection Period or if such day is not a
Business Day the next preceding Business Day.
"Servicer Termination": As defined in Section 5.01.
"Servicing Account": As defined in Section 2.08(b).
"Servicing Fee": As defined in the Indenture.
"Standby Servicing Agreement": The Standby Servicing Agreement,
dated July 15, 2004, by and among the Servicer, the Issuer, the Indenture
Trustee and the Successor Servicer in the form attached hereto as Exhibit A.
"Sub-Servicer": As defined in Section 2.02.
"Sub-Servicing Agreement": An agreement between the Servicer and a
Sub-Servicer as described in Section 2.02.
"Successor Servicer": As defined in the Indenture.
"Uninsured Cause": Any cause of damage to property subject to a
Mortgage such that the property cannot be completely restored out of the
proceeds of the Hazard Insurance Policies required to be maintained pursuant to
Section 2.13.
Section 1.02 Terms Defined in the Indenture.
For purposes of this Agreement, all capitalized terms used herein
that are defined in the Indenture (other than terms defined in Section 1.01 of
this Agreement) shall have the respective meanings assigned to such terms in the
Indenture.
ARTICLE TWO
ADMINISTRATION AND SERVICING OF MORTGAGE ASSETS
Section 2.01 The Servicer to Act as Servicer.
The Servicer shall service and administer the Mortgage Assets, in
accordance with the express terms of this Agreement, applicable state and
federal law, and with the standards and procedures employed by a servicer with
respect to the servicing of similar mortgage assets held in its own portfolio
and in accordance with the Servicer's historical servicing standards set forth
on Exhibit C, and the Servicer shall have full power and authority, acting
alone, to do any and all things in connection with such servicing and
administration that it may deem necessary or desirable and, subject to the
foregoing and the provisions of the Indenture to execute and deliver in the
Servicer's own name, on behalf of the Issuer, any and all deeds, sale contracts,
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments, with respect to the Mortgage
Assets and with respect to the Mortgaged Properties; provided, however, any
Successor Servicer shall not be bound by the Servicer's historical servicing
standards.
Notwithstanding the preceding paragraph, the Servicer shall at all
times follow the procedures set forth below:
1. The Servicer shall use its reasonable best efforts to contact,
either by telephone, mail, in person, or in such other manner as the Servicer
deems appropriate under the circumstances, each Obligor on any Mortgage Asset
that is delinquent 30 days or more in any payments called for under the terms
and provisions of the Mortgage Assets (including outstanding advances for taxes,
insurance and other amounts) as of the most recent Monthly Cut-Off Date, in
order to ascertain the reason for the delinquency and the likelihood that the
Mortgage Asset will become current. Thereafter, the Servicer shall diligently
pursue collection efforts in order to bring the Mortgage Asset current with
respect to all outstanding amounts (including outstanding taxes, insurance and
other amounts) unless the Servicer in its good faith judgment believes it is
most appropriate, under the circumstances, and not as a general matter, not to
pursue the outstanding amounts for taxes, insurance and other amounts.
2. The Servicer shall use its reasonable best efforts to physically
inspect or visit the Mortgaged Property securing any Mortgage Asset that is 60
or more days delinquent as of the most recent Monthly Cut-Off Date, unless the
Servicer otherwise determines to its reasonable satisfaction that the value of
the Mortgaged Property securing such Mortgage Asset has not been materially
impaired and that such property has not been abandoned.
3. The Servicer shall use its reasonable best efforts to diligently
pursue, foreclose upon, sell the underlying note, or otherwise comparably
convert the ownership of properties securing a Mortgage Asset that continues in
default (including default in payment of taxes and insurance) for more than 90
days, unless the Servicer, in its best judgment, believes that the Mortgage
Asset can be returned to current status within a reasonable period of time or,
solely with respect to defaults due solely to default in payment of taxes and
insurance and other amounts, unless the Servicer in its good faith judgment
believes it is most appropriate, under the circumstances, and not as a general
matter, not to pursue the outstanding amounts for taxes, insurance and other
amounts.
4. With respect to Mortgaged Properties that are known by the
Servicer to be abandoned or in foreclosure, or properties with respect to which
title has been acquired, the Servicer shall take such action as it deems
reasonably necessary in its good faith judgment and not in violation of law to
protect such property from vandalism or damage by the elements.
5. The deed to any REO Property delivered as a result of any
foreclosure or similar proceeding or deed in lieu thereof shall name the Issuer
as grantee unless the Servicer deems it necessary to foreclose or otherwise
comparably convert title to any Mortgaged Property in the name of a party other
than the Issuer. In that event, the Servicer may designate a party, including
itself, to hold title to the REO Property. The party designated to hold such
title shall sign a written acknowledgment that it is holding title on behalf of
the Issuer and any such acknowledgment shall be delivered to the Indenture
Trustee, or Document Custodian on behalf of the Indenture Trustee, together with
the deed to such REO Property.
6. Upon acquisition of an REO Property by the Issuer (or other party
so designated by the Servicer to hold title), the Servicer shall prepare, if
applicable, the written acknowledgement specified in the previous paragraph (in
form acceptable to the Indenture Trustee, or Document Custodian on behalf of the
Indenture Trustee) and furnish such written acknowledgement to the Indenture
Trustee, or Document Custodian on behalf of the Indenture Trustee, within two
Business Days of acquiring a deed in respect of such REO Property.
If an REO Property is resold in exchange for a new Mortgage Asset
within two Business Days of acquisition of such REO Property, the written
acknowledgement or deed of trust for the REO Property need not be executed and
delivered to the Indenture Trustee, or Document Custodian on behalf of the
Indenture Trustee, provided the Mortgage Asset Documents for such new Mortgage
Asset and all assignments and endorsements with respect to such new Mortgage
Asset required by the Indenture are delivered to the Indenture Trustee, or
Document Custodian on behalf of the Indenture Trustee, within five Business Days
of acquisition.
7. Upon the acquisition of an REO Property, the Servicer shall (i)
deliver the deed or certificate of sale and any written acknowledgment to the
Indenture Trustee, or Document Custodian on behalf of the Indenture Trustee,
(ii) advance all taxes and standard hazard insurance premiums relating to the
REO Property, (iii) process any claims for redemption and otherwise comply with
any redemption procedures required by law, (iv) use its reasonable best efforts
to promptly sell or otherwise dispose of such REO Property at a price which in
its best judgment represents reasonable value and remit the proceeds to the
Indenture Trustee, and (v) if, in order to sell the property at what it
reasonably determines to be the best price available, the Servicer deems it
reasonably necessary to provide mortgage financing to the prospective buyer, the
Servicer shall undertake, as agent for the Issuer, to apply substantially the
same underwriting standards as the Servicer or Sub-Servicer (if such mortgage
financing is in the form of a Mortgage Loan) applies to similar transactions
originated by it for its own account (or the Sub-Servicer for its own account);
provided, however that the Maturity Date of any such Mortgage Asset shall not
exceed August 2037.
8. If the Servicer deems it reasonably necessary to convey an REO
Property in exchange for a new Mortgage Asset, such new Mortgage Asset may be
originated on documents naming the Servicer or Sub-Servicer as payee; provided,
however, that the Maturity Date of any such new Mortgage Asset shall not exceed
August 2037. The Sub-Servicer's or Servicer's rights under any such documents
shall be subject to its obligation to convey proceeds of the disposition of the
REO Property.
In connection with the sale of an REO Property, any contract of sale
or deed shall be executed by the Servicer or Sub-Servicer in its individual
capacity and as agent and attorney in fact for the Issuer. The Servicer shall
request return of the written acknowledgement by the Indenture Trustee, or
Document Custodian on behalf of the Indenture Trustee. Immediately upon
consummation of the sale, the Servicer or Sub-Servicer shall assign all of its
right, title and interest in the new Mortgage Asset to the Issuer and the Issuer
shall assign all of its right, title and interest in the new Mortgage Asset to
the Indenture Trustee. The Servicer shall record the release, the deed, the
Mortgage, endorse and deliver the Mortgage Asset Documents to the Indenture
Trustee, or Document Custodian on behalf of the Indenture Trustee, to perfect
the security interest in the Issuer and provide an assignment of the Mortgage by
the Issuer to the Indenture Trustee immediately.
9. The Servicer shall segregate and hold all funds collected and
received in connection with the rental or sale of any REO Property separate and
apart from its own funds and general assets and shall deposit such moneys in the
Holding Account in accordance with Section 2.07(b).
10. Except as expressly permitted by Section 2.10 or as otherwise
provided in Exhibit C, the Servicer shall not alter, change or modify, or permit
the alteration, change or modification of, any Mortgage Asset without the prior
consent of the Indenture Trustee; provided, however, that the Servicer may
charge-off or write-off Mortgage Assets when the Servicer determines in its best
judgment that it is prudent to do so and that the costs and expenses of
continued servicing of such Mortgage Assets (including foreclosure proceedings)
exceeds the expected revenues therefrom, and such determination is evidenced by
a certification signed by a duly authorized officer of the Servicer setting
forth such conclusions and the basis therefor.
Promptly after the execution and delivery of this Agreement, the
Servicer shall deliver to the Issuer, the Indenture Trustee and Document
Custodian, if any, a list of officers of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Assets.
At all times while the Servicer is servicing the Mortgage Assets
pursuant to this Agreement, the Servicer or the Sub-Servicer shall employ field
servicing personnel for each state in which Mortgaged Properties are located who
are assigned to service the related outstanding Mortgage Assets of that state;
provided, however, that if the Servicer or Sub-Servicer does not employ field
servicing personnel in any such state or does not employ sufficient field
servicing personnel in any such state to service the related outstanding
Mortgage Assets of that state in accordance with the terms and provisions of
this Agreement, the Servicer shall enter into one or more Sub-Servicing
Agreements as described in Section 2.02 with a Sub-Servicer that employs field
servicing personnel or agents for that state providing for the servicing of the
effected outstanding Mortgage Assets of that state.
Section 2.02 Sub-Servicing Agreements Between Servicer and
Sub-Servicer.
The Servicer may enter into sub-servicing agreements (each, a
"Sub-Servicing Agreement") with sub-servicers (each, a "Sub-Servicer") which may
include affiliates of the Servicer, for the servicing and administration of any
or all of the Mortgage Assets. In the event that any such Sub-Servicing
Agreement exists, the Sub-Servicer will represent and warrant that it is duly
organized and existing under the applicable laws of the United States or any
state and is duly qualified and licensed to do business in each state in which
the Mortgaged Property relating to a Mortgage Asset to be serviced under such
Sub-Servicing Agreement is located. Any such Sub-Servicing Agreement entered
into by the Successor Servicer shall not be less favorable to the Issuer in its
reasonable judgment. For purposes of this Agreement (except as otherwise
provided herein), the Servicer shall be deemed to have received payments on
Mortgage Assets referred to in Sections 2.07 and 2.15 when the Sub-Servicer has
received such payments. The Servicer and any Sub-Servicer may enter into
amendments of a Sub-Servicing Agreement; provided, however, that any such
amendments shall be consistent with and not violate the provisions of this
Agreement. Copies of all amendments shall promptly be sent as provided in
Section 7.04 hereof to the Indenture Trustee, the Rating Agencies and any
Document Custodian.
