Exhibit 99.2
EXECUTION
RECONSTITUTED SERVICING AGREEMENT
THIS RECONSTITUTED SERVICING AGREEMENT (this "Agreement"), entered
into as of the 1st day of May, 2001, by and between XXXXXX CAPITAL, A DIVISION
OF XXXXXX BROTHERS HOLDINGS INC., a Delaware corporation ("Xxxxxx Capital"),
and XXXXX FARGO HOME MORTGAGE, INC., a California corporation (formerly known
as Norwest Mortgage, Inc. and referred to herein as the "Servicer"), recites
and provides as follows:
RECITALS
WHEREAS, Xxxxxx Capital has conveyed certain Mortgage Loans identified
on Schedule I hereto (the "Serviced Mortgage Loans") to Structured Asset
Securities Corporation, a Delaware special purpose corporation ("SASCO"), which
in turn has conveyed the Serviced Mortgage Loans to Bank One, National
Association, a national banking association, as trustee (the "Trustee"), under
a trust agreement, dated as of April 1, 2001 (the "Trust Agreement"), among the
Trustee, Xxxxx Fargo Bank Minnesota, National Association ("WFBM" and, together
with any successor Master Servicer appointed pursuant to the provisions of the
Trust Agreement, the "Master Servicer"), SASCO, as depositor and The Murrayhill
Company, as loss mitigation advisor (the "Loss Mitigation Advisor") under a
Loss Mitigation Advisory Agreement (the "Loss Mitigation Advisory Agreement")
dated as of April 1, 2001 between the Servicer and the Loss Mitigation Advisor.
WHEREAS, multiple classes of certificates (the "Certificates") will be
issued on the Closing Date pursuant to the Trust Agreement, including the Class
X Certificate.
WHEREAS, the Serviced Mortgage Loans are currently being serviced by
the Servicer pursuant to a Seller's Warranties and Servicing Agreement between
Xxxxxx Brothers Bank, FSB (the "Bank") and the Servicer, dated as of December
1, 2000 (for Adjustable and Fixed Rate Mortgage Loans (WFMR 2000-WO7)) (the
hereinafter, "SWSA").
WHEREAS, pursuant to an Assignment, Assumption and Recognition
Agreement, dated as of April 1, 2001, the Bank has assigned all of its rights,
title and interest in the Serviced Mortgage Loans to Xxxxxx Capital and
delegated all of its duties and obligations as purchaser under the SWSA to
Xxxxxx Capital, and Xxxxxx Capital has accepted such assignment and delegation.
WHEREAS, Xxxxxx Capital desires that the Servicer continue to service
the Serviced Mortgage Loans, and the Servicer has agreed to do so, subject to
the rights of the Class X Certificateholder and the Master Servicer to
terminate the rights and obligations of the Servicer hereunder as set forth
herein and to the other conditions set forth herein.
WHEREAS, Xxxxxx Capital and the Servicer agree that the provisions of
the SWSA shall apply to the Serviced Mortgage Loans, but only to the extent
provided herein and that this Agreement shall constitute a Reconstitution
Agreement which shall govern the Serviced Mortgage Loans for so long as such
Serviced Mortgage Loans remain subject to the provisions of the Trust
Agreement.
WHEREAS, the Master Servicer and any successor master servicer shall
be obligated, among other things, to supervise the servicing of the Serviced
Mortgage Loans on behalf of the Trustee, and shall have the right, under
certain circumstances, to terminate the rights and obligations of the Servicer
under this Agreement.
WHEREAS, Xxxxxx Capital and the Servicer intend that each of the
Master Servicer and the Trustee is an intended third party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Xxxxxx Capital and the Servicer
hereby agree as follows:
AGREEMENT
1. Definitions. Capitalized terms used and not defined in this
Agreement, including Exhibit A hereto and any provisions of the SWSA between
Xxxxxx Capital and the Servicer incorporated by reference herein (regardless if
such terms are defined in the SWSA), shall have the meanings ascribed to such
terms in the Trust Agreement attached as Exhibit B hereto.
2. Servicing. The Servicer agrees, with respect to the Serviced
Mortgage Loans, to perform and observe the duties, responsibilities and
obligations that are to be performed and observed under the provisions of the
SWSA, except as otherwise provided herein and on Exhibit A hereto, and that the
provisions of the SWSA, as so modified, are and shall be a part of this
Agreement to the same extent as if set forth herein in full.
3. Trust Cut-off Date. The parties hereto acknowledge that by
operation of Section 4.05 and Section 5.01 of the SWSA, the remittance on May
18, 2001 to the Trust Fund is to include principal due after April 1, 2001 (the
"Trust Cut-off Date") plus interest at the Mortgage Loan Remittance Rate
collected during the related Due Period exclusive of any portion thereof
allocable to a period prior to the Trust Cut-off Date, with the adjustments
specified in clauses (c) and (d) of Section 5.01 of the SWSA.
4. Master Servicing; Termination of Servicer. The Servicer, including
any successor servicer hereunder, shall be subject to the supervision of the
Master Servicer, which Master Servicer shall be obligated to ensure that the
Servicer services the Serviced Mortgage Loans in accordance with the provisions
of this Agreement. The Master Servicer, acting on behalf of the Trustee and the
ARC 2001-BC3 Trust Fund (the "Trust Fund") created pursuant to the Trust
Agreement, shall have the same rights as the Bank under the SWSA to enforce the
obligations of the Servicer under the SWSA and the term "Purchaser" as used in
the SWSA in connection with any rights of the Purchaser shall refer to the
Master Servicer, except as otherwise specified in Exhibit A hereto. The Master
Servicer shall be entitled to terminate the rights and obligations of the
Servicer under this Agreement upon the failure of the Servicer to perform any
of its obligations under this Agreement, as provided in Article X of the SWSA.
Notwithstanding anything herein to the contrary, in no event shall the Master
Servicer assume any of obligations of Xxxxxx Brothers Bank, FSB under the SWSA;
and, in connection with the performance of the Master Servicer's duties
hereunder, the parties and other signatories hereto agree that the Master
Servicer shall be entitled to all of the rights, protections and limitations of
liability afforded to the Master Servicer under the Trust Agreement.
5. No Representations. Neither the Servicer nor the Master Servicer
shall be obligated or required to make any representations and warranties
regarding the characteristics of the Serviced Mortgage Loans (other than those
representations and warranties previously made by the Servicer in Section 3.02
of the SWSA) in connection with the transactions contemplated by the Trust
Agreement and issuance of the Certificates issued pursuant thereto.
6. Notices. All notices and communications between or among the
parties hereto (including any third party beneficiary thereof) or required to
be provided to the Trustee shall be in writing and shall be deemed received or
given when mailed first-class mail, postage prepaid, addressed to each other
party at its address specified below or, if sent by facsimile or electronic
mail, when facsimile or electronic confirmation of receipt by the recipient is
received by the sender of such notice. Each party may designate to the other
parties in writing, from time to time, other addresses to which notices and
communications hereunder shall be sent.
All notices required to be delivered to the Master Servicer under this
Agreement shall be delivered to the Master Servicer at the following address:
Xxxxx Fargo Bank Minnesota, National Association
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Master Servicing Department, ARC 2001-BC3
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
All remittances required to be made to the Master Servicer under this
Agreement shall be on a scheduled/scheduled basis and made to the following
wire account:
Xxxxx Fargo Bank Minnesota, National Association
Minneapolis, Minnesota
ABA#: 000-000-000
Account Name: Corporate Trust Clearing
Account Number: 0000000000
For further credit to: Collection Account No. [ ] (ARC 2001-BC3)
All notices required to be delivered to the Trustee hereunder shall be
delivered to the Trustee at the following address:
Bank One, National Association
1 Bank Xxx Xxxxx
Xxxx Xxxxx xX0-0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Global Corporate Trust Services
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
All notices required to be delivered to Xxxxxx Capital hereunder shall
be delivered to Xxxxxx Capital at the following address:
Xxxxxx Capital, a Division of Xxxxxx Brothers Holdings Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Mortgage Backed Finance Department
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
All notices required to be delivered to the Servicer hereunder shall
be delivered to its office at the address for notices as set forth in the SWSA.
7. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, NOTWITHSTANDING NEW YORK
OR OTHER CHOICE OF LAW RULES TO THE CONTRARY.
8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all of which counterparts shall together constitute but one and the same
instrument.
