EXHIBIT 99.1
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IMPAC FUNDING CORPORATION,
as Master Servicer,
IMPAC CMB TRUST SERIES 2002-3,
as Issuer
and
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Indenture Trustee,
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SERVICING AGREEMENT
Dated as of June 26, 2002
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Mortgage Loans
Impac CMB Trust Series 2002-3
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TABLE OF CONTENTS
PAGE
ARTICLE I
Definitions..............................................................................................2
Section 1.01 DEFINITIONS.......................................................................2
Section 1.02 OTHER DEFINITIONAL PROVISIONS.....................................................2
Section 1.03 INTEREST CALCULATIONS.............................................................2
ARTICLE II
Representations and Warranties...........................................................................4
Section 2.01 REPRESENTATIONS AND WARRANTIES REGARDING THE MASTER SERVICER......................4
Section 2.02 EXISTENCE.........................................................................5
Section 2.03 ENFORCEMENT OF REPRESENTATIONS AND WARRANTIES.....................................5
ARTICLE III
Administration and Servicing of Mortgage Loans...........................................................7
Section 3.01 MASTER SERVICER TO ASSURE SERVICING...............................................7
Section 3.02 SUBSERVICING AGREEMENTS BETWEEN MASTER
SERVICER AND SUBSERVICERS....................................................9
Section 3.03 SUCCESSOR SUBSERVICERS...........................................................10
Section 3.04 LIABILITY OF THE MASTER SERVICER.................................................10
Section 3.05 ASSUMPTION OR TERMINATION OF SUBSERVICING
AGREEMENTS BY INDENTURE TRUSTEE.............................................11
Section 3.06 COLLECTION OF MORTGAGE LOAN PAYMENTS.............................................11
Section 3.07 WITHDRAWALS FROM THE COLLECTION ACCOUNT..........................................14
Section 3.08 COLLECTION OF TAXES ASSESSMENTS
AND SIMILAR ITEMS; SERVICING ACCOUNTS.......................................16
Section 3.09 ACCESS TO CERTAIN DOCUMENTATION AND
INFORMATION REGARDING THE MORTGAGE LOANS....................................16
Section 3.10 MAINTENANCE OF PRIMARY INSURANCE POLICIES
AND THE RADIAN POLICY; COLLECTION THEREUNDER................................17
Section 3.11 MAINTENANCE OF HAZARD INSURANCE AND FIDELITY COVERAGE............................18
Section 3.12 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.......................................19
Section 3.13 REALIZATION UPON DEFAULTED MORTGAGE LOANS........................................20
Section 3.14 INDENTURE TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES........................21
Section 3.15 MASTER SERVICING COMPENSATION....................................................23
Section 3.16 ANNUAL STATEMENTS OF COMPLIANCE..................................................23
Section 3.17 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT..........................23
Section 3.18 OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS....................................24
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Section 3.19 INFORMATION REQUIRED BY THE INTERNAL REVENUE
SERVICE GENERALLY AND REPORTS OF FORECLOSURES
AND ABANDONMENTS OF MORTGAGED PROPERTY......................................24
ARTICLE IV
Servicing Certificate...................................................................................25
Section 4.01 REMITTANCE REPORTS...............................................................25
Section 4.02 RESERVED.........................................................................25
Section 4.03 RESERVED.........................................................................25
Section 4.04 ADVANCES.........................................................................25
Section 4.05 COMPENSATING INTEREST PAYMENTS...................................................26
ARTICLE V
The Master Servicer.....................................................................................27
Section 5.01 LIABILITY OF THE MASTER SERVICER.................................................27
Section 5.02 MERGER OR CONSOLIDATION OF OR ASSUMPTION
OF THE OBLIGATIONS OF THE MASTER SERVICER...................................27
Section 5.03 LIMITATION ON LIABILITY OF THE MASTER SERVICER AND OTHERS........................27
Section 5.04 MASTER SERVICER NOT TO RESIGN....................................................28
Section 5.05 DELEGATION OF DUTIES.............................................................29
Section 5.06 MASTER SERVICER TO PAY INDENTURE TRUSTEE'S
AND OWNER TRUSTEE'S FEES AND EXPENSES; INDEMNIFICATION......................29
ARTICLE VI
Default.................................................................................................31
Section 6.01 SERVICING DEFAULT................................................................31
Section 6.02 INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR...............................34
Section 6.03 NOTIFICATION TO BONDHOLDERS......................................................36
Section 6.04 WAIVER OF DEFAULTS...............................................................36
ARTICLE VII
Miscellaneous Provisions................................................................................37
Section 7.01 AMENDMENT........................................................................37
Section 7.02 GOVERNING LAW....................................................................37
Section 7.03 NOTICES..........................................................................37
Section 7.04 SEVERABILITY OF PROVISIONS.......................................................38
Section 7.05 THIRD-PARTY BENEFICIARIES........................................................38
Section 7.06 COUNTERPARTS.....................................................................38
Section 7.07 EFFECT OF HEADINGS AND TABLE OF CONTENTS.........................................39
Section 7.08 TERMINATION......................................................................39
Section 7.09 NO PETITION......................................................................39
Section 7.10 NO RECOURSE......................................................................39
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ARTICLE VIII
DUTIES OF THE MASTER SERVICER...........................................................................40
Section 8.01 ADMINISTRATIVE DUTIES............................................................40
Section 8.02 RECORDS.........................................................................41
Section 8.03 ADDITIONAL INFORMATION TO BE FURNISHED...........................................41
EXHIBIT A
MORTGAGE LOAN SCHEDULE.................................................................................A-1
EXHIBIT B
FORM OF REQUEST FOR RELEASE............................................................................B-1
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This Servicing Agreement, dated as of June 26, 2002, among
Impac Funding Corporation, as Master Servicer (the "Master Servicer" ), Impac
CMB Trust Series 2002-3, as Issuer (the "Issuer") and Deutsche Bank National
Trust Company, as Indenture Trustee (the "Indenture Trustee").
W I T N E S S E T H T H A T :
WHEREAS, pursuant to the terms of the Mortgage Loan Sale and
Contribution Agreement, IMH Assets Corp. (the "Company" or the "Depositor") will
acquire the Mortgage Loans;
WHEREAS, the Company will create Impac CMB Trust Series
2002-3, a Delaware business trust, and will transfer the Mortgage Loans and all
of its rights under the Mortgage Loan Sale and Contribution Agreement to the
Issuer;
WHEREAS, pursuant to the terms of an Amended and Restated
Trust Agreement dated as of June 26, 2002 (the "Trust Agreement") among the
Company, as depositor, Wilmington Trust Company, as owner trustee (the "Owner
Trustee") and Deutsche Bank National Trust Company, as certificate registrar and
certificate paying agent, the Company will convey the Mortgage Loans to the
Issuer in exchange for the Certificates (as defined below);
WHEREAS, pursuant to the terms of the Trust Agreement, the
Issuer will issue and transfer to or at the direction of the Depositor, the
Trust Certificates, Series 2002-3 (the "Certificates");
WHEREAS, pursuant to the terms of an Indenture dated as of
June 26, 2002 (the "Indenture") between the Issuer and Deutsche Bank National
Trust Company (the "Indenture Trustee"), the Issuer will pledge the Mortgage
Loans and issue and transfer to or at the direction of the Purchaser the
Collateralized Asset-Backed Bonds, Series 2002-3, Class 1-A-1, Class 1-A-2 and
Class B (collectively, the "Bonds"); and
WHEREAS, pursuant to the terms of this Servicing Agreement,
the Master Servicer will service the Mortgage Loans set forth on the Mortgage
Loan Schedule attached hereto as Exhibit A directly or through one or more
Subservicers;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01 DEFINITIONS. For all purposes of this Servicing Agreement,
except as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in the Definitions contained in Appendix A to the
Indenture which is incorporated by reference herein. All other capitalized terms
used herein shall have the meanings specified herein.
Section 1.02 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Servicing Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(b) As used in this Servicing Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Servicing Agreement or in any such certificate or other
document, and accounting terms partly defined in this Servicing Agreement or in
any such certificate or other document, to the extent not defined, shall have
the respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Servicing Agreement or in any such certificate or other document are
inconsistent with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Servicing Agreement or in any such
certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Servicing Agreement shall refer to this Servicing
Agreement as a whole and not to any particular provision of this Servicing
Agreement; Section and Exhibit references contained in this Servicing Agreement
are references to Sections and Exhibits in or to this Servicing Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation".
(d) The definitions contained in this Servicing Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
Section 1.03 INTEREST CALCULATIONS. All calculations of interest
hereunder that are made in respect of the Stated Principal Balance of a Mortgage
Loan shall be made on the basis of a 360-day
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year consisting of twelve 30-day months, notwithstanding the terms of the
related Mortgage Note and Mortgage.
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ARTICLE II
Representations and Warranties
Section 2.01 REPRESENTATIONS AND WARRANTIES REGARDING THE MASTER
SERVICER. The Master Servicer represents and warrants to the Issuer and for the
benefit of the Indenture Trustee, as pledgee of the Mortgage Loans, the Bond
Insurer and the Bondholders, as of the Cut-Off Date and the Closing Date, and
Subsequent Cut-off Date and the Subsequent Transfer Date, as applicable, that:
(i) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California and has the corporate power to own its assets and to
transact the business in which it is currently engaged. The Master
Servicer is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it requires
such qualification and in which the failure to so qualify would have a
material adverse effect on the business, properties, assets, or
condition (financial or other) of the Master Servicer or the validity
or enforceability of the Mortgage Loans;
(ii) The Master Servicer has the power and authority to make,
execute, deliver and perform this Servicing Agreement and all of the
transactions contemplated under this Servicing Agreement, and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Servicing Agreement. When executed and delivered,
this Servicing Agreement will constitute the legal, valid and binding
obligation of the Master Servicer enforceable in accordance with its
terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable
remedies;
(iii) The Master Servicer is not required to obtain the
consent of any other Person or any consent, license, approval or
authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Servicing Agreement, except for such consent, license, approval or
authorization, or registration or declaration, as shall have been
obtained or filed, as the case may be;
(iv) The execution and delivery of this Servicing Agreement
and the performance of the transactions contemplated hereby by the
Master Servicer will not violate any provision of any existing law or
regulation or any order or decree of any court applicable to the Master
Servicer or any provision of the certificate of incorporation or bylaws
of the Master Servicer, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the Master
Servicer is a party or by which the Master Servicer may be bound;
(v) No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending (other
than litigation with respect to which pleadings or documents have been
filed with a court, but not served on the Master Servicer), or to the
knowledge of the Master Servicer threatened, against the Master
Servicer or any of its
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properties or with respect to this Servicing Agreement or the Bonds or
the Certificates which, to the knowledge of the Master Servicer, has a
reasonable likelihood of resulting in a material adverse effect on the
transactions contemplated by this Servicing Agreement; and
(vi) The Master Servicer is a member of MERS in good standing,
and will comply in all material respects with the rules and procedures
of MERS in connection with the servicing of the Mortgage Loans that are
registered with MERS.
The foregoing representations and warranties shall survive any
termination of the Master Servicer hereunder.
Section 2.02 EXISTENCE. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) 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 Servicing Agreement.
Section 2.03 ENFORCEMENT OF REPRESENTATIONS AND WARRANTIES. The Master
Servicer, on behalf of and subject to the direction of the Indenture Trustee, as
pledgee of the Mortgage Loans, or the Bond Insurer shall enforce the
representations and warranties and related obligations for breaches thereof of
the Seller pursuant to the Mortgage Loan Sale and Contribution Agreement and the
Subsequent Mortgage Loan Sale and Contribution Agreements, as applicable. Upon
the discovery by the Seller, the Master Servicer, the Indenture Trustee, the
Bond Insurer or the Company of a breach of any of the representations and
warranties made in the Mortgage Loan Sale and Contribution Agreement and the
Subsequent Mortgage Loan Sale and Contribution Agreements, as applicable, in
respect of any Mortgage Loan, or upon the occurrence of a Repurchase Event,
which materially and adversely affects the interests of the Bondholders or the
Certificateholders or the Bond Insurer, the party discovering the same shall
give prompt written notice to the other parties. The Master Servicer shall
promptly notify the Seller and request that, pursuant to the terms of the
Mortgage Loan Sale and Contribution Agreement and the Subsequent Mortgage Loan
Sale and Contribution Agreements, as applicable, the Seller either (i) cure such
breach or Repurchase Event in all material respects or (ii) purchase such
Mortgage Loan, in each instance in accordance with the Mortgage Loan Sale and
Contribution Agreement and the Subsequent Mortgage Loan Sale and Contribution
Agreements, as applicable; provided that the Seller shall, subject to the
conditions set forth in the Mortgage Loan Sale and Contribution Agreement and
the Subsequent Mortgage Loan Sale and Contribution Agreements, as applicable,
have the option to substitute an Eligible Substitute Mortgage Loan or Eligible
Substitute Mortgage Loans for such Mortgage Loan. Monthly Payments due with
respect to Eligible Substitute Mortgage Loans in the month of substitution shall
not be part of the Trust Estate and will be retained by the Master Servicer and
remitted by the Master Servicer to the Seller on the next succeeding Payment
Date. For the month of substitution, distributions to the Payment Account
pursuant to this Agreement will include the Monthly Payment due on a Deleted
Mortgage Loan for such month and thereafter the Seller shall be entitled to
retain all amounts received in respect of such Deleted Mortgage Loan. The Master
Servicer shall amend or cause to be amended the Mortgage Loan Schedule to
reflect the removal of such Mortgage Loan and the
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substitution of the Eligible Substitute Mortgage Loans and the Master Servicer
shall promptly deliver the amended Mortgage Loan Schedule to the related
Subservicer, the Bond Insurer, Owner Trustee and Indenture Trustee.
In connection with the substitution of one or more Eligible Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Master Servicer will
determine the amount (such amount, a "Substitution Adjustment Amount"), if any,
by which the aggregate principal balance of all such Eligible Substitute
Mortgage Loans as of the date of substitution is less than the aggregate
principal balance of all such Deleted Mortgage Loans (after application of the
principal portion of the Monthly Payments due in the month of substitution that
are to be distributed to the Payment Account in the month of substitution). The
Seller shall pay the Substitution Adjustment Amount to the Master Servicer and
the Master Servicer shall deposit such Substitution Adjustment Amount into the
Collection Account upon receipt.