Section 2.03 Successor Sub-Servicers.
The Servicer shall be entitled to terminate any Sub-Servicing
Agreement that may exist from time to time in accordance with the terms and
conditions of such Sub-Servicing Agreement and, except as hereinafter provided
in this Section 2.03, without any limitation by virtue of this Agreement;
provided, however, that in the event of termination of any Sub-Servicing
Agreement by the Servicer or the Sub-Servicer the Servicer shall either act as
primary servicer of the related Mortgage Assets or enter into a Sub-Servicing
Agreement in accordance with the provisions of Section 2.02 with a successor
Sub-Servicer.
Section 2.04 Liability of the Servicer.
Notwithstanding any Sub-Servicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer or reference to actions taken through a Sub-Servicer or
otherwise, the Servicer shall remain primarily obligated and liable to the
Issuer and the Indenture Trustee for the servicing and administering of the
Mortgage Assets in accordance with the provisions of this Agreement without
diminution of such obligation or liability by virtue of such Sub-Servicing
Agreement or arrangements or by virtue of indemnification from the Sub-Servicer
and to the same extent and under the same terms and conditions as if the
Servicer alone were servicing and administering the Mortgage Assets. The
Servicer shall be entitled to enter into any agreement with a Sub-Servicer for
indemnification of the Servicer by such Sub-Servicer, and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
Section 2.05 No Contractual Relationship Between Sub-Servicer and
Indenture Trustee or Issuer.
Any Sub-Servicing Agreement that may be entered into and any other
transactions or services relating to the Mortgage Assets involving a
Sub-Servicer in its capacity as such shall be deemed to be between the
Sub-Servicer and the Servicer alone and the Sub-Servicer shall have no claim
against the Indenture Trustee or the Issuer except to the extent set forth in
Section 2.06 arising from any Sub-Servicing Agreement; provided, however, that
the Indenture Trustee and the Issuer may upon the happening of a default
thereunder enforce the Servicer's rights under any Sub-Servicing Agreement as
third party beneficiaries thereof.
Section 2.06 Assumption of Sub-Servicing Agreement by Successor
Servicer.
In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default or Trigger Event), the
Successor Servicer may, at its election, assume all of the rights and
obligations of the Servicer under each Sub-Servicing Agreement that may have
been entered into. The Indenture provides that the Successor Servicer may, at
its election, assume all of the Servicer's interest therein and replace the
Servicer as a party to the Sub-Servicing Agreement to the same extent as if the
Sub-Servicing Agreement had been assigned to the assuming party, except that the
Servicer shall not thereby be relieved of any liability or obligation under the
Sub-Servicing Agreement.
The Servicer shall, upon request of the Indenture Trustee or the
Successor Servicer but at the expense of the Servicer, deliver to the Successor
Servicer all documents and records pursuant to Section 2.09 relating to the
Sub-Servicing Agreement and the Mortgage Assets then being serviced and an
accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the Sub-Servicing
Agreement to the assuming party.
Section 2.07 Collection of Mortgage Asset Payments; Holding Account.
(a) In accordance with the servicing standards set forth in Section
2.01, the Servicer shall use its reasonable best efforts to cause each Obligor
to make all payments in respect of his or her Mortgage Asset to the Servicer and
to collect all payments (including amounts for taxes and insurance and other
Escrow Payments) called for under the terms and provisions of the Mortgage
Assets (other than any fees and charges the collectability of which is not
legally enforceable). Consistent with the foregoing, the Servicer may in its
discretion (i) waive any late payment charge, assumption fee, prepayment charge,
or penalty interest in connection with the prepayment of a Mortgage Asset and
(ii) arrange a schedule for liquidation of delinquent payments due on a Mortgage
Asset, running for a period as the Servicer reasonably believes prudent under
the circumstances.
(b) On or before the Closing Date the Servicer shall establish the
Holding Account and shall cause all payments received with respect to the
Mortgage Assets (other than Escrow Payments) after the Cut-off Date that have
not already been deposited in the Collection Account pursuant to Section 2.08(a)
to be deposited in the Holding Account. The deposit of substantially all such
amounts shall be made as soon as reasonably practicable after such payment is
actually received by it but in no event later than two Business Days after
receipt by the Servicer, and in the case of all payments received by
Sub-Servicers with respect to the Mortgage Assets, such amounts shall be
remitted as soon as reasonably practicable to the Servicer but in no event later
than two Business Days after collection by the Sub-Servicer and deposited by the
Servicer in the Holding Account as described above. The Servicer shall hold in
escrow all moneys received in respect of taxes and insurance to be disbursed in
accordance with the applicable Mortgage. The Sub-Servicer shall not deposit any
amounts received by it in any deposit, trust, or similar account prior to
remitting such amounts to the Servicer. On each Remittance Date the Servicer
shall submit to the Custodian, with a copy to the Indenture Trustee, a report
substantially in the form provided in the Holding Account Agreement relating to
funds deposited in the Holding Account during the immediately preceding calendar
week which specifies the amount of such funds referred to in Section 2.08(a) to
be transferred from the Holding Account by the Custodian to the Collection
Account.
(c) The Servicer may, by written request delivered to the Custodian,
with a copy to the Indenture Trustee, receive funds from the Holding Account for
the following purposes:
(i) to repay to the Servicer moneys in the Holding Account upon
certification by the Servicer reasonably acceptable to the Indenture
Trustee that such funds are not part of the Trust Estate;
(ii) to clear the Holding Account pursuant to Section 7.01(a);
(iii) to deposit Insurance Proceeds in the Servicing Account for
application to restoration or repair of a Mortgaged Property in the
future, to the extent such proceeds were deposited in the Holding Account;
(iv) to pay the Servicer the Servicing Fee pursuant to Section 2.16;
(v) to pay the Servicer amounts represented by any late payment
charges, interest charged on advances of taxes and insurance premiums,
assumption fees and other such additional charges as additional servicing
compensation;
(vi) to reimburse the Servicer for advances of taxes, insurance
premiums and other amounts in accordance with Sections 2.12 and 2.13,
respectively; provided, however, that with respect to advances of taxes
and insurance premiums and other amounts made on the Mortgage Assets on or
prior to the Cut-Off Date the extent of reimbursement for such advances
shall be limited to the related amounts collected by the Servicer or, in
the case of a liquidation, the amount by which the related Liquidation
Proceeds, if any, for each such Mortgage Asset exceeds the sum of the
Principal Balance of the related Mortgage Asset and the related
Liquidation Expenses other than such advances;
(vii) to reimburse the Servicer from the related Insurance Proceeds
and Liquidation Proceeds with respect to a Mortgaged Property for any
expenses incurred by it in good faith pursuant to Section 2.14 for
restoration of such Mortgaged Property damaged by an Uninsured Cause;
(viii) to reimburse the Servicer from the Holding Account for any
unreimbursed usual and customary Liquidation Expenses subject to the
limitations set forth in Sections 2.12 and 2.13 with respect to advances
for taxes and insurance;
(ix) to reimburse the Servicer for expenses reasonably incurred by
the Servicer pursuant to Section 6.01; and
(x) to reimburse the Servicer for reasonable and necessary expenses
incurred in connection with the preservation and management of Acquired
Properties.
Section 2.08 Collection Account; Servicing Account.
(a) On or before the Closing Date the Issuer shall open the
Collection Account as provided in Section 8.02 of the Indenture. On the Closing
Date, the Servicer shall on behalf of the Issuer remit to the Indenture Trustee
for deposit in the Collection Account all Monthly Payments and all prepayments
(net of the applicable Servicing Fee) collected on the Mortgage Assets after the
Cut-Off Date and received by the Servicer not less than five Business Days
before the Closing Date. All funds collected in respect of the Mortgage Assets
prior to the Closing Date not deposited in the Collection Account pursuant to
the preceding sentence on the Closing Date shall be deposited in the Holding
Account on the Closing Date and transferred to the Collection Account on the
first Remittance Date following the Closing Date. Thereafter, the Servicer shall
submit to the Custodian, with a copy to the Indenture Trustee, the report
required by Section 2.07(b) directing the deposit into the Collection Account
or, with respect to certain Insurance Proceeds, the Servicing Account of all
payments and collections in respect of the Mortgage Assets then on deposit in
the Holding Account (other than withdrawals simultaneously requested pursuant to
Section 2.07(c) and amounts in respect of payments by Obligors made by checks
subsequently returned for insufficient funds or other reason for non-payment)
including the following:
(i) all Obligor payments on account of principal, including Full
Prepayments, of the Mortgage Assets;
(ii) all Obligor payments on account of finance charges on the
Mortgage Assets; and
(iii) all net Insurance Proceeds (other than proceeds to be applied
to the restoration or repair of the related Mortgaged Property which shall
be deposited to the Servicing Account) and Net Liquidation Proceeds with
respect to the Mortgage Assets.
The Servicer may request withdrawals from the Collection Account as permitted by
Section 2.11 hereof.
(b) The Servicer shall open, at the Corporate Trust Office or at any
other financial institution the deposits of which are fully insured by the
Federal Deposit Insurance Corporation ("FDIC") (through either the Bank
Insurance Fund or the Savings Association Insurance Fund), one or more accounts
(collectively, the "Servicing Account"), which such accounts shall be Eligible
Accounts, designated as follows: "Mid-State Homes, Inc., as Servicer for
Mid-State Capital Corporation 2004-1 Trust." There shall be deposited in the
Servicing Account on the Closing Date all Insurance Proceeds which are to be
applied to the restoration or repair of the related Mortgaged Property received
after the Cut-Off Date and still in the custody of the Servicer on the Closing
Date; thereafter all Insurance Proceeds shall be deposited into the Servicing
Account. Obligors' funds in a Servicing Account shall be segregated, and the
Servicer shall instruct the financial institution in which such account is
maintained accordingly. The Servicing Account shall be an interest bearing
account fully insured as to amounts deposited therein by the FDIC. In addition,
moneys in the Servicing Account may be invested as provided in Section 2.08(c).