9. Reconstitution. Xxxxxx Capital and the Servicer agree that this
Agreement is a "Reconstitution Agreement", and that the date hereof is the
"Reconstitution Date", each as defined in the SWSA.
Executed as of the day and year first above written.
XXXXXX CAPITAL, A DIVISION OF
XXXXXX BROTHERS HOLDINGS INC.
By: /s/ Xxxxxxx Xxxxx
------------------------------------
Name: Xxxxxxx Xxxxx
Title: Authorized Signatory
XXXXX FARGO HOME MORTGAGE, INC.
By: /s/ Xxxxxx Xxxx
------------------------------------
Name: Xxxxxx Xxxx
Title: Vice President
Acknowledged:
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Master Servicer
By: /s/ Xxx Xxxxx
-----------------------------------
Name: Xxx Xxxxx
Title: Assistant Vice President
BANK ONE, NATIONAL ASSOCIATION
as Trustee
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: First Vice President
EXHIBIT A
Modifications to the SWSA
1. Unless otherwise specified herein, any provisions of the SWSA,
including definitions, relating to (i) representations and warranties
relating to the Mortgage Loans and not relating to the servicing of
the Mortgage Loans, (ii) Mortgage Loan repurchase obligations, (iii)
Whole Loan and Pass-Through Transfers and Reconstitution, and (iv)
Assignments of Mortgage, shall be disregarded. The exhibits to the
SWSA and all references to such exhibits shall also be disregarded.
2. The definition of "Business Day" in Article I is hereby amended by
replacing the words "the State of Maryland or" with the words "the
State of Maryland, the State of Minnesota or the State of Illinois".
3. The definition of "Custodial Agreement" in Article I is hereby amended
in its entirety to read as follows:
Custodial Agreement: The custodial agreement relating to the
custody of the Serviced Mortgage Loans among U.S. Bank Trust
National Association, as Custodian, the Trustee and the
Depositor.
4. The definition of "Custodian" in Article I is hereby amended in its
entirety to read as follows:
Custodian: U.S. Bank Trust National Association or its successor
in interest or assigns or any successor to the Custodian under
the Custodial Agreement as provided therein.
5. The definition of "Determination Date" in Article I is hereby amended
in its entirety to read as follows:
Determination Date: The last day of the related Due Period
(or if such last day is not a Business Day, the Business Day
immediately preceding such last day).
6. The definition of "First Remittance Date" in Article I is hereby
deleted in its entirety.
7. The definition of "Mortgage Loan Documents" in Article I is hereby
amended by replacing the words "addenda and riders" with the words
"addenda, riders and modification agreements" in each instance.
8. The definition of "Opinion of Counsel" in Article I is hereby amended
by changing the word "Purchaser" therein to "Trustee and the Master
Servicer" and adding the words ", provided that any Opinion of Counsel
relating to (a) qualification of the Mortgage Loans in a REMIC or (b)
compliance with the REMIC Provisions, must be an opinion of counsel
acceptable to the Trustee, the Master Servicer and Xxxxxx Capital, who
(i) is in fact independent of the Servicer and any master servicer of
the Mortgage Loans, (ii) does not have any material direct or indirect
financial interest in the Servicer or any master servicer of the
Mortgage Loans or in an affiliate of either and (iii) is not connected
with the Servicer or any master servicer of the Mortgage Loans as an
officer, employee, director or person performing similar functions" to
the end of such definition.
9. A new definition of "Prepayment Interest Shortfall Amount" is added to
Article I immediately following the definition of "PMI Policy" to read
as follows:
Prepayment Interest Shortfall Amount: With respect to any
Mortgage Loan that was subject to a Principal Prepayment in full
or in part during any Due Period, which Principal Prepayment was
applied to such Mortgage Loan prior to such Mortgage Loan's Due
Date in such Due Period, the amount of interest (net of the
related Servicing Fee for Principal Prepayments in full only)
that would have accrued on the amount of such Principal
Prepayment during the period commencing on the date as of which
such Principal Prepayment was applied to such Mortgage Loan and
ending on the day immediately preceding such Due Date,
inclusive.
10. The definition of "Principal Prepayment Period" is hereby replaced in
its entirety by the following:
"The second day of the month immediately preceding the
Remittance Date to the first day of the month of the Remittance
Date."
11. A new definition of "Realized Loss" is added to Article I immediately
following the definition of "Qualified Substituted Mortgage Loan" to
read as follows:
Realized Loss: With respect to each Liquidated Mortgage Loan (as
defined in the Trust Agreement), an amount equal to (i) the unpaid
principal balance of such Mortgage Loan as of the date of liquidation,
minus (ii) Liquidation Proceeds received, to the extent allocable to
principal, net of amounts that are reimbursable therefrom to the
Master Servicer or the Servicer with respect to such Mortgage Loan
(other than Monthly Advances of principal) including expenses of
liquidation.
12. The definition of "Remittance Date" in Article I is hereby amended by
deleting ", beginning with the First Remittance Date".
13. The definition of "REO Property" in Article I is hereby amended by
replacing the word "Purchaser" with "Trustee and the Trust Fund".
14. Section 2.01 (Conveyance of Mortgage Loans; Possession of Mortgage
Files; Maintenance of Servicing Files) is hereby amended by deleting
the first paragraph and replacing the word "Purchaser" with the words
"Trustee and the Trust Fund" in each instance.
15. Section 2.02 (Books and Records; Transfer of Mortgage Loans) is hereby
amended to change the reference to "Purchaser" in the first paragraph
and the second sentence of the second paragraph of such section to
"Trustee and the Trust Fund"; and by amending the third paragraph of
such section to read as follows:
The Servicer shall maintain with respect to each Serviced
Mortgage Loan and shall make available for inspection by the
Master Servicer or its designee the related Servicing File
during the time the Trust Fund retains ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and
regulations; and
16. The parties acknowledge that the fourth paragraph of Section 2.02
shall be inapplicable to this Agreement.
17. The parties acknowledge that Section 2.03 (Custodial Agreement;
Delivery of Documents) shall be superceded by the provisions of the
Custodial Agreement.
18. Section 3.01(c) (No Conflicts) is hereby amended by deleting the words
"the acquisition of the Mortgage Loans by the Company, the sale of the
Mortgage Loans to the Purchaser".
19. Section 3.01(f) (Ability to Perform) is hereby amended by deleting the
second and third sentences thereof.
20. Section 3.01(h) (No Consent Required) is hereby amended by deleting
the words "or the sale of the Mortgage Loans".
21. Section 3.01 (i) (Selection Process), Section 3.01(k) (Sale
Treatment), Section 3.01(m) (No Broker's Fees') and Section 3.01(n)
(Fair Consideration) shall be inapplicable to this Agreement.
22. A new paragraph is hereby added at the end of Section 3.01 (Company
Representations and Warranties) to read as follows:
It is understood and agreed that the representations and
warranties set forth in Section 3.01 (a) through (h), (l) and
(o) shall survive the engagement of the Servicer to perform the
servicing responsibilities hereunder and the delivery of the
Servicing Files to the Servicer and shall inure to the benefit
of the Trustee, the Trust Fund and the Master Servicer. Upon
discovery by either the Servicer, the Master Servicer or the
Trustee of a breach of any of the foregoing representations and
warranties which materially and adversely affects the ability of
the Servicer to perform its duties and obligations under this
Agreement or otherwise materially and adversely affects the
value of the Mortgage Loans, the Mortgaged Property or the
priority of the security interest on such Mortgaged Property or
the interest of the Trustee or the Trust Fund, the party
discovering such breach shall give prompt written notice to the
other.
Within 60 days of the earlier of either discovery by or
notice to the Servicer of any breach of a representation or
warranty set forth in Section 3.01 which materially and
adversely affects the ability of the Servicer to perform its
duties and obligations under this Agreement or otherwise
materially and adversely affects the value of the Loans, the
Mortgaged Property or the priority of the security interest on
such Mortgaged Property, the Servicer shall use its best efforts
promptly to cure such breach in all material respects and, if
such breach cannot be cured, the Servicer shall, at the
Trustee's option, assign the Servicer's rights and obligations
under this Agreement (or respecting the affected Loans) to a
successor Servicer selected by the Trustee with the prior
consent and approval of the Master Servicer. Such assignment
shall be made in accordance with Section 12.01.
In addition, the Servicer shall indemnify (from its own
funds) the Trustee, the Trust Fund and the Master Servicer and
hold each of them harmless against any costs resulting from any
claim, demand, defense or assertion based on or grounded upon,
or resulting from, a breach of the Servicer's representations
and warranties contained in this Agreement. It is understood and
agreed that the remedies set forth in this Section 3.01
constitute the sole remedies of the Master Servicer, the Trust
Fund and the Trustee respecting a breach of the foregoing
representations and warranties.