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ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01 MASTER SERVICER TO ASSURE SERVICING. (a) The Master
Servicer shall supervise, or take such actions as are necessary to ensure, the
servicing and administration of the Mortgage Loans and any REO Property in
accordance with this Servicing Agreement and its normal servicing practices,
which generally shall conform to the standards of an institution prudently
servicing mortgage loans for its own account and shall have full authority to do
anything it reasonably deems appropriate or desirable in connection with such
servicing and administration. The Master Servicer may perform its
responsibilities relating to servicing through other agents or independent
contractors, but shall not thereby be released from any of its responsibilities
as hereinafter set forth. The authority of the Master Servicer, in its capacity
as master servicer, and any Subservicer acting on its behalf, shall include,
without limitation, the power to (i) consult with and advise any Subservicer
regarding administration of a related Mortgage Loan, (ii) approve any
recommendation by a Subservicer to foreclose on a related Mortgage Loan, (iii)
supervise the filing and collection of insurance claims and take or cause to be
taken such actions on behalf of the insured Person thereunder as shall be
reasonably necessary to prevent the denial of coverage thereunder, and (iv)
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing a related Mortgage Loan, including the employment of
attorneys, the institution of legal proceedings, the collection of deficiency
judgments, the acceptance of compromise proposals, the filing of claims under
any Primary Insurance Policy and the Radian Lender-Paid PMI Policy with respect
to any Non-High CLTV Loan and any other matter pertaining to a delinquent
Mortgage Loan. The authority of the Master Servicer shall include, in addition,
the power on behalf of the Bondholders, the Indenture Trustee, the Bond Insurer
or any of them to (i) execute and deliver customary consents or waivers and
other instruments and documents, (ii) consent to transfer of any related
Mortgaged Property and assumptions of the related Mortgage Notes and Security
Instruments (in the manner provided in this Servicing Agreement) and (iii)
collect any Insurance Proceeds and Liquidation Proceeds. Without limiting the
generality of the foregoing, the Master Servicer and any Subservicer acting on
its behalf may, and is hereby authorized, and empowered by the Indenture Trustee
to, execute and deliver, on behalf of itself, the Bondholders, the Indenture
Trustee, the Bond Insurer or any of them, any instruments of satisfaction,
cancellation, partial or full release, discharge and all other comparable
instruments, with respect to the related Mortgage Loans, the Insurance Policies
and the accounts related thereto, and the Mortgaged Properties. The Master
Servicer may exercise this power in its own name or in the name of a
Subservicer.
In accordance with the standards of the preceding paragraph, the Master
Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.08, and further as
provided in Section 3.07; provided that the Master Servicer shall not be
obligated to make such advance if, in its good faith judgment, the Master
Servicer determines that such advance to be a Nonrecoverable Advance.
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The relationship of the Master Servicer (and of any successor to the
Master Servicer under this Agreement) to the Indenture Trustee under this
Agreement is intended by the parties to be that of an independent contractor and
not that of a joint venturer, partner or agent; provided, however, that the
Master Servicer is authorized and empowered by the Indenture Trustee, on behalf
of the Bondholders, the Bond Insurer and the Indenture Trustee, in its own name
or in the name of any Subservicer, when the Master Servicer or such Subservicer,
as the case may be, believes it is appropriate in its best judgment to register
any Mortgage Loan on the MERS(R) System, or cause the removal from the
registration of any Mortgage Loan on the MERS(R) System, to execute and deliver,
on behalf of the Indenture Trustee, the Bond Insurer and the Bondholders or any
of them, any and all instruments of assignment and other comparable instruments
with respect to such assignment or re-recording of a Mortgage in the name of
MERS, solely as nominee for the Indenture Trustee and its successors and
assigns. Any expenses incurred in connection with the actions described in the
preceding sentence shall be borne by the Master Servicer in accordance with
Section 3.15, with no right of reimbursement; provided, that if, as a result of
MERS discontinuing or becoming unable to continue operations in connection with
the MERS System, it becomes necessary to remove any Mortgage Loan from
registration on the MERS System and to arrange for the assignment of the related
Mortgages to the Indenture Trustee, then any related expenses shall be
reimbursable to the Master Servicer from the Trust Fund.
(b) If the Mortgage relating to a Mortgage Loan did not have a lien
senior to the Mortgage Loan on the related Mortgaged Property as of the related
Cut-off Date or Subsequent Cut- off Date, as applicable, then the Master
Servicer, in such capacity, may not consent to the placing of a lien senior to
that of the Mortgage on the related Mortgaged Property. If the Mortgage relating
to a High CLTV Loan had a lien senior to the High CLTV Loan on the related
Mortgaged Property as of the related Cut-Off Date, then the Master Servicer, in
such capacity, may consent to the refinancing of the prior senior lien, provided
that the following requirements are met:
(i) the resulting Combined Loan-to-Value Ratio of such High
CLTV Loan is no higher than the Combined Loan-to-Value Ratio prior to
such refinancing; PROVIDED, HOWEVER if such refinanced mortgage loan is
a "rate and term" mortgage loan (meaning, the borrower does not receive
any cash from the refinancing), the Combined Loan-to-Value Ratio may
increase to the extent of either (a) the reasonable closing costs of
such refinancing or (b) any decrease in the value of the related
Mortgaged Property, if the borrower is in good standing;
(ii) the interest rate for the loan evidencing the refinanced
senior lien is no higher than the interest rate on the loan evidencing
the existing senior lien immediately prior to the date of such
refinancing; PROVIDED, HOWEVER if the loan evidencing the existing
senior lien prior to the date of refinancing has an adjustable rate and
the loan evidencing the refinanced senior lien has a fixed rate, then
the loan evidencing the refinanced senior lien may be up to 2.0% higher
than the then-current mortgage rate of the loan evidencing the existing
senior lien; and
(iii) the loan evidencing the refinanced senior lien is
not subject to negative amortization.
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(c) The Master Servicer or the related Subservicer, as the case may be,
shall be entitled to (A) execute assumption agreements, substitution agreements,
and instruments of satisfaction or cancellation or of full release or discharge,
or any other document contemplated by this Servicing Agreement and other
comparable instruments with respect to the Mortgage Loans and with respect to
the Mortgaged Properties subject to the Mortgages (and the Issuer and the
Indenture Trustee each shall promptly execute any such documents on request of
the Master Servicer and prepared by it) and (B) approve the granting of an
easement thereon in favor of another Person, any alteration or demolition of the
related Mortgaged Property or other similar matters, if it has determined,
exercising its good faith business judgment in the same manner as it would if it
were the owner of the related Mortgage Loan, that the security for, and the
timely and full collectability of, such Mortgage Loan would not be adversely
affected thereby. An assumption pursuant to this Section 3.01 is permitted
solely if the creditworthiness of the prospective purchaser of a Mortgaged
Property meets the same or better underwriting guidelines as those which were
applied to the original borrower and the security for such Mortgage Loan is not
impaired by the assumption. Any fee collected by the Master Servicer or the
related Subservicer for processing such request will be retained by the Master
Servicer or such Subservicer as additional servicing compensation.
(d) Certain of the Mortgage Notes related to the High CLTV Loans
contain a rider allowing the related Mortgagor to transfer the lien on the
related Mortgaged Property to another, new Mortgaged Property. In the event that
a Mortgagor requests such a transfer, such Mortgage Loan shall remain in the
Trust Fund only if the following requirements are met:
(i) the Combined Loan-to-Value Ratio of the High CLTV Loan
after such transfer must be less than or equal to the original Combined
Loan-to-Value Ratio;
(ii) the Loan-to-Value Ratio of the first lien on the new
Mortgaged Property must be less than or equal to the Loan-to-Value
Ratio of the first lien on the prior Mortgaged Property at the time the
related High CLTV Loan was originated;
(iii) both the original and the new Mortgaged Property must
be a single-family owner occupied property;
(iv) following such transfer, the aggregate Principal Balance
of High CLTV Loans included in the Trust Fund which have been similarly
transferred is equal to 5% or less of the aggregate Principal Balance
of the Mortgage Loans at such time; and
(v) following such transfer, not more than 40% of the
aggregate Principal Balance of the Mortgage Loans will be: (a)
obligations secured by real estate the fair market value of which
equaled at least eighty percent (80%) of the adjusted issue price of
such obligation at the time of origination; or (b) obligations
substantially all of the proceeds of which were used to acquire,
improve or protect an interest in real property that, at the
origination date, was the only security for such obligation.
If such requirements cannot be met, the High CLTV Loan must be purchased from
the Trust Fund at the Repurchase Price in accordance with Section 3.18 hereof.
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For purposes of applying the criteria of clause (v) of the preceding
paragraph, "substantially all of the proceeds" shall mean at least sixty-six and
two-thirds percent (66 2/3%) of such proceeds, and the fair market value of real
estate shall first be reduced by the amount of any lien senior to the lien
securing a High CLTV Loan (or reduced proportionately by the amount of any lien
in parity with such lien).
(e) Notwithstanding the provisions of Subsection 3.01(a), the Master
Servicer shall not take any action inconsistent with the interests of the
Indenture Trustee, the Bond Insurer or the Bondholders or with the rights and
interests of the Indenture Trustee, the Bond Insurer or the Bondholders under
this Servicing Agreement.
(f) The Indenture Trustee shall execute and return to the Master
Servicer any limited powers of attorney and other documents in form as provided
to it necessary or appropriate to enable the Master Servicer to service and
administer the related Mortgage Loans and REO Property.
Section 3.02 SUBSERVICING AGREEMENTS BETWEEN MASTER SERVICER AND
SUBSERVICERS. (a) The Master Servicer may enter into Subservicing Agreements
with Subservicers for the servicing and administration of the Mortgage Loans and
for the performance of any and all other activities of the Master Servicer
hereunder. Each Subservicer shall be either (i) an institution the accounts of
which are insured by the FDIC or (ii) another entity that engages in the
business of originating or servicing mortgage loans comparable to the Mortgage
Loans, and in either case shall be authorized to transact business in the state
or states in which the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Subservicer to perform its obligations hereunder and under the Subservicing
Agreement, and in either case shall be a Xxxxxxx Mac or Xxxxxx Mae approved
mortgage servicer. Any Subservicing Agreement entered into by the Master
Servicer shall include the provision that such Agreement may be immediately
terminated (x) with cause and without any termination fee by any Master Servicer
hereunder or (y) without cause in which case the Master Servicer shall be
responsible for any termination fee or penalty resulting therefrom. In addition,
each Subservicing Agreement shall provide for servicing of the Mortgage Loans
consistent with the terms of this Servicing Agreement. With the consent of the
Indenture Trustee and the Bond Insurer, the Master Servicer and the Subservicers
may enter into Subservicing Agreements and make amendments to the Subservicing
Agreements or enter into different forms of Subservicing Agreements providing
for, among other things, the delegation by the Master Servicer to a Subservicer
of additional duties regarding the administration of the Mortgage Loans;
provided, however, that any such amendments or different forms shall be
consistent with and not violate the provisions of this Servicing Agreement, and
that no such amendment or different form shall be made or entered into which
could be reasonably expected to be materially adverse to the interests of the
Bond Insurer or the Bondholders, without the consent of the Holders of Bonds
representing not less than a majority of the aggregate Bond Principal Balance of
the Bonds.
The Master Servicer has entered into Subservicing Agreements with the
Initial Subservicers for the servicing and administration of the Mortgage Loans
and may enter into additional Subservicing Agreements with Subservicers
acceptable to the Indenture Trustee and the Bond Insurer for the servicing and
administration of certain of the Mortgage Loans.
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(b) As part of its servicing activities hereunder, the Master Servicer,
for the benefit of the Indenture Trustee, the Bond Insurer and the Bondholders,
shall enforce the obligations of each Subservicer under the related Subservicing
Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Subservicing Agreements and the pursuit of
other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Master Servicer shall pay the costs of such enforcement at its own expense, but
shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement only to the extent, if any, that such recovery exceeds all
amounts due in respect of the related Mortgage Loan or (ii) from a specific
recovery of costs, expenses or attorneys' fees against the party against whom
such enforcement is directed.
(c) The Master Servicer represents that it has entered into a contract
regarding the sale of sub-servicing rights with respect to the Mortgage Loans
with Countrywide Home Loans Servicing LP ("Countrywide") and shall transfer the
subservicing of the Mortgage Loans from Wendover to Countrywide or an affiliate
thereof on or about September 1, 2002, with respect to the Initial Mortgage
Loans, or no later than three months after the date of transfer to the trust,
with respect to the Subsequent Mortgage Loans. The Indenture Trustee and the
Bond Insurer hereby consents to such transfer.
Section 3.03 SUCCESSOR SUBSERVICERS. The Master Servicer shall be
entitled to terminate any Subservicing Agreement that may exist in accordance
with the terms and conditions of such Subservicing Agreement and without any
limitation by virtue of this Servicing Agreement; provided, however, that upon
termination, the Master Servicer shall either act as servicer of the related
Mortgage Loan or enter into an appropriate contract with a successor Subservicer
acceptable to the Indenture Trustee and the Bond Insurer pursuant to which such
successor Subservicer will be bound by all relevant terms of the related
Subservicing Agreement pertaining to the servicing of such Mortgage Loan.
Section 3.04 LIABILITY OF THE MASTER SERVICER. (a) Notwithstanding any
Subservicing Agreement, any of the provisions of this Servicing Agreement
relating to agreements or arrangements between the Master Servicer and a
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Master Servicer shall under all circumstances remain obligated and primarily
liable to the Indenture Trustee, the Bondholders and the Bond Insurer for the
servicing and administering of the Mortgage Loans and any REO Property in
accordance with this Servicing Agreement. The obligations and liability of the
Master Servicer shall not be diminished by virtue of Subservicing Agreements or
by virtue of indemnification of the Master Servicer by any Subservicer, or any
other Person. The obligations and liability of the Master Servicer shall remain
of the same nature and under the same terms and conditions as if the Master
Servicer alone were servicing and administering the related Mortgage Loans. The
Master Servicer shall, however, be entitled to enter into indemnification
agreements with any Subservicer or other Person and nothing in this Servicing
Agreement shall be deemed to limit or modify such indemnification. For the
purposes of this Servicing Agreement, the Master Servicer shall be deemed to
have received any payment on a Mortgage Loan on the date the Subservicer
received such payment; PROVIDED, HOWEVER, that this sentence shall not apply to
the Indenture Trustee as the successor Master Servicer; PROVIDED, FURTHER,
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however, that the foregoing provision shall not affect the obligation of the
Master Servicer if it is also the Indenture Trustee to advance amounts which are
not Nonrecoverable Advances.
Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Master Servicer alone, and the Indenture Trustee, the
Bond Insurer and the Bondholders shall not be deemed parties thereto and shall
have no claims, rights, obligations, duties or liabilities with respect to the
Subservicer except as set forth in Section 3.05.
Section 3.05 ASSUMPTION OR TERMINATION OF SUBSERVICING AGREEMENTS BY
INDENTURE TRUSTEE. (a) If the Indenture Trustee or a successor Master Servicer
shall assume the master servicing obligations of the Master Servicer in
accordance with Section 6.02 below, the Indenture Trustee, to the extent
necessary to permit the Indenture Trustee to carry out the provisions of Section
6.02 with respect to the Mortgage Loans, shall succeed to all of the rights and
obligations of the Master Servicer under each of the Subservicing Agreements. In
such event, the Indenture Trustee or its designee as the successor master
servicer shall be deemed to have assumed all of the Master Servicer's rights and
obligations therein and to have replaced the Master Servicer as a party to such
Subservicing Agreements to the same extent as if such Subservicing Agreements
had been assigned to the Indenture Trustee or its designee as a successor master
servicer, except that the Indenture Trustee or its designee as a successor
master servicer shall not be deemed to have assumed any obligations or
liabilities of the Master Servicer arising prior to such assumption (other than
the obligation to make any Advances) and the Master Servicer shall not thereby
be relieved of any liability or obligations under such Subservicing Agreements
arising prior to such assumption. Nothing in the foregoing shall be deemed to
entitle the Indenture Trustee or its designee as a successor master servicer at
any time to receive any portion of the servicing compensation provided under
Section 3.15 except for such portion as the Master Servicer would be entitled to
receive.
(b) In the event that the Indenture Trustee or a successor Master
Servicer assumes the servicing obligations of the Master Servicer under Section
6.02, upon the reasonable request of the Indenture Trustee or such successor
Master Servicer, the Master Servicer shall at its own expense deliver to the
Indenture Trustee, or to such successor Master Servicer, photocopies of all
documents, files and records, electronic or otherwise, relating to the
Subservicing Agreements and the related Mortgage Loans or REO Property then
being serviced and an accounting of amounts collected and held by it, if any,
and will otherwise cooperate and use its reasonable efforts to effect the
orderly and efficient transfer of the Subservicing Agreements, or
responsibilities hereunder to the Indenture Trustee, or to such successor Master
Servicer.
Section 3.06 COLLECTION OF MORTGAGE LOAN PAYMENTS. (a) The Master
Servicer will coordinate and monitor remittances by Subservicers to it with
respect to the Mortgage Loans in accordance with this Servicing Agreement.
(b) The Master Servicer shall make its best reasonable efforts to
collect or cause to be collected all payments required under the terms and
provisions of the Mortgage Loans and shall follow, and use its best reasonable
efforts to cause Subservicers to follow, collection procedures comparable to the
collection procedures of prudent mortgage lenders servicing mortgage loans for
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their own account to the extent such procedures shall be consistent with this
Servicing Agreement. Consistent with the foregoing, the Master Servicer or the
related Subservicer may in its discretion (i) waive or permit to be waived any
late payment charge, prepayment charge, assumption fee, or any penalty interest
in connection with the prepayment of a Mortgage Loan and (ii) suspend or reduce
or permit to be suspended or reduced regular monthly payments for a period of up
to six months, or arrange or permit an arrangement with a Mortgagor for a
scheduled liquidation of delinquencies; provided, however, that the Master
Servicer or the related Subservicer may permit the foregoing only if it
believes, in good faith, that recoveries of Monthly Payments will be maximized;
provided further, however, that Monthly Payments may not be suspended during the
twelve months prior to the final maturity of the Bonds. In the event the Master
Servicer or related Subservicer shall consent to the deferment of the due dates
for payments due on a Mortgage Note, the Master Servicer shall nonetheless make
an Advance or shall cause the related Subservicer to make an advance to the same
extent as if such installment were due, owing and delinquent and had not been
deferred through liquidation of the Mortgaged Property; PROVIDED, HOWEVER, that
the obligation of the Master Servicer or the related Subservicer to make an
Advance shall apply only to the extent that the Master Servicer believes, in
good faith, that such advances are not Nonrecoverable Advances.
(c) Within five Business Days after the Master Servicer has determined
that all amounts which it expects to recover from or on account of a Mortgage
Loan have been recovered and that no further Liquidation Proceeds will be
received in connection therewith, the Master Servicer shall cause the related
Subservicer to provide to the Master Servicer a certificate of a Servicing
Officer that such Mortgage Loan became a Liquidated Mortgage Loan as of the date
of such determination. The Master Servicer shall provide to the Indenture
Trustee a monthly summary of each Mortgage Loan that became a Liquidated
Mortgage Loan.
(d) The Master Servicer shall establish a segregated account in the
name of the Indenture Trustee (the "Collection Account"), which shall be an
Eligible Account, in which the Master Servicer shall deposit or cause to be
deposited any amounts representing payments on and any collections in respect of
the Mortgage Loans due subsequent to the Cut-Off Date (other than in respect of
the payments referred to in the following paragraph) within one Business Day
(two Business Days if the Subservicer is Countrywide Home Loans Servicing LP)
following receipt thereof (or otherwise on or prior to the Closing Date),
including the following payments and collections received or made by it (without
duplication):
(i) all payments of principal, including Principal
Prepayments, of or interest on the Mortgage Loans (including advances
by a Subservicer) received by the Master Servicer directly from
Mortgagors or from the respective Subservicer, net of any portion of
the interest thereof retained by the Subservicer as subservicing fees;
(ii) the aggregate Repurchase Price of the Mortgage Loans
purchased by the Master Servicer pursuant to Section 3.18;
(iii) Net Liquidation Proceeds;
(iv) all proceeds of any Mortgage Loans repurchased by the
Seller pursuant to the Mortgage Loan Sale and Contribution Agreement
and the Subsequent Mortgage Loan Sale
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and Contribution Agreements, as applicable, and all Substitution
Adjustment Amounts required to be deposited in connection with the
substitution of an Eligible Substitute Mortgage Loan pursuant to the
Mortgage Loan Sale and Contribution Agreement and the Subsequent
Mortgage Loan Sale and Contribution Agreements, as applicable;
(v) Insurance Proceeds, other than Net Liquidation
Proceeds, resulting from any insurance policy maintained on a Mortgaged
Property;
(vi) any Advance and any Compensating Interest payments; and
(vii) any other amounts received by the Master Servicer,
including any fees or penalties not retained by a Subservicer, required
to be deposited in the Collection Account pursuant to this Servicing
Agreement.
PROVIDED, HOWEVER, that with respect to each Due Period, the Master Servicer
shall be permitted to retain from payments in respect of interest on the
Mortgage Loans, the Servicing Fee for such Due Period. The foregoing
requirements respecting deposits to the Collection Account are exclusive, it
being understood that, without limiting the generality of the foregoing, the
Master Servicer need not deposit in the Collection Account fees (including
annual fees or assumption fees) or late charge and prepayment penalties, payable
by Mortgagors, each as further described in Section 3.15, or amounts received by
the Subservicer for the accounts of Mortgagors for application towards the
payment of taxes, insurance premiums, assessments and similar items. In the
event any amount not required to be deposited in the Collection Account is so
deposited, the Master Servicer may at any time (prior to being terminated under
this Agreement) withdraw such amount from the Collection Account, any provision
herein to the contrary notwithstanding. The Master Servicer shall keep records
that accurately reflect the funds on deposit in the Collection Account that have
been identified by it as being attributable to the Mortgage Loans and shall hold
all collections in the Collection Account for the benefit of the Owner Trustee,
the Indenture Trustee, the Bond Insurer and the Bondholders, as their interests
may appear. The Master Servicer shall remit all Foreclosure Profits to the
Collection Account, to the extent not payable to the related Subservicer.
Funds in the Collection Account may not be invested with, and shall not
be commingled with the Master Servicer's own funds or general assets or with
funds respecting payments on mortgage loans or with any other funds not related
to the Bonds. Funds in the Collection Account shall be invested solely in
Eligible Investments, designated in the name of the Indenture Trustee, which
shall mature not later than the Business Day next preceding the third Business
Day prior to each Payment Date next following the date of such investment and
shall not be sold or disposed of prior to maturity. All income and gain realized
from any such investment shall be for the benefit of the Master Servicer or the
related Subservicer. The amount of any losses incurred with respect to any such
investments shall be deposited in the Collection Account by the Master Servicer.
In the event the Indenture Trustee assumes the responsibilities of the
Master Servicer under this Servicing Agreement upon a Servicing Default under
Section 6.01, the Indenture Trustee shall be entitled to reimburse itself for
Advances pursuant to Sections 3.07(a)(v), (viii) and (ix) prior to reimbursement
of the terminated Master Servicer or any successor Master Servicer.
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(e) The Master Servicer will require each Subservicer to hold all funds
constituting collections on the Mortgage Loans, pending remittance thereof to
the Master Servicer, in one or more accounts meeting the requirements of an
Eligible Account, and invested in Eligible Investments, and in the name of the
Indenture Trustee. The Subservicer shall segregate and hold all funds collected
and received pursuant to each Mortgage Loan separate and apart from any of its
own funds and general assets and any other funds. Each Subservicer shall make
remittances to the Master Servicer no later than the eighteenth (18th) day of
each month, commencing on the eighteenth (18th) day of the month next following
the Closing Date, or if such eighteenth (18th) day is not a Business Day, the
first Business Day immediately preceding such eighteenth (18th) day.
Section 3.07 WITHDRAWALS FROM THE COLLECTION ACCOUNT. (a) The Master
Servicer shall, from time to time as provided herein, make withdrawals from the
Collection Account of amounts on deposit therein pursuant to Section 3.06 that
are attributable to the Mortgage Loans for the following purposes (without
duplication):
(i) to deposit in the Payment Account, by the third Business
Day prior to each Payment Date, the Available Funds required to be
distributed as provided in the Indenture on a Payment Date;
(ii) to the extent deposited to the Collection Account, to
reimburse itself or the related Subservicer for previously unreimbursed
expenses incurred in maintaining individual insurance policies pursuant
to Sections 3.10 or 3.11, or Liquidation Expenses, paid pursuant to
Section 3.13 or otherwise reimbursable pursuant to the terms of this
Servicing Agreement, such withdrawal right being limited to amounts
received on the related Mortgage Loans (other than any Repurchase Price
in respect thereto) which represent late recoveries of the payments for
which such advances were made, or from related Liquidation Proceeds;
(iii) to pay to itself out of each payment received on account
of interest on a Mortgage Loan as contemplated by Section 3.15, an
amount equal to the related Master Servicing Fee (to the extent not
retained pursuant to Section 3.06);
(iv) to pay to itself or the Seller, with respect to any
Mortgage Loan or property acquired in respect thereof that has been
purchased or otherwise transferred to the Seller, the Master Servicer
or other entity, all amounts received thereon and not required to be
distributed to Bondholders as of the date on which the related Purchase
Price or Repurchase Price is determined;
(v) to reimburse the Master Servicer or any Subservicer for
any Advance of its own funds or any advance of such Subservicer's own
funds, the right of the Master Servicer or a Subservicer to
reimbursement pursuant to this subclause (v) being limited to amounts
received (including, for this purpose, the Repurchase Price therefor,
Insurance Proceeds and Liquidation Proceeds) which represent late
payments or recoveries of the principal of or interest on such Mortgage
Loan respecting which such Advance or advance was made;
(vi) to reimburse the Master Servicer or any Subservicer
from Insurance Proceeds or Liquidation Proceeds relating to a
particular Mortgage Loan for amounts expended by the
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Master Servicer or such Subservicer pursuant to Section 3.13 in good
faith in connection with the restoration of the related Mortgaged
Property which was damaged by the Uninsured Cause or in connection with
the liquidation of such Mortgage Loan;
(vii) to pay the Master Servicer or any Subservicer (payment
to any Subservicer to be subject to prior payment to the Master
Servicer of an amount equal to the Subservicing Fee), as appropriate,
from Liquidation Proceeds or Insurance Proceeds received in connection
with the liquidation of any Mortgage Loan, the amount which it or such
Subservicer would have been entitled to receive under subclause (iii)
of this Subsection 3.07(a) as servicing compensation on account of each
defaulted Monthly Payment on such Mortgage Loan if paid in a timely
manner by the related Mortgagor, but only to the extent that the
aggregate of Liquidation Proceeds and Insurance Proceeds with respect
to such Mortgage Loan, after any reimbursement to the Master Servicer
or any Subservicer, pursuant to other subclauses of this Subsection
3.07(a), exceeds the outstanding Stated Principal Balance of such
Mortgage Loan plus accrued and unpaid interest thereon at the related
Mortgage Rate less the Servicing Fee Rate to but not including the date
of payment (in any event, the amount of servicing compensation received
by a Subservicer and the Master Servicer with respect to any defaulted
Monthly Payment shall not exceed the applicable Servicing Fee);
(viii) to reimburse the Master Servicer or any Subservicer for
advances of funds pursuant to Article III, the right to reimbursement
pursuant to this subclause being limited to amounts received on the
related Mortgage Loan (including, for this purpose, the Repurchase
Price therefor, Insurance Proceeds and Liquidation Proceeds) which
represent late recoveries of the payments for which such advances were
made;
(ix) to reimburse the Master Servicer or any Subservicer
for any Nonrecoverable Advance previously made, and not reimbursed
pursuant to this Subsection 3.07(a);
(x) to deposit in the Payment Account, by the third Business
Day prior to each Payment Date, the Indenture Trustee Fee and the
Derivative Contract Payment Amount;
(xi) to withdraw any other amount deposited in the
Collection Account that was not required to be deposited therein
pursuant to Section 3.06;
(xii) to pay Radian the premium with respect to the Radian
Lender-Paid PMI Policy;
(xiii) to pay the Owner Trustee the Owner Trustee Fee and
the Bond Insurer the Premium Amount;
(xiv) to reimburse the Master Servicer for costs associated
with the environmental report specified in Section 3.13(e); and
(xv) clear and terminate the Collection Account following a
termination of the Trust pursuant to Section 8.01 of the Trust
Agreement.