The Servicer shall make withdrawals from a Servicing Account only (i) for the
purpose of applying proceeds of a Hazard Insurance Policy or other insurance
policy to the restoration or repair of a Mortgaged Property, to the extent such
proceeds were deposited in such Servicing Account; (ii) to the extent required
by applicable law or regulation or by the related Mortgage Assets and to the
extent of earnings on the Servicing Account then on deposit in the Servicing
Account to pay interest on funds in such Servicing Account to the Obligors
entitled thereto; (iii) to pay to the Obligors Insurance Proceeds required to be
paid to them pursuant to the terms of the related Account Note or Mortgage Note,
as applicable; (iv) to clear and terminate such Servicing Account at the
termination of this Agreement in accordance with Section 7.01; (v) to pay to the
Servicer net earnings on amounts in the Servicing Account to the extent
permitted by Section 2.08(c) below; or (vi) to transfer to the Holding Account
any funds then on deposit in the Servicing Account upon a determination by the
Servicer that such funds will not be applied in the manner described in (i)
through (v) above.
(c) Monies in any Servicing Account from time to time may be
invested and reinvested by the Servicer, but only in one or more Eligible
Investments and obligations on which the Indenture Trustee in its commercial
capacity is the obligor. No such investment shall mature later than one Business
Day prior to the next Remittance Date (or on such Remittance Date, in the case
of Eligible Investments of which the Indenture Trustee is the obligor). All net
income or gain from such investment of moneys shall be paid to the Servicer as
it is earned and received, provided that all interest required to be paid to
Obligors shall be paid to them as required or shall be held for the Obligors
entitled thereto. If any loss results from such investments, the Servicer shall
promptly reimburse the Servicing Account for the amount of any such loss from
its own funds. Whenever any amounts invested as aforesaid shall be needed for
disbursement from a Servicing Account, the Servicer shall cause a sufficient
amount of such investments to be sold or otherwise converted to cash for such
purpose.
(d) Notwithstanding Section 2.08(c), all funds in the Servicing
Account are held by the Servicer as agent and bailee of the Indenture Trustee
for the benefit of the Indenture Trustee, the Noteholders and the Obligors.
Section 2.09 Records and Servicing Account Moneys.
(a) The Servicer agrees to act as agent and bailee of the Indenture
Trustee in holding any Mortgage Asset Documents released to the Servicer
pursuant to Section 3.13(c) of the Indenture, and any other items constituting a
part of the Trust Estate that from time to time come into the possession of the
Servicer. The Servicer agrees, for the benefit of the Indenture Trustee and the
Noteholders, to act as such agent and bailee, and to hold and deal with such
Mortgage Assets and such items, as agent and bailee for the Indenture Trustee,
in accordance with the provisions of this Agreement and the Indenture.
(b) The Servicer shall for a period of four years following
termination of this Agreement or from the time a Mortgage Asset is paid in full,
with respect to such Mortgage Asset, retain all data relating directly to or
maintained in connection with the servicing of the Mortgage Assets at the
Servicer's principal service office in Tampa, Florida, or at such other place
where the servicing offices of the Servicer are located, and shall give the
Indenture Trustee access to all data at all reasonable times, and, while an
Event of Default shall be continuing, the Servicer shall, on demand of the
Indenture Trustee or the Successor Servicer, deliver to the Indenture Trustee or
the Successor Servicer, as the case may be, all data necessary for the servicing
of the Mortgage Assets, provide the Indenture Trustee and the Successor Servicer
with the information called for by Section 2.07(b) concerning all moneys in the
Holding Account and deliver to the Indenture Trustee all moneys in each
Servicing Account and all other moneys collected by it from Obligors and not
previously deposited in the Holding Account or the Servicing Account. If the
rights of the Servicer shall have been terminated in accordance with Section
5.01 or if this Agreement shall have been terminated pursuant to Section
7.01(b), the Servicer shall, upon demand of the Indenture Trustee, the Successor
Servicer or the Noteholders in the case of Section 5.01, or of the successor to
the rights of the Issuer in the case of Section 7.01(b), deliver to the
Successor Servicer all data necessary for the servicing of the Mortgage Assets,
provide the Indenture Trustee and the Successor Servicer with the information
called for by Section 2.07(b) concerning all moneys in the Holding Account and
deliver to the Indenture Trustee all moneys in each Servicing Account and all
other moneys collected by it from obligors and not previously deposited in the
Holding Account or the Servicing Account. In addition to delivering such data
and moneys the Servicer shall use its reasonable best efforts to effect the
orderly and efficient transfer of the servicing of the Mortgage Assets to the
party which will be assuming responsibility for such servicing.
Section 2.10 Assumption Agreements.
(a) When a Mortgaged Property has been or is about to be conveyed by
the Obligor, the Servicer is authorized to take or enter into an assumption
agreement or other similar agreement from or with the person to whom such
Mortgaged Property has been or is about to be conveyed, provided that (i) the
interest rate on, Monthly Payment and balance of such Mortgage Asset shall not
be reduced, (ii) the term of the Mortgage Asset shall not be extended, (iii)
there are either no unreimbursed advances for taxes and insurance on such
Mortgage Asset following assumption or such advances are assumed and (iv) the
Servicer shall not agree to any other modification unless in the best judgment
of the Servicer such modification would not materially adversely affect the
collectability or enforceability of the Mortgage Assets or the interests of the
Noteholders. The Servicer shall notify the Indenture Trustee and any Document
Custodian that any such assumption agreement or similar agreement has been
completed by forwarding to the Indenture Trustee, or Document Custodian on
behalf of the Indenture Trustee, the original copy of such assumption agreement
or similar agreement for addition to the related Mortgage Asset Documents. Any
fee collected by the Servicer for entering into an assumption agreement or
similar agreement shall be retained by the Servicer as additional servicing
compensation. The Servicer shall use its reasonable best efforts to enter into
an assumption agreement or other similar agreement; however, if, in connection
with the conveyance of such Mortgaged Property, the continuation of liability of
the original Obligor shall be impracticable, or if, in the opinion of the
Servicer, the release of the liability of the original Obligor would not
substantially impair the ability of the holder of the related Mortgage Asset to
realize the full repayment of such Mortgage Asset, the Servicer may release the
original Obligor from liability on such Mortgage Asset so long as the new
Obligor meets the underwriting standards which the Servicer is applying to
similar transactions originated for its own account. The Servicer shall notify
the Indenture Trustee and any Document Custodian if the original Obligor is
released from liability on such Mortgage Asset.
(b) The Servicer shall not be deemed to be in default, breach or any
other violation of its obligations under this Agreement by reason of any
assumption of a Mortgage Asset by operation of law or any assumption or transfer
of property subject to a Mortgage Asset which the Servicer may be restricted by
law from preventing, for any reason whatever.
Section 2.11 Permitted Withdrawals from the Collection Account.
If at any time funds on deposit in the Holding Account are
insufficient to satisfy the Servicer withdrawal requests referred to in Section
2.07(c) hereof, and so long as no Event of Default or Trigger Event shall have
occurred and be continuing, the Servicer may request withdrawal of such
deficiency from the Collection Account, and upon receipt of such written
request, the Indenture Trustee shall withdraw the amount of such deficiency from
the Collection Account and make the requested payments to the Servicer, provided
that such payments shall not be made within six Business Days of a Payment Date.
In addition, the Indenture Trustee shall make withdrawals from the Collection
Account to repay to the Servicer moneys in the Collection Account upon
certification by the Servicer reasonably acceptable to the Indenture Trustee
that such funds are not part of the Trust Estate.
Section 2.12 Advances for Delinquent Taxes.
(a) If the Servicer shall have knowledge that real property taxes or
other taxes, charges or assessments relating to any Mortgaged Property have not
been paid when due, the Servicer shall make such payment prior to the time by
which failure to make such payment would give rise to a lien on the related
Mortgaged Property. Any costs so incurred by the Servicer shall be recoverable
by the Servicer pursuant to Section 2.07(c), or to the extent recoverable from
any Sub-Servicer servicing such Mortgage Asset, or from the related Obligor or
from other funds on deposit in the Holding Account to the extent that the
Servicer certifies that such advances are not otherwise recoverable due to
insufficient Net Liquidation Proceeds.
(b) The Servicer shall indemnify the Issuer for any losses resulting
from a failure to make the payments referred to in Paragraph (a) above and the
Servicer shall deposit the amount of such loss in the Collection Account on the
next Remittance Date following the determination of such loss.
Section 2.13 Maintenance of Insurance; Collection Thereunder.
(a) Except as otherwise provided in subsection (b) of this Section
2.13, the Servicer shall cause to be maintained with respect to each Mortgaged
Property and REO Property one or more Hazard Insurance Policies that provide at
least the same coverage as a standard form fire and extended coverage insurance
policy issued by a company regulated under applicable state law and authorized
by such state to issue such policies in the state in which the Mortgaged
Property or REO Property is located and in an amount that is not less than an
amount that would satisfy the definition of Full Prepayment with respect to the
related Mortgage Asset; provided, however, that the amount of coverage provided
by each Hazard Insurance Policy shall be sufficient to avoid the application of
any co-insurance clause contained therein. Any individual Hazard Insurance
Policies shall name the Servicer as additional loss payee and run to the benefit
of the Servicer's successors and assigns as their interests may appear. Any
amounts received under any such policies shall be transferred to or deposited in
the Holding Account or Servicing Account (or paid over to the related Obligor if
the Servicer reasonably does not deem it necessary to deposit such amounts in
the Servicing Account) pursuant to Sections 2.07 and 2.08. If any Obligor is in
default in the payment of such premiums, the Servicer shall pay such premiums
out of its own funds, and any costs so incurred by the Servicer shall be
recoverable by the Servicer to the extent such costs constitute Liquidation
Expenses pursuant to Section 2.14, or to the extent recoverable from any
Sub-Servicer servicing such Mortgage Asset, or from the related Obligor or from
other funds on deposit in the Holding Account to the extent that the Servicer
certifies that such advances are not otherwise recoverable due to insufficient
Net Liquidation Proceeds.
(b) The Servicer may, in lieu of causing individual Hazard Insurance
Policies to be maintained with respect to each Mortgaged Property pursuant to
subsection (a) of this Section 2.13, and shall, to the extent that the related
Mortgage Assets do not require the Obligor to maintain a Hazard Insurance Policy
with respect to the related Mortgaged Property, maintain one or more blanket
insurance policies covering losses on the mortgagee's interest in the Mortgage
Assets resulting from the lack of or insufficiency of individual Hazard
Insurance Policies issued by a company regulated under applicable state law and
authorized by such state to issue such policies in the state in which the
Mortgaged Property is located and in an amount that is not less than an amount
that would satisfy the definition of Full Prepayment with respect to the related
Mortgage Asset. The Servicer shall pay the premium for such policy on the basis
described therein and shall pay any deductible amount with respect to claims
under such policy relating to the Mortgage Assets; provided, however, that such
deductible cannot exceed an amount that is customary under similar policies. If
the insurer thereunder shall cease to be acceptable to the Servicer, the
Servicer shall exercise its reasonable best efforts to obtain from another
insurer a replacement policy comparable to such policy. All amounts collected by
the Servicer under any such policy and reimbursements by the Servicer of
deductible amounts shall be deposited in the Holding Account in accordance with
Section 2.07.
