Exhibit 99.1
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0000 Xxx Xxxx
Xxxxxx Xxxxx, XX 00000
PMI Mortgage Insurance Co. (an Arizona corporation hereinafter called the
"Company") agrees to pay to the Insured, in consideration of the premium or
premiums to be paid as hereinafter specified and in reliance upon the
Insured's representations and statements made in any Application for coverage
under this Policy, any loss due to the Default by a Borrower on a Loan,
subject to the terms and conditions contained herein.
To obtain information about this Policy, to register a complaint or to obtain
information about related mortgage guaranty insurance products and services
offered by the Company, the insured or its servicer may call the Company toll
free at 000-000-0000.
Insured's Name and Mailing Address Policy Number
The Bank of New York Trust Company N.A. as Co-Trustee 00000-0000-0
for the CWABS Asset-Backed Certificates Series 2004-AB2
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000-0000
IN WITNESS WHEREOF, the Company has caused its Corporate Seal to be affixed
hereto and these presents to be signed by its duly authorized officers in
facsimile to become effective as its original seal and signature and binding
on the Company.
PMI Mortgage Insurance Co.
[GRAPHIC OMITTED]
/s/ X. Xxxxxxx Xxxxx /s/ Xxxxxx X. Xxxxxxxxxx
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X. Xxxxxxx Xxxxx, President Xxxxxx X. Xxxxxxxxxx, Secretary
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TERMS AND CONDITIONS
I. Definitions
A. Acquisition Option means the method of determining the amount of the
Insurance Benefit with respect to a Loan as set forth in Section V.,
C., 1.
B. Advances means the reasonable and necessary sums paid by the Insured
with respect to Loan after Default, for the following:
1. Hazard insurance premiums;
2. Real estate property taxes;
3. Property protection and preservation expenses;
4. Property sales expenses;
5. Customary foreclosure costs including Court Expenses and
reasonable attorney's fees;
6. Costs of other customary legal proceedings, as may be necessary
to obtain Good and Merchantable Title to or Possession of the
Property; and
7. Loss mitigation expenses.
C. Anticipated Loss means, in connection with a Claim, an amount equal
to the Company's cost of paying the full Claim Amount calculated in
accordance with Section V., B., less the amount the Company
reasonably anticipates receiving as net proceeds of the sale of the
Property, subtracting also from such proceeds all anticipated costs
of the sale and holding costs, but in any event, such amount shall
never be greater than the Loss calculated under the Percentage
Option in accordance with Section V., C., 2.
D. Application means the Insured's statements and descriptions, both
oral and written, relative to the Loan made in connection with the
application or negotiation for the insurance provided by this
Policy, including the representations made, and documents executed
by the Borrower, as evidenced by documents, writings, electronic
media transfers, telephone data transmissions, and the like.
E. Appropriate Proceedings means any legal or administrative action or
proceeding by the Insured affecting either the Loan or the title to
the Property, and include, but are not limited to:
1. enforcing the terms of the Loan as allowed by the laws where
the Property is located; or
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2. establishing a deficiency amount where appropriate and
permissible and where directed by the Company; or
3. acquiring all the Borrower's right and title to the Property in
the Insured's name, but excluding any voluntary conveyance
under Section IV., D., (Voluntary Conveyance); or
4. asserting the Insured's interest in the Property in a
Borrower's bankruptcy or similar proceeding.
F. Borrower means any Person required to repay the debt obligation
created pursuant to the Loan. The Borrower may be more than one
Person, and the term shall include any co-signer or guarantor of the
Loan.
X. Xxxxxxxx's Own Funds means any funds owned by the Borrower and
neither borrowed from other sources, nor subject to refund, rebate,
or repayment.
X. Xxxxxxxx's Title means such title to a Property as was vested in the
Borrower at the time of a conveyance to the Insured extinguishing
all of the Borrower's rights in the Property; provided, however, if
the Insured so elects, the redemption period need not have expired.
The deed evidencing such title in the Insured need not be recorded
unless required by applicable law.
I. Certificate means once all conditions for coverage have been
satisfied, the number issued by the Company to a Loan, as listed on
a Certificate Schedule.
J. Certificate Schedule means a list of Loans to which coverage has
been extended under this Policy, and which is attached to this
Policy, or added thereto by endorsement, and any document issued by
the Company pursuant to this Policy amending coverage for a Loan.
K. Claim means the timely filed written request, made on a form
provided by or in a manner approved by the Company, to receive
benefits of this Policy. A Claim received by the Company containing
all information or proof required by the Company shall be called a
Perfected Claim.
L. Claim Amount means the actual loss incurred by the Insured with
respect to a Loan as calculated in accordance with Section V., B.,
(Calculation of Claim Amount) giving effect to adjustments made by
the Company due to failure of the Insured to mitigate loss.
M. Claim Settlement Period means a sixty (60) day period following the
filing of a Claim with the Company provided that such period shall
be extended by the number of days elapsed from the date the Company
sends notice of deficiency of a Claim to the Insured to the date
that the Insured files a Perfected Claim with the Company.
N. Closed means the later of:
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1. The date on which all Loan documents were executed and
delivered; or
2. The date on which the funds under the Loan were initially
disbursed to or for the benefit of the Borrower.
O. Court Expenses means the out-of-pocket cost of initiating and
conducting Appropriate Proceedings or any eviction proceedings.
These expenses include costs of filing or serving pleadings,
conducting discovery and enforcing judgment. These expenses do not
include reimbursement for any time spent by the Insured or the
Insured's employees, officers or agents, nor do these expenses
include attorney's fees.
P. Default means the failure by a Borrower to pay when due: (i) an
amount equal to or greater than one (1) regular periodic payment due
under the terms of a Loan, or (ii) the failure by a Borrower to pay
when due all amounts due under a Loan after the exercise by the
Insured of the "due on sale" provision of such Loan, provided
however, that a Default as defined in (i) above which is cured
within 59 days of the payment due date, will not be deemed to be a
Default for purposes of administration of this Policy unless the
missed payment is the first payment due under a Loan. Default does
not mean any other non-monetary default or violation of any other
term or condition of the Loan, which would allow for acceleration of
the debt or foreclosure or other action to realize upon the security
provided by the Loan.
A Loan is deemed to be in Default for the period for which, as of
the close of business on the installment due date, a scheduled
installment payment has not been made. For example, a Loan is "four
periodic payments in Default" if the periodic payments due on
January 1 through April 1 remain unpaid as of the close of business
on April 1.
Q. Default Amount means the unpaid principal balance of a Loan as of
the date of Default excluding any Negative Amortization. If a Loan
has been divided into secured and unsecured portions pursuant to
proceedings under the federal bankruptcy laws, the Default Amount
shall include the unpaid principal balance due under the unsecured
portion of the Loan even if the Insured has written off such
unsecured portion of the Loan, provided that the premium paid has
been calculated based on both the secured and unsecured portions of
the Loan.