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In connection with withdrawals pursuant to clauses (ii), (iii), (iv), (v), (vi),
(vii) and (viii), the Master Servicer's entitlement thereto is limited to
collections or other recoveries on the related Mortgage Loan, and the Master
Servicer shall keep and maintain separate accounting, on a Mortgage Loan by
Mortgage Loan basis, for the purpose of justifying any withdrawal from the
Collection Account pursuant to such clauses. Notwithstanding any other provision
of this Servicing Agreement, the Master Servicer shall be entitled to reimburse
itself for any previously unreimbursed expenses incurred pursuant to Section
3.13 or otherwise reimbursable expenses incurred pursuant to the terms of this
Servicing Agreement, but only to the extent of collections or other recoveries
on the related Mortgage Loan.
(b) Notwithstanding the provisions of this Section 3.07, the Master
Servicer may, but is not required to, allow the Subservicers to deduct from
amounts received by them or from the related account maintained by a
Subservicer, prior to deposit in the Collection Account, any portion to which
such Subservicers are entitled as servicing compensation (including income on
Eligible Investments) or reimbursement of any reimbursable Advances or Servicing
Advances made by such Subservicers.
Section 3.08 COLLECTION OF TAXES ASSESSMENTS AND SIMILAR ITEMS;
SERVICING ACCOUNTS.
(a) The Master Servicer shall establish and maintain or cause the
related Subservicer to establish and maintain, one or more Servicing Accounts.
The Master Servicer or a Subservicer will deposit and retain therein all
collections from the Mortgagors for the payment of taxes, assessments, insurance
premiums, or comparable items as agent of the Mortgagors.
(b) The deposits in the Servicing Accounts shall be held in trust by
the Master Servicer or a Subservicer (and its successors and assigns) in the
name of the Indenture Trustee. Such Servicing Accounts shall be Eligible
Accounts and if permitted by applicable law, invested in Eligible Investments
held in trust by the Master Servicer or a Subservicer as described above and
maturing, or be subject to redemption or withdrawal, no later than the date on
which such funds are required to be withdrawn, and in no event later than 45
days after the date of investment; withdrawals of amounts from the Servicing
Accounts may be made only to effect timely payment of taxes, assessments,
insurance premiums, or comparable items, to reimburse the Master Servicer or a
Subservicer for any advances made with respect to such items, to refund to any
Mortgagors any sums as may be determined to be overages, to pay interest, if
required, to Mortgagors on balances in the Servicing Accounts or to clear and
terminate the Servicing Accounts at or any time after the termination of this
Servicing Agreement.
Section 3.09 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE MORTGAGE LOANS. The Master Servicer shall provide, and shall cause any
Subservicer to provide, to the Indenture Trustee, the Bond Insurer and the Owner
Trustee access to the documentation regarding the related Mortgage Loans and REO
Property and to the Bondholders, the FDIC, and the supervisory agents and
examiners of the FDIC access to the documentation regarding the related Mortgage
Loans required by applicable regulations, such access being afforded without
charge but only upon reasonable request and during normal business hours at the
offices of the Master Servicer or the Subservicers that are designated by these
entities; PROVIDED, HOWEVER, that, unless otherwise required by law, the Master
Servicer or the Subservicer shall not be required to provide access to
17
such documentation if the provision thereof would violate the legal right to
privacy of any Mortgagor; PROVIDED, FURTHER, HOWEVER, that the Indenture
Trustee, the Bond Insurer and the Owner Trustee shall coordinate their requests
for such access so as not to impose an unreasonable burden on, or cause an
unreasonable interruption of, the business of the Master Servicer or any
Subservicer. The Master Servicer and the Subservicers shall allow
representatives of the above entities to photocopy any of the documentation and
shall provide equipment for that purpose at a charge that covers their own
actual out-of-pocket costs.
Section 3.10 MAINTENANCE OF PRIMARY INSURANCE POLICIES AND THE RADIAN
POLICY; COLLECTION THEREUNDER.
(a) The Master Servicer shall, or shall cause the related Subservicer
to, exercise its best reasonable efforts to maintain and keep in full force and
effect each Primary Insurance Policy by a Qualified Insurer, or other insurer
satisfactory to the Bond Insurer and the Rating Agencies, with respect to each
first lien Non-High CLTV Loan as to which as of the Cut-Off Date such a Primary
Insurance Policy was in effect (or, in the case of a Substitute Mortgage Loan,
the date of substitution) and the original principal amount of the related
Mortgage Note exceeded 80% of the Original Value in an amount at least equal to
the excess of such original principal amount over 75% of such Original Value
until the principal amount of any such first lien Mortgage Loan is reduced below
80% of the Original Value or, based upon a new appraisal, the principal amount
of such first lien Mortgage Loan represents less than 80% of the new appraised
value. The Master Servicer shall, or shall cause the related Subservicer to,
effect the timely payment of the premium on each Primary Insurance Policy. The
Master Servicer and the related Subservicer shall have the power to substitute
for any Primary Insurance Policy another substantially equivalent policy issued
by another Qualified Insurer, PROVIDED, THAT, such substitution shall be subject
to the condition that it will not cause the ratings on the Bonds to be
downgraded or withdrawn, without taking into account the Bond Insurance Policy,
as evidenced by a writing from each Rating Agency, and (ii) the Bond Insurer
shall have consented thereto, which consent shall not be unreasonably withheld.
(b) The Master Servicer shall take all such actions on behalf of the
Trust as are necessary to service, maintain and administer the Radian
Lender-Paid PMI Policy and to enforce the Trust's rights under the Radian
Lender-Paid PMI Policy. The Master Servicer shall effect the timely payment of
the Radian PMI Policy Fee. To the extent the Mortgagor with respect to a Radian
PMI Insured Loan is delinquent, the Master Servicer shall advance the related
Radian PMI Policy Fee as a Servicing Advance. Except as expressly set forth
herein, the Master Servicer shall have full authority on behalf of the Trust to
do anything it reasonably deems appropriate or desirable in connection with the
servicing, maintenance and administration of the Radian Lender-Paid PMI Policy.
The Master Servicer shall make its best reasonable efforts to file all insured
claims under the Radian Lender-Paid PMI Policy and collect from Radian all
Insurance Proceeds due to the Trust under the Radian Lender-Paid PMI Policy. The
Master Servicer shall not take, or permit any Subservicer to take, any action
which would result in non-coverage under the Radian Lender-Paid PMI Policy of
any loss which, but for the actions of the Master Servicer or any Subservicer,
would have been covered thereunder. To the extent coverage is available, the
Master Servicer shall keep or cause to be kept in full force and effect the
Radian Lender-Paid PMI Policy for the life of the Mortgage Loan. Neither the
Master Servicer nor the Indenture Trustee shall terminate the Radian Lender-Paid
PMI Policy
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with respect to any Mortgage Loan, except in accordance with the terms thereof.
The Master Servicer shall cooperate with Radian and shall use its best efforts
to furnish all reasonable aid, evidence and information in the possession of the
Master Servicer or to which the Master Servicer has access with respect to any
Radian PMI Insured Loan.
(c) If Radian remains in default pursuant to the Radian Lender-Paid PMI
Policy and may be terminated thereunder without payment of any further premium
for such policy, the Master Servicer shall use its best efforts to replace such
policy with a substitute policy at the same premium rate that is charged under
the Radian Lender-Paid PMI Policy and with coverage for losses in amounts
substantially similar to those under the Radian Lender-Paid PMI Policy. Any
substitute policy shall be entered into only with the written consent of the
Bond Insurer.
Section 3.11 MAINTENANCE OF HAZARD INSURANCE AND FIDELITY COVERAGE. (a)
The Master Servicer shall maintain and keep, or cause each Subservicer to
maintain and keep, with respect to each Non-High CLTV Loan and each REO
Property, in full force and effect hazard insurance (fire insurance with
extended coverage) equal to at least the lesser of the Stated Principal Balance
of the Non-High CLTV Loan or the current replacement cost of the Mortgaged
Property, and containing a standard mortgagee clause, PROVIDED, HOWEVER, that
the amount of hazard insurance may not be less than the amount necessary to
prevent loss due to the application of any co-insurance provision of the related
policy. Unless applicable state law requires a higher deductible, the deductible
on such hazard insurance policy may be no more than $1,000 or 1% of the
applicable amount of coverage, whichever is less. In the case of a condominium
unit or a unit in a planned unit development, the required hazard insurance
shall take the form of a multi-peril policy covering the entire condominium
project or planned unit development, in an amount equal to at least 100% of the
insurable value based on replacement cost.
(b) Any amounts collected by the Master Servicer or a Subservicer under
any such hazard insurance policy (other than amounts to be applied to the
restoration or repair of the Mortgaged Property or amounts released to the
Mortgagor in accordance with the Master Servicer's or a Subservicer's normal
servicing procedures, the Mortgage Note, the Security Instrument or applicable
law) shall be deposited initially in a Collection Account, for transmittal to
the Payment Account, subject to withdrawal pursuant to Section 3.07.
(c) Any cost incurred by a Master Servicer or a Subservicer in
maintaining any such hazard insurance policy shall not be added to the amount
owing under the Non-High CLTV Loan for the purpose of calculating monthly
distributions to Bondholders, notwithstanding that the terms of the Mortgage
Loan so permit. Such costs shall be recoverable by the Master Servicer or a
Subservicer out of related late payments by the Mortgagor or out of Insurance
Proceeds or Liquidation Proceeds or by the Master Servicer from the Repurchase
Price, to the extent permitted by Section 3.07.
(d) No earthquake or other additional insurance is to be required of
any Mortgagor or maintained on property acquired with respect to a Security
Instrument other than pursuant to such applicable laws and regulations as shall
at any time be in force and shall require such additional insurance. When, at
the time of origination of the Non-High CLTV Loan or at any subsequent time, the
Mortgaged Property is located in a federally designated special flood hazard
area, the Master Servicer shall use its best reasonable efforts to cause with
respect to the Non-High CLTV Loans and
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each REO Property flood insurance (to the extent available and in accordance
with mortgage servicing industry practice) to be maintained. Such flood
insurance shall cover the Mortgaged Property, including all items taken into
account in arriving at the Appraised Value on which the Non- High CLTV Loan was
based, and shall be in an amount equal to the lesser of (i) the Stated Principal
Balance of the related Mortgage Loan and (ii) the minimum amount required under
the terms of coverage to compensate for any damage or loss on a replacement cost
basis, but not more than the maximum amount of such insurance available for the
related Mortgaged Property under either the regular or emergency programs of the
National Flood Insurance Program (assuming that the area in which such Mortgaged
Property is located is participating in such program). Unless applicable state
law requires a higher deductible, the deductible on such flood insurance may not
exceed $1,000 or 1% of the applicable amount of coverage, whichever is less.
(e) If insurance has not been maintained complying with Subsections
3.11 (a) and (d) and there shall have been a loss which would have been covered
by such insurance had it been maintained, the Master Servicer shall pay, or
cause the related Subservicer to pay, for any necessary repairs.
(f) The Master Servicer shall present, or cause the related Subservicer
to present, claims under any applicable Primary Insurance Policy or the related
hazard insurance or flood insurance policy.
(g) The Master Servicer shall obtain and maintain at its own expense
and for the duration of this Servicing Agreement and shall cause each
Subservicer to obtain and maintain a blanket fidelity bond and an errors and
omissions insurance policy covering such Person's officers, employees and other
persons acting on its behalf in connection with its activities under this
Servicing Agreement or the related Subservicing Agreement. The amount of
coverage shall be at least equal to the coverage maintained by the Master
Servicer acceptable to Xxxxxx Xxx or Xxxxxxx Mac to service loans for it or
otherwise in an amount as is commercially available at a cost that is generally
not regarded as excessive by industry standards. The Master Servicer shall
promptly notify the Indenture Trustee of any material change in the terms of
such bond or policy. The Master Servicer shall provide annually to the Indenture
Trustee a certificate of insurance that each such bond and policy are in effect.
If any such bond or policy ceases to be in effect, the Master Servicer shall, to
the extent possible, give the Indenture Trustee ten days' notice prior to any
such cessation and shall use its reasonable best efforts to obtain a comparable
replacement bond or policy, as the case may be. Any amounts relating to the
Mortgage Loans collected under each such bond or policy shall be deposited
initially in a Collection Account for transmittal to the Payment Account,
subject to withdrawal pursuant to Section 3.07.
Section 3.12 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS. (a) In any
case in which the Master Servicer is notified by any Mortgagor or Subservicer
that a Mortgaged Property relating to a Mortgage Loan has been or is about to be
conveyed by the Mortgagor, the Master Servicer shall enforce, or shall instruct
such Subservicer to enforce, any due-on-sale clause contained in the related
Security Instrument to the extent permitted under the terms of the related
Mortgage Note and by applicable law. The Master Servicer or the related
Subservicer may repurchase a Mortgage Loan at the Repurchase Price when the
Master Servicer requires acceleration of the Mortgage Loan, but only if the
Master Servicer is satisfied, as evidenced by an Officer's Certificate delivered
to the Indenture
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Trustee, that either (i) such Mortgage Loan is in default or default is
reasonably foreseeable or (ii) if such Mortgage Loan is not in default or
default is not reasonably foreseeable, such repurchase will have no adverse tax
consequences for the Trust Estate or any Securityholder. If the Master Servicer
reasonably believes that such due-on-sale clause cannot be enforced under
applicable law or if the Mortgage Loan does not contain a due-on-sale clause,
the Master Servicer is authorized, and may authorize any Subservicer, to consent
to a conveyance subject to the lien of the Mortgage, and to take or enter into
an assumption agreement from or with the Person to whom such property has been
or is about to be conveyed, pursuant to which such Person becomes liable under
the related Mortgage Note and unless prohibited by applicable state law, such
Mortgagor remains liable thereon, on condition, however, that the related
Mortgage Loan shall continue to be covered by a hazard policy and (if so covered
before the Master Servicer or the related Subservicer enters into such
agreement) by any Primary Insurance Policy. In connection with any such
assumption, no material term of the related Mortgage Note may be changed. The
Master Servicer shall forward to the Indenture Trustee the original copy of such
assumption agreement, which copy shall be added by the Indenture Trustee to the
related Mortgage File and which shall, for all purposes, be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. A portion, equal to up to 2% of the Stated
Principal Balance of the related Mortgage Loan, of any fee or additional
interest collected by the Master Servicer or the related Subservicer for
consenting in any such conveyance or entering into any such assumption agreement
may be retained by the related Subservicer as additional servicing compensation.