(c) The Servicer shall indemnify the Issuer for any losses resulting
from a failure to maintain insurance pursuant to this Section 2.13 and the
Servicer shall deposit the amount of such loss in the Collection Account on the
next Remittance Date following the determination of such loss.
Section 2.14 Realization upon Defaulted Mortgage Asset.
With respect to any defaulted Mortgage Asset, the Servicer shall use
its reasonable best efforts consistent with the servicing procedures as set
forth in Section 2.01 hereof, to foreclose upon or otherwise comparably convert
(through replevin, deed in lieu of foreclosure or otherwise) the ownership of
properties securing any Mortgage Asset that comes into and continues in default
and as to which no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 2.07. The Servicer shall prepare all
documents necessary and appropriate in connection with the realization upon
defaulted Mortgage Assets. The Servicer's obligations under this Section 2.14
are subject to the proviso that, in the case of damage to Mortgaged Property
from an Uninsured Cause, the Servicer shall not be required to expend its own
funds in restoring such property unless it shall in good faith determine (i)
that such restoration will increase the proceeds of liquidation of the related
Mortgage Asset, after reimbursement to itself for such expenses, and (ii) that
such expenses will be recoverable by it either as Liquidation Expenses or as
Insured Expenses. For purposes of clause (ii) of the preceding sentence, if the
Servicer is maintaining a blanket Hazard Insurance Policy pursuant to Section
2.13(b), expenses shall be deemed recoverable as Insured Expenses if they would
have been recoverable under an individual Hazard Insurance Policy maintained
pursuant to Section 2.13(a). The Servicer shall be responsible for all other
costs and expenses incurred by it in connection with any action taken in respect
of a defaulted Mortgage Asset; provided, however, that it shall be entitled to
reimbursement of such costs and expenses to the extent they constitute
Liquidation Expenses, Insured Expenses or reasonable and necessary expenses
incurred in the preservation and the management of Acquired Properties. All
Liquidation Proceeds shall be deposited in the Holding Account in accordance
with Section 2.07(b) hereof.
Section 2.15 Release of Mortgage Assets.
In the case of a final Monthly Payment, Full Prepayment or
liquidation of any Mortgage Asset, the Servicer shall deliver to the Indenture
Trustee, the Issuer and any Document Custodian an Officers' Certificate (i)
identifying the Mortgage Asset that was the subject of such final payment, Full
Prepayment or liquidation, (ii) stating with respect to a Full Prepayment that
all prepayment proceeds received in connection therewith are in an amount
necessary to effect a Full Prepayment (after taking into account amounts
representing reimbursement for advances by the Servicer for taxes and insurance
premiums) and have been deposited in the Holding Account, (iii) stating with
respect to a liquidation of a Mortgage Asset, that all Liquidation Proceeds
which have been determined by the Servicer in its reasonable judgment to be
finally recoverable have been received and the Net Liquidation Proceeds have
been deposited in the Holding Account, (iv) stating that with respect to a final
Monthly Payment, all amounts due under such Mortgage Asset have been paid (after
taking into account amounts representing reimbursement for advances by the
Servicer for taxes and insurance premiums) and such amounts have been deposited
in the Holding Account and (v) identifying such documents as the Servicer or the
Obligor may request to evidence satisfaction and discharge of such Mortgage
Asset.
In connection with any prepaid Mortgage Asset with respect to which
the related Mortgage is a deed of trust, the Servicer is authorized to procure
from the trustee under such deed of trust a deed of full reconveyance covering
the property encumbered by such deed of trust, which deed of reconveyance shall
be delivered by the Servicer to the person or persons entitled thereto, but no
expenses incurred in connection with such deed of reconveyance shall be payable
out of the proceeds received in respect of such Mortgage Asset.
If from time to time and as appropriate for the servicing or
foreclosure of any Mortgage Asset the Servicer requests the Indenture Trustee,
or Document Custodian on behalf of the Indenture Trustee, to release the related
Mortgage Asset Documents and delivers to the Indenture Trustee, or Document
Custodian on behalf of the Indenture Trustee, a trust receipt reasonably
satisfactory to the Indenture Trustee, or Document Custodian on behalf of the
Indenture Trustee, and signed by a Servicing Officer, the Indenture Trustee, or
Document Custodian on behalf of the Indenture Trustee, shall release the related
Mortgage Asset Documents to the Servicer. Such trust receipt shall obligate the
Servicer to return the related Mortgage Asset Documents to the Indenture
Trustee, or Document Custodian on behalf of the Indenture Trustee, when the need
therefor by the Servicer no longer exists. If such Mortgage Asset shall be
liquidated and the Indenture Trustee, or Document Custodian on behalf of the
Indenture Trustee, receives a certificate from the Servicer as provided above,
then, upon request of the Issuer, the Indenture Trustee, or Document Custodian
on behalf of the Indenture Trustee, shall release the trust receipt to or upon
the order of the Issuer.
Section 2.16 Servicing Compensation.
As compensation for the performance of its obligations under this
Agreement, the Servicer shall be entitled to the Servicing Fee for each Mortgage
Asset that is not a repossessed or foreclosed Mortgage Asset at the beginning of
any month and that has a Principal Balance commencing on the Cut-off Date and
terminating on the first to occur of the maturity of such Mortgage Asset or the
date of Full Prepayment of such Mortgage Asset. The Servicing Fee in respect of
a Mortgage Asset for a particular month shall be paid to the Servicer by the
Custodian from amounts held in the Holding Account upon submission to the
Custodian of a withdrawal request pursuant to Section 2.07(c). In addition to
the Servicing Fee, the Servicer shall be entitled to receive pursuant to this
Section 2.16 as additional servicing compensation all late payment charges,
assumption fees, interest on taxes, insurance premiums and similar charges paid
in respect of the Mortgage Assets and previously deposited in the Holding
Account. The Servicer shall pay all expenses and charges imposed on the Servicer
hereunder, including servicing fees, expenses and charges of any Sub-Servicers,
out of its servicing compensation or its own funds, and shall not be entitled to
reimbursement for such expenses and charges except as specifically provided for
herein.
Section 2.17 Establishment of Escrow Accounts; Deposits in Escrow
Accounts.
The Servicer shall segregate and hold all funds collected and
received pursuant to each Mortgage Loan which constitute Escrow Payments
separate and apart from any of its own funds and general assets and shall
establish and maintain one or more Escrow Accounts, in the form of time deposit
or demand accounts. A copy of such letter agreement shall be furnished to the
Indenture Trustee upon request. The Escrow Account shall be an Eligible Account.
The Servicer shall deposit in the Escrow Account or Accounts on a
daily basis within two Business Days of receipt, and retain therein, 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. The Servicer shall make withdrawals therefrom only to effect such
payments as are required under this Agreement, and for such other purposes as
shall be set forth in, or in accordance with, Section 2.18. The Servicer 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 Obligor and, to the extent required by the related
Mortgage Loan, the Servicer shall pay interest on escrowed funds to the Obligor
notwithstanding that the Escrow Account is non-interest bearing or that interest
paid thereon is insufficient for such purposes.
Section 2.18 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by the Servicer or
Subservicer (i) to effect timely payments of ground rents, taxes, assessments,
water rates, fire, flood and hazard insurance premiums and comparable items in a
manner and at a time that assures that the lien priority of the Mortgage is not
jeopardized (or, with respect to the payment of taxes, in a manner and at a time
that avoids the loss of the Mortgaged Property due to a tax sale or the
foreclosure as a result of a tax lien), (ii) to reimburse the Servicer for any
advance made by it with respect to a related Mortgage Loan but only from amounts
received on the related Mortgage Loan which represent Escrow Payments thereunder
with respect to taxes and assessments and with respect to hazard insurance,
(iii) to refund to the Obligor any funds as may be determined to be overages,
(iv) for transfer to the Holding Account in accordance with the terms of this
Agreement, (v) to pay to the Servicer, or to the Obligor to the extent required
by the related Mortgage Loan, any interest paid on the funds deposited in the
Escrow Account or (vi) to clear and terminate the Escrow Account on the
termination of this Agreement.
In the event the Servicer shall deposit in the Escrow Account any
amount not required to be deposited therein, it may at any time withdraw such
amount from the Escrow Account, any provision herein to the contrary
notwithstanding.
Section 2.19 Indemnification.
The Servicer agrees to indemnify, reimburse and hold harmless the
Indenture Trustee and its officers, directors, representatives, agents and
employees (hereinafter in this Section 2.19 referred to individually as
"Indemnitee," and collectively as "Indemnitees") from any and all claims,
demands, actions, suits, judgments and any and all costs and expenses (including
reasonable attorneys' fees and expenses) (for the purpose of this Section 2.19,
the foregoing are collectively called "expenses") of whatsoever kind and nature
imposed on, asserted against or incurred by any of the Indemnitees in any way
relating to, or arising out of, (i) the failure on the part of the Servicer to
perform its obligations in accordance with the terms of this Agreement, or (ii)
the Servicer's negligence, bad faith or willful misconduct; provided, however,
that no Indemnitee shall be indemnified pursuant to this Section 2.19 for
losses, damages or liabilities to the extent caused by the negligence or willful
misconduct of such Indemnitee. The provisions of this Section 2.19 shall survive
the termination of this Agreement or the earlier resignation or removal of the
Indenture Trustee.
ARTICLE THREE
STATEMENTS, REPORTS AND NOTICES
Section 3.01 Reporting by the Servicer.
(a) On or before each Reporting Date, the Servicer shall render to
the Issuer, the Indenture Trustee and Banc of America Securities LLC, a
certificate, as of the immediately preceding Monthly Cut-Off Date, certifying to
all funds collected by it through such Monthly Cut-Off Date that it was required
to deposit in the Holding Account in respect of the preceding Collection Period
and, except for amounts provided on a cumulative basis, that have not been
previously reflected on a prior certificate pursuant to this Section 3.01 and
reporting certain other information. Such certificate shall be substantially in
the form of Exhibit B hereto. Such certificate shall also be sent to Xxxxx'x
Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention:
MBS Monitoring Department and Standard & Poor's, a division of The XxXxxx-Xxxx
Companies, Inc., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention:
Asset-Backed Surveillance Group.
(b) On or before each Reporting Date, the Servicer shall provide the
Issuer, with such information as of the immediately preceding Monthly Cut-Off
Date as is necessary in connection with the maintenance of the Issuer's
financial records and preparation of the Issuer's financial statements.
(c) On or before each Reporting Date, the Servicer shall provide the
Successor Servicer with servicing tapes in a format compatible with the
Successor Servicer's computer systems and containing such data as the Successor
Servicer may reasonably request.
Section 3.02 Annual Certificate; Mortgage Asset Statement.