Any cause of action against the Servicer relating to or
arising out of the breach of any representations and warranties
made in Section 3.01 shall accrue upon (i) discovery of such
breach by the Servicer or notice thereof by the Trustee or
Master Servicer to the Servicer, (ii) failure by the Servicer to
cure such breach within the applicable cure period, and (iii)
demand upon the Servicer by the Trustee or the Master Servicer
for compliance with this Agreement.
23. Section 3.03 (Repurchase) is hereby amended by replacing the word
"Purchaser's" in the eighth line thereto with "Trustee's".
24. Section 4.01 (Company to Act as Servicer) is hereby amended by (i)
replacing the word "Purchaser" in the fifth and 21st lines of the
second paragraph thereto with "Trustee and the Trust Fund", (ii) by
changing the word "unless" in the sixth line of the second paragraph
thereof to "except in the case where" (iii) by adding the following
after the word "Loan" in the eleventh line of the second paragraph:
unless the Servicer shall have provided to the Master Servicer
and the Trustee an Opinion of Counsel in writing to the effect
that such modification, waiver or amendment would not cause an
Adverse REMIC Event.
; (iv) by replacing the word "Purchaser" in the 23rd line of the
second paragraph thereto with "Trustee" (v) by adding the following
sentence as the last sentence of the second paragraph:
The Servicer shall notify the Loss Mitigation Advisor of
any modification to a Mortgage Loan if as a result of such
modification the current loan-to-value rates of such Mortgage
Loan would be in excess of 100%.
and (vi) by replacing the third paragraph with the following paragraph:
The Servicer or any designee of the Servicer shall not waive any
prepayment charge or fee with respect to any Mortgage Loan which
contains a prepayment charge and which prepays during the term
of the penalty. If the Servicer or its designee fails to collect
the prepayment charge upon any prepayment of any Mortgage Loan
which contains a prepayment charge, the Servicer shall deposit
into the Custodial Account an amount equal to the prepayment
charge which was not collected. Notwithstanding the above, the
Servicer or its designee may waive a prepayment charge without
remitting the amount of the foregone prepayment charge to the
Custodial Account if the prepayment is not a result of a
refinancing by the Servicer or any of its affiliates and (i) the
Mortgage Loan is in default or foreseeable default and such
waiver would, in the Servicer's reasonable judgement, maximize
recovery of total proceeds taking into account the value of such
prepayment charge and the related Mortgage Loan or (ii) the
collection of the prepayment charge would be in violation of
applicable laws.
25. Section 4.02 (Liquidation of Mortgage Loans) is hereby amended by (i)
adding the following to the end of the second sentence thereto:
no later than such 90th day; provided, however, that the Company
is required to commence foreclosure proceedings on the 65th day
of such delinquency if the Company determines no alternative
resolution strategy would be effective.
(ii) replacing the word "Purchaser" in the seventh and nineteenth
lines of the first paragraph thereto with "Trustee and the Trust Fund"
and (iii) replacing the word "Purchaser" in the second sentence of the
second paragraph thereto with "Trust Fund".
26. Section 4.04 (Establishment of and Deposits to Custodial Account) is
hereby amended as follows:
(a) the words "in trust for the Purchaser and/or subsequent
purchasers of Mortgage Loans, and various Mortgagors-P&I"
in the fourth and fifth lines of the first sentence of the
first paragraph shall be replaced by the following: "in
trust for Xxxxx Fargo Bank Minnesota, N.A., as Master
Servicer for the ARC 2001-BC3 Trust and various
Mortgagors."
(b) by amending clause (ix) to read as follows:
(ix) the amount of any Prepayment Interest Shortfall
Amount;
(c) by adding the word "and" after the semi-colon in clause (x)
and designating the two lines after clause (x) as clause
(xi).
27. Section 4.05 (Permitted Withdrawals From Custodial Account) is hereby
amended by replacing the last five lines of clause (ii) with the
following:
the Trust Fund; provided however, that in the event that
the Servicer determines in good faith that any unreimbursed
Monthly Advances will not be recoverable from amounts
representing late recoveries of payments of principal or
interest respecting the particular Mortgage Loan as to which
such Monthly Advance was made or from Liquidation Proceeds or
Insurance Proceeds with respect to such Mortgage Loan, the
Servicer may reimburse itself for such amounts from the
Custodial Account, it being understood, in the case of any such
reimbursement, that the Servicer's right thereto shall be prior
to the rights of the Trust Fund;
28. Section 4.06 (Establishment of and Deposits to Escrow Account) shall
be amended by deleting the words "Purchaser and/or subsequent
purchasers of Residential Mortgage Loans, and various Mortgagors-T&I"
in the fourth and fifth lines of the first sentence of the first
paragraph, and replacing it with the following:
"in trust for Xxxxx Fargo Bank Minnesota, N.A., as Master
Servicer for the ARC 2001-BC3 Trust".
29. Section 4.09 (Protection of Accounts) is hereby amended by replacing
the word "Purchaser" in the third line thereto with "Trustee and the
Trust Fund".
30. Section 4.14 (Restoration of Mortgaged Property) is hereby amended by
replacing the word "Purchaser" in the last sentence thereto with
"Trustee or Trust Fund".
31. Section 4.15 (Maintenance of PMI Policy; Claims) is hereby amended by
replacing the word "Purchaser" in the second line thereto with "Master
Servicer, Trustee or Trust Fund".
32. Section 4.16 (Title, Management and Disposition of REO Property) is
hereby amended by (i) replacing the word "Purchaser" in the first
paragraph thereto with "Trust Fund", (ii) replacing the word
"Purchaser" in the second paragraph and the first line of the third
paragraph thereto with "the Trustee on behalf of the Trust Fund",
(iii) replacing the word "Purchaser" in the second and last lines of
the third paragraph thereof with "Trust Fund", (iv) replacing the
reference to "one year" in the eighth line of the third paragraph
thereof with "three years" and (v) adding two new paragraphs after the
third paragraph thereof to read as follows:
In the event that the Trust Fund acquires any REO Property
in connection with a default or imminent default on a Mortgage
Loan, the Servicer shall dispose of such REO Property not later
than the end of the third taxable year after the year of its
acquisition by the Trust Fund unless the Servicer has applied
for and received a grant of extension from the Internal Revenue
Service to the effect that, under the REMIC Provisions and any
relevant proposed legislation and under applicable state law,
the applicable Trust REMIC may hold REO Property for a longer
period without adversely affecting the REMIC status of such
REMIC or causing the imposition of a federal or state tax upon
such REMIC. If the Servicer has received such an extension, then
the Servicer shall continue to attempt to sell the REO Property
for its fair market value for such period longer than three
years as such extension permits (the "Extended Period"). If the
Servicer has not received such an extension and the Servicer is
unable to sell the REO Property within the period ending 3
months before the end of such third taxable year after its
acquisition by the Trust Fund or if the Servicer has received
such an extension, and the Servicer is unable to sell the REO
Property within the period ending three months before the close
of the Extended Period, the Servicer shall, before the end of
the three year period or the Extended Period, as applicable, (i)
purchase such REO Property at a price equal to the REO
Property's fair market value or (ii) auction the REO Property to
the highest bidder (which may be the Servicer) in an auction
reasonably designed to produce a fair price prior to the
expiration of the three-year period or the Extended Period, as
the case may be. The Trustee shall sign any document or take any
other action reasonably requested by the Servicer which would
enable the Servicer, on behalf of the Trust Fund, to request
such grant of extension.
Notwithstanding any other provisions of this Agreement, no
REO Property acquired by the Trust Fund shall be rented (or
allowed to continue to be rented) or otherwise used by or on
behalf of the Trust Fund in such a manner or pursuant to any
terms that would: (i) cause such REO Property to fail to qualify
as "foreclosure property" within the meaning of Section
860G(a)(8) of the Code; or (ii) subject any Trust REMIC to the
imposition of any federal income taxes on the income earned from
such REO Property, including any taxes imposed by reason of
Sections 860F or 860G(c) of the Code, unless the Servicer has
agreed to indemnify and hold harmless the Trust Fund with
respect to the imposition of any such taxes.