(b) Notwithstanding the foregoing paragraph or any other provision of
this Servicing Agreement, the Master Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reason of
any assumption of a Mortgage Loan by operation of law or any conveyance by the
Mortgagor of the related Mortgaged Property or assumption of a Mortgage Loan
which the Master Servicer reasonably believes it may be restricted by law from
preventing, for any reason whatsoever or if the exercise of such right would
impair or threaten to impair any recovery under any applicable insurance policy.
Section 3.13 REALIZATION UPON DEFAULTED MORTGAGE LOANS. (a) The Master
Servicer shall, or shall direct the related Subservicer to, foreclose upon or
otherwise comparably convert the ownership of properties securing any Non-High
CLTV Loans that come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.06, except that the Master Servicer shall not, and shall
not direct the related Subservicer to, foreclose upon or otherwise comparably
convert a Mortgaged Property if there is evidence of toxic waste or other
environmental hazards thereon unless the Master Servicer follows the procedures
in Subsection (e) below.
(b) With respect to such of the High CLTV Loans as come into and
continue in default, the Master Servicer shall, or shall direct the related
Subservicer to decide whether to, (i) foreclose upon the Mortgaged Properties
securing such High CLTV Loans, (ii) write off the unpaid principal balance of
the High CLTV Loans as bad debt, (iii) take a deed in lieu of foreclosure, (iv)
accept a short sale, (v) arrange for a repayment plan, (vi) agree to a
modification in accordance with this Servicing Agreement, or (vii) take an
unsecured note, in the case of (i) and (ii) subject to the rights of any related
first lien holder, except that the Master Servicer shall not, and shall not
direct the related Subservicer to, foreclose upon or otherwise comparably
convert a Mortgaged Property if the
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Master Servicer has actual knowledge that any Mortgaged Property is affected by
hazardous or toxic wastes or other substances and the acquisition or such
property would not be commercially reasonable, which determination shall be made
in accordance with the procedures in subsection (e) below. In connection with
such decision, the Master Servicer shall follow such practices (including, in
the case of any default on a related senior mortgage loan, the advancing of
funds to correct such default if deemed to be appropriate by the Master
Servicer) and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities (including any
analysis and decisions regarding whether to realize a gain or loss pursuant to
Section 1001 of the Code); PROVIDED that the Master Servicer shall not be liable
in any respect hereunder if the Master Servicer is acting in connection with any
such foreclosure or attempted foreclosure which is not completed or other
conversion in a manner that is consistent with the provisions of this Servicing
Agreement.
(c) In connection with such foreclosure or other conversion, the Master
Servicer in conjunction with the related Subservicer, if any, shall use its best
reasonable efforts to preserve REO Property and to realize upon defaulted
Mortgage Loans in such manner (including short sales) as to maximize the receipt
of principal and interest by the Bondholders, taking into account, among other
things, the timing of foreclosure and the considerations set forth in Subsection
3.13(d). The foregoing is subject to the proviso that the Master Servicer shall
not be required to expend its own funds in connection with any foreclosure or
towards the restoration of any property unless it determines in good faith (i)
that such restoration or foreclosure will increase the proceeds of liquidation
of the Mortgage Loan to Bondholders after reimbursement to itself for such
expenses and (ii) that such expenses will be recoverable to it either through
Liquidation Proceeds (respecting which it shall have priority for purposes of
reimbursements from the Collection Account pursuant to Section 3.07) or through
Insurance Proceeds (respecting which it shall have similar priority). The Master
Servicer shall be responsible for all other costs and expenses incurred by it in
any such proceedings; PROVIDED, HOWEVER, that it shall be entitled to
reimbursement thereof (as well as its normal servicing compensation), and in
respect of any Subservicer only, to receive Foreclosure Profits as additional
servicing compensation to the extent that transfers or withdrawals from the
Collection Account with respect thereto are permitted under Section 3.07. Any
income from or other funds (net of any income taxes) generated by REO Property
shall be deemed for purposes of this Servicing Agreement to be Insurance
Proceeds.
(d) The Trust Estate shall not acquire any real property (or any
personal property incident to such real property) except in connection with a
default or reasonably foreseeable default of a Mortgage Loan. In the event that
the Trust Estate acquires any real property (or personal property incident to
such real property) in connection with a default or imminent default of a
Mortgage Loan, such property shall be disposed of by the Master Servicer (or its
agent) on behalf of the Trust Estate within two years after its acquisition by
the Trust Estate.
(e) With respect to any Mortgage Loan as to which the Master Servicer
or a Subservicer has received notice of, or has actual knowledge of, the
presence of any toxic or hazardous substance on the Mortgaged Property, the
Master Servicer shall promptly notify the Indenture Trustee, the Owner Trustee
and the Bond Insurer and shall act in accordance with any such directions and
instructions provided by the Bond Insurer, or if a Bond Insurer Default exists,
by the Indenture Trustee, as pledgee of the Issuer. Notwithstanding the
preceding sentence of this Section 3.13(e),
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with respect to any Mortgage Loan described in such sentence, the Master
Servicer shall, if requested by the Bond Insurer, obtain and deliver to the
Issuer, the Indenture Trustee and the Bond Insurer an environmental audit report
prepared by a Person who regularly conducts environmental audits using customary
industry standards, a copy of which shall be delivered to the Issuer and the
Indenture Trustee. The Master Servicer shall be entitled to reimbursement for
such report pursuant to Section 3.07. If the Bond Insurer or the Indenture
Trustee, as applicable, has not provided directions and instructions to the
Master Servicer in connection with any such Mortgage Loan within 30 days of a
request by the Master Servicer for such directions and instructions, then the
Master Servicer shall take such action as it deems to be in the best economic
interest of the Trust Estate (other than proceeding against the Mortgaged
Property) and is hereby authorized at such time as it deems appropriate to
release such Mortgaged Property from the lien of the related Mortgage. The
parties hereto acknowledge that the Master Servicer shall not obtain on behalf
of the Issuer a deed as a result or in lieu of foreclosure, and shall not
otherwise acquire possession of or title to, or commence any proceedings to
acquire possession of or title to, or take any other action with respect to, any
Mortgaged Property, if the Owner Trustee or the Indenture Trustee could
reasonably be considered to be a responsible party for any liability arising
from the presence of any toxic or hazardous substance on the Mortgaged Property,
unless the Owner Trustee or the Indenture Trustee has been indemnified to its
reasonable satisfaction against such liability.
Section 3.14 INDENTURE TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES.
(a) Upon payment in full of any Mortgage Loan or the receipt by the Master
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Master Servicer will immediately notify the
Indenture Trustee by a certification signed by a Servicing Officer in the form
of the request for release (the "Request for Release") attached hereto as
Exhibit B (which certification shall include a statement to the effect that all
amounts received or to be received in connection with such payment which are
required to be deposited in the Payment Account have been or will be so
deposited) and shall request delivery to the Master Servicer or Subservicer, as
the case may be, of the Mortgage File. Upon receipt of such certification and
request, the Custodian shall release the related Mortgage File to the Master
Servicer or Subservicer and execute and deliver to the Master Servicer, without
recourse, the request for reconveyance, deed of reconveyance or release or
satisfaction of mortgage or such instrument releasing the lien of the Security
Instrument (furnished by the Master Servicer), together with the Mortgage Note
with written evidence of cancellation thereon. In connection with the
satisfaction of any MOM Loan, the Master Servicer is authorized to cause the
removal from the registration on the MERS(R) System of such Mortgage.
(b) From time to time as is appropriate, for the servicing or
foreclosure of any Mortgage Loan or collection under an insurance policy, the
Master Servicer may deliver to the Custodian a Request for Release signed by a
Servicing Officer on behalf of the Master Servicer in substantially the form
attached as Exhibit B hereto. Upon receipt of the Request for Release, the
Indenture Trustee shall deliver the Mortgage File or any document therein to the
Master Servicer or Subservicer, as the case may be, as bailee for the Indenture
Trustee.
(c) The Master Servicer shall cause each Mortgage File or any document
therein released pursuant to Subsection 3.14(b) to be returned to the Indenture
Trustee, when the need therefor no longer exists, and in any event within 21
days of the Master Servicer's receipt thereof, unless the Mortgage Loan has
become a Liquidated Mortgage Loan and the Liquidation Proceeds relating to
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the Mortgage Loan have been deposited in the Collection Account or such Mortgage
File is being used to pursue foreclosure or other legal proceedings. Prior to
return of a Mortgage File or any document to the Indenture Trustee, the Master
Servicer, the related insurer or Subservicer to whom such file or document was
delivered shall retain such file or document in its respective control as bailee
for the Indenture Trustee unless the Mortgage File or such document has been
delivered to an attorney, or to a public trustee or other public official as
required by law, to initiate or pursue legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non- judicially, and
the Master Servicer has delivered to the Indenture Trustee a certificate of a
Servicing Officer certifying as to the name and address of the Person to which
such Mortgage File or such document was delivered and the purpose or purposes of
such delivery. If a Mortgage Loan becomes a Liquidated Mortgage Loan, the
Indenture Trustee shall deliver the Request for Release with respect thereto to
the Master Servicer and upon deposit of the related Liquidation Proceeds in the
Collection Account.
(d) The Indenture Trustee shall execute and deliver to the Master
Servicer any court pleadings, requests for trustee's sale or other documents
necessary to (i) the foreclosure or trustee's sale with respect to a Mortgaged
Property; (ii) any legal action brought to obtain judgment against any Mortgagor
on the Mortgage Note or Security Instrument; (iii) obtain a deficiency judgment
against the Mortgagor; or (iv) enforce any other rights or remedies provided by
the Mortgage Note or Security Instrument or otherwise available at law or
equity. Together with such documents or pleadings the Master Servicer shall
deliver to the Indenture Trustee a certificate of a Servicing Officer in which
it requests the Indenture Trustee to execute the pleadings or documents. The
certificate shall certify and explain the reasons for which the pleadings or
documents are required. It shall further certify that the Indenture Trustee's
execution and delivery of the pleadings or documents will not invalidate any
insurance coverage under the insurance policies or invalidate or otherwise
affect the lien of the Security Instrument, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale.
Section 3.15 MASTER SERVICING COMPENSATION. (a) As compensation for its
activities hereunder, the Master Servicer shall be entitled to receive the
Servicing Fee from full payments of accrued interest on each Mortgage Loan. The
Master Servicer shall be solely responsible for paying any and all fees with
respect to a Subservicer and the Trust Estate shall not bear any fees, expenses
or other costs directly associated with any Subservicer.
(b) The Master Servicer or the related Subservicer may retain
additional servicing compensation in the form of prepayment charges, if any, a
portion of the assumption fees up to 2% of the Stated Principal Balance of the
related Mortgage Loan, tax service fees, fees for statement of account or
payoff, late payment charges, or otherwise, to the extent such fees are
collected from the related Mortgagors or, with respect to a Liquidated Mortgage
Loan, to the extent such fees have accrued. The Master Servicer shall be
required to pay all expenses it incurs in connection with servicing activities
under this Servicing Agreement and shall not be entitled in connection with
servicing activities under this Servicing Agreement to reimbursement except as
provided in this Servicing Agreement. Expenses to be paid by the Master Servicer
under this Subsection 3.15(b) shall include payment of the expenses of the
accountants retained pursuant to Section 3.17.
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Section 3.16 ANNUAL STATEMENTS OF COMPLIANCE. Within 120 days after
December 31 of each year, commencing December 2002, the Master Servicer at its
own expense shall deliver to the Indenture Trustee, with a copy to the Bond
Insurer and the Rating Agencies, an Officer's Certificate stating, as to the
signer thereof, that (i) a review of the activities of the Master Servicer
during the preceding calendar year and of performance under this Servicing
Agreement has been made under such officer's supervision, (ii) to the best of
such officer's knowledge, based on such review, the Master Servicer has
fulfilled all its obligations under this Servicing Agreement for such year, or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof including the steps being taken by the Master Servicer to remedy such
default; (iii) a review of the activities of each Subservicer during the
Subservicer's most recently ended calendar year on or prior to such December 31
and its performance under its Subservicing Agreement has been made under such
officer's supervision; and (iv) to the best of the Servicing Officer's
knowledge, based on his review and the certification of an officer of the
Subservicer (unless the Servicing Officer has reason to believe that reliance on
such certification is not justified), either each Subservicer has performed and
fulfilled its duties, responsibilities and obligations under this Servicing
Agreement and its Subservicing Agreement in all material respects throughout the
year, or, if there has been a default in performance or fulfillment of any such
duties, responsibilities or obligations, specifying the nature and status of
each such default known to the Servicing Officer. Copies of such statements
shall be provided by the Master Servicer to the Bondholders upon request or by
the Indenture Trustee at the expense of the Master Servicer should the Master
Servicer fail to provide such copies.
Section 3.17 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
(a) Within 120 days after December 31 of each year, commencing December 2002,
the Master Servicer, at its expense, shall cause a firm of independent public
accountants who are members of the American Institute of Certified Public
Accountants and who are KPMG LLP (or a successor thereof) or are otherwise
acceptable to the Bond Insurer to furnish a statement to the Master Servicer,
which will be provided to the Indenture Trustee, the Bond Insurer and the Rating
Agencies, to the effect that, in connection with the firm's examination of the
Master Servicer's financial statements as of the end of such calendar year,
nothing came to their attention that indicated that the Master Servicer was not
in compliance with Sections 3.06, 3.07 and 3.08 except for (i) such exceptions
as such firm believes to be immaterial and (ii) such other exceptions as are set
forth in such statement.
(b) Within 120 days after December 31 of each year, commencing December
2002, the Master Servicer, at its expense, shall or shall cause each Subservicer
to cause a nationally recognized firm of independent certified public
accountants to furnish to the Master Servicer or such Subservicer a report
stating that (i) it has obtained a letter of representation regarding certain
matters from the management of the Master Servicer or such Subservicer which
includes an assertion that the Master Servicer or such Subservicer has complied
with certain minimum mortgage loan servicing standards (to the extent applicable
to residential mortgage loans) identified in the Uniform Single Attestation
Program for Mortgage Bankers established by the Mortgage Bankers Association of
America with respect to the servicing of first and second lien conventional
single family mortgage loans during the most recently completed calendar year
and (ii) on the basis of an examination conducted by such firm in accordance
with standards established by the American Institute of Certified Public
Accountants, such representation is fairly stated in all material respects,
subject to such exceptions and other qualifications that may be appropriate.