On or before 75 days after the end of the fiscal year of the
Servicer that ends in December, 2004 and each fiscal year thereafter, the
Servicer shall deliver or cause to be delivered to the Issuer and the Indenture
Trustee an Officers' Certificate, dated as of the first Monthly Cut-Off Date
following the end of the preceding fiscal year, to the effect that a review of
the activities of the Servicer during the period from the beginning of the first
Collection Period (or the Closing Date in the case of the first such Officers'
Certificate required to be delivered) to the end of the last Collection Period
during the preceding fiscal year has been made under the supervision of the
officers executing such Officers' Certificate with a view to determining whether
during such period the Servicer had performed and observed all of its
obligations under this Agreement. Such Certificate shall state to the best of
the Servicer's knowledge either (A) no Default by the Servicer under this
Agreement has occurred and is continuing, or (B) if such a Default has occurred
and is continuing, specifying such Default and the nature and status thereof.
Section 3.03 Annual Accountants' Reports.
On or before 75 days after the end of the fiscal year of the
Servicer that ends in December, 2004 and each fiscal year thereafter, the
Servicer shall deliver to the Issuer and the Indenture Trustee a report,
prepared by a firm of Accountants of recognized national standing selected by
the Servicer, to the effect that (i) they have examined certain documents and
records relating to the Mortgage Assets during the preceding fiscal year in
accordance with the requirements of the Uniform Single Audit Program for
Mortgage Bankers and (ii) such examinations disclosed no exceptions that, in
their opinion, were material, relating to such Mortgage Assets, or, if any such
exceptions were disclosed thereby, setting forth such exceptions that, in their
opinion, were material. If any of the Mortgage Assets are being serviced by a
Sub-Servicer, the firm of Accountants preparing the report with respect to the
servicing of such Mortgage Assets by the Servicer may rely, as to matters
relating to the servicing of such Mortgage Assets, upon a comparable report
(rendered with respect to the most recent fiscal year of such Sub-Servicer which
ended at or prior to the end of the Servicer's fiscal year) of another firm of
Accountants of recognized national standing with respect to such Sub-Servicer's
servicing of such Mortgage Assets.
Section 3.04 Notices.
The Servicer shall, as promptly as practicable following receipt by
it of notice thereof, notify the Indenture Trustee of the commencement of a
class-action litigation challenging the validity or enforceability of Mortgage
Assets having an aggregate Principal Balance totaling $1,000,000 or more.
ARTICLE FOUR
THE SERVICER
Section 4.01 Representations and Warranties of the Servicer.
The Servicer represents and warrants to the Issuer as of the Closing
Date as follows:
(a) The Servicer (i) is a corporation, validly existing and in good
standing under the laws of the State of its incorporation, (ii) has qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary, and (iii) has full power,
authority and legal right to own its property, to carry on its business as
presently conducted, and to enter into and perform its obligations under this
Agreement.
(b) The execution and delivery by the Servicer of this Agreement are
within the corporate power of the Servicer and have been duly authorized by all
necessary corporate action on the part of the Servicer. Neither the execution
and delivery of this Agreement, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will conflict with or
result in a breach of, or constitute a default under, any of the provisions of
any law, governmental rule, regulation, judgment, decree or order binding on the
Servicer or its properties or the charter or by-laws of the Servicer, or any of
the provisions of any indenture, mortgage, contract or other instrument to which
the Servicer is a party or by which it is bound or result in the creation or
imposition of any lien, charge or encumbrance upon any of its property pursuant
to the terms of any such indenture, mortgage, contract or other instrument (or
if such conflict with, breach of or default under any such indenture, mortgage,
contract or other instrument exists or will exist, any remedies in respect
thereof and in respect of any such related lien, charge or encumbrance have been
stayed under the Bankruptcy Code).
(c) The execution, delivery and performance by the Servicer of this
Agreement and the consummation of the transactions contemplated hereby 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 as has been previously obtained
and are in effect.
(d) This Agreement has been duly executed and delivered by the
Servicer and constitutes a legal, valid and binding instrument enforceable
against the Servicer in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally.
(e) There are no actions, suits or proceedings pending or, to the
knowledge of the Servicer, threatened or likely to be asserted against or
affecting the Servicer, before or by any court, administrative agency,
arbitrator or governmental body with respect to any of the transactions
contemplated by this Agreement or the Indenture, or which will, if determined
adversely to the Servicer, materially and adversely affect it or its business,
assets, operations or condition, financial or otherwise, or adversely affect the
Servicer's ability to perform its obligations under this Agreement. The Servicer
is not in default with respect to any order of any court, administrative agency,
arbitrator or governmental body so as to materially and adversely affect the
transactions contemplated by the above-mentioned documents.
(f) The Servicer has obtained or made all necessary consents,
approvals, waivers and notifications of stockholders, creditors, lessors and
other nongovernmental persons, in each case, in connection with the execution,
delivery and performance of this Agreement.
The foregoing representations and warranties shall be deemed to be
made to the Indenture Trustee, as assignee of the Issuer.
Section 4.02 Merger or Consolidation of the Servicer.
The Servicer will keep in full effect its existence, rights and
franchises as a corporation under the laws of the State of Florida, and will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Indenture or any of the Mortgage Assets
and to perform its duties under this Agreement.
Any Person into which the Servicer may be merged or consolidated, or
any entity resulting from any merger or consolidation to which the Servicer
shall be a party, or any Person succeeding to the business of the Servicer shall
be the successor of the Servicer hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto.
Section 4.03 Performance of Obligations.
(a) The Servicer shall punctually perform and observe all of its
obligations and agreements contained in this Agreement and shall take such
action as may be necessary to prevent the attachment on the Mortgaged Properties
of liens or levies superior to the lien of the Mortgages securing the Mortgage
Assets arising from actions by or claims against the Servicer. In no event shall
the Indenture Trustee be liable for the actions or omissions of the Servicer or
any Sub-Servicer or obligated to monitor or supervise the Servicer or any
Sub-Servicer.
(b) The Servicer shall not take any action, or permit any action to
be taken by others, which would (i) materially and adversely affect the validity
or collectability of the Mortgage Assets or (ii) excuse any person from any of
its covenants or obligations under any of the Mortgage Assets or under any other
instrument included in the Trust Estate, or (iii) result in the amendment,
hypothecation, subordination, termination or discharge of, or (iv) impair the
validity or effectiveness of, any of the Mortgage Asset Documents or any such
instrument, except as expressly provided herein and therein.
Section 4.04 Servicer Not to Resign.
(a) The Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that its duties hereunder are no
longer permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Indenture Trustee. No such resignation shall become
effective unless and until the Successor Servicer or another new servicer,
qualified to act as a mortgage servicer and reasonably acceptable to the
Indenture Trustee, enters into a servicing agreement with the Issuer and the
Indenture Trustee in form and substance substantially similar to this Agreement.
(b) The Servicer may not assign this Agreement or any of its rights,
powers, duties or obligations hereunder except as permitted under Section 4.02
hereof.
(c) Except as provided in Section 4.04(a), the duties and
obligations of the Servicer under this Agreement shall continue until this
Agreement shall have been terminated as provided in Section 7.01, and shall
survive the exercise by the Issuer or the Indenture Trustee of any right or
remedy under this Agreement, or the enforcement by the Issuer, the Indenture
Trustee or any Noteholder of any provision of the Indenture, the Notes or this
Agreement.
Section 4.05 Fidelity Bond.
On or before the Closing Date, the Servicer shall obtain and deliver
to the Indenture Trustee and shall thereafter maintain in effect a fidelity bond
(or a direct surety bond) in the amount of $1,500,000 (subject to a deductible
of an amount not exceeding $250,000.00). Such bond shall name the Indenture
Trustee as an additional insured and as a joint loss payee, shall provide for 30
days' prior notice of cancellation to the Indenture Trustee and shall otherwise
be in form and substance reasonably satisfactory to the Indenture Trustee. Any
successor to the Servicer appointed as servicer of the Mortgage Assets pursuant
to Section 3.07(d) of the Indenture or Section 4.04(a) of this Agreement shall
be obligated to obtain and maintain a fidelity bond to the same extent as the
Servicer is obligated under this Section 4.05 or under the higher of the then
current Xxxxxx Xxx or Xxxxxxx Mac guidelines and shall deliver a copy of such
bond to the Indenture Trustee promptly after its appointment. The Servicer or
any successor servicer shall deliver to the Indenture Trustee, within 30 days
prior to the expiration of any such bond, a renewal or replacement thereof.
ARTICLE FIVE
DEFAULT
Section 5.01 Events of Default.
(a) Any of the following acts or occurrences shall constitute an
Event of Default by the Servicer under this Agreement:
(i) any failure by the Servicer to remit to the Indenture Trustee or
the Holding Account any amount required to be so remitted under the terms
of this Agreement that continues unremedied for a period of five Business
Days after the date upon which such amount was due to be so remitted; or
(ii) failure to submit to the Indenture Trustee the report called
for by Section 2.07(b) within two Business Days following the related
Remittance Date; or
(iii) failure on the part of the Servicer duly to observe or perform
any other of the covenants or agreements on the part of the Servicer
contained in this Agreement that 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 Servicer by the
Indenture Trustee or to the Servicer and the Indenture Trustee by the
holders of Notes representing at least a majority of the Voting Rights; or
(iv) a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises pursuant to any bankruptcy or
insolvency law or any other law relating to the relief of debtors, to the
readjustment, composition or extension of indebtedness, to liquidation or
to reorganization, or any formal or informal proceeding for the
dissolution, liquidation or winding up of the affairs of, or for the
settlement of claims against, the Servicer which is involuntary on the
part of the Servicer is entered and is not discharged or stayed for a
period of sixty (60) days;
(v) the Servicer becomes insolvent, generally fails to pay its debts
as they become due, has any receiver, trustee, liquidator, sequestrator or
custodian of it or any of its property appointed (whether with or without
its consent), makes any assignment for the benefit of creditors or
commences any case or other proceeding pursuant to any bankruptcy or
insolvency law or any other law relating to the relief of debtors, to the
readjustment, composition or extension of indebtedness, to liquidation or
to reorganization, or any formal or informal proceeding for the
dissolution, liquidation or winding up of the affairs of, or for the
settlement of claims against it; or
(vi) any representation, warranty or statement of the Servicer made
in this Agreement or any certificate, report or other writing delivered
pursuant hereto shall prove to be incorrect in any material respect as of
the time when the same shall have been made and, within 30 days after
written notice thereof shall have been given to the Servicer by the
Indenture Trustee or by the holders of Notes representing at least a
majority of the Voting Rights, the circumstance or condition in respect of
which such representation, warranty or statement was incorrect shall not
have been eliminated or otherwise cured.