(v) deleting the first sentence of the fourth paragraph thereto, (vi)
replacing the word "sentence" with "paragraph" in the sixth line of
the fourth paragraph thereto, (vii) replacing the word "Purchaser" in
the third line of the sixth paragraph thereto with "Trust Fund" and
(viii) replacing the word "advances" in the sixth line of the sixth
paragraph thereof with "Monthly Advances".
33. Section 4.17 is hereby amended by replacing the words "Remittance
Date" with "tenth calendar day of".
34. Section 5.02 (Statements to Purchaser) is hereby amended in its
entirety to read as follows:
Section 5.02 Statements to Master Servicer.
-----------------------------
Not later than the tenth calendar day (or if such tenth
calendar day is not a Business Day, the immediately preceding
Business Day) of each month, the Servicer shall furnish to the
Master Servicer (a) a monthly remittance advice containing such
information in a format mutually acceptable to the Servicer and
the Master Servicer as to the accompanying remittance and the
period ending on the preceding Determination Date and (b) all
such information required pursuant to clause (a) above on a
magnetic tape or other similar media reasonably acceptable to
the Master Servicer.
Such monthly remittance advice shall also include on a
cumulative basis the amount of any (i) claims filed, (ii) claim
payments made, (iii) claims denied and (iv) policies cancelled
with respect to those Serviced Mortgage Loans covered by
loan-level primary mortgage insurance policies provided by MGIC
(as set forth in Schedule II hereof) or any other provider of
primary mortgage insurance purchased by the Trust.
The Servicer shall provide the Master Servicer with such
information available to it concerning the Mortgage Loans as is
necessary for the Master Servicer to prepare the Trust Fund's
federal income tax returns as the Master Servicer may reasonably
request from time to time.
Section 5.03 (Monthly Advances by Company) is hereby amended
by:
(i) deleting the words "if requested by a Rating Agency
(hereinafter defined) or a guarantor in connection with a
securitization," from the third sentence thereto; and
(ii) deleting the last sentence thereto.
35. Section 6.02 (Satisfaction of Mortgages and Release of Mortgage Files)
is hereby amended by replacing the word "Purchaser" in the third line
of the second paragraph thereto with the word "Trust Fund".
36. Section 6.04 (Annual Statement as to Compliance) is hereby amended by
replacing the words "May 31, 2000" in the second line of the first
sentence thereof with the words "May 31, 2002".
37. Section 6.05 (Annual Independent Accountants' Servicing Report) is
hereby amended by replacing the words "May 31, 2000" in the first line
of the first sentence thereof with the words "May 31, 2002".
38. A new Section 7.03 (Compensating Interest) is added to Article VII to
immediately follow Section 7.02 and to read as follows:
Section 7.03 Compensating Interest
The Servicer shall deposit in the Custodial Account on a
daily basis, and retain therein with respect to each Principal
Prepayment, the Prepayment Interest Shortfall Amount, if any,
for the month of distribution. Such deposit shall be made from
the Servicer's own funds, without reimbursement therefor up to a
maximum amount of the Servicing Fee actually received for such
month for the Mortgage Loans.
39. Section 8.01 (Indemnification; Third Party Claims) is amended by
replacing the word "Purchaser" in the first line thereof with the
words "Trust Fund, the Trustee and the Master Servicer"; by replacing
the word "Purchaser" in the third line thereof with the words "Trust
Fund or Master Servicer"; by changing the word "Purchaser" in the
tenth line thereof to "the Master Servicer, the Trustee or Trust
Fund"; and by changing the word "Purchaser" in the last sentence of
such Section to "Trust Fund."
40. Section 8.03 (Limitation on Liability of Company and Others) is
amended by changing the word "Purchaser" in the second line thereof to
"Trust Fund, the Trustee or the Master Servicer"; and by changing the
word "Purchaser" in the sixteenth line thereof to "Trust Fund."
41. Section 8.04 (Limitation on Resignation and Assignment by Company) is
hereby amended by replacing the word "Purchaser" in the seventh line
of the first paragraph thereof and the second line of the second
paragraph thereto with "Master Servicer and the Trustee".
42. Section 10.01 (Event of Default) is hereby amended by:
(a) changing any reference to "Purchaser" to "Master Servicer"
(b) changing the reference to "five days" to "two Business
Days" in clause (i);
(c) adding the words "within the applicable cure period" after
the word "remedied" in the first line of the second
paragraph; and
(d) changing the word "Upon" in the first line of the third
paragraph to "Within 90 days of" and by adding the
following proviso at the end of the first sentence of the
third paragraph:
; provided, however, the obligation of the Master
Servicer or other successor servicer to make Monthly
Advances not made by the defaulting Servicer shall be
effective immediately upon receipt of such notice by
the defaulting Servicer.
43. Section 10.02 (Waiver of Defaults) is hereby amended by changing the
reference to "Purchaser" to "Master Servicer" with the prior written
consent of the Trustee".
44. Section 11.01 (Termination) is hereby amended by restating subclause
(ii) thereof to read as below and adding the following sentence after
the first sentence of Section 11.01:
(ii) mutual consent of the Servicer and the Trustee in writing,
provided such termination is also acceptable to the Master
Servicer and the Rating Agencies.
At the time of any termination of the Servicer pursuant to
Section 11.01, the Servicer shall be entitled to all accrued and
unpaid Servicing Fees and unreimbursed Servicing Advances and
Monthly Advances; provided, however, in the event of a
termination for cause under Sections 10.01 and 12.14 hereof,
such unreimbursed amounts shall not be reimbursed to the
Servicer until such amounts are received by the Trust Fund from
the related Mortgage Loans.
45. The first paragraph of Section 11.02 (Termination Without Cause) is
hereby deleted and replaced with the following:
Upon 30 days' prior notice, in writing and delivered to the
Trustee, the Master Servicer and the Servicer by registered mail
as provided in Section 12.05, the Class X Certificateholder may
terminate the rights and obligations of the Servicer under this
Agreement without cause. The Servicer shall comply with the
termination procedures set forth in Section 12.01 hereof. The
Master Servicer or the Trustee shall have no right to terminate
the Servicer pursuant to the foregoing sentences of this Section
11.02. In connection with any such termination pursuant to this
Section 11.02, the Class X Certificateholder will be responsible
for reimbursing the Servicer for all unreimbursed Servicing
Advances, Monthly Advances, Servicing Fees and other reasonable
or necessary out-of-pocket costs associated with any such
servicing transfer at the time of such termination without any
right of reimbursement to Xxxxxx Capital from the Trust Fund.
The second paragraph of Section 11.02 is amended by replacing the word
"Purchaser" with "Xxxxxx Capital from its own funds without reimbursement."
46. Section 11.03 is hereby amended by replacing the first paragraph
thereof with the following:
Subject to the requirements set forth in this Section 11.03,
Xxxxxx Capital may terminate this Agreement, with the prior written
consent of the Master Servicer and the Trustee, with respect to the
servicing of those Mortgage Loans that are determined to be Distressed
Mortgage Loans as of the Notice Date and servicing of such Mortgage
Loans will be transferred to a Special Servicer which must be a
Xxxxxxx Mac- or Xxxxxx Xxx-approved servicer (the "Special Servicer").
The appointment of a Special Servicer by Xxxxxx Capital and the
execution of a special servicing agreement between Xxxxxx Capital and
the Special Servicer shall be subject to the consent of the Master
Servicer and the Trustee and the receipt of confirmation from the
Rating Agencies that the transfer of servicing to the Special Servicer
shall not result in a reduction of any rating previously given by such
Rating Agency to any Certificate. Any monthly fee paid to the Special
Servicer in connection with any Mortgage Loan serviced by such Special
Servicer shall not exceed one-twelfth of the product of (a) 0.50% and
(b) the outstanding principal balance of such Mortgage Loan.
All reasonable costs and expenses incurred in connection with
a transfer of servicing to the Special Servicer including, without
limitation, the costs and expenses of the Master Servicer or any other
Person in appointing a Special Servicer, or of transferring the
Servicing Files and the other necessary data to the Special Servicer
shall be paid by Xxxxxx Capital from its own funds without
reimbursement.
Xxxxxx Capital shall be responsible for the delivery of all
required Transfer Notices and will send a copy of the Transfer Notice
to the Master Servicer.
47. Section 12.01 (Successor to Company) is hereby amended by:
(i) replacing the words "Prior to" with "Upon" in the first
line of the first paragraph thereto;
(ii) by changing the word "Purchaser" in the second line of
the first paragraph to "Master Servicer" and by adding
the words ", in accordance with the Trust Agreement,"
after the word "shall" in the second line of the first
paragraph thereto;
(iii) adding the following new sentences immediately following
the first sentence of the first paragraph thereof to read
as follows:
Prior to termination of the Servicer's responsibilities,
rights, duties and obligations under this Agreement pursuant to
Section 11.02, Xxxxxx Capital shall appoint a successor which
shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under
this Agreement. Any successor to the Servicer shall be a Xxxxxxx
Mac- or Xxxxxx Mae-approved servicer and shall be subject to the
approval of the Master Servicer and each Rating Agency, as
evidenced by a letter from such Rating Agency delivered to the
Trustee that the transfer of servicing will not result in a
qualification, withdrawal or downgrade of the then-current
rating of any of the Certificates.
(iv) amending the existing second sentence of the first
paragraph thereof by (a) changing the word "Purchaser" to
"the Master Servicer" and (b) by adding the following
proviso at the end of such sentence:
; provided, however, that no such compensation shall be
in excess of that permitted the Servicer under this
Agreement.
(v) replacing the word "Purchaser" in the second line of the
second paragraph thereof with "Trustee and Master
Servicer".
(vi) adding the following paragraph at the end of the third
paragraph thereof:
In the event the Servicer is terminated pursuant to
Section 11.02, Xxxxxx Capital shall be responsible for payment
of any out-of-pocket costs from its own funds without
reimbursement incurred by the Servicer and the Master Servicer
in connection with the transfer of the Serviced Mortgage Loans
to a successor servicer.
Except as otherwise provided in the Agreement, all
reasonable costs and expenses incurred in connection with any
transfer of servicing hereunder (whether as a result of
termination or removal of the Servicer or resignation of the
Servicer or otherwise), including, without limitation, the costs
and expenses of the Master Servicer or any other Person in
appointing a successor servicer, or of the Master Servicer in
assuming the responsibilities of the Servicer hereunder, or of
transferring the Servicing Files and the other necessary data,
including the completion, correction or manipulation of such
servicing data as may be required to correct any errors or
insufficiencies in the servicing data, to the successor servicer
shall be paid by the terminated, removed or resigning Servicer
from its own funds without reimbursement.
48. Section 12.02 (Amendment) is hereby amended by replacing the words "by
the Company and by written agreement signed by the Company and the
Purchaser" with "by written agreement by the Servicer and Xxxxxx
Capital, with the written consent of the Master Servicer and the
Trustee".
49. Section 12.04 (Duration of Agreement) is hereby amended by deleting
the last sentence thereof.
50. Section 12.07 (Relationship of Parties) is hereby amended by replacing
the words "the Purchaser" with "Xxxxxx Capital, the Master Servicer,
the Trustee or the Trust Fund".
51. Section 12.10 (Assignment by Purchaser) is hereby deleted in its
entirety.
52. Section 12.11 (Solicitation of Mortgagor) is hereby amended by
replacing the word "Purchaser" with "Xxxxxx Capital or the Trustee" in
each instance.
53. New Sections 12.12 (Intended Third Party Beneficiaries) is added to
the SWSA to read as follows:
Section 12.12 Intended Third Party Beneficiaries.
----------------------------------
Notwithstanding any provision herein to the contrary, the
parties to this Agreement agree that it is appropriate, in furtherance
of the intent of such parties as set forth herein, that the Master
Servicer and the Trustee receive the benefit of the provisions of this
Agreement as intended third party beneficiaries of this Agreement to
the extent of such provisions. The Servicer shall have the same
obligations to the Master Servicer and the Trustee as if they were
parties to this Agreement, and the Master Servicer and the Trustee
shall have the same rights and remedies to enforce the provisions of
this Agreement as if they were parties to this Agreement. The Servicer
shall only take direction from the Master Servicer (if direction by
the Master Servicer is required under this Agreement) unless otherwise
directed by this Agreement or the Loss Mitigation Advisory Agreement.
Notwithstanding the foregoing, all rights and obligations of the
Master Servicer hereunder (other than the right to indemnification)
shall terminate upon termination of the Trust Agreement and of the
Trust Fund pursuant to the Trust Agreement.
Schedule I
Schedule of Serviced Mortgage Loans
Exhibit B
Trust Agreement for ARC 2001-BC3
Schedule I
Schedule of Serviced Mortgage Loans
covered by MGIC PMI Insurance Policy
Execution Copy
XXXXXX BROTHERS BANK, FSB
Purchaser
and
XXXXX FARGO HOME MORTGAGE, INC.
Company
--------------------------------------------
SELLER'S WARRANTIES AND SERVICING AGREEMENT
Dated as of December 1, 2000
--------------------------------------------
Adjustable and Fixed Rate Mortgage Loans
WFMR 2000-W07
TABLE OF CONTENTS
ARTICLE I....................................................................1
DEFINITIONS..................................................................1
ARTICLE II...................................................................9
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS
AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS......................9
ARTICLE III.................................................................12
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH..........................12
ARTICLE IV..................................................................29
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS..............................29
ARTICLE V...................................................................42
PAYMENTS TO PURCHASER.......................................................42
ARTICLE VI..................................................................44
GENERAL SERVICING PROCEDURES................................................44
ARTICLE VII.................................................................48
COMPANY TO COOPERATE........................................................48
ARTICLE VIII................................................................48
THE COMPANY.................................................................48
ARTICLE IX..................................................................50
PASS-THROUGH TRANSFER.......................................................50
ARTICLE X...................................................................52
DEFAULT.....................................................................52
ARTICLE XI..................................................................54
TERMINATION.................................................................54
MISCELLANEOUS PROVISIONS....................................................56
EXHIBITS
Exhibit A Mortgage Loan Schedule
Exhibit A-1 Electronic Data Fields
Exhibit B Contents of Each Mortgage Loan File
Exhibit C Custodial Agreement
Exhibit D Mortgage Loan Schedule of Balloon Loans
Exhibit E Custodial Account Certifications
Exhibit F Escrow Account Certifications
Exhibit G Form of Assignment and Assumption Agreement
Exhibit H Underwriting Guidelines
Exhibit I Form of Loss Mitigation Advisory Agreement
This is a Seller's Warranties and Servicing Agreement for adjustable
rate and fixed rate residential first mortgage loans, dated and effective as of
December 1, 2000, and is executed between Xxxxxx Brothers Bank, FSB, as
purchaser (the "Purchaser"), and Xxxxx Fargo Home Mortgage, Inc., as seller and
servicer (the "Company").
W I T N E S S E T H
WHEREAS, the Purchaser has agreed to purchase from the Company and the
Company has agreed to sell to the Purchaser certain Mortgage Loans which have
an aggregate outstanding principal balance as of the close of business on the
Cut-off Date, after deduction of payments due on or before such date, of
$351,409,521.20;
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of
trust or other security instrument creating a first lien on a residential
dwelling located in the jurisdiction indicated on the Mortgage Loan Schedule,
which is annexed hereto as Exhibit A; and
WHEREAS, the Purchaser and the Company wish to prescribe the manner of
purchase of the Mortgage Loans and the conveyance, servicing and control of the
Mortgage Loans.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Purchaser and the Company agree
as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the
content otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.
Adjustment Date: As to each Mortgage Loan, the date on which the
Mortgage Interest Rate is adjusted in accordance with the terms of the related
Mortgage Note and Mortgage.
Agreement: This Seller's Warranties and Servicing Agreement and all
amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
Appraised Value: With respect to any Mortgage Loan, the lesser of (i)
the value set forth on the appraisal made in connection with the origination of
the related Mortgage Loan as the value of the related Mortgaged Property, or
(ii) the purchase price paid for the Mortgaged Property, provided, however,
that in the case of a refinanced Mortgage Loan, such value shall be based
solely on the appraisal made in connection with the origination of such
Mortgage Loan.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to
reflect the sale of the Mortgage to the Purchaser.
BIF: The Bank Insurance Fund, or any successor thereto.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking and savings and loan institutions in the State of Iowa or
the State of Maryland or the State of New York are authorized or obligated by
law or executive order to be closed.
Closing Date: December 20, 2000.
Code: The Internal Revenue Code of 1986, as it may be amended from
time to time or any successor statute thereto, and applicable U.S. Department
of the Treasury regulations issued pursuant thereto.
Company: Xxxxx Fargo Home Mortgage, Inc., or its successor in interest
or assigns, or any successor to the Company under this Agreement appointed as
herein provided.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Custodial Account: The separate account or accounts created and
maintained pursuant to Section 4.04.
Custodial Agreement: The agreement governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents, a form of which is annexed hereto as Exhibit C.
Custodian: The custodian under the Custodial Agreement, or its
successor in interest or assigns, or any successor to the Custodian under the
Custodial Agreement as provided therein.
Cut-off Date: December 1, 2000.
Deleted Mortgage Loan: A Mortgage Loan which is repurchased by the
Company in accordance with the terms of this Agreement and which is, in the
case of a substitution pursuant to Section 3.03, replaced or to be replaced
with a Qualified Substitute Mortgage Loan.
Determination Date: The Business Day immediately preceding the related
Remittance Date.
Distressed Mortgage Loan: As of any Transfer Date, any Mortgage Loan
that was not in foreclosure, bankruptcy, actively participating in a repayment
plan or REO, but which is delinquent in payment for a period of 91 days or
more, without giving effect to any grace period permitted by the related
Mortgage or Mortgage Note. Notwithstanding the prior sentence, any Mortgage
Loan being referred to foreclosure as of the Notice Date or in the month of the
Transfer Date shall be considered a Distressed Mortgage Loan. No Mortgage Loan
shall be considered delinquent for the purpose of this definition by virtue of
the related Mortgagor having made payment to a prior servicer.
Due Date: The first day of the month on which the Monthly Payment is
due on a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period
commencing on the second day of the month preceding the month of the Remittance
Date and ending on the first day of the month of the Remittance Date.
Errors and Omissions Insurance Policy: An errors and omissions
insurance policy to be maintained by the Company pursuant to Section 4.12.
Escrow Account: The separate account or accounts created and
maintained pursuant to Section 4.06.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed
by the Mortgagor with the mortgagee pursuant to the Mortgage or any other
related document.
Event of Default: Any one of the conditions or circumstances
enumerated in Section 10.01.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, or any successor
thereto.
Fidelity Bond: A fidelity bond to be maintained by the Company
pursuant to Section 4.12.
First Remittance Date: January 18, 2001.
FNMA: Xxxxxx Xxx, or any successor thereto.
Gross Margin: With respect to each Mortgage Loan, the fixed percentage
amount set forth in the related Mortgage Note which is added to the Index in
order to determine the related Mortgage Interest Rate, as set forth in the
Mortgage Loan Schedule.
Index: On each Adjustment Date, the applicable index shall in
accordance with the Mortgage Note on each Adjustment Date, be a rate per annum
equal to the weekly average yield on U.S. Treasury securities adjusted to a
constant maturity of one year as made available by the Federal Reserve Board in
Statistical Release No. H.15 or a comparable publication, or, if not so
published, as reported by any Federal Reserve Bank or by any U.S. Government
department or agency, for the week for which such figures were most recently
published or reported as of the date 45 days prior to the Adjustment Date; or
based upon the rate per annum equal to the average of interbank offered rates
for six-month U.S. Dollar Denominated deposits in the London Market (LIBOR) as
published in the Wall Street Journal.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged
Property.
Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of
the related Mortgaged Property if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
ratio of the original loan amount of the Mortgage Loan at its origination
(unless otherwise indicated) to the Appraised Value of the Mortgaged Property.
Monthly Advance: The portion of each Monthly Payment that is
delinquent with respect to each Mortgage Loan at the close of business on the
Determination Date required to be advanced by the Company pursuant to Section
5.03 on the Business Day immediately preceding the Remittance Date of the
related month.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Loan.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on an unsubordinated estate in fee
simple in real property securing the Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit B annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as described in Section 4.11.
Mortgage Interest Rate: The annual rate of interest borne on a
Mortgage Note in accordance with the provisions of the Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the subject of
this Agreement, each Mortgage Loan originally sold and subject to this
Agreement being identified on the Mortgage Loan Schedule, which Mortgage Loan
includes without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO Disposition Proceeds and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan.
Mortgage Loan Documents: With respect to a Mortgage Loan, the original
related Mortgage Note with applicable addenda and riders, the original related
Mortgage and the originals of any required addenda and riders, the original
related Assignment and any original intervening related Assignments, the
original related title insurance policy and related PMI policy, if any.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
related Mortgage Interest Rate minus the Servicing Fee Rate.
Mortgage Loan Schedule: A schedule of Mortgage Loans annexed hereto as
Exhibit A, such schedule setting forth the following information with respect
to each Mortgage Loan: (1) the Company's Mortgage Loan number; (2) the city
state and zip code of the Mortgaged Property; (3) a code indicating whether the
Mortgaged Property is a single family residence, two-family residence,
three-family residence, four-family residence, PUD or Condominium; (4) the
current Mortgage Interest Rate; (5) the current net Mortgage Interest Rate; (6)
the current Monthly Payment; (7) the Gross Margin; (8) the original term to
maturity; (9) the scheduled maturity date; (10) the principal balance of the
Mortgage Loan as of the Cut-off Date after deduction of payments of principal
due on or before the Cut-off Date whether or not collected; (11) the
Loan-to-Value Ratio; (12) the next Adjustment Date; (13) the lifetime Mortgage
Interest Rate cap; (14) whether the Mortgage Loan is convertible or not; (15) a
code indicating the mortgage guaranty insurance company; and (16) the Servicing
Fee, together with an electronic data tape containing the fields described in
Exhibit A-1.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The real property securing repayment of the debt
evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Notice Date: The first Business Day of each calendar month, as
applicable.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or the President or a Vice President or
an Assistant Vice President and by the Treasurer or the Secretary or one of the
Assistant Treasurers or Assistant Secretaries of the Company, and delivered to
the Purchaser as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Company, reasonably acceptable to the Purchaser.
Pass-Through Transfer: The sale or transfer of some or all of the
Mortgage Loans by the Purchaser to a trust to be formed as part of a publicly
issued or privately placed mortgage-backed securities transaction.
Periodic Interest Rate Cap: As to each Mortgage Loan, the maximum
increase or decrease in the Mortgage Interest Rate on any Adjustment Date as
defined in the Mortgage Note.
Person: Any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof.
PMI Policy: A policy of primary mortgage guaranty insurance issued by
a Qualified Insurer.
Prime Rate: The prime rate announced to be in effect from time to
time, as published as the average rate in The Wall Street Journal.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any prepayment penalty or premium thereon and which is not accompanied by an
amount of interest representing scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.
Principal Prepayment Period: The month preceding the month in which
the related Remittance Date occurs.
Purchaser: Xxxxxx Brothers Bank, FSB, or its successor in interest or
any successor to the Purchaser under this Agreement as herein provided.
Qualified Depository: A deposit account or accounts maintained with a
federal or state chartered depository institution the deposits in which are
insured by the FDIC to the applicable limits and the short-term unsecured debt
obligations of which (or, in the case of a depository institution that is a
subsidiary of a holding company, the short-term unsecured debt obligations of
such holding company) are rated A-1 by Standard & Poor's Ratings Group or
Prime-1 by Xxxxx'x Investors Service, Inc. (or a comparable rating if another
rating agency is specified by the Purchaser by written notice to the Company)
at the time any deposits are held on deposit therein.
Qualified Insurer: A mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by FNMA or FHLMC.
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Company for a Deleted Mortgage Loan which must, on the date
of such substitution, (i) have an outstanding principal balance, after
deduction of all scheduled payments due in the month of substitution (or in the
case of a substitution of more than one mortgage loan for a Deleted Mortgage
Loan, an aggregate principal balance), not in excess of the Stated Principal
Balance of the Deleted Mortgage Loan; (ii) have a Mortgage Loan Remittance Rate
not less than, and not more than 2% greater, than the Mortgage Loan Remittance
Rate of the Deleted Mortgage Loan; (iii) have a remaining term to maturity not
greater than and not more than one year less than that of the Deleted Mortgage
Loan; and (iv) comply with each representation and warranty set forth in
Sections 3.01 and 3.02.
Reconstitution Date: The date on which any or all of the Mortgage
Loans serviced under this Agreement shall be removed from this Agreement and
reconstituted as part of a Pass-Through Transfer or Whole Loan Transfer
pursuant to Section 9.01 hereof. The Reconstitution Date shall be such date
which the Purchaser and the shelf registrant shall designate. On such date, the
Mortgage Loans transferred shall cease to be covered by this Agreement and the
Company's servicing responsibilities shall cease under this Agreement with
respect to the related transferred Mortgage Loans.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to
a REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter
1, Subtitle A of the Code, and related provisions, and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The 18th day (or if such 18th day is not a Business
Day, the first Business Day immediately following) of any month, beginning with
the First Remittance Date.
REO Disposition: The final sale by the Company of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 4.16.
REO Property: A Mortgaged Property acquired by the Company on behalf
of the Purchaser through foreclosure or by deed in lieu of foreclosure, as
described in Section 4.16.
Repurchase Price: Unless agreed otherwise by the Purchaser and the
Company, a price equal to (i) the Stated Principal Balance of the Mortgage Loan
plus (ii) interest on such Stated Principal Balance at the Mortgage Loan
Remittance Rate from the date on which interest has last been paid and
distributed to the Purchaser to the last day of the month in which the
repurchase occurs, less amounts received or advanced in respect of such
repurchased Mortgage Loan which are being held in the Custodial Account for
distribution in the month of repurchase.
SAIF: The Savings Association Insurance Fund, or any successor
thereto.
Securities Act of 1933 or the 1933 Act: The Securities Act of 1933, as
amended.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses other than Monthly Advances (including reasonable
attorney's fees and disbursements) incurred in the performance by the Company
of its servicing obligations, including, but not limited to, the cost of (a)
the preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the management
and liquidation of any REO Property and (d) compliance with the obligations
under Section 4.08.
Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual fee the Purchaser shall pay to the Company, which shall, for a period of
one full month, be equal to one-twelfth of the product of (a) the Servicing Fee
Rate and (b) the outstanding principal balance of such Mortgage Loan. Such fee
shall be payable monthly, computed on the basis of the same principal amount
and period respecting which any related interest payment on a Mortgage Loan is
computed. The obligation of the Purchaser to pay the Servicing Fee is limited
to, and the Servicing Fee is payable solely from, the interest portion
(including recoveries with respect to interest from Liquidation Proceeds, to
the extent permitted by Section 4.05) of such Monthly Payment collected by the
Company, or as otherwise provided under Section 4.05.
Servicing Fee Rate: 0.50% per annum per Mortgage Loan.
Servicing File: With respect to each Mortgage Loan, the file retained
by the Company consisting of originals of all documents in the Mortgage File
which are not delivered to the Custodian and copies of the Mortgage Loan
Documents listed in the Custodial Agreement the originals of which are
delivered to the Custodian pursuant to Section 2.03.
Servicing Officer: Any officer of the Company involved in or
responsible for the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Company to the
Purchaser upon request, as such list may from time to time be amended.
Special Servicer: Such Person designated by the Purchaser to assume
the servicing of Distressed Mortgage Loans pursuant to Section 11.03.
Stated Principal Balance: As to each Mortgage Loan, (i) the principal
balance of the Mortgage Loan at the Cut-off Date after giving effect to
payments of principal due on or before such date, whether or not received,
minus (ii) all amounts previously distributed to the Purchaser with respect to
the related Mortgage Loan representing payments or recoveries of principal or
advances in lieu thereof.
Transfer Date: The 18th calendar day of each month, or, if such day is
not a Business Day, the next succeeding Business Day. Each transfer of
servicing on a Transfer Date shall be deemed to be effective immediately
following the close of business on such Transfer Date.
Transfer Notice: A certification by the Company listing the Distressed
Mortgage Loans expected to be the subject of a servicing transfer on the
related Transfer Date, based on information available as of the related Notice
Date.
Underwriting Guidelines: The Company's underwriting guidelines
attached hereto as Exhibit H.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans by the Purchaser to a third party, which sale or transfer is not
a Pass-Through Transfer.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
DELIVERY OF DOCUMENTS
Section 2.01 Conveyance of Mortgage Loans; Possession of Mortgage Files;
Maintenance of Servicing Files.
The Company, simultaneously with the execution and delivery of this
Agreement, does hereby sell, transfer, assign, set over and convey to the
Purchaser, without recourse, but subject to the terms of this Agreement, all
the right, title and interest of the Company in and to the Mortgage Loans.
Pursuant to Section 2.03, the Company has delivered the Mortgage Loan Documents
to the Custodian.
The contents of each Mortgage File not delivered to the Custodian are
and shall be held in trust by the Company for the benefit of the Purchaser as
the owner thereof. The Company shall maintain a Servicing File consisting of a
copy of the contents of each Mortgage File and the originals of the documents
in each Mortgage File not delivered to the Custodian. The possession of each
Servicing File by the Company is at the will of the Purchaser for the sole
purpose of servicing the related Mortgage Loan, and such retention and
possession by the Company is in a custodial capacity only. Upon the sale of the
Mortgage Loans the ownership of each Mortgage Note, the related Mortgage and
the related Mortgage File and Servicing File shall vest immediately in the
Purchaser, and the ownership of all records and documents with respect to the
related Mortgage Loan prepared by or which come into the possession of the
Company shall vest immediately in the Purchaser and shall be retained and
maintained by the Company, in trust, at the will of the Purchaser and only in
such custodial capacity. The Company shall release its custody of the contents
of any Servicing File only in accordance with written instructions from the
Purchaser, unless such release is required as incidental to the Company's
servicing of the Mortgage Loans or is in connection with a repurchase of any
Mortgage Loan pursuant to Section 3.03 or 6.02. All such costs associated with
the release, transfer and re-delivery to the Company shall be the
responsibility of the Purchaser.
Section 2.02 Books and Records; Transfers of Mortgage Loans.
From and after the sale of the Mortgage Loans to the Purchaser all
rights arising out of the Mortgage Loans, including, but not limited to, all
funds received on or in connection with the Mortgage Loans, shall be received
and held by the Company in trust for the benefit of the Purchaser as owner of
the Mortgage Loans, and the Company shall retain record title to the related
Mortgages for the sole purpose of facilitating the servicing and the
supervision of the servicing of the Mortgage Loans.
The sale of each Mortgage Loan shall be reflected on the Company's
balance sheet and other financial statements as a sale of assets by the
Company. The Company shall be responsible for maintaining, and shall maintain,
a complete set of books and records for each Mortgage Loan which shall be
marked clearly to reflect the ownership of each Mortgage Loan by the Purchaser.
In particular, the Company shall maintain in its possession, available for
inspection by the Purchaser, or its designee, and shall deliver to the
Purchaser upon demand, evidence of compliance with all federal, state and local
laws, rules and regulations, and requirements of FNMA or FHLMC, including but
not limited to documentation as to the method used in determining the
applicability of the provisions of the Flood Disaster Protection Act of 1973,
as amended, to the Mortgaged Property, documentation evidencing insurance
coverage and eligibility of any condominium project for approval by FNMA or
FHLMC and periodic inspection reports as required by Section 4.13. To the
extent that original documents are not required for purposes of realization of
Liquidation Proceeds or Insurance Proceeds, documents maintained by the Company
may be in the form of microfilm or microfiche or such other reliable means of
recreating original documents, including but not limited to, optical imagery
techniques so long as the Company complies with the requirements of the FNMA
Selling and Servicing Guide, as amended from time to time.
The Company shall maintain with respect to each Mortgage Loan and
shall make available for inspection by any Purchaser or its designee the
related Servicing File during the time the Purchaser retains ownership of a
Mortgage Loan and thereafter in accordance with applicable laws and
regulations.
The Company shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the Company
shall note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be
made unless such transfer is in compliance with the terms hereof. For the
purposes of this Agreement, the Company shall be under no obligation to deal
with any person with respect to this Agreement or the Mortgage Loans unless the
books and records show such person as the owner of the Mortgage Loan. The
Purchaser may, subject to the terms of this Agreement, sell and transfer one or
more of the Mortgage Loans, provided, however, that in no event shall there be
more than four Persons at any given time having the status of "Purchaser"
hereunder. The Purchaser also shall advise the Company of the transfer. Upon
receipt of notice of the transfer, the Company shall xxxx its books and records
to reflect the ownership of the Mortgage Loans of such assignee, and shall
release the previous Purchaser from its obligations hereunder with respect to
the Mortgage Loans sold or transferred. If the Company receives notification of
a transfer less than two (2) Business Days before the last calendar day of the
month, the Company's duties to remit and report as required by Section 5 shall
begin with the next Due Period.
Section 2.03 Custodial Agreement; Delivery of Documents.
The Company has delivered and released to the Custodian those Mortgage
Loan Documents as required by Exhibit B to this Agreement with respect to each
Mortgage Loan.
The Custodian has certified its receipt of all such Mortgage Loan
Documents required to be delivered pursuant to the Custodial Agreement, as
evidenced by the Initial Certification of the Custodian in the form annexed to
the Custodial Agreement. The Company shall be responsible for recording the
initial assignments of mortgage. The Purchaser will be responsible for the fees
and expenses of the Custodian.
The Company shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with Section 4.01 or 6.01 within one
week of their execution, provided, however, that the Company shall provide the
Custodian with a certified true copy of any such document submitted for
recordation within ten (10) days of its execution, and shall provide the
original of any document submitted for recordation or a copy of such document
certified by the appropriate public recording office to be a true and complete
copy of the original within sixty days of its submission for recordation.
In the event the public recording office is delayed in returning any
original document, the Company shall deliver to the Custodian within 180 days
of its submission for recordation, a copy of such document and an Officer's
Certificate, which shall (i) identify the recorded document; (ii) state that
the recorded document has not been delivered to the Custodian due solely to a
delay by the public recording office, (iii) state the amount of time generally
required by the applicable recording office to record and return a document
submitted for recordation, and (iv) specify the date the applicable recorded
document will be delivered to the Custodian. The Company will be required to
deliver the document to the Custodian by the date specified in (iv) above. An
extension of the date specified in (iv) above may be requested from the
Purchaser, which consent shall not be unreasonably withheld.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH
Section 3.01 Company Representations and Warranties.
The Company hereby represents and warrants to the Purchaser that, as
of the Closing Date:
(a) Due Organization and Authority.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of
California and has all licenses necessary to carry on its
business as now being conducted and is licensed, qualified
and in good standing in each state where a Mortgaged Property
is located if the laws of such state require licensing or
qualification in order to conduct business of the type
conducted by the Company, and in any event the Company is in
compliance with the laws of any such state to the extent
necessary to ensure the enforceability of the related
Mortgage Loan and the servicing of such Mortgage Loan in
accordance with the terms of this Agreement; the Company has
the full corporate power and authority to execute and deliver
this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement
(including all instruments of transfer to be delivered
pursuant to this Agreement) by the Company and the
consummation of the transactions contemplated hereby have
been duly and validly authorized; this Agreement evidences
the valid, binding and enforceable obligation of the Company;
and all requisite corporate action has been taken by the
Company to make this Agreement valid and binding upon the
Company in accordance with its terms;
(b) Ordinary Course of Business.
The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the
Company, who is in the business of selling and servicing
loans, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Company pursuant to
this Agreement are not subject to the bulk transfer or any
similar statutory provisions in effect in any applicable
jurisdiction;
(c) No Conflicts.
Neither the execution and delivery of this Agreement, the
acquisition of the Mortgage Loans by the Company, the sale of
the Mortgage Loans to the Purchaser or the transactions
contemplated hereby, nor the fulfillment of or compliance
with the terms and conditions of this Agreement will conflict
with or result in a breach of any of the terms, articles of
incorporation or by-laws or any legal restriction or any
agreement or instrument to which the Company is now a party
or by which it is bound, or constitute a default or result in
the violation of any law, rule, regulation, order, judgment
or decree to which the Company or its property is subject, or
impair the ability of the Purchaser to realize on the
Mortgage Loans, or impair the value of the Mortgage Loans;
(d) Ability to Service.
The Company is an approved seller/servicer of conventional
residential mortgage loans for FNMA or FHLMC, with the
facilities, procedures, and experienced personnel necessary
for the sound servicing of mortgage loans of the same type as
the Mortgage Loans. The Company is in good standing to sell
mortgage loans to and service mortgage loans for FNMA or
FHLMC, and no event has occurred, including but not limited
to a change in insurance coverage, which would make the
Company unable to comply with FNMA or FHLMC eligibility
requirements or which would require notification to either
FNMA or FHLMC;
(e) Reasonable Servicing Fee.
The Company acknowledges and agrees that the Servicing Fee
represents reasonable compensation for performing such
services and that the entire Servicing Fee shall be treated
by the Company, for accounting and tax purposes, as
compensation for the servicing and administration of the
Mortgage Loans pursuant to this Agreement;
(f) Ability to Perform.
The Company does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every
covenant contained in this Agreement. The Company is solvent
and the sale of the Mortgage Loans will not cause the Company
to become insolvent. The sale of the Mortgage Loans is not
undertaken to hinder, delay or defraud any of the Company's
creditors;
(g) No Litigation Pending.
There is no action, suit, proceeding or investigation pending
or threatened against the Company which, either in any one
instance or in the aggregate, may result in any material
adverse change in the business, operations, financial
condition, properties or assets of the Company, or in any
material impairment of the right or ability of the Company to
carry on its business substantially as now conducted, or in
any material liability on the part of the Company, or which
would draw into question the validity of this Agreement or
the Mortgage Loans or of any action taken or to be
contemplated herein, or which would be likely to impair
materially the ability of the Company to perform under the
terms of this Agreement;
(h) No Consent Required.
No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution,
delivery and performance by the Company of or compliance by
the Company with this Agreement or the sale of the Mortgage
Loans as evidenced by the consummation of the transactions
contemplated by this Agreement, or if required, such approval
has been obtained prior to the Closing Date;
(i) Selection Process. The Mortgage Loans were selected from
among the outstanding fixed and adjustable rate one- to
four-family mortgage loans in the Company's portfolio at the
Closing Date as to which the representations and warranties
set forth in Section 3.02 could be made and such selection
was not made in a manner so as to affect adversely the
interests of the Purchaser;
(j) No Untrue Information.
Neither this Agreement nor any statement, report or other
document furnished or to be furnished pursuant to this
Agreement or in connection with the transactions contemplated
hereby contains any untrue statement of fact or omits to
state a fact necessary to make the statements contained
therein not misleading;
(k) Sale Treatment.
The Company has determined that the disposition of the
Mortgage Loans pursuant to this Agreement will be afforded
sale treatment for accounting and tax purposes;
(l) No Material Change.
There has been no material adverse change in the business,
operations, financial condition or assets of the Company
since the date of the Company's most recent financial
statements;
(m) No Brokers' Fees.
The Company has not dealt with any broker, investment banker,
agent or other Person that may be entitled to any commission
or compensation in the connection with the sale of the
Mortgage Loans;
(n) Fair Consideration.
The consideration received by the Company upon the sale of
the Mortgage Loans under this Agreement constitutes fair
consideration and reasonably equivalent value of the Mortgage
Loans; and
(o) Low Income Borrowers.
The Company currently operates and actively participates in
an on-going business (A) to originate single family mortgage
loans and/or (B) to make periodic purchases of mortgage loans
from originators or sellers, and/or (C) to issue and/or
purchase securities or bonds supported by mortgage loans, a
portion of which mortgage loans are made to borrowers who
are:
(a) low income families (families with incomes 80% or less of
area median income) living in low-income areas (a census
tract or block numbering area in which the median income does
not exceed 80% of the area median income); or
(b) very low income families (families with incomes 60% or
less of area median income).
Section 3.02 Representations and Warranties Regarding Individual Mortgage
Loans.
As to each Mortgage Loan, the Company hereby represents and warrants
to the Purchaser that as of the Closing Date:
(a) Mortgage Loans as Described.
As to each Mortgage Loan and in the aggregate, the
information set forth in the Mortgage Loan Schedule attached
hereto as Exhibit A and the information contained on the
electronic data file delivered to the Purchaser is true and
correct;
(b) Payments Current.
No payment under any Mortgage Loan has been 30 days
delinquent more than one time within twelve months prior to
the Closing Date and no payment under any Mortgage Loan is
more than thirty (30) days delinquent as of the Cut-off Date;
(c) No Outstanding Charges.
There are no defaults in complying with the terms of the
Mortgages, and all taxes, governmental assessments, insurance
premiums, leasehold payments, water, sewer and municipal
charges, which previously became due and owing have been
paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid
and which has been assessed but is not yet due and payable.
The Seller has not advanced funds, or induced, or solicited
directly or indirectly, the payment of any amount required
under the Mortgage Loan, except for interest accruing from
the date of the Mortgage Note or date of disbursement of the
Mortgage Loan proceeds, whichever is later, to the day which
precedes by one month the Due Date of the first installment
of principal and interest;
(d) Original Terms Unmodified.
The terms of the Mortgage Note and Mortgage have not been
impaired, waived, altered or modified in any respect, except
by a written instrument which has been recorded, if
necessary, to protect the interests of the Purchaser and
which has been delivered to the Custodian. The substance of
any such waiver