Immediately upon receipt of such
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report, the Master Servicer shall or shall cause each Subservicer to furnish a
copy of such report to the Indenture Trustee, the Bond Insurer and the Rating
Agencies.
Section 3.18 OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS. The Master
Servicer may, on behalf of the Issuer, but is not obligated to, repurchase from
the Issuer any Mortgage Loan delinquent in payment for a period of 90 days or
longer for a price equal to the Repurchase Price therefor. In addition, the
Master Servicer must repurchase any Mortgage Loan which does not satisfy the
requirements of 3.01(d) at a price equal to the Repurchase Price. Any such
purchase shall be accomplished as provided in Subsection 2.03 hereof.
Notwithstanding the foregoing, the Indenture Trustee, whether acting as
Indenture Trustee or in the capacity of successor Master Servicer, shall have no
obligation hereunder or under any other Basic Document to repurchase any
Mortgage Loan.
Section 3.19 INFORMATION REQUIRED BY THE INTERNAL REVENUE SERVICE
GENERALLY AND REPORTS OF FORECLOSURES AND ABANDONMENTS OF MORTGAGED PROPERTY.
The Master Servicer shall prepare and deliver all federal and state information
reports when and as required by all applicable state and federal income tax
laws. In particular, with respect to the requirement under Section 6050J of the
Code to the effect that the Master Servicer or Subservicer shall make reports of
foreclosures and abandonments of any mortgaged property for each year beginning
in 2002, the Master Servicer or Subservicer shall file reports relating to each
instance occurring during the previous calendar year in which the Master
Servicer (i) acquires an interest in any Mortgaged Property through foreclosure
or other comparable conversion in full or partial satisfaction of a Mortgage
Loan, or (ii) knows or has reason to know that any Mortgaged Property has been
abandoned. The reports from the Master Servicer or Subservicer shall be in form
and substance sufficient to meet the reporting requirements imposed by Section
6050J, Section 6050H (reports relating to mortgage interest received) and
Section 6050P of the Code (reports relating to cancellation of indebtedness).
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ARTICLE IV
Servicing Certificate
Section 4.01 REMITTANCE REPORTS. On the Business Day following each
Determination Date, the Master Servicer shall deliver to the Indenture Trustee a
report, prepared as of the close of business on the Determination Date (the
"Remittance Report"), in the form of a magnetic tape or disk or such other
method as to which the Master Servicer and Indenture Trustee shall agree. The
Remittance Report and any written information supplemental thereto shall include
such information with respect to the Mortgage Loans that is reasonably available
to the Master Servicer and that is required by the Indenture Trustee for
purposes of making the calculations and providing the reports referred to in the
Indenture, as set forth in written specifications or guidelines issued by the
Indenture Trustee from time to time.
In addition, prior to each Payment Date, the Master Servicer shall
determine the total amount of Realized Losses, if any, that resulted from any
Cash Liquidation, Debt Service Reduction, Deficient Valuation or REO Disposition
that occurred during the related Collection Period and the total amount of
Realized Losses incurred due to a High CLTV Loan being 180 days or more
delinquent. The amount of each Realized Loss shall be evidenced by an Officer's
Certificate delivered to the Indenture Trustee with the related Remittance
Report in the month following the month during which the High CLTV Loan becomes
180 days delinquent.
The determination by the Master Servicer of such amounts shall, in the
absence of obvious error, be presumptively deemed to be correct for all purposes
hereunder and the Owner Trustee and Indenture Trustee shall be protected in
relying upon the same without any independent check or verification. The
Indenture Trustee shall have no obligation to recompute, recalculate or verify
any information provided to it by the Master Servicer.
Section 4.02 RESERVED.
Section 4.03 RESERVED.
Section 4.04 ADVANCES. If any Monthly Payment on a Mortgage Loan (other
than Balloon Payments) that was due on the immediately preceding Due Date (with
respect to a Non-High CLTV Loan) or due during the related Collection Period
(with respect to a High CLTV Loan) and delinquent on the Determination Date is
delinquent other than as a result of application of the Relief Act, the Master
Servicer will deposit in the Collection Account not later than the third
Business Day immediately preceding the related Payment Date an amount equal to
such Monthly Payment (with respect to a Non-High CLTV Loan) or the interest
portion of such Monthly Payment (with respect to a High CLTV Loan) net of the
related Servicing Fee and Radian PMI Policy Fee for such Mortgage Loan, except
to the extent the Master Servicer or the related Subservicer determines any such
advance to be nonrecoverable from Liquidation Proceeds, Insurance Proceeds or
future payments on any Mortgage Loan. Subject to the foregoing and in the
absence of such a determination, the Master Servicer shall continue to make such
advances through the date that the related Mortgaged Property has, in the
judgment of the Master Servicer, been completely liquidated.
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No later than the fourth Business Day preceding each Payment Date, the Master
Servicer shall present an Officer's Certificate to the Indenture Trustee and the
Bond Insurer with respect to the Mortgage Loans, (i) stating that the Master
Servicer elects not to make an Advance in a stated amount and (ii) detailing the
reason it deems the advance to be a Nonrecoverable Advance. The Master Servicer
will include in the Remittance Report a list of each Non-High CLTV Loan and High
CLTV Loan for which it does not make an Advance in accordance with this Section.
Such Advances may be made in whole or in part from funds in the
Collection Account being held for future distribution or withdrawal on or in
connection with Payment Dates in subsequent months. Any funds being held for
future distribution to Securityholders and so used shall be replaced by the
Master Servicer from its own funds by deposit in the Collection Account on or
before the fourth Business Day preceding any Payment Date to the extent that
funds in the Collection Account with respect to such Payment Date shall be less
than payments to Securityholders required to be made on such date.
Section 4.05 COMPENSATING INTEREST PAYMENTS. The Master Servicer shall
deposit in the Collection Account not later than the third Business Day
preceding the Payment Date an amount equal to the Compensating Interest for the
related Determination Date. The Master Servicer shall not be entitled to any
reimbursement of any Compensating Interest payment.
Section 4.06 TERMINATION ADVANCES. In addition to Advances, the Master
Servicer will be required to deposit in the Collection Account three Business
Days prior to the Payment Date in June 2032, all Monthly Payments due until
maturity of each Mortgage Loan on any non-delinquent Mortgage Loans which remain
unpaid or unadvanced prior to the Due Date in June 2032. The amount of this
deposit will be made without regard to recoverability, and will be reimbursable
to the Master Servicer pursuant to Section 3.07(ix) solely from Monthly Payments
from the related Mortgage Loan due after the Due Date in June 2032.
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ARTICLE V
The Master Servicer
Section 5.01 LIABILITY OF THE MASTER SERVICER. The Master Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Master Servicer herein.
Section 5.02 MERGER OR CONSOLIDATION OF OR ASSUMPTION OF THE
OBLIGATIONS OF THE MASTER SERVICER. Any corporation into which the Master
Servicer may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Master Servicer shall be a party, or any corporation succeeding to the business
of the Master Servicer, shall be the successor of the Master Servicer,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; PROVIDED, HOWEVER, that the successor or surviving Person to
the Master Servicer shall be qualified to sell mortgage loans to and service
mortgage loans for Xxxxxx Xxx or Xxxxxxx Mac.
The Master Servicer may assign its rights and delegate its duties and
obligations under this Servicing Agreement; PROVIDED, that the Person accepting
such assignment or delegation shall be a Person which is qualified to service
mortgage loans on behalf of Xxxxxx Mae or Xxxxxxx Mac, is reasonably
satisfactory to the Indenture Trustee (as pledgee of the Mortgage Loans) and the
Company (in its sole discretion) and the Bond Insurer, is willing to service the
Mortgage Loans and executes and delivers to the Indenture Trustee and the
Company an agreement, in form and substance reasonably satisfactory to the Bond
Insurer, the Indenture Trustee and the Company, which contains an assumption by
such Person of the due and punctual performance and observance of each covenant
and condition to be performed or observed by the Master Servicer under this
Servicing Agreement; PROVIDED, FURTHER, that each Rating Agency's rating of the
Class A Bonds without regard to the Bond Insurance Policy or the Class B Bonds
in effect immediately prior to such assignment and delegation will not be
qualified, reduced, or withdrawn as a result of such assignment and delegation
(as evidenced by a letter to such effect from each Rating Agency) or considered
to be below investment grade.
Section 5.03 LIMITATION ON LIABILITY OF THE MASTER SERVICER AND OTHERS.
Neither the Master Servicer nor any of the directors or officers or employees or
agents of the Master Servicer shall be under any liability to the Company, the
Issuer, the Owner Trustee, the Indenture Trustee or the Bondholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Servicing Agreement, PROVIDED, HOWEVER, that this provision
shall not protect the Master Servicer or any such Person against any liability
which would otherwise be imposed by reason of its willful misfeasance, bad faith
or gross negligence in the performance of its duties hereunder or by reason of
its reckless disregard of its obligations and duties hereunder. The Master
Servicer and any director or officer or employee or agent of the Master Servicer
may rely in good faith on any document of any kind PRIMA FACIE properly executed
and submitted by any Person respecting any matters arising hereunder. The Master
Servicer and any director or officer or employee or agent of the Master Servicer
shall be indemnified by the Company and held harmless
29
against any loss, liability or expense incurred in connection with any legal
action relating to this Servicing Agreement or the Bonds, including any amount
paid to the Owner Trustee or the Indenture Trustee pursuant to Section 5.06(b),
other than any loss, liability or expense related to any specific Mortgage Loan
or Mortgage Loans (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Servicing Agreement) and any loss,
liability or expense incurred by reason of its willful misfeasance, bad faith or
gross negligence in the performance of its duties hereunder or by reason of its
reckless disregard of its obligations and duties hereunder. The Master Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties to service the Mortgage Loans in
accordance with this Servicing Agreement, and which in its opinion may involve
it in any expense or liability; PROVIDED, HOWEVER, that the Master Servicer may
in its sole discretion undertake any such action which it may deem necessary or
desirable in respect of this Servicing Agreement, and the rights and duties of
the parties hereto and the interests of the Securityholders hereunder. In such
event, the reasonable legal expenses and costs of such action and any liability
resulting therefrom shall be expenses, costs and liabilities of the Company, and
the Master Servicer shall be entitled to be reimbursed therefor. The Master
Servicer's right to indemnity or reimbursement pursuant to this Section 5.03
shall survive any resignation or termination of the Master Servicer pursuant to
Section 5.04 or 6.01 with respect to any losses, expenses, costs or liabilities
arising prior to such resignation or termination (or arising from events that
occurred prior to such resignation or termination).
Section 5.04 MASTER SERVICER NOT TO RESIGN. Subject to the provisions
of Section 5.02, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that the performance
of its obligations or duties hereunder are no longer permissible under
applicable law or (ii) upon satisfaction of the following conditions: (a) the
Master Servicer has proposed a successor servicer to the Company, the Bond
Insurer and the Indenture Trustee in writing and such proposed successor
servicer is reasonably acceptable to the Company and the Indenture Trustee; and
(b) each Rating Agency shall have delivered a letter (obtained by and at the
expense of the Master Servicer) to the Company, the Bond Insurer and the
Indenture Trustee prior to the appointment of the successor servicer stating
that the proposed appointment of such successor servicer as Master Servicer
hereunder will not result in the reduction or withdrawal of the then current
rating of the Bonds or the then current rating of the Bonds without taking into
account the Bond Insurance Policy; and (c) such proposed successor servicer is
acceptable to the Bond Insurer, as evidenced by a letter to the Company and the
Indenture Trustee; PROVIDED, HOWEVER, that no such resignation by the Master
Servicer shall become effective until such successor servicer or, in the case of
(i) above, the Indenture Trustee, as pledgee of the Mortgage Loans, shall have
assumed the Master Servicer's responsibilities and obligations hereunder or
another successor Master Servicer has been appointed in accordance with Section
6.02. Any such resignation shall not relieve the Master Servicer of
responsibility for any of the obligations specified in Sections 6.01 and 6.02 as
obligations that survive the resignation or termination of the Master Servicer.
The Master Servicer shall have no claim (whether by subrogation or otherwise) or
other action against any Bondholder or the Bond Insurer for any amounts paid by
the Master Servicer pursuant to any provision of this Servicing Agreement. Any
such determination permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect delivered to the Indenture
Trustee and the Bond Insurer.
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Section 5.05 DELEGATION OF DUTIES. In the ordinary course of business,
the Master Servicer at any time may delegate any of its duties hereunder to any
Person, including any of its Affiliates, who agrees to conduct such duties in
accordance with standards comparable to those with which the Master Servicer
complies pursuant to Section 3.01. Such delegation shall not relieve the Master
Servicer of its liabilities and responsibilities with respect to such duties and
shall not constitute a resignation within the meaning of Section 5.04.
Section 5.06 MASTER SERVICER TO PAY INDENTURE TRUSTEE'S AND OWNER
TRUSTEE'S FEES AND EXPENSES; INDEMNIFICATION. (a) The Master Servicer covenants
and agrees to pay to the Owner Trustee, the Indenture Trustee and any co-trustee
of the Indenture Trustee from time to time, and the Owner Trustee, the Indenture
Trustee and any such co-trustee shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by each
of them in the execution of the trusts created under the Trust Agreement, the
Indenture or any other Basic Document and in the exercise and performance of any
of the powers and duties under the Trust Agreement or the Indenture, as the case
may be, of the Owner Trustee, the Indenture Trustee and any co-trustee of the
Indenture Trustee, and the Master Servicer will pay or reimburse (i) the
Indenture Trustee and any co-trustee upon request for all reasonable expenses,
disbursements and advances incurred or made by the Indenture Trustee or any
co-trustee of the Indenture Trustee in accordance with any of the provisions of
this Servicing Agreement or any other Basic Document except any such expense,
disbursement or advance as may arise from its negligence or bad faith and (ii)
the Owner Trustee upon request for all reasonable expenses, disbursements and
advances incurred or made by the Owner Trustee in accordance with any of the
provisions of this Servicing Agreement except any such expense, disbursement or
advance as may arise from its willful misconduct, gross negligence or bad faith
or grossly negligent failure to act.