(b) So long as an Event of Default shall have occurred and be
continuing, the Issuer or the Indenture Trustee (in each case subject to the
provisions of the Indenture), or the holders of Notes representing at least a
majority of the Voting Rights may, by notice given to the Servicer (with a copy
to the parties not giving such notice), terminate all of the rights and powers
of the Servicer under this Agreement ("Servicer Termination"), including without
limitation all rights of the Servicer to receive the Servicing Fee. On and after
the receipt of such notice, all rights, powers, duties and responsibilities of
the Servicer under this Agreement, whether with respect to the Mortgage Assets,
Holding Account, Collection Account, Servicing Account, any Servicing Fee or
otherwise, shall vest in and be assumed by the Successor Servicer as provided in
Section 3.07 of the Indenture, and the Issuer and the Indenture Trustee are each
hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, all documents and other instruments
(including any notices to Obligors deemed necessary or advisable by the
Indenture Trustee) and to do or accomplish all other acts or things necessary or
appropriate to effect such vesting and assumption. The terminated Servicer shall
cooperate promptly and in good faith with the Successor Servicer to transfer the
servicing records and other Mortgage Asset Documents maintained by the
terminated Servicer to the Successor Servicer in a prompt and efficient manner.
Except as otherwise expressly provided in the Indenture, the Issuer shall not
have any right to waive any Default or Event of Default by the Servicer under
this Agreement. In addition to any right of the Indenture Trustee upon an Event
of Default hereunder, the Indenture Trustee may take any action at law or in
equity that it deems appropriate to protect the interest of the Holders of
Notes.
Section 5.02 No Effect on Other Parties.
Upon any termination of the rights and powers of the Servicer from
time to time pursuant to Section 5.01 or upon any appointment of a successor to
the Servicer, all the rights, powers, duties and obligations of the Issuer under
this Agreement or under the Indenture shall remain unaffected by such
termination or appointment and shall remain in full force and effect thereafter,
except as otherwise expressly provided in this Agreement or in the Indenture.
Section 5.03 Rights Cumulative.
All rights and remedies from time to time conferred upon or reserved
to the Issuer, the Indenture Trustee or the Noteholders or to any or all of the
foregoing are cumulative, and none is intended to be exclusive of another. No
delay or omission in insisting upon the strict observance or performance of any
provision of this Agreement, or in exercising any right or remedy, shall be
construed as a waiver or relinquishment of such provision, nor shall it impair
such right or remedy. Every right and remedy may be exercised from time to time
and as often as deemed expedient.
ARTICLE SIX
THE MORTGAGE ASSETS
Section 6.01 Representations and Warranties; Mortgage Asset
Documents.
The representations and warranties of the Issuer set forth in
Section 3.11 of the Indenture with respect to each Mortgage Asset shall survive
delivery of the Mortgage Asset Documents to the Indenture Trustee, or Document
Custodian on behalf of the Indenture Trustee, and shall continue so long as such
Mortgage Asset remains outstanding. Upon discovery by the Issuer, the Indenture
Trustee, any Document Custodian or the Servicer that any of such representations
or warranties was incorrect as of the time made or that any of the Mortgage
Asset Documents relating to any such Mortgage Asset has not been properly
executed by the Obligor or contains a material defect or has not been received
by the Indenture Trustee, or Document Custodian on behalf of the Indenture
Trustee, the party making such discovery shall give prompt notice to the other
and to the Indenture Trustee and any Document Custodian (other than in cases
where the Indenture Trustee has given notice thereof). If any such defect,
misrepresentation or omission materially and adversely affects the interest of
the holders of Notes, as provided in Section 3.11(b) of the Indenture, the
Servicer shall, after discovery thereof or receipt of notice thereof, use its
reasonable best efforts to cure the defect or eliminate or otherwise cure the
circumstances or condition in respect of which such representation or warranty
was incorrect as of the time made and within 90 days of notice of such defect
the Servicer shall notify the Indenture Trustee of the action it has taken with
respect thereto and the results thereof. If such breach, omission or defect is
not or cannot be cured within such 90-day period or, with the prior written
consent of a Responsible Officer of the Indenture Trustee if so consented to
under the Indenture, such longer period as specified in such consent, the
Servicer shall cause the Issuer to either (i) deposit into the Collection
Account an amount equal to 100% of the then current Principal Balance of the
affected Mortgage Asset, at which time the Defective Mortgage Asset shall be
released from the lien of the Indenture and reconveyed to the Grantor or (ii)
remove such Mortgage Asset from the Trust Estate and substitute one or more
Qualified Substitute Mortgage Assets. The Servicer shall be entitled to
reimbursement for any reasonable and necessary expenses incurred by it in the
performance of its obligations under this Section 6.01.
ARTICLE SEVEN
MISCELLANEOUS PROVISIONS
Section 7.01 Termination.
(a) The respective duties and obligations of the Servicer and the
Issuer created by this Agreement shall terminate upon the final payment or other
liquidation of the last outstanding Mortgage Asset. Upon the termination of this
Agreement pursuant to this Section 7.01(a), the Servicer shall pay all moneys in
the Servicing Account to the persons entitled thereto, and shall direct the
Indenture Trustee to pay over to the Issuer or any other person entitled thereto
all other moneys with respect to the Mortgage Assets held in the Holding
Account.
(b) Following an Event of Default under the Indenture and
foreclosure upon the Trust Estate pursuant thereto, the successor to the rights
of the Issuer (including, without limitation, the Indenture Trustee or any or
all of the related Noteholders) shall have the right to terminate this Agreement
by notice to the Servicer, the Indenture Trustee and the Issuer, within 90 days
after the date such successor shall have succeeded to such rights of the Issuer.
Upon such termination, the Servicer shall be entitled to receive only the
accrued and unpaid Servicing Fee to the date of such termination, any amounts it
would have been permitted to receive pursuant to Section 2.07 from the Holding
Account or the Collection Account as of the date of such termination.
Section 7.02 Amendment.
(a) This Agreement may be amended from time to time by the Issuer
and the Servicer without the prior written consent of the Indenture Trustee, or
any of the Noteholders, provided that such action shall not adversely affect in
any material respect the interests of the Indenture Trustee or any Noteholder
and the Indenture Trustee shall have received an Opinion of Counsel to the
effect that such amendment does not adversely affect in any material respect the
interest of the Noteholders (such Opinion of Counsel may rely as to factual
matters on representations of the parties hereto or other persons appropriate
therefor).
(b) Notwithstanding paragraph (a) of this Section 7.02, this
Agreement may be amended in accordance with the proviso set forth in the first
sentence of Section 3.14 of the Indenture.
(c) This Agreement may also be amended from time to time by the
Issuer and the Servicer, with the written consent of the Indenture Trustee and
the Holders of Notes representing 51% or more of the aggregate Voting Rights of
all Classes of Notes voting together as a single class, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement; provided, however, that no such amendment shall,
without the consent of the Indenture Trustee and each holder of Outstanding
Notes, (i) adversely affect in any material respect the amount of, or the timing
of, payments received on the related Mortgage Assets which are required to be
deposited in the Holding Account and the Collection Account; (ii) alter the
priorities with which any allocation of funds shall be made under this
Agreement; (iii) permit the creation of any lien on the Trust Estate or any
portion thereof or deprive any such holder of the benefit of this Agreement with
respect to the Trust Estate or any portion thereof; or (iv) modify this Section
7.02 or Section 4.02, 4.03(b), 4.04 or 4.05.
(d) Promptly after the execution of any amendment, the Servicer
shall send to the Indenture Trustee a conformed copy of each such amendment, but
the failure to do so will not impair or affect its validity.
(e) It shall not be necessary for any consent of Noteholders under
this Section 7.02 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Noteholders shall be subject to such reasonable regulations
as the Indenture Trustee may prescribe.
(f) Prior to the execution of any amendment, the Servicer shall send
a copy of the proposed amendment to the Rating Agencies.
(g) Any amendment or modification effected contrary to the
provisions of this Section 7.02 shall be void.
Section 7.03 Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of Florida, and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 7.04 Notices.
All demands, notices and communications hereunder shall be in
writing and shall be delivered or mailed by registered or certified United
States mail, postage prepaid, and addressed in each case as follows: (a) if to
the Issuer, at Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx, 00000 c/o Wilmington
Trust Company, Attention: Corporate Trust Administration, (b) if to the
Servicer, at 0000 Xxxx Xxx Xxxxx Xxxxxxxxx, Xxxxx, Xxxxxxx, 00000, Attention:
General Counsel, (c) if to the Indenture Trustee, at 000 Xxxxxxx Xxxxxx - 0X,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Trust Department, (d) if to any
Document Custodian, at the address provided in the Custodial Agreement and (e)
if to any Noteholder, at the address of such holder as it appears in the Note
Register. Any of the persons in subclauses (a) through (e) above may change its
address for notices hereunder by giving notice of such change to the other
persons. Any change of address shown on a Note Register shall, after the date of
such change, be effective to change the address for such Noteholder hereunder.
All notices and demands shall be deemed to have been given either at the time of
the delivery thereof to any officer of the person entitled to receive such
notices and demands at the address of such person for notices hereunder, or on
the third day after the mailing thereof to such address, as the case may be.
Notices required hereunder shall in addition be sent to Xxxxx'x
Investors Service, Inc. at its address at 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, and to Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc.,
at its address at 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Section 7.05 Severability of Provisions.
If one or more of the provisions of this Agreement shall be for any
reason whatever held invalid or unenforceable, such provisions shall be deemed
severable from the remaining covenants, agreements and provisions of this
Agreement and such invalidity or unenforceability shall in no way affect the
validity or enforceability of such remaining provisions, the rights of any
parties hereto, or the rights of the Indenture Trustee or any Noteholders. To
the extent permitted by law, the parties hereto hereby waive any provision of
law that renders any provision of this Agreement invalid or unenforceable in any
respect.
Section 7.06 Inspection and Audit Rights.
The Servicer agrees that, on reasonable prior notice, it will permit
any representative of the Issuer, during the Servicer's normal business hours,
to examine all the books of account, records, reports and other papers of the
Servicer relating to the Mortgage Assets, to make copies and extracts therefrom
to cause such books to be audited by Accountants selected by the Issuer and to
discuss its affairs, finances and accounts relating to the Mortgage Assets with
its officers, employees and Independent Accountants (and by this provision the
Servicer hereby authorizes said Independent Accountants to discuss with such
representatives such affairs, finances and accounts) all at such reasonable
times and as often as may be reasonably requested. Any expense incident to the
exercise by the Issuer of any right under this Section 7.06 shall be borne by
the Issuer, provided that if an audit is made during the continuance of an Event
of Default, the expense incident to such audit shall be borne by the Servicer.
Section 7.07 Binding Effect.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of the parties hereto, and
all such provisions shall inure to the benefit of the Indenture Trustee, the
Noteholders and their successors and assigns.
Section 7.08 Article and Section Headings.
The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning thereof.
Section 7.09 The Owner Trustee.