R. Deficiency Expenses means reasonable attorneys fees and necessary
court costs incurred by the Insured for those Appropriate
Proceedings necessary to pursue or establish a deficiency against
the Borrower and which are in addition to those incurred in standard
and customary foreclosure proceedings, plus additional interest
accruing on the Loan, real estate taxes, casualty insurance premiums
and Property preservation expenses incurred during such Appropriate
Proceedings and any additional related redemption period.
S. Down Payment means (i) a cash contribution made by the Borrower,
either prior to or at the time the Loan is Closed, from the
Borrower's Own Fund's towards the purchase price of the Property, or
(ii) a
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verifiable equity in the Property vested in the Borrower only, after
completion of the improvements in accordance with the Original
Appraisal.
T. Effective Date means, provided that the premium has been paid as
required herein, 12:01 a.m. on the date of coverage as indicated on
the Certificate Schedule.
U. Environmental Impairment means Physical Damage to a Property
occurring by reason of environmental contamination including, but
not limited to, nuclear reaction or radioactive waste, toxic waste,
poisoning or pollution of earth or water subjacent to the Property
or of the atmosphere above the Property; or similar hazard including
any condition giving rise to liability under the Comprehensive
Environmental Response, Compensation and Liability Act or any
similar law existing under either federal law or the law of the
state where the Property is located.
V. First Party means (a) the Insured or any officer, employee or agent
of the Insured or (b) any of the following Persons: the
correspondent lender, mortgage loan broker or other intermediary
underwriting or originating the Loan on behalf of the Insured or
originating lender, or escrow or closing agents or anyone under
contract with the Insured or originating lender in connection with
the origination of such Loan, such as an appraiser.
W. FMV means the fair market value of a Property as of a specific date
which shall be equal to the lesser of the appraised value or the
sale price of the Property on that date; or in the event of a
foreclosure sale, the appraised value or estimated value determined
in accordance with customary servicing practices, or the value as
determined under applicable law, where such law prescribes a method
for determining the value of a Property.
X. Good and Merchantable Title means title to the Property, free and
clear of all liens and encumbrances, covenants, conditions,
restrictions, easements and rights of redemption, except for:
1. Any lien established by public bond, assessment or tax, when no
installment, call or payment of or under such bond, assessment
or tax is delinquent; and
2. Any municipal or zoning ordinances, building restrictions or
other restrictions, covenants, regulations of use, provided the
Property is in compliance with, and its intended use and
occupancy is not materially adversely affected by, such
restrictions, covenants, regulations or ordinances; and
3. Easements, rights of way, sewer and utility rights, mineral,
oil or timber rights, or any impediments which will not have a
materially adverse effect on either the transferability of the
Property or the sale thereof to a bona fide purchaser.
The Property must have, at a minimum, the following characteristics
to establish Good and Merchantable Title: (i) adequate means of
ingress and egress; (ii) the right to use of water and sewer
facilities appertaining to the Property, whether such rights be by
virtue of public easement or private
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grant; (iii) the Property must be free of any lien for any toxic
waste or environmental contamination or similar hazard or claim of
such hazard pursuant to the Comprehensive Environmental Response
Compensation and Liability Act, as amended, or similar federal or
state law providing for liens in connection with the clean up of
environmental conditions, and no proceedings to initiate such a lien
may be pending, unless otherwise agreed to by the Company.
Y. Insurance Benefit means the liability of the Company with respect to
a Loan calculated in accordance with this Policy. A right to receive
an Insurance Benefit shall be deemed to have arisen when a Default
occurs while the Policy is in force for a Loan, notwithstanding that
the amount of the Insurance Benefit is not then either presently
ascertainable or due and payable.
Z. Insured means with respect to any Loan:
1. The Person designated on the face of this Policy; or
2. Any Person, other than a natural Person, who owns the Loan,
either for its own benefit or as trustee for the benefit of a
third party.
AA. Loan means any note or other evidence of indebtedness and the
indebtedness it so evidences, together with the mortgage, bond, deed
of trust, or other instrument securing said indebtedness, and to
which coverage under this Policy has been extended.
BB. Negative Amortization means the additions to the principal amount of
a Loan arising from the insufficiency of regularly scheduled
payments to cover interest as it accrues against the principal
amount of the Loan as provided for therein.
CC. Original Appraisal means the appraisal, other report or description
of the Property, obtained by the lender under the Loan at the time
it was originated, which establishes the value of the Property at
that time.
DD. Percentage Option means the method of determining the amount of the
Insurance Benefit with respect to a Loan set forth in Section V.,
C., 2.
EE. Person means any individual natural person, or any corporation,
partnership, association or other legally recognized entity.
FF. Physical Damage means tangible damage to a Property that materially
adversely affects the use, marketability, or value of the Property,
whether caused by accident or otherwise, including, but not limited
to damage caused by reason of fire, destruction of tangible
property, defects in construction, land subsidence, earth movement
or slippage, flood, earthquake, war, civil insurrection, or riot;
and further, Physical Damage includes Environmental Impairment and
the destruction or removal of chattel items that are considered part
of the Property (see Section I., KK., [Property]) For purposes of
this definition "material" shall mean an amount equal to or greater
than $1,500.00 such that the estimated cost to repair a Property is
$1,500.00 or more before the exclusion set forth in Section III.,
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G., (Physical Damage Exclusion) would apply to exclude coverage for
a Loan. The presence of radon gas, lead paint or asbestos in the
dwelling on the Property shall not be deemed to be Physical Damage.
GG. Policy means this contract of insurance together with all
Applications, all endorsements, and the Certificate Schedule, all of
which are incorporated herein for all purposes.
HH. Possession of the Property means actual and physical occupancy and
control of the Property.
II. Pre-Arranged Sale means:
1. A sale of a Property, with the prior approval of the Company,
arranged by the Insured (or by the Borrower and approved by the
Insured) prior to foreclosure because of a Default by a
Borrower, or by the Insured after foreclosure and before
expiration of the Claim Settlement Period; or
2. A foreclosure or trustee's sale of a Property to a third party,
or redemption from foreclosure, at a price equal to or greater
than the minimum amount specified by the Company to be bid by
the Insured at such sale.
JJ. Pre-Arranged Sale Option means the method of determining the amount
of the Insurance Benefit with respect to a Loan set forth in Section
V., C., 3.
KK. Property means the real property and all improvements thereon
including any chattel items (including any built-in appliances)
which are noted in the Original Appraisal, including all
replacements or additions thereto, together with all easements and
appurtenances, all rights of access, all rights to use, as well as
any co-ownership interests in common areas, recreational and
appurtenant facilities, and all replacements or additions thereto.
LL. Residential means:
1. A type of building which is designed for occupancy by not more
than four families; or
2. A single-family condominium or planned unit development unit;
or
3. Any other single-family residence unit as to which Good and
Merchantable Title may be held or conveyed freely under law,
and which the Company has approved in writing.
MM. Servicer means that Person, other than a natural Person, who at any
time is servicing a Loan (as a master servicer, if subservicing is
also involved) with respect to the Insured's obligations under the
Policy. The Insured shall be presumed to be the Servicer unless the
Company is notified otherwise.
NN. Uninsured Casualty means Physical Damage to a Property which is
either not covered by casualty insurance, or not covered in an
amount sufficient to restore such Physical Damage to the Property.
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OO. Uninsured Loan Balance means, at any time, with respect to a Loan,
the estimated Claim Amount less the Insurance Benefit estimated
pursuant to the Percentage Option.
PP. Any pronouns, when used herein, shall mean the single or plural,
masculine or feminine, as the case may be.
II. Coverage
A. Extension of and Level of Coverage- Extension of coverage to a Loan
under this Policy shall be evidenced by issuance of a Certificate
number on the Certificate Schedule. The Certificate Schedule and the
Application for each Loan are incorporated herein by reference and
made a part hereof for all purposes. The Policy is issued in
reliance upon the Application and on the representations made in
connection therewith. Coverage shall commence upon the payment of
the initial premium, as of the Effective Date of the Certificate
Schedule. The coverage level for each Loan shall be indicated on the
Certificate Schedule.
B. Initial Premium - On the Effective Date of the Certificate Schedule,
the Insured shall forward the appropriate initial premium due to the
Company to establish coverage as of the Effective Date.
C. Payment of Renewal Premium - For coverage to be renewed, the entire
renewal premium must be paid no later than the fifteenth (15th) day
of the second month following the month in which each anniversary of
the Effective Date occurs. For example, if the Effective Date was
January 12, renewal premium must be paid by March 15. The Company
shall give the Servicer, if a Servicer is shown on the records of
the Company, or otherwise, the Insured, notice of the renewal
premium due date. If the renewal premium is not paid by the last day
of the grace period provided above, then the liability of the
Company shall terminate as of 12:01 a.m. on the later of the last
anniversary of the Effective Date through which the premium has been
paid, or, if a non-payment notice is required by applicable law, the
last day of the cure period specified in such non-payment notice or
as may be required by applicable law (the "Lapse Date"). However,
failure to pay a renewal premium will not impair or terminate
coverage for Defaults occurring prior to the Lapse Date.
Notwithstanding the foregoing, if the renewal premium is not paid by
the last day of the above-stated grace period and such Loan is among
a group of Loans whose coverage has lapsed due to the transfer,
seizure or surrender of the servicing for such Loans, the Insured
shall have an additional sixty (60) day grace period in which to pay
the renewal premium for such Loan.
D. Full Premium Payment - The Company shall have the right to hold in a
suspense account for up to ninety (90) days any premium payment
received, without obligation to apply such premium to coverage while
any of the following circumstances exist:
1. The payment received is less than the full amount of the
premium due with respect to a Certificate;
2. Information received with the payment is insufficient to
identify the Loan to which the payment applies.
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At the end of the ninety (90) day period if the Company has not been
able to resolve the suspended premium payment with the Insured, then
the Company shall either refund the payment or be deemed to have
accepted and applied it without lapse of coverage. Where the Company
has received notice that there is a Servicer for a Loan then, if a
premium is refunded, the Insured shall be notified that such refund
was made and shall have sixty (60) days from such notice to cure or
perform the conditions precedent to coverage.
E. Cancellation by the Insured of Coverage for a Loan - The Insured may
cancel coverage with respect to a Loan by making a request for
cancellation to the Company in writing or via any medium acceptable
to the Company. Upon receipt thereof, for coverage having refundable
premiums, the Company shall refund such sum as may be determined to
be due in accordance with the appropriate cancellation or premium
schedule. The Company reserves the right to net out any unpaid
premium from any premium refund. However, no refund on a Certificate
will be paid if a notice of Default has been filed unless the
Insured waives its rights to the Insurance Benefit with respect to
that Loan. Cancellation of coverage for a Loan will not cancel this
Policy.
F. Cancellation of Policy - Once coverage has become effective with
respect to a Loan, this Policy may not be canceled by the Company
for as long as any Certificate assigned under this Policy remains in
force. If the Insured desires to cancel this Policy, it may do so by
canceling all outstanding Certificates that have been issued under
this Policy.
G. Loan Modifications - Unless prior written approval is obtained from
the Company, the Insured shall not make any change in the terms of
any Loan including, but not limited to, any change in the amount of
the indebtedness, the interest rate, the use of escrow funds or
other funds, term or amortization schedule of the Loan, change in
the Property, nor release any Borrower from liability on a Loan,
provided, however, that changes in the Loan permitted by the
instrument evidencing the Loan shall be deemed approved without
prior approval.
H. Assumptions and Balloon Restructures - The renewal or restructure of
a Loan at the maturity of a Balloon Payment (hereinafter defined)
and the assumption of a Loan by a purchaser of the Property, with or
without the release of the original Borrower, are changes to a Loan
requiring the Company's prior approval as set forth in Section II.,
G., (Loan Modifications) above, provided, however, that if under
applicable law, the Insured cannot enforce the "Due on Sale"
provision of a Loan, then the Company will be deemed to have
approved the assumption of such Loan. Notwithstanding anything to
the contrary in this Section II., H., the Company will be deemed to
have approved the assumption of any Loan where no release is
requested and under Section II-406.02 of the Federal National
Mortgage Association's Servicing Guide or any successor provision
thereof, or any similar provision of the Federal Home Loan
Corporation's Sellers' & Servicers' Guide, the assumption is an
"exempt transaction" that the Servicer is to approve without review
of the terms of the transaction.
I. Increase in Loan Amount - In addition to the approval requirement of
Section II., G., (Loan Modifications) above, if the principal
balance of a Loan is increased (excluding any Negative
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Amortization), the Insured shall pay an additional premium
corresponding to the increase in coverage, at the then prevailing
premium rate.
J. Approval of Loan Modifications - The Company shall not unreasonably
withhold any approval required to be obtained in connection with any
of the changes listed in Sections II., G., and H.,; however, failure
by the Insured to obtain any such approval with respect to any Loan
shall constitute a waiver of coverage for that Loan and the Company
shall refund premium for the period following such waiver.
K. Servicing - The Loans will be serviced by one of five servicers
qualified and approved by the Company and the Insured. Unless the
prior written approval of the Company is obtained, the Servicing of
any of the Loans may not be transferred, sold, or assigned unless
such transfer, sale or assignment is approved in writing by the
Company. The Company shall not unreasonably withhold approval of a
proposed servicer. The Company's approval shall be deemed to be
given for the transfer, sale or assignment of all or part of the
Loans to a federally insured bank or savings association, an
institutional investor, the Federal Home Loan Mortgage Corporation
("Xxxxxxx Xxx"), Xxxxxx Xxx, or to a Xxxxxx Xxx or Freddie Mac
approved mortgage banker, provided that notice of the same is given
as required by this paragraph.
L. Change of Insured - If all of the Loans are transferred, sold or
assigned by the Insured, coverage will continue PROVIDED THAT (a)
notice thereof is given to the Company within thirty (30) days of
such change, (b) the change in ownership, however denominated, is
not occasioned by the redemption, repurchase, cancellation or other
method of extinguishing the transaction pursuant to which the Loans
were securitized, and (c) the Company approves the change in
writing. The Company shall not unreasonably withhold approval of an
new Insured.
M. Coordination and Duplication of Insurance Benefits -
1. If any portion of a Loan is uninsured, all payments made by the
Borrower on the Loan shall be allocated to the insured portion
of the Loan in the same ratio as the insured principal amount
bears to the total principal amount of the Loan. The Insurance
Benefit hereunder shall likewise be calculated on the same pro
rata basis.
2. The Insured shall not carry duplicate mortgage guaranty
insurance (other than mortgage guaranty pool insurance or
supplemental mortgage guaranty insurance) on any Loan.
3. If at the time of Default there is any other valid and
collectible insurance in effect for the Loan which would attach
if this insurance were not in effect, then the coverage under
this Policy shall apply only as excess coverage and in no event
as contributing insurance.
N. Mitigation of Loss - The Insured and its Servicer shall attempt to
limit and mitigate loss by adhering to customary servicing standards
applicable to delinquent Loans, which may include in appropriate
cases, but is not limited to, trying to obtain a cure of Defaults
and trying to effectuate a Pre-Arranged
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Sale or voluntary conveyance of the Property. The Insured shall
permit the Company to participate in workout activities for any Loan
in Default. Failure of the Insured to materially comply with this
Section II., N., with respect to any Loan shall entitle the Company
to adjust the Claim Amount by the amount the Company was damaged by
such noncompliance. The Company shall attempt to limit and mitigate
any loss to the Insured which will not be covered by the Insurance
Benefit provided under this Policy.
III. Exclusions from Coverage
The Company shall not be liable for, and the Policy shall not apply
to, extend to or cover the exclusions listed below. In the event
that coverage is excluded for any Loan, the Company will refund all
premium for that Loan for the period following the occurrence of the
event giving rise to such exclusion. Except where prohibited by law,
if the damage to the Company arising from an excluded event can be
reasonably quantified, the Company shall adjust the Claim Amount by
the amount of such damage rather than exclude coverage altogether
for such Loan, unless a refund of premium as provided for in the
preceding sentence would provide a greater payment to the Insured.
A. Balloon Payment Exclusion - Any Claim arising out of or in
connection with the failure of the Borrower to make any payment of
principal and interest due under the Loan, which payment becomes due
when the Insured exercises its right to call the Loan when not in
default or because the term of the Loan is shorter than the
amortization period, and which payment is for an amount more than
twice the regular periodic payment of principal and interest that
are set forth in the Loan (commonly referred to as a "Balloon
Payment"); provided, however, that this Exclusion shall not apply if
the Insured or its Servicer offers the Borrower in writing, before
the due date of the Balloon Payment, a renewal or extension of the
Loan, or a new loan at then current market rates, in an amount not
less than the then outstanding principal balance and with no
decrease in the amortization period and the Borrower declines to
seek such renewal or refinancing.
B. Effective Date Exclusion - Any Claim resulting from a Default
occurring before the Effective Date of the Policy or after its
lapse, cancellation, or expiration; or after coverage is canceled
with respect to the Loan.
C. Incomplete Construction Exclusion - Any Claim when, as of the date
of such Claim, construction of the Property had not been completed
in accordance with the construction plans and specifications
approved by the Loan originator at the time the Loan was originated
or in accordance with the Original Appraisal. (This Incomplete
Construction Exclusion shall not apply if the construction of the
Property has been fully completed and, if Physical Damage occurs
during construction, any repairs necessary to restore the Property
to its complete condition, reasonable wear and tear excepted, have
been completed.) However, coverage for a Default occurring during
construction may be excluded by Section III., B., (Effective Date
Exclusion) above.
D. Residential Property Exclusion - Any Claim where the Property is
not, as of the date the Loan is Closed, on the Effective Date, and
on the date the Claim is filed, Residential real property.
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E. Negligence and Fraud Exclusion - Any Claim involving or arising out
of, or any Claim where the origination of the Loan or extension of
coverage hereunder involved or arose out of, any dishonest,
fraudulent, criminal, or knowingly wrongful act (including error or
omission) by the Insured, the Servicer or any agent of the Insured
or Servicer; or any Claim involving or arising out of the negligence
of the Insured or the Servicer, which negligence is material either
to the acceptance of the risk or to the hazard assumed by the
Company.
F. Non-Approved Servicer Exclusion - Any Claim occurring when the
Servicer, at the time of Default or thereafter, was not approved by
the Company, provided, however, that this Non-Approved Servicer
Exclusion shall not apply to any Loan for which a Default occurs
within 150 days after the Company withdraws approval of the Servicer
for such Loan. If the Company decides to withdraw approval of a
Servicer it shall give written notice of that decision to the
Insured for each affected Loan as shown in the Company's records.
G. Physical Damage Exclusion - Any Claim where there is Physical Damage
to the Property, occurring or manifesting itself after the Effective
Date; provided, however, that this exclusion will not apply (i.e.,
the Company will provide coverage for a Claim) where Physical Damage
has occurred to the Property if:
1. The Default giving rise to a Claim was not primarily caused by
an Uninsured Casualty occurring prior to such Default, and the
Company has elected to pay either the Percentage Option or the
Pre-Arranged Sale Option as the Insurance Benefit for the Loan;
or
2. The Property has been restored to its condition as reported in
the Original Appraisal (as fully completed), reasonable wear
and tear excepted. The Insured may elect to accept a reduction
in the Claim Amount by an amount equal to the estimated cost to
completely restore the Property as would otherwise be required
by this exclusion rather than be required to restore the
Property to obtain an Insurance Benefit under this Policy. In
the event the Company relies on an estimate for such
restoration that is not obtained by the Insured, then the
Company shall, at the request of the Insured, provide a copy of
such estimate to the Insured.
H. Loan to Value Ratio Exclusion - Any Claim where the original
principal balance of the Loan exceeded one hundred percent (100%) of
the FMV of the Property at the time the Loan was originated, and
such fact was not disclosed to the Company at the time coverage
under this Policy was extended to such Loan.
I. Negative Amortization Exclusion - Unless otherwise endorsed, any
Negative Amortization with respect to a Loan.
J. Defenses to Loan Exclusion - That portion of any Claim equal to the
amount of the indebtedness from which the Borrower is released, or
any Claim against which the Borrower successfully asserts defenses
that have the effect of releasing, in whole or in part, the
Borrower's obligations to repay the
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Loan, provided, however, this Defenses to Loan Exclusion shall not
apply where the release of the Borrower is the result of a
bankruptcy "cram down" so long as the Insured has continued to pay
premium on the full amount of the indebtedness and that all other
conditions of this Policy have met.
K. Environmental Impairment Exclusion - Any Claim where there is
Environmental Impairment to the Property which existed prior to the
Effective Date if the existence, or suspected existence, of the
Environmental Impairment was not disclosed in the Application and
the Environmental Impairment (i) is a principal cause of the
Default, and (ii) has made the principal Residential structure on
the Property uninhabitable. A structure will be considered
"uninhabitable" if generally recognized standards for residential
occupancy are violated or if, in the absence of such standards, a
fully informed and reasonable person would conclude that such
structure was not safe to live in without fear of injury to health
or safety. Notwithstanding the foregoing, this exclusion shall not
apply if the Insured has removed or remedied the condition that
constitutes the Environmental Impairment or the Insured has removed
the hazardous character of such condition in accordance with
applicable federal, state or local laws.
IV. Conditions Precedent to Payment of Claim
The following Claim payment procedures contain the conditions
precedent to, and additional limitations upon the Company's
obligation to pay Insurance Benefits under this Policy:
A. Notice of Default - The Insured shall give the Company notice:
1. Within forty-five (45) days of Default, if it occurs when the
first payment is due under a Loan; or
2. Not later than the last business day of the month following the
month in which the first of the following events occur:
a. The date when the Borrower becomes three (3) periodic
payments in Default on the Loan if the periodic payments are
made monthly, and not later than ninety (90) days after the
occurrence of a Default for Loans having periodic payments more
often than once a month; or
b. Foreclosure or other Appropriate Proceedings have been
commenced.
Such notice shall be on forms provided by or approved by the Company
or via a medium acceptable to the Company. Unavailability of Company
forms is not a valid reason for delay in reporting. Failure to
report a Default as required by this Section IV., B., shall entitle
the Company to deduct from the Claimable Amount of a Claim thirty
(30) days of interest accruing on the Loan during the period between
the date the notice of Default should have been filed and the date
it was submitted to the Company.
B. Monthly Reports - Following a notice of Default on a Loan or the
commencement of Appropriate Proceedings, the Insured shall give the
Company monthly reports on forms furnished or approved by
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the Company or via a medium acceptable to the Company, on the status
of the Loan and on the servicing efforts undertaken to remedy the
Default or conclude the Appropriate Proceedings. These monthly
reports shall continue until the Borrower is no longer in Default,
the Appropriate Proceedings terminate, or until title to the
Property has been transferred to the Insured.
C. Company's Options after Notice of Default - If the Company so
directs, at any time after receiving the Insured's notice of
Default, the Insured shall file a Claim within twenty (20) days and
the Company may elect to pay the Insurance Benefit pursuant to the
Percentage Option. Thereafter, following the Insured's acquisition
of the Borrower's Title to the Property, the Insured shall be
entitled to file a supplemental Claim in an amount equal to the sum
of the Advances not included in the initial Claim, plus any
Deficiency Expenses (See Section I.,R.) subject to the limitations
and deductions of Section V., B., (Calculation of Claim Amount) and
such supplemental Claim shall be paid by the Company in accordance
with the Percentage Option.
D. Voluntary Conveyance - The Insured may accept a conveyance of title
from the Borrower in lieu of foreclosure or other proceedings if:
1. The ability of the Insured to preserve, transfer and assign to
the Company the Insured's rights against the Borrower is not
impaired; and
2. The rights of the Company under this Policy against such
Borrower are not adversely affected; or if
3. The written approval of the Company has been obtained;
provided, however, it is understood that such approval shall
not constitute nor be deemed an admission of liability by the
Company with respect to coverage for the related Loan.
E. Appropriate Proceedings - The Insured MUST begin Appropriate
Proceedings when the Loan becomes six (6) months in Default unless
the Company provides written instructions that some other action be
taken. The Company reserves the right to direct the Insured to
institute Appropriate Proceedings at any time after Default. When
either defending against or bringing Appropriate Proceedings, the
Insured shall report the status of these proceedings to the Company
as reasonably and expeditiously as possible.
In conducting Appropriate Proceedings, the Insured shall:
1. Diligently pursue the Appropriate Proceedings once they have
begun;
2. Apply for the appointment of a receiver and assignment of
rents, if permitted by law, requested by the Company, and
appropriate for the Property;
3. At the request of the Company, furnish the Company with copies
of all notices and pleadings filed or required in the
Appropriate Proceedings;
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4. Act so that its ability to preserve, transfer and assign to the
Company its rights against the Borrower is not impaired; and so
that the rights of the Company under this Policy against the
Borrower are not adversely affected, including any rights to
obtain a deficiency judgment, provided that the Insured shall
not be required to pursue or establish a deficiency against the
Borrower in those states where the Company is not permitted to
pursue such a deficiency;
5. Bid an amount at the foreclosure sale which is not less than
the minimum amount nor more than the maximum amount set forth
below, unless the Company notifies the Insured of other
instructions or waives its right to give bidding instructions,
in writing.
a. If the FMV of a Property is less than the Uninsured Loan
Balance, the Insured shall start bidding at not less than the
FMV of the Property and may continue bidding up to a maximum of
the Uninsured Loan Balance.
b. If the FMV of a Property is greater than the Uninsured Loan
Balance, the Insured shall start bidding at not less than the
Uninsured Loan Balance up to a maximum amount equal to the
Claim Amount.
If other bidding instructions are provided they will not
specify a maximum bid that is less than the Uninsured Loan
Balance, and, if the Property is subject to redemption for less
than the outstanding amount of the Loan, then such other
bidding instructions will not specify an opening bid of less
than the Uninsured Loan Balance.
F. Pre-Arranged Sales - In the event of Default on a Loan, it shall be
a condition precedent to payment of any Insurance Benefit on the
Loan that (i) the Insured attempt to obtain a Pre-Arranged Sale of
the Property whenever reasonable, and (ii) the Insured shall
authorize its broker, when requested by the Company, to release
marketing information for the Property to the Company, if requested
by the Company, unless the Insured shall have notified the broker
that the Company's right to acquire the Property has expired or been
waived. For purposes of this section, a "Pre-Arranged Sale Offer"
means an offer to purchase the Property received by the Insured,
together with a schedule of (i) expense items proposed by the
Insured to be included in the settlement amount of the Pre-Arranged
Sale Offer is accepted and the proposed Property sale closes, and
(ii) the Insured's then-estimated amounts thereof. Pre-Arranged Sale
Offers that the Insured chooses to submit to the Company will be
approved or rejected by the Company.
G. Claim Requirements - The Insured must provide the Company with:
1. A completed form furnished or approved by the Company for
payment of a Claim ("Claim for Loss Form"); and
2. All information reasonably requested on the Claim for Loss Form
together with all documentation requested on or necessary to
complete such Claim for Loss Form; and
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3. Evidence satisfactory to the Company that the Insured has
acquired the Borrower's Title to the Property, except where the
Company has elected the Pre-Arranged Sale Option provided,
however, if the primary cause of the Default was a circumstance
or event which would prevent the Insured from obtaining Good
and Merchantable Title, then no matter which settlement option
the Company elects, the Insured must comply with the
requirements of Section IV., G., 4, as if the Company had
elected the Acquisition Option; and
4. In the event the Company elects the Acquisition Option, a
recordable deed in normal and customary form containing the
usual warranties and covenants conveying to the Company or its
designee Good and Merchantable Title to the Property, along
with evidence satisfactory to the Company that the Insured has
acquired and can convey to the Company or its designee Good and
Merchantable Title to the Property; and
5. All other documentation or information reasonably requested by
the Company for purposes of investigating and/or adjusting the
Claim; and
6. Access to the Property for purposes of determining its value,
and for investigating and/or adjusting the Claim; provided,
however, if the Company elects the Acquisition Option, then
Possession of the Property must be provided by the Insured,
unless the Company waives this requirement in writing.
V. Loss Payment Procedure
A. Filing of Claim - The Insured shall file a Claim no later than sixty
(60) days after the earlier of acquiring the Borrower's Title to the
Property or a Pre-Arranged Sale, provided that if the Company elects
to acquire the Property, then no later than sixty (60) days after
the Insured acquires Good and Merchantable Title to the Property.
Failure of the Insured to file a Claim within this time period shall
(i) relieve the Company of any obligation to include in the Claim
Amount interest and Advances accruing on the Loan after such sixty
(60) day period has expired, and (ii) entitle the Company to adjust
such Claim to the extent that the Company is prejudiced by such late
filing of the Claim, up to 100% of the Insurance Benefit.
Unavailability of Company forms is not a valid reason to delay
filing a Claim. If a Claim filed by the Insured is incomplete the
Company shall within twenty (20) days of receipt of a Claim, notify
the Insured of all items needed to perfect such Claim. If no notice
of deficiency of the Claim is sent within the twenty (20) day period
following receipt of the Claim by the Company, then the Claim shall
be deemed to be perfected as of the date the Company received the
Claim.
B. Calculation of Claim Amount - The Claim Amount for any Loan shall be
an amount equal to the sum of:
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1. The Default Amount but excluding any portion of the principal
balance attributable to any increase therein after the first
payment is due and payable, and excluding capitalized penalty
interest or late payment charges. (See Section III., I.,
(Negative Amortization Exclusion) THIS POLICY DOES NOT COVER
NEGATIVE AMORTIZATION UNLESS SUCH COVERAGE IS ENDORSED FOR A
LOAN); and
2. The amount of accumulated delinquent interest due on the Loan
at the contract rate stated in the Loan from the date of
Default through the date that the Claim is submitted to the
Company, but excluding applicable late charges and penalty
interest; additional interest computed on the Default Amount
until the Pre-Arranged Sale of the Property, and thereafter
until the Pre-Arranged Sale closing information is submitted,
computed on the Default Amount reduced by the net proceeds of
such Pre-Arranged Sale (For purposes of this Section, "late
charges and penalty interest" includes, but is not limited to,
increases in interest rate caused by non-performance of the
Borrower. In no event will the Claim Amount include interest at
a rate other than what the Insured would receive if the Loan
were paid as current in accordance with its own terms); and
3. The amount of Advances made by the Insured; provided that:
a. Attorney's fees advanced thereunder shall not exceed three
percent (3%) of the sum of the (1) and (2) above; and
b. Payment for Advances other than Attorney's fees, shall be
prorated through the earlier of the date the Claim is submitted
to the Company or the Pre-Arranged Sale of the Property;
less:
----
4. All rents and other payments (excluding proceeds of fire and
extended coverage insurance and proceeds of a Pre-Arranged
Sale) collected or received by the Insured, which are derived
from or in any way related to the Property;
5. The amount of cash available to the Insured remaining in any
escrow account as of the last payment date;
6. The amount of cash to which the Insured has retained the right
of possession as security for the Loan; and
7. The amount paid under applicable fire and extended coverage
policies which has not been applied to either the restoration
of the Property, if the Property suffered Physical Damage, or
to the payment of the Loan; and
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8. The amount expended by the Insured for Advances requiring
approval by the Company which are not in compliance with the
Company's guidelines and which have not been approved by the
Company.
C. Payment of Insurance Benefit - The Company, at its sole option,
shall elect one of the following three options and pay to the
Insured, on or before the last day of the Claim Settlement Period,
as the Insurance Benefit, either:
1. The Acquisition Option which shall equal the Claim Amount less
the amount of any payments of Loss previously made by the
Company with respect to the Loan, payable in exchange for the
conveyance of Good and Merchantable Title to and Possession of
the Property; provided, however, that if the Insured is unable
to perform any conditions precedent to payment of a Claim
within the later of thirty (30) days after the redemption
period or ninety (90) days after the Claim Adjustment Period,
then, so long as the Claim is not otherwise excluded, the
Insured may retain title to the Property and the Insurance
Benefit under this Acquisition Option shall be an amount equal
to the Company's Anticipated Loss in connection with such
Property ; or
2. The Percentage Option which is an amount equal to the Claim
Amount multiplied by the percentage of coverage specified in
this Policy, or
3. The Pre-Arranged Sale Option is an amount equal to the lesser
of the Percentage Option or the Insured's actual loss in
connection with a Pre-Arranged Sale of the Property. The
Insured's actual loss shall be an amount equal to the Claim
Amount plus all reasonable costs incurred in obtaining and
closing such sale less the proceeds of the Pre-Arranged Sale.
In addition to payment under one of the foregoing options, the
Company will pay whatever Deficiency Expenses are payable to the
Insured pursuant to Section V., D. (Deficiency Expenses).
In the event that a Pre-Arranged Sale fails to close prior to the
end of the Claim Settlement Period, the Company may postpone payment
of the Insurance Benefit for up to (90) ninety days, or if earlier,
until such Pre-Arranged Sale closes or is terminated, provided that
interest on the Default Amount at the rate due upon the Loan during
such postponement is paid to the Insured.
Further, in the event the Property is redeemed after the payment of
the Percentage Option, the Insured shall be obligated to promptly
refund to the Company the amount, if any, by which the redemption
price plus the Insurance Benefit exceeds the Claim Amount.
In the event the Company does not pay the Insurance Benefit within
the Claim Settlement Period, it will pay interest on the Insurance
Benefit at the rate due under the Loan from the last day of the
Claim Settlement Period until the Claim is paid.
D. Deficiency Expenses - Notwithstanding the provisions of Section V.,
C., (Payment of Insurance Benefit) above, in the case where a
deficiency against the Borrower is being pursued solely at the
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request of the Company, then any Deficiency Expenses shall be added
to the amount of the Insurance Benefit. If a deficiency against a
Borrower is being pursued as part of Appropriate Proceedings, for
the benefit of both the Insured and the Company, then at the time
such deficiency rights are established or a deficiency judgment is
obtained, whichever shall occur first, the Deficiency Expenses plus
any similar expenses incurred by the Company in connection with such
deficiency shall be settled between the parties on the same pro rata
basis set forth in Section VI., B. (Subrogation) for the settlement
of deficiency recoveries. Expenses and costs arising after that
point shall be treated as collection expenses to be netted against
the deficiency recovery, if any, (and, if none, to be shared between
the parties on the same pro rata basis when it becomes clear that
nothing will be recovered).
To facilitate the decision of whether to pursue or establish a
deficiency against a Borrower, the Insured shall provide the Company
with any information it may have relevant to collecting on a
deficiency judgment for that case. The Company will discuss all such
information it may have with the Insured so that the parties can
decide whether any Appropriate Proceedings (necessary to
establishing or pursuing a deficiency) are to be pursued for the
benefit of both parties or whether one of the parties will elect not
to participate in any recovery. The Insured will be deemed to be
participating in Appropriate Proceedings solely at the request of
the Company when such proceedings are not a condition precedent to
obtaining Borrower's Title to or Possession of a Property and, after
the parties have exchanged information on the Loan, the Insured has
advised the Company in writing why the Insured does not wish to
participate in such proceedings.
E. Discharge of Obligation - Any payment by the Company in accordance
with Section V., C., (Payment of Insurance Benefit) and, if
applicable, Section V., D., (Deficiency Expenses) or Section IV.,
C., (Company's Options after Notice of Default), taking into account
appropriate adjustments, shall be a full and final discharge of the
Company's obligation under this Policy with respect to the related
Loan. Notwithstanding the preceding sentence, the Company shall not
be relieved of its obligation to pay any appropriate supplemental
Claims filed pursuant to Section IV., C., (Company's Options after
Notice of Default) or as may otherwise be agreed to by the Company.
VI. Additional Conditions
A. Proceedings of Eminent Domain - In the event that part or all of the
Property is taken by eminent domain, condemnation or by any other
proceedings by federal, state or local governmental unit or agency,
the Insured shall require that the Borrower apply the maximum
permissible amount of any compensation awarded in such proceedings
to reduce the principal balance of the Loan, in accordance with the
law of the jurisdiction where the Property is located.
B. Subrogation - The Company shall be subrogated pro rata, to the full
extent permitted by law (except where the Company is prohibited by
law from pursuing recovery of a Loan), to all of the Insured's
Recovery Rights with respect to a Loan, upon payment of a Claim
hereunder. "Recovery Rights" shall mean all rights of recovery
against the Borrower and any other Person or organization relating
to the Loan or to the Property. The Company's pro rata share of the
net deficiency recovered (i.e., amounts
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recovered less reasonable costs and expenses) with respect to any
Loan shall be the amount of the Insurance Benefit divided by the
amount of the deficiency judgment. Internal staff costs and overhead
expenses shall not be deducted in determining the amount of a net
deficiency recovery unless specifically agreed to in writing by the
parties.
The Insured hereby designates the Company its exclusive agent (i) to
pursue all of the Insured's Recovery Rights to which the Company has
not become subrogated by payment of a Claim (i.e., the Insured's
share of the Recovery Rights), (ii) to file any action in the
Company's name as assignee of the Insured, to collect on the
Insured's Recovery Rights, and (iii) to settle and compromise any
such Recovery Rights on behalf of the Insured, it being understood
and agreed that the Company shall have the exclusive rights to
pursue and settle all Recovery Rights for any Loan on which a Claim
payment is made hereunder, unless waived in writing by the Company.
If the Company decides not to pursue Recovery Rights with respect to
a Loan, then the Company shall issue a written waiver of its
subrogation and management rights to the Insured. The Insured shall
execute and deliver at the request of the Company such instruments
and documents, and undertake such actions as may be necessary to
transfer, assign and secure such Recovery Rights to the Company. The
Insured shall refrain from any action, either before or after
payment of a Claim hereunder that shall prejudice such Recovery
Rights.
Notwithstanding any provision in the foregoing paragraph to the
contrary, in the event the Insured has, in addition to Recovery
Rights against a Borrower or any other Person, a claim or claims
against such Borrower or other Person not related to the Recovery
Rights, then the Insured shall have the right to pursue in its own
name all the Recovery Rights in conjunction with the Insured's other
claim or claims, and the Company will waive its right to manage the
pursuit of the Recovery Rights.
The execution by the authorized party, even if it be a party other
than the Insured, of a release or waiver of the right to collect the
unpaid balance of a Loan, if it has such effect, shall release the
Company from its obligations hereunder to the extent and amount of
such release or waiver, unless the Company is prohibited by law from
pursuing recovery of such Loan.
C. Representations and Reliance; Incontestability - All statements made
by the Insured, the Servicer, the Borrower or any other Person in
any part of the Application, including the Original Appraisal, plans
and specifications, or any exhibits or documents submitted
therewith, are deemed to be the Insured's representations. The
Company has issued this Policy and has extended coverage to each
Loan listed on the Certificate Schedule in reliance on the
correctness and completeness of such representations as made or
deemed to be made by the Insured.
No Claim otherwise payable under this Policy with respect to a Loan
will be denied, nor will the coverage for such Loan be rescinded,
based on any misrepresentation in the Application made by the
Borrower or any Person other than a First Party, once twelve (12)
regularly scheduled periodic payments have been made on that Loan
from the Borrower's Own Funds.
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Notwithstanding the foregoing provisions of this Section VI., C.,,
the Company will not be precluded from denying a Claim or rescinding
coverage for a Loan where prior to the Borrower making twelve (12)
regularly scheduled payments from the Borrower's Own Funds, the
Company notifies the Insured in writing that the Company has
sufficient evidence to establish a reasonable belief that there was
a material misrepresentation made in the Application with respect to
such Loan and the Company provides a reasonable description of such
misrepresentation.
D. Notice - Premium payments are to be paid as provided in Sections
II., B., and C., and sent to the Company at the address listed on
the Commitment, or as otherwise instructed by the Company in
writing. All other notices, Claims, tenders, reports and other data
required to be submitted to the Company by the Insured shall be
either (i) mailed postpaid, (ii) sent by overnight courier, (iii)
transmitted electronically or via magnetic tape or other media in a
manner approved by the Company, or (iv) sent by telephonic facsimile
transmission, to the Company's home office at the following address
and facsimile number:
For Claim matters:
PMI Mortgage Insurance Co.
P. O. Box 193837
San Francisco, California 94119
Attention: Claim Department
Facsimile Number: (000) 000-0000
For Customer Service matters:
PMI Mortgage Insurance Co.
P.O. Box 3836
San Francisco, California 94119
Attention: Customer Service Department
Facsimile Number: (000) 000-0000
All notices to the Insured shall be given to the Servicer unless the
Company has not been notified that a Loan is being serviced by a
Person other than the Insured, and shall be either (i) mailed
postpaid, (ii) sent by overnight courier, (iii) transmitted
electronically or magnetically in a manner approved by the Insured,
or (iv) sent by telephonic facsimile transmission, to the Servicer,
at the address and facsimile number provided in writing by the
Insured to the Company, or to the last known address and facsimile
number for that Servicer, except that for facsimile transmissions,
the Company shall confirm telephonically or otherwise the accuracy
of the facsimile number used. Nonpayment notices under Section II.,
C. and notices required under Section III., F. shall be sent to both
the Insured and the Servicer whenever the Company has been notified
that the Servicer is a Person other than the Insured. All notices to
the Insured and Servicer will be sent to those Persons whom the
Company was last notified as owning or servicing the Loan,
respectively, at the last known address for such Persons as
reflected in the records of the Company.
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Either party may notify the other of a change in address in the same
manner as provided for giving notice. All notices, Claims, tenders,
reports and other data required to be submitted to the Company or to
the Insured shall be deemed to have been given five (5) days after
the same is deposited in the U.S. Mail, delivered to an overnight
courier, or transmitted in a manner approved above, unless actually
received earlier. If the Insured requests that notices be sent to a
third party other than the Insured and Servicer, the Company agrees
to use its best efforts to give such notices but the Company shall
not incur any liability for failure to send any notice to any third
parties.
E. Reports and Examinations - As pertinent to any Loan or the Policy,
the Company may call on the Insured for such reports as it may deem
reasonably necessary, and may inspect the files, books and records
of the Insured as they pertain to any Loan or to the Policy. The
Company has the right to require that any information which the
Insured is required to provide under this Policy be certified as to
its truthfulness and accuracy by an officer or properly authorized
employee of either or both the Insured and the Servicer.
X. Xxxxxxxxxxx - Unless prohibited by applicable law, any controversy
or dispute, including any Claim made hereunder, arising out of or
relating to this Policy, may, upon the mutual consent of all parties
to the dispute, be settled by binding arbitration in accordance with
the title insurance rules of the American Arbitration Association in
effect on the date the demand for arbitration is made. If this
remedy is elected by all parties to the dispute, then the decision
of the arbitrator(s) shall be final and binding on all the parties,
and shall be enforceable in any court of competent jurisdiction in
the United States of America.
G. Suit -
1. No suit or action for recovery of any Claim or Insurance
Benefit under this Policy shall be sustained in any court of
law or equity unless the Insured has materially and
substantially complied with the terms and conditions of this
Policy, and unless the suit or action in equity is commenced
within three (3) years or such longer period of time as may be
required by applicable law, after (i) the Claim has been
presented to the Company or (ii) the date on which the cause of
action accrued, whichever is earlier. No suit or action on a
Claim or Insurance Benefit may be brought against the Company
until sixty (60) days have elapsed from the later of the date
that the Insured is notified that Claim is perfected or from
the date the Claim is deemed to be a Perfected Claim, unless
the subject matter of the suit or action is whether a Perfected
Claim has been filed.
2. If a dispute arises concerning the Loan and involving either
the Property or the Insured, the Company has the right to
protect its interest by defending any action arising from such
dispute, even if the allegations involved are groundless, false
or fraudulent. The Company is NOT REQUIRED to defend any
lawsuit involving either the Insured, the Property or the Loan.
The Company shall also have the right to direct the Insured to
institute suit on the Insured's behalf, if this suit is
necessary or appropriate to preserve the Company's rights in
connection with a Loan
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or Property. If any litigation costs and expenses incurred by
either the Company or the Insured under this Section VI., G.,
arise out of an action involving the negligent or wrongful
conduct or breach of contract on the part of the Insured, then
the Insured shall bear all such costs and expenses, and in all
other cases, the Company shall bear such costs and expenses.
H. Parties in Interest - This contract shall be binding upon and
inure to the benefit of the Company and its successors and
assigns and the Insured and its permitted successors and
assigns. Neither the Borrower, nor any successive owner of a
Property, nor any pool insurance carrier, nor any other Person
is included or intended as a third party beneficiary to this
Policy. Payments made to the Insured hereunder are intended as
indemnification for actual loss and shall not affect nor impair
the Insured's rights of recovery against the Borrower subject,
however, to the provisions of Section VI., B., (Subrogation).
Because the Company and the Insured are the only parties to the
Policy, they may agree to modify or amend or terminate this
Policy or any Certificate without the consent of, or notice to,
any Borrower, Servicer or any other Person.
I. Agency - Neither the Insured, its Servicer, its originators,
nor any of their respective employees or agents shall be or
shall be deemed to be agents of the Company, nor shall the
Company be or be deemed to be an agent of the Insured or
Servicer except to the extent of the Recovery Rights assigned
to the Company pursuant to Section IV., B., (Subrogation). The
Servicer is deemed to be an agent of the Insured for all
purposes under this Policy, including, but not limited to, for
receiving notices, payments of Insurance Benefit, settling
Claims, and performing acts required of the Insured under this
Policy excepting for receipt of notices required under Section
III., F., (Non-Approved Servicer).
J. Governing Law; Conformity to Statute - This Policy, including
the Certificate Schedule, Claim or Insurance Benefit related to
any Loan, shall be governed by the law of the jurisdiction in
which the original named Insured is located as shown in on the
face page hereof. Any provision of this Policy which is in
conflict with the law of the aforesaid jurisdiction is hereby
amended to conform to the minimum requirements of that law.
K. Electronic Data Storage - It is understood that the Company may
store information, the contents or images of documents or other
data on electronic media or other media generally accepted for
business records (such as microfiche). The Company and Insured
agree that the data stored on such electronic or other media
are equally acceptable between the parties for all purposes as
information, documents or other data maintained in printed or
written form, including but not limited to, for the purposes of
litigation or arbitration.
L. No Waiver - Except as provided in Section VI., C.,
Representations and Reliance; Incontestability, nothing
contained in this Policy shall be deemed to waive or limit the
Company's rights arising at law or in equity to rescind or
reform this Policy or the Certificate in the event that
material misrepresentations of fact or fraudulent statements
were relied upon by the Company in issuing this Policy or
extending coverage hereunder to any Loan.
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