(b) The Master Servicer agrees to indemnify the Indenture Trustee and
the Owner Trustee for, and to hold the Indenture Trustee and the Owner Trustee,
as the case may be, harmless against, any claim, tax, penalty, loss, liability
or expense of any kind whatsoever, incurred without negligence (gross negligence
in the case of the Owner Trustee) or willful misconduct on its part, arising out
of, or in connection with, the failure by the Master Servicer to perform its
duties in compliance with this Servicing Agreement, including the costs and
expenses (including reasonable legal fees and expenses) of defending itself
against any claim in connection with the exercise or performance of any of its
powers or duties under any Basic Document, provided that:
(i) with respect to any such claim, the Indenture Trustee or
Owner Trustee, as the case may be, shall have given the Master Servicer
written notice thereof promptly after the Indenture Trustee or Owner
Trustee, as the case may be, shall have actual knowledge thereof, it
being understood that failure to give such notice shall not relieve the
Master Servicer of its indemnification obligations hereunder;
(ii) while maintaining control over its own defense, the
Company, the Indenture Trustee or Owner Trustee, as the case may be,
shall cooperate and consult fully with the Master Servicer in preparing
such defense; and
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(iii) notwithstanding anything in this Servicing Agreement to
the contrary, the Master Servicer shall not be liable for settlement of
any claim by the Indenture Trustee or the Owner Trustee, as the case
may be, entered into without the prior consent of the Master Servicer,
which consent shall not be unreasonably withheld.
(c) The Master Servicer agrees to indemnify the Owner Trustee for, and
to hold the Owner Trustee, harmless against, any claim, tax, penalty, loss,
liability or expense of any kind whatsoever, in connection with the Owner
Trustee's duties under any of the Basic Documents, except to the extent that
such claim, tax, penalty, loss liability or expense is (i) caused by the Owner
Trustee's own willful misconduct, gross negligence or bad faith or grossly
negligent failure to act or (ii) incurred as a result of the inaccuracy of any
representation or warranty contained in Section 6.03 of the Trust Agreement
expressly made by the Owner Trustee.
(d) No termination of this Servicing Agreement or the resignation or
removal of the Owner Trustee or the Indenture Trustee shall affect the
obligations created by this Section 5.06 of the Master Servicer to indemnify the
Indenture Trustee and the Owner Trustee under the conditions and to the extent
set forth herein. This section shall survive the termination of this Servicing
Agreement and the resignation or removal of the Master Servicer. Any amounts to
be paid by the Master Servicer pursuant to this Subsection may not be paid from
the Trust Estate.
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ARTICLE VI
Default
Section 6.01 SERVICING DEFAULT. If any one of the following events
(each, a "Servicing Default") shall occur and be continuing:
(i) Any failure by the Master Servicer to deposit in the
Collection Account or Payment Account any deposit required to be made
under the terms of this Servicing Agreement, including any Advances and
Compensating Interest (other than Servicing Advances), which continues
unremedied for a period of one (1) Business Day after the date upon
which written notice of such failure shall have been given to the
Master Servicer by the Company, the Issuer or the Indenture Trustee or
to the Master Servicer, the Company, the Issuer and the Indenture
Trustee by the Bond Insurer; or
(ii) Failure on the part of the Master Servicer duly to
observe or perform in any material respect any other covenants or
agreements of the Master Servicer (including Servicing Advances) set
forth in the Bonds or in this Servicing Agreement, which failure, in
each case, materially and adversely affects the interests of
Bondholders and which continues unremedied for a period of 30 days
after the date on which written notice of such failure, requiring the
same to be remedied, and stating that such notice is a "Notice of
Default" hereunder, shall have been given to the Master Servicer by the
Company, the Issuer or the Indenture Trustee; or
(iii) The entry against the Master Servicer of a decree or
order by a court or agency or supervisory authority having jurisdiction
in the premises for the appointment of a trustee, conservator, receiver
or liquidator in any insolvency, conservatorship, receivership,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for
a period of 60 consecutive days; or
(iv) The Master Servicer shall voluntarily go into
liquidation, consent to the appointment of a conservator, receiver,
liquidator or similar person in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or of or relating to all or
substantially all of its property, or a decree or order of a court,
agency or supervisory authority having jurisdiction in the premises for
the appointment of a conservator, receiver, liquidator or similar
person in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Master
Servicer and such decree or order shall have remained in force
undischarged, unbonded or unstayed for a period of 60 days; or the
Master Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors or voluntarily suspend payment of its
obligations; or
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(v) Any failure by the Seller (so long as the Seller is the
Master Servicer) or the Master Servicer, as the case may be, to pay
when due any amount payable by it under the terms of the Insurance
Agreement which continues unremedied for a period of three (3) Business
Days after the date upon which written notice of such failure shall
have been given to the Seller (so long as the Seller is the Master
Servicer) or the Master Servicer, as the case may be; or
(vi) Failure on the part of the Seller or the Master Servicer
to duly perform in any material respect any covenant or agreement set
forth in the Insurance Agreement, which failure continues unremedied
for a period of 30 days (5 days in the event of a failure to enforce
the Radian Lender-Paid PMI Policy) after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Seller or the Master Servicer (with a copy to the
Indenture Trustee), as the case may be, by the Bond Insurer; or
(vii) The occurrence of any of the following additional
events: (1) with respect to any Payment Date, the aggregate Cumulative
Loss Percentage with respect to the Mortgage Loans over the prior
twelve months is more than 1.75% of the aggregate Principal Balance of
the Mortgage Loans as of the first day of the first month of such
twelve month period; or (2) the Rolling Delinquency Percentage with
respect to the Mortgage Loans for any Payment Date is more than 5.75%.
then, (a) and in every such case, other than that set forth in (v), (vi) or
(vii) hereof, so long as a Servicing Default shall not have been remedied by the
Master Servicer, either the Issuer, subject to the direction of the Indenture
Trustee as pledgee of the Mortgage Loans, with the consent of the Bond Insurer,
or the Bond Insurer, or if a Bond Insurer Default exists, the holders of at
least 51% of the aggregate Bond Principal Balance of each Class of Bonds, by
notice then given in writing to the Master Servicer (and to the Indenture
Trustee and the Issuer if given by the Bond Insurer) or (b) in the case of the
events set forth in (v), (vi) or (vii) hereof, the Bond Insurer, or if a Bond
Insurer Default exists, the holders of at least 51% of the aggregate Bond
Principal Balance of each Class of Bonds may, by notice to the Master Servicer,
terminate all of the rights and obligations of the Master Servicer as servicer
under this Servicing Agreement other than its right to receive servicing
compensation and expenses for servicing the Mortgage Loans hereunder during any
period prior to the date of such termination and the Issuer, subject to the
direction of the Indenture Trustee as pledgee of the Mortgage Loans, with the
consent of the Bond Insurer, or the Bond Insurer may exercise any and all other
remedies available at law or equity; provided, however, that the successor to
the Master Servicer appointed pursuant to Section 6.02 shall have accepted the
duties of Master Servicer effective upon the resignation or termination of the
Master Servicer. Any such notice to the Master Servicer shall also be given to
each Rating Agency, the Bond Insurer, the Company and the Issuer. On or after
the receipt by the Master Servicer of such written notice, all authority and
power of the Master Servicer under this Servicing Agreement, whether with
respect to the Bonds or the Mortgage Loans or otherwise, shall pass to and be
vested in the Indenture Trustee, pursuant to and under this Section 6.01; and,
without limitation, the Indenture Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the Master Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement of each
Mortgage Loan and related documents, or otherwise.
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Notwithstanding the foregoing, the parties hereto and the Securityholders by
their acceptance of any Security, acknowledge and agree that there will be a
period of transition before the actual servicing functions can be fully
transferred to the Indenture Trustee, as successor Master Servicer, or to a
successor Master Servicer appointed by the Indenture Trustee pursuant to the
provisions hereof, provided, that the Indenture Trustee shall use its reasonable
best efforts to succeed to the actual servicing functions or find a successor
Master Servicer as soon as possible but no later than 90 days after such
termination. The Master Servicer agrees to cooperate with the Indenture Trustee
in effecting the termination of the responsibilities and rights of the Master
Servicer hereunder, including, without limitation, the transfer to the Indenture
Trustee or the successor Master Servicer for administration by it of (i) the
property and amounts which are then or should be part of the Trust Fund or which
thereafter become part of the Trust Estate; (ii) originals or copies of all
documents of the Master Servicer reasonably requested by the Indenture Trustee
to enable it to assume the Master Servicer's duties thereunder; (iii) the rights
and obligations of the Master Servicer under the Subservicing Agreements with
respect to the Mortgage Loans; (iv) all cash amounts which shall at the time be
deposited by the Master Servicer or should have been deposited to the Collection
or the Payment Account or thereafter be received with respect to the Mortgage
Loans; and (v) all costs or expenses associated with the complete transfer of
all servicing data and the completion, correction or manipulation of such
servicing data as may be required by the Indenture Trustee or any successor
Master Servicer to correct any errors or insufficiencies in the servicing data
or otherwise to enable the Indenture Trustee or successor Master Servicer to
service the Mortgage Loans properly and effectively. All reasonable costs and
expenses (including, but not limited to, attorneys' fees) incurred in connection
with the succession as Master Servicer, including amending this Servicing
Agreement to reflect such succession as Master Servicer pursuant to this Section
6.01 shall be paid by the predecessor Master Servicer (or if the predecessor
Master Servicer is the Indenture Trustee, the initial Master Servicer) upon
presentation of reasonable documentation of such costs and expenses, and if not
so paid by the predecessor Master Servicer, shall be reimbursed by the Trust
pursuant to Section 6.07 of the Indenture.
Notwithstanding any termination of the activities of the Master
Servicer hereunder, the Master Servicer shall be entitled to receive, out of any
late collection of a payment on a Mortgage Loan which was due prior to the
notice terminating the Master Servicer's rights and obligations hereunder and
received after such notice, that portion to which the Master Servicer would have
been entitled pursuant to Sections 3.07 and 3.15 as well as its Master Servicing
Fee in respect thereof, and any other amounts payable to the Master Servicer
hereunder the entitlement to which arose prior to the termination of its
activities hereunder.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 6.01(i) after the applicable grace periods specified in such
Section, shall not constitute a Servicing Default if such delay or failure could
not be prevented by the exercise of reasonable diligence by the Master Servicer
and such delay or failure was caused by an act of God or the public enemy, acts
of declared or undeclared war, public disorder, rebellion or sabotage,
epidemics, landslides, lightning, fire, hurricanes, earthquakes, floods or
similar causes. The preceding sentence shall not relieve the Master Servicer
from using reasonable efforts to perform its respective obligations in a timely
manner in accordance with the terms of this Servicing Agreement and the Master
Servicer shall provide the Indenture Trustee, the Bond Insurer and the
Bondholders with notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations. The Master Servicer
shall
35
immediately notify the Indenture Trustee, the Bond Insurer and the Owner Trustee
in writing of any Servicing Default.
Section 6.02 INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR. Within
90 days of the time the Master Servicer receives a notice of termination
pursuant to Section 6.01 or sends a notice pursuant to clause (i) of Section
5.04, the Indenture Trustee on behalf of the Bondholders and the Bond Insurer,
or other successor appointed in accordance with this Section 6.02, shall be the
successor in all respects to the Master Servicer in its capacity as servicer
under this Servicing Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Master Servicer by the terms and provisions
hereof, including but not limited to the provisions of Article VIII. Nothing in
this Servicing Agreement shall be construed to permit or require the Indenture
Trustee or any other successor Master Servicer to (i) succeed to the
responsibilities, duties and liabilities of the initial Master Servicer in its
capacity as the Seller under the Mortgage Loan Sale and Contribution Agreement
and the Subsequent Mortgage Loan Sale and Contribution Agreements, as
applicable, (ii) be responsible or accountable for any act or omission of the
Master Servicer prior to the effectiveness of the Master Servicer's termination
hereunder, (iii) require or obligate the Indenture Trustee, in its capacity as
successor Master Servicer, to purchase, repurchase or substitute any Mortgage
Loan, (iv) fund any losses on any Eligible Investment directed by any other
Master Servicer, or (v) be responsible for the representations and warranties of
the Master Servicer, except as provided herein; PROVIDED, HOWEVER, that the
Indenture Trustee, as successor Master Servicer, shall be required to make any
Advances to the extent that the Master Servicer failed to make such Advances, to
the extent such Advance is not determined by the Indenture Trustee to be
nonrecoverable. As compensation therefor, the Indenture Trustee shall be
entitled to such compensation as the Master Servicer would have been entitled to
hereunder if no such notice of termination had been given. Notwithstanding the
above, (i) if the Indenture Trustee is unwilling to act as successor Master
Servicer, or (ii) if the Indenture Trustee is legally unable so to act, the
Indenture Trustee on behalf of the Bondholders and the Bond Insurer may (in the
situation described in clause (i)) or shall (in the situation described in
clause (ii)) appoint or petition a court of competent jurisdiction to appoint
any established housing and home finance institution, bank or other mortgage
loan servicer having a net worth of not less than $10,000,000 as the successor
to the Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder;
PROVIDED that the appointment of any such successor Master Servicer shall be
acceptable to the Bond Insurer, as evidenced by the Bond Insurer's prior written
consent and provided further that the appointment of any such successor Master
Servicer will not result in the qualification, reduction or withdrawal of the
ratings assigned to the Class A Bonds without regard to the Bond Insurance
Policy or the Class B Bonds by the Rating Agencies. Pending appointment of a
successor to the Master Servicer hereunder, unless the Indenture Trustee is
prohibited by law from so acting or is unwilling to act as such, the Indenture
Trustee shall act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the successor shall be entitled to receive
compensation out of payments on Mortgage Loans in an amount equal to the
compensation which the Master Servicer would otherwise have received pursuant to
Section 3.15 (or such lesser compensation as the Indenture Trustee and such
successor shall agree). The appointment of a successor Master Servicer shall not
affect any liability of the predecessor Master Servicer which may have arisen
under this Servicing Agreement prior to its termination as Master Servicer
(including, without limitation, the obligation to purchase Mortgage Loans
pursuant
36
to Section 3.01, to pay any deductible under an insurance policy pursuant to
Section 3.11 or to indemnify the Indenture Trustee pursuant to Section 5.06),
nor shall any successor Master Servicer be liable for any acts or omissions of
the predecessor Master Servicer or for any breach by such Master Servicer of any
of its representations or warranties contained herein or in any related document
or agreement. The Indenture Trustee, the Custodian and such successor shall take
such action, consistent with this Servicing Agreement, as shall be necessary to
effectuate any such succession.
In connection with the termination or resignation of the Master
Servicer hereunder, either (i) the successor Master Servicer, including the
Indenture Trustee if the Indenture Trustee is acting as successor Master
Servicer, shall represent and warrant that it is a member of MERS in good
standing and shall agree to comply in all material respects with the rules and
procedures of MERS in connection with the servicing of the Mortgage Loans that
are registered with MERS, in which case the predecessor Master Servicer shall
cooperate with the successor Master Servicer in causing MERS to revise its
records to reflect the transfer of servicing to the successor Master Servicer as
necessary under MERS' rules and regulations, or (ii) the predecessor Master
Servicer shall cooperate with the successor Master Servicer in causing MERS to
execute and deliver an assignment of Mortgage in recordable form to transfer the
Mortgage from MERS to the Indenture Trustee and to execute and deliver such
other notices, documents and other instruments as may be necessary or desirable
to effect a transfer of such Mortgage Loan or servicing of such Mortgage Loan on
the MERS(R) System to the successor Master Servicer. The predecessor Master
Servicer shall file or cause to be filed any such assignment in the appropriate
recording office. The predecessor Master Servicer shall bear any and all fees of
MERS, costs of preparing any assignments of Mortgage, and fees and costs of
filing any assignments of Mortgage that may be required under this Section 6.02.
The successor Master Servicer shall cause such assignment to be delivered to the
Indenture Trustee promptly upon receipt of the original with evidence of
recording thereon or a copy certified by the public recording office in which
such assignment was recorded.
(b) Any successor, including the Indenture Trustee on behalf of the
Bondholders, to the Master Servicer as servicer shall during the term of its
service as servicer (i) continue to service and administer the Mortgage Loans
for the benefit of the Securityholders and the Bond Insurer, (ii) maintain in
force a policy or policies of insurance covering errors and omissions in the
performance of its obligations as Master Servicer hereunder and a fidelity bond
in respect of its officers, employees and agents to the same extent as the
Master Servicer is so required pursuant to Section 3.11(g).
(c) Any successor Master Servicer, including the Indenture Trustee on
behalf of the Bondholders, shall not be deemed to be in default or to have
breached its duties hereunder if the predecessor Master Servicer shall fail to
deliver any required deposit to the Collection Account or otherwise cooperate
with any required servicing transfer or succession hereunder.
(d) Notwithstanding anything else herein to the contrary, in no event
shall the Indenture Trustee be liable for any servicing fee or any differential
in the amount of the servicing fee paid hereunder and the amount necessary to
induce any successor Servicer to act as a successor Servicer under this
Servicing Agreement and the transactions set forth or provided for herein.
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Section 6.03 NOTIFICATION TO BONDHOLDERS. Upon any termination or
appointment of a successor to the Master Servicer pursuant to this Article VI or
Section 5.04, the Indenture Trustee shall give prompt written notice thereof to
the Bondholders, the Owner Trustee, the Bond Insurer, the Company, the Issuer
and each Rating Agency.
Section 6.04 WAIVER OF DEFAULTS. The Indenture Trustee shall transmit
by mail to all Bondholders and the Bond Insurer, within 10 days after the
occurrence of any Servicing Default known to the Indenture Trustee, unless such
Servicing Default shall have been cured, notice of each such Servicing Default
hereunder known to a Responsible Officer of the Indenture Trustee. The Bond
Insurer, or if a Bond Insurer Default exists, the holders of at least 51% of the
aggregate Bond Principal Balance of the Bonds may waive any default by the
Master Servicer in the performance of its obligations hereunder and the
consequences thereof, except a default in the making of or the causing to be
made any required distribution on the Bonds. Upon any such waiver of a past
default, such default shall be deemed to cease to exist, and any Servicing
Default arising therefrom shall be deemed to have been timely remedied for every
purpose of this Servicing Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived. The Master Servicer shall give notice of any such
waiver to the Rating Agencies.
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ARTICLE VII
Miscellaneous Provisions
Section 7.01 AMENDMENT. This Servicing Agreement may be amended from
time to time by the parties hereto, provided that any amendment be accompanied
by a letter from the Rating Agencies that the amendment will not result in the
downgrading or withdrawal of the rating then assigned to the Bonds or the rating
then assigned to the Bonds without taking into account the Bond Insurance
Policy, and the consent of the Bond Insurer and the Indenture Trustee.
Section 7.02 GOVERNING LAW. THIS SERVICING AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 7.03 NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if when
delivered to:
(a) in the case of the Master Servicer: Impac Funding Corporation
0000 Xxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: General Counsel
(b) in the case of the Bond Insurer: Ambac Assurance Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Consumer Asset-Backed
Securities Group
(c) in the case of Rating Agencies: Xxxxx'x Investors Service, Inc.
0xx Xxxxx
00 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Residential Mortgage Monitoring
Unit
Standard & Poor's, a division of The
XxXxxx-Xxxx Companies, Inc.
00 Xxxxx Xxxxxx - 41st Floor
New York, New York 10041
Attention: Asset Backed Surveillance Group
(d) in the case of the Owner Trustee,
39
the Corporate Trust Office: Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
(e) in the case of the Issuer,
to Impac CMB Trust Series 2002-2: c/o IMH Assets Corp.
0000 Xxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
(f) in the case of the Indenture Trustee: to its Corporate Trust Office, with a copy to
Deutsche Bank National Trust Company
0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Attention: Impac CMB Trust Series
2002-3 (IM0203)
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party. Any notice required or permitted to be
mailed to a Bondholder shall be given by first class mail, postage prepaid, at
the address of such Bondholder as shown in the Bond Register. Any notice so
mailed within the time prescribed in this Servicing Agreement shall be
conclusively presumed to have been duly given, whether or not the Bondholder
receives such notice. Any notice or other document required to be delivered or
mailed by the Indenture Trustee to any Rating Agency shall be given on a
reasonable efforts basis and only as a matter of courtesy and accommodation and
the Indenture Trustee shall have no liability for failure to deliver such notice
or document to any Rating Agency.
Section 7.04 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Servicing Agreement shall be
for any reason whatsoever held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Servicing Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Servicing
Agreement or of the Bonds or the rights of the Bondholders thereof.
Section 7.05 THIRD-PARTY BENEFICIARIES. This Servicing Agreement will
inure to the benefit of and be binding upon the parties hereto, the Bondholders,
the Bond Insurer, the Owner Trustee, the Indenture Trustee and their respective
successors and permitted assigns. Except as otherwise provided in this Servicing
Agreement, no other Person will have any right or obligation hereunder. The
Indenture Trustee shall have the right to exercise all rights of the Issuer
under this Agreement.
Section 7.06 COUNTERPARTS. This instrument may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
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Section 7.07 EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 7.08 TERMINATION. The respective obligations and
responsibilities of the Master Servicer and the Issuer created hereby shall
terminate upon the satisfaction and discharge of the Indenture pursuant to
Section 4.10 thereof.
Section 7.09 NO PETITION. The Master Servicer, by entering into this
Servicing Agreement, hereby covenants and agrees that it will not at any time
institute against the Issuer, or join in any institution against the Issuer, any
bankruptcy proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations of the Issuer. This section shall
survive the termination of this Servicing Agreement by one year.
Section 7.10 NO RECOURSE. The Master Servicer acknowledges that no
recourse may be had against the Issuer, except as may be expressly set forth in
this Servicing Agreement.
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ARTICLE VIII
DUTIES OF THE MASTER SERVICER
Section 8.01 ADMINISTRATIVE DUTIES. (a) DUTIES WITH RESPECT TO THE
INDENTURE. The Master Servicer shall perform all its duties and the duties of
the Issuer under the Indenture. In addition, the Master Servicer shall consult
with the Owner Trustee as the Master Servicer deems appropriate regarding the
duties of the Issuer under the Indenture. The Master Servicer shall monitor the
performance of the Issuer and shall advise the Owner Trustee when action is
necessary to comply with the Issuer's duties under the Indenture. The Master
Servicer shall prepare for execution by the Issuer or shall cause the
preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Issuer to prepare, file or deliver pursuant to the Indenture. In furtherance of
the foregoing, the Master Servicer shall take all necessary action that is the
duty of the Issuer to take pursuant to the Indenture.
(b) DUTIES WITH RESPECT TO THE ISSUER.
(i) In addition to the duties of the Master Servicer set forth
in this Servicing Agreement or any of the Basic Documents, the Master
Servicer shall perform such calculations and shall prepare for
execution by the Issuer or the Owner Trustee or shall cause the
preparation by other appropriate Persons of all such documents,
reports, filings, instruments, certificates and opinions as it shall be
the duty of the Issuer or the Owner Trustee to prepare, file or deliver
pursuant to this Servicing Agreement or any of the Basic Documents or
under state and federal tax and securities laws, and at the request of
the Owner Trustee, the Indenture Trustee or the Bond Insurer shall take
all appropriate action that it is the duty of the Issuer to take
pursuant to this Servicing Agreement or any of the Basic Documents. In
accordance with the directions of the Issuer, the Bond Insurer or the
Owner Trustee, the Master Servicer shall administer, perform or
supervise the performance of such other activities in connection with
the Bonds (including the Basic Documents) as are not covered by any of
the foregoing provisions and as are expressly requested by the Issuer,
the Indenture Trustee, the Bond Insurer or the Owner Trustee.
(ii) Notwithstanding anything in this Servicing Agreement or
any of the Basic Documents to the contrary, the Master Servicer shall
be responsible for promptly notifying the Owner Trustee and the Bond
Insurer in the event that any withholding tax is imposed on the
Issuer's payments (or allocations of income) to an Owner (as defined in
the Trust Agreement) as contemplated in Section 5.03 of the Trust
Agreement. Any such notice shall be in writing and specify the amount
of any withholding tax required to be withheld by the Owner Trustee
pursuant to such provision.
(iii) In carrying out the foregoing duties or any of its other
obligations under this Servicing Agreement, the Master Servicer may
enter into transactions with or otherwise deal with any of its
Affiliates; PROVIDED, HOWEVER, that the terms of any such transactions
or dealings shall be in accordance with any directions received from
the Issuer and shall be, in
42
the Master Servicer's opinion, no less favorable to the Issuer in any
material respect than with terms made available to unrelated third
parties.
(c) TAX MATTERS. The Master Servicer shall prepare, on behalf of the
Owner Trustee, financial statements and such annual or other reports of the
Issuer as are necessary for the preparation by the Indenture Trustee of tax
returns and information reports as provided in Section 5.03 of the Trust
Agreement, including, without limitation, Form 1099.
(d) NON-MINISTERIAL MATTERS. With respect to matters that in the
reasonable judgment of the Master Servicer are non-ministerial, the Master
Servicer shall not take any action pursuant to this Article VIII unless within a
reasonable time before the taking of such action, the Master Servicer shall have
notified the Owner Trustee, the Bond Insurer and the Indenture Trustee of the
proposed action and the Owner Trustee and the Bond Insurer and, with respect to
items (A), (B), (C) and (D) below, the Indenture Trustee shall not have withheld
consent or provided an alternative direction. For the purpose of the preceding
sentence, "non-ministerial matters" shall include:
(A) the amendment of or any supplement to the
Indenture;
(B) the initiation of any claim or lawsuit by the
Issuer and the compromise of any action, claim or lawsuit
brought by or against the Issuer (other than in connection
with the collection of the Mortgage Loans);
(C) the amendment, change or modification of
this Agreement or any of the Basic Documents;
(D) the appointment of successor Certificate Paying
Agents and successor Indenture Trustees pursuant to the
Indenture or the appointment of successor Servicers or the
consent to the assignment by the Certificate Registrar, Paying
Agent or Indenture Trustee of its obligations under the
Indenture; and
(E) the removal of the Indenture Trustee.
Section 8.02 RECORDS. The Master Servicer shall maintain appropriate
books of account and records relating to services performed under this Servicing
Agreement, which books of account and records shall be accessible for inspection
by the Issuer, the Indenture Trustee at any time during normal business hours.
Section 8.03 ADDITIONAL INFORMATION TO BE FURNISHED. The Master
Servicer shall furnish to the Issuer, the Bond Insurer and the Indenture Trustee
from time to time such additional information regarding the Mortgage Loans and
the Bonds as the Issuer, the Bond Insurer and the Indenture Trustee shall
reasonably request.
43
IN WITNESS WHEREOF, the Master Servicer, the Issuer and the Indenture
Trustee have caused this Servicing Agreement to be duly executed by their
respective officers or representatives all as of the day and year first above
written.
IMPAC FUNDING CORPORATION,
as Master Servicer
By: /s/ Xxxx Xxxxxxxx
------------------------------
Name: Xxxx Xxxxxxxx
Title: Senior Vice President
IMPAC CMB TRUST SERIES 2002-3,
as Issuer
Wilmington Trust Company, not in its individual
capacity, but solely as Owner Trustee
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Financial Services Officer
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Indenture Trustee
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Associate
Acknowledged and agreed with respect to Section 5.03 hereof:
IMH ASSETS CORP.
By:
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer
EXHIBIT A
MORTGAGE LOAN SCHEDULE
(provided upon request)
A-1
EXHIBIT B
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with your administration of the Mortgage Loans, we request the
release of the Mortgage File described below.
Servicing Agreement Dated:
Series #:
Account #:
Pool #:
Loan #:
Borrower Name(s):
Reason for Document Request: (circle one) Mortgage Loan Prepaid in Full
Other
Mortgage Loan Repurchased
Please deliver the Mortgage File to---------------------------------------------
--------------------------------------------------------------------------------
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Servicing Agreement."
-------------------------
[Name of Master Servicer]
Authorized Signature
******************************************************************************
TO CUSTODIAN: Please acknowledge this request, and check off documents being
enclosed with a copy of this form. You should retain this form for your files in
accordance with the terms of the Servicing Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Primary Insurance Policy
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or Deed of
Trust
[ ] Title Insurance Policy
_____________________ [ ] Other:
Name
_____________________
Title
_____________________
Date
B-1