It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by Wilmington Trust Company, not
individually but solely as Owner Trustee under the Trust Agreement, in the
exercise of the powers and authority conferred and vested in it as the Owner
Trustee, (b) each of the representations, undertakings and agreements herein
made on the part of the Issuer is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust Company but is
made and intended for the purpose of binding only the Trust Property, (c)
nothing herein contained shall be construed as creating any liability on
Wilmington Trust Company, individually or personally, to perform any covenant
either expressed or implied contained herein, all such liability, if any, being
expressly waived by the Servicer and the Indenture Trustee and by any Person
claiming by, through or under the Servicer and the Indenture Trustee and (d)
under no circumstances shall Wilmington Trust Company be personally liable for
the payment of any indebtedness or expenses of the Indenture Trustee or be
liable for the breach or failure of any obligation, representations, warranty or
covenant made or undertaken by the Issuer under this Agreement.
Section 7.10 Distribution of Servicing Procedures and Standards.
The Servicer agrees to distribute the procedures and standards set
forth herein to each of its field offices and to take all reasonable action to
instruct its field servicing personnel concerning their duties hereunder as soon
as practicable after execution hereof.
Section 7.11 Property Address.
Within nine months from the Closing Date the Servicer shall provide
the Indenture Trustee and any Document Custodian a magnetic tape showing, for
each Mortgage Asset, the Mortgage Asset number, property address and customer
name.
Section 7.12 Power of Attorney.
The Issuer is authorized from time to time to deliver one or more
powers of attorney to the Servicer or Sub-Servicer that authorize the Servicer
and/or Sub-Servicer, as applicable, to act on behalf of the Issuer as
contemplated by this Agreement and any Sub-Servicing Agreement. The Issuer shall
upon request of any Successor Servicer deliver one or more powers of attorney to
the Successor Servicer or its designated agent for purposes contemplated by this
Agreement.
Section 7.13 Rights Upon Discharge of Indenture.
Upon the payment in full of the Notes, the satisfaction and
discharge of the Indenture, the Owner Trustee will succeed to all rights of the
Indenture Trustee hereunder and the Owners (as such term is defined in the Trust
Agreement) will succeed to all rights of the Noteholders hereunder.
Section 7.14 Non-Petition.
The Servicer hereby agrees not to petition or otherwise invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Issuer under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequester or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer.
IN WITNESS WHEREOF, the Owner Trustee on behalf of the Issuer, the
Servicer and the Indenture Trustee have caused this Agreement to be duly
executed by their respective officers thereunder duly authorized as of the day
and year first above written.
ISSUER:
MID-STATE CAPITAL CORPORATION 2004-1
TRUST
By: WILMINGTON TRUST COMPANY, not in
its individual capacity, but
solely as Owner Trustee of
Mid-State Capital Corporation
2004-1 Trust
By:
------------------------------------
Name:
Title:
SERVICER:
MID-STATE HOMES, INC.
By:
------------------------------------
Name:
Title:
THE BANK OF NEW YORK
as Indenture Trustee
By:
------------------------------------
Name:
Title:
EXHIBIT A
FORM OF STANDBY SERVICING AGREEMENT
EXHIBIT B
MID-STATE CAPITAL CORPORATION 2004-1 TRUST
SERVICER'S CERTIFICATE
_______________ and ________________ hereby certify that they are
officers of Mid-State Homes, Inc. (the "Servicer") holding their respective
offices set forth beneath their signatures and that they are duly authorized to
execute this Servicer's Certificate on behalf of the Servicer and further
certify that with respect to the preceding Collection Period (________ to
________):
(i) the aggregate Principal Balance of all Mortgage Assets as of the
last day of the month of the preceding Collection Period is $______;
(ii) with respect to any Mortgage Asset that became an REO Property
during the preceding Collection Period, the Principal Balance of such Mortgage
Asset as of the date it became an REO Property;
(iii) the aggregate book value of the REO Properties as of the last
day of the month of the preceding Collection Period is $______;
(iv) the sum of the aggregate Principal Balance of all Mortgage
Assets and the aggregate book value of all REO Properties as of the last day of
the month of the preceding Collection Period is $______;
(v) the total number of Mortgage Assets outstanding as of the end of
the preceding Collection Period is _____ and the aggregate funds collected on
the Mortgage Assets with respect to the preceding Collection Period is
$________;
(vi) _________ Additional Mortgage Assets were added during the
preceding Collection Period and have an aggregate Principal Balance as of the
end of the preceding Collection Period of $__________;
(vii) (a) the aggregate amount of the Servicing Fee included in (i)
above is $________ based on the ________ Mortgage Assets outstanding that have a
Principal Balance of more than zero as of the beginning of the preceding
Collection Period and the cumulative amount for the related Collection Period is
$________;
(b) the aggregate amount of reimbursement for advances for
taxes and insurance premiums and other advances included in (i) above is
$________;
(c) the aggregate amount of late payment charges, prepayment
penalties and assumption fees is $___________;
(d) the aggregate amount previously deposited in the Holding
Account in respect of payments by Obligors made by checks subsequently returned
for insufficient funds or other reason for non-payment is $_________;
(viii) the amount in (i) for the preceding Collection Period minus
the total of amounts in (ii) for the preceding Collection Period is
$___________;
(ix) (a) the aggregate amount withdrawn from the Holding Account as
reimbursement to the Servicer for expenses for the restoration of Mortgaged
Property damaged by an Uninsured Cause and as reimbursement for usual and
customary Liquidation Expenses is $______________. [A schedule of the Mortgage
Asset numbers for the related Mortgage Assets shall be attached];
(b) the aggregate amount withdrawn from the Holding Account as
reimbursement for Insured Expenses is $________. [A schedule of the Mortgage
Asset Numbers for the related Mortgage Assets shall be attached]; and
(c) the aggregate amount withdrawn from the Holding Account
that is not part of the Trust Estate is $_______;
(x) the amount in (iv) minus the total of the amounts in (v) is
$________;
(a) the portion of such amount that represents Net Insurance
Proceeds that do not constitute a Full Prepayment with respect to any Mortgage
Asset is $________;
(b) the portion of such amount that represents Net Liquidation
Proceeds is $___________;
(c) the portion of such amount that represents Full
Prepayments is $_________;
(xi) with respect to each Mortgage Asset that was the subject of a
Full Prepayment:
Mortgage Asset Number Full Prepayment Amount
--------------------- ----------------------
(xii) the cumulative amount of Prepayments is $______;
(xiii) Cumulative Realized Losses are $___________;
(a) the cumulative Principal Balance of all Mortgage Assets
which have been repossessed equals $_______; and
(b) if applicable, the Principal Balance of those Mortgage
Assets which are delinquent over 120 days equals $_________; and
(c) the amount of cumulative Net Liquidation Proceeds is
$_______________;
(xiv) the Principal Balance of all Mortgage Assets with respect to
which there is a material breach of any representation or warranty made in
Section 3.11 of the Indenture or in the related Addition Transfer Agreement or
as to which there is a material defect in the related Mortgage Asset Documents
in accordance with Section 3.12(b) of the Indenture is $________;
(xv) the amount that represents the cumulative amount since the
Cut-off Date of the cash component of aggregate Net Liquidation Proceeds equals
$________;
(xvi) with respect to delinquent Mortgage Assets:
Aggregate
Period of Number of Principal
Delinquency Mortgage Assets Balance ($)
---------------------- ------------------- ---------------
0-30 days
31-60 days
61-90 days
91 or more days
------------------- ---------------
Total
The percentage equal to the average of the 60+ Day Delinquent
Mortgage Assets for each of the three immediately preceding Collection Periods
with respect to the Mortgage Assets is ____%;
(xvii) with respect to property acquired in respect of a Mortgage
Asset:
Aggregate
Period of Time Number of Principal
as Real Estate Owned Mortgage Assets Balance ($)
---------------------- ------------------- ---------------
0-3 months
4-6 months
7-9 months
10-12 months
Over 12 months
------------------- ---------------
Total
(xviii) delivered herewith, if previously requested, is a copy of a
magnetic tape file containing the Schedule of Mortgage Assets information and
current mailing address information for each Mortgage Asset and showing the
paid-through status of each Mortgage Asset;
(xix) a list of Mortgage Assets which became the subject of an
Assumption Agreement;
(xx) with respect to the Servicing Account for the related
Collection Period:
Beginning Balance $
Deposits
Disbursements
------------------------
Ending Balance $
========================
(xxi) with respect to each Mortgage Asset that was the subject of a
Repossession:
Mortgage Asset Number Principal Balance
--------------------- -----------------
(xxii) with respect to each Mortgage Asset that was the subject of a
Resale:
Mortgage Asset Number Principal Balance
--------------------- -----------------
(xxiii) the aggregate number and aggregate Principal Balance of all
Mortgage Assets that were set-up (i.e., rewritten) during the Collection Period
was $________ and $________, respectively;
(xxiv) the aggregate number and aggregate Principal Balance of all
Mortgage Assets that were set-up (i.e., rewritten) during the Collection Period
and the prior eleven (11) Collection Periods was _________ and $________,
respectively; and
(xxv) the number and aggregate Principal Balances of all Mortgage
Assets 30, 60 and 90 or more days past due and in repossession, foreclosure or
bankruptcy are as follows: ______________.
The undersigned hereby certify that all amounts received from the
Holding Account during the preceding Collection Period are authorized
withdrawals pursuant to Section 2.07(c) or 2.11 of the Servicing Agreement.
Mid-State Homes, Inc.
By:
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Name:
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Title:
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By:
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Name:
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Title:
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EXHIBIT C
Mid-State Homes, Inc.
Xxxx Xxxxxx Xxx 00000 x Xxxxx, Xxxxxxx 00000-0000
0000 X. Xxx Xxxxx Xxxx. x Xxxxx, Xxxxxxx 00000
July 15, 2004
Servicing Procedures
Mid-State Homes, Inc.
Reference is made to the Servicing Agreement (the "Servicing
Agreement") dated July 15, 2004, among the undersigned (the "Servicer"),
Mid-State Capital Corporation 2004-1 Trust, a statutory trust established under
the laws of the State of Delaware (the "Trust") and The Bank of New York (the
"Indenture Trustee") entered into in connection with the issuance and sale by
the Trust of its $180,251,000.00 6.005% Asset-Backed Notes, Class A,
$48,282,000.00 6.497% Asset-Backed Notes, Class M-1, $34,602,000.00 8.114%
Asset-Backed Notes, Class M-2, and $31,383,000.00 8.900% Asset-Backed Notes,
Class B (the "Notes") pursuant to the indenture dated July 15, 2004 (the
"Indenture") between the Trust and the Indenture Trustee.
Set forth below is a description of the servicing standards
historically employed by the Servicer referred to in Section 2.1 of the
Servicing Agreement.
I. COLLECTION PROCEDURES
The following procedures are those generally followed by the
Servicer as of July 15, 2004 in the collection, through its subservicing agent,
Xxxxxx Mortgage Company ("Xxxxxx Mortgage"), of past-due Mortgage Assets.
However, it should be noted that since supervisory personnel and management
exercise substantial discretionary judgment in the collection effort, the
procedures followed in the collection of any particular past-due Mortgage Asset
may deviate from those described below.
A. Mortgage Assets
A database of delinquent Mortgage Assets is updated daily. The
database is viewed and analyzed through a collection screen inquiry system. Each
delinquent Mortgage Asset is assigned to one of the two following categories:
1. "Field Mortgage Assets": Mortgage Assets in respect of which the
Obligor will, if a payment is not made during the course of the then current
month, be in arrears by at least two installment payments. Field Mortgage Asset
Obligors may also owe amounts advanced by the Servicer in respect of insurance
premiums, real property taxes or other amounts.
2. "Off-Code Mortgage Assets": Mortgage Assets in respect of which
the Obligor either is current on installment payments or, in the event that a
payment is not made during the course of the then-current month, will be in
arrears with respect to only one installment payment at the end of such month,
and is indebted to the Servicer for amounts advanced by the Servicer in respect
of insurance premiums, real property taxes or other amounts.
B. Field Offices
Field Mortgage Assets and Off-Code Mortgage Assets are serviced from
Xxxxxx Mortgage's Field Offices. Xxxxxx Mortgage has approximately 84 such Field
Offices serving 24 different states. Each Field Representative services an
average of approximately 240 Mortgage Assets per month. Each Field
Representative uses the delinquency database on a daily basis to review
delinquent Field Mortgage Assets and Off-Code Mortgage Assets respecting
properties within his service area, and the delinquency database for each Field
Office within a division is made available to the Divisional Vice Presidents,
Assistant Divisional Supervisors, and other members of Senior Management in Fort
Worth, Texas or Tampa, Florida.
Upon receipt of the database updates, each Field Representative
seeks to make contact with each delinquent Obligor either by telephone or in
person, in order to make payment arrangements with such Obligors. Field
Representatives and their respective Assistant Divisional Supervisors
communicate not less frequently than every other day to review Field Mortgage
Assets and to discuss progress and problems in such Field Representative's
collection efforts. All collection efforts of the Field Representatives (whether
by phone or in person) are documented directly on the delinquency database.
At least weekly, the Assistant Divisional Supervisor reviews orally
with the respective Divisional Vice President the results of the field
collection efforts for the previous week. Additionally, Assistant Divisional
Supervisors request, upon the recommendation of the Field Representative, that
the Mortgage Asset be foreclosed or repossessed, request a deed in lieu of
foreclosure or refrain from foreclosing or repossessing a Mortgage Asset which
is three or more installments in arrears. The final decision is made by the
Divisional Vice President.
In the event an Obligor fails to adhere to the payment schedule
arranged with the Field Representative, the Field Representative will re-contact
such Obligor, usually by means of a visit to the Obligor's home. The Field
Representatives spend a significant portion of their time on the road making
face-to-face contact with delinquent Obligors. Not only does such visit seek to
impress upon the Obligor the urgency of coming to some successful arrangement,
but also affords the Field Representative the opportunity to make a cursory
inspection of the condition of the house and property, so that repair plans can
be made should reacquisition become necessary. The highest priority of
visitation is placed on the delinquent Mortgage Assets with the largest balance.
In many circumstances, a satisfactory payment schedule can be
arranged with the Obligor (see below "WORK-OUT POLICIES"). However, if it is
felt that the chances of arranging a successful repayment program satisfactory
to the Servicer are not good, after a final attempt by either one or both of the
Divisional Vice President or Assistant Divisional Supervisor, the Field Mortgage
Asset Obligor will either be requested to sign a deed in lieu of foreclosure or
will be advised that his Mortgage Asset has been or will be referred to an
attorney for the commencement of foreclosure proceedings (see below "FORECLOSURE
POLICIES").
While it is discouraged, Field Representatives sometimes receive
monthly payments and other repayments of outstanding advances directly from the
Obligors. The Field Representatives give the Obligor a receipt for such payment
and mail the payment to the lock box or to Ft. Worth or Tampa, if manual
processing is required, as soon as practicable. When the receipt book is used up
it is forwarded to the Divisional Office for review. Each day the Field
Representatives take all collections made or which have otherwise been received
and mail such payments to the lock box or Ft. Worth or Tampa headquarters.
C. Collection of Off-Code Mortgage Assets
Approximately twelve telephone collectors and one Supervisor, all
located at a central office in Fort Worth, Texas, are also responsible for the
collection of Off-Code Mortgage Assets. Collection efforts begin immediately
upon receipt of the update of the delinquency database and are confined to
contacting Obligors by telephone, by mail or by assignment to a Field
Representative. Since the majority of Obligors with respect to Mortgage Assets
in this category have built up substantial equity in the relevant properties, it
is the experience of the Servicer that such Obligors can be persuaded to bring
their Mortgage Asset balance current with relative ease. Therefore, the bulk of
the collection effort expended by such telephone collectors is directed toward
collecting amounts advanced by the Servicer on such Obligor's behalf in respect
of insurance premiums and real property taxes. All Obligor contacts in the
collection effort are documented directly on the delinquency database. Mortgage
Asset Obligors incapable of paying all such amounts upon demand are permitted to
pay in installments pursuant to a repayment schedule satisfactory to the
Servicer.
Central office telephone collectors review the collection status of
all their Mortgage Assets with the Supervisor at least every other day. When, in
his judgment, the telephone collectors deem it appropriate, he will refer an
Off-Code Mortgage Asset to the field for collection efforts by a Field
Representative.
In certain circumstances, the telephone collectors will also assist
the given Field Office in the collection of Field Mortgage Assets. This is
driven by the volume associated with the given Field Office.
II. WORK-OUT POLICIES
As a general rule, the Servicer will not permit a Mortgage Asset to
remain two installment payments in arrears. Whether or not the Obligor will be
allowed to arrange a repayment schedule rather than be required either to bring
the Mortgage Asset current or seek foreclosure proceedings brought will depend
upon the Servicer's estimate of the likelihood of a successful work-out being
accomplished. Naturally, such an estimate is subjective to a certain degree.
The factors considered in arriving at a decision whether or not to
enter into an arrangement with an Obligor include whether or not the Obligor has
a record of making previous payments in a timely fashion, the nature of the
reason for failure to remain current on mortgage payments, the likelihood of
such reason being cured or removed in the near future and the difficulty, if
any, anticipated in prosecuting an action for foreclosure.
Generally, an acceptable work-out schedule of payments will require
the Obligor to pay either two installment payments, or a payment and a half, in
the immediately following month or months. On rare occasions, if an Obligor has
a good past payment record and experiences difficulty in making payment, which
difficulty, in the judgment of the relevant Representatives and Supervisors, is
likely to be cured or removed, the Mortgage Asset may be deemed current and the
delinquent payments added to the end of the original outstanding balance of such
Mortgage Asset. All Mortgage Assets that are "deemed to be current" through this
process must have been approved by senior management at the central office in
Tampa, Florida.
A successful work-out should result in a current Mortgage Asset
within the space of two or three months following agreement upon a repayment
schedule.
III. FORECLOSURE POLICIES
A. Generally
Mortgage Assets in respect of which foreclosure proceedings are to
be commenced are referred for foreclosure by Xxxxxx Mortgage. The actual
foreclosure process consists of Xxxxxx Mortgage delivering the necessary
Mortgage Asset Documents to attorneys in the state in which the mortgaged
property is located with direction to foreclose on the Mortgage Asset as quickly
as possible. Xxxxxx Mortgage also has staff in Tampa, Florida to oversee the
foreclosure activities of all local counsel.
In any case in which an Obligor has agreed to surrender the
mortgaged property by deed in lieu of foreclosure, Xxxxxx Mortgage performs a
search of the records on file in the applicable county to determine whether the
property is subject to tax or other liens. If there are liens on record, other
than tax liens, Xxxxxx Mortgage refuses the deed in lieu of foreclosure and, if
necessary, initiates foreclosure to acquire the property free of such liens.
Mortgage Assets recommended for foreclosure are notified that Xxxxxx
Mortgage intends to initiate foreclosure or repossession if payment is not made
in 30 days. Provided that Xxxxxx Mortgage is the successful bidder at the
resulting judicial sale, the relevant Xxxxxx Mortgage Field Representative will
be responsible for reselling the repossessed property. The average period
elapsed between repossession of a property and its resale is approximately 67
days.
B. Maintenance and Repair of Repossessed Homes
Immediately upon becoming aware that a property has been abandoned
or vacated or following repossession of a property, the Field Representative
will arrange for basic clean-up of the yard and interior of the house as
necessary. Periodic inspections of the property are made during the period
between repossession and resale to ensure that the property does not deteriorate
significantly.
The Field Representative will recommend needed repairs to the
Assistant Divisional Supervisor. Generally speaking, repairs necessary to
prevent any structural deterioration will be made forthwith. Depending upon the
magnitude of interior repairs, such repairs may either be made at once or they
may be made a part of the negotiation of the price and terms of the resale
contract. Likewise, in the case of a house which was both sold and repossessed
in an unfinished state, as a general rule no work will be done on the interior
to bring it to a higher state of completion except as part of a firm contract of
resale.
Hazard Insurance coverage is maintained on each REO Property;
additionally, all property taxes, assessments and utility bills for such
properties are paid and appropriate steps are taken to protect against damage to
plumbing during winter months.
C. Resale
During the repossession and/or foreclosure process, the Field
Representative resale efforts are commenced. After title to the house is taken,
the Field Representative's resale effort may take the form of canvassing the
neighborhood, leaving information and pictures at corner stores and factories or
advertising in local newspapers.
1. Resale Price
Several points of reference are used in arriving at a resale price
for a repossessed home. First, the Servicer will provide a baseline number that
represents its cash cost. Sales for a price below such baseline price require
the permission of the Divisional Vice President. Second, the Field
Representative makes reference to the current price for a similar new home.
Finally, the Field Representative refers to the market price prevailing for
comparable homes in the area, discounting, if necessary, for the work left to be
done to bring the house to completion.
If the proposed sale price is less than a specified deviation below
the baseline price, the property must be seen by the Assistant Divisional
Supervisor or Divisional Vice President supervising the area in which the
property is located. The Divisional Vice President must explain any shortfalls
to an officer in the central office in Tampa or Fort Worth, who will attach the
statement to the sale package.
2. Resale Credit Policies
Prospective purchasers at resale are subject to the same credit
review procedures as purchasers of new homes. In lieu of the pledge of real
property received from new home buyers, a certain amount of equity in the
property is provided in a resale by requiring the purchaser at resale to make a
down payment of between a minimum of $750 and up to 10% of the selling price,
depending upon the credit profile of such purchaser.
MID-STATE HOMES, INC.
By:
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Name:
Title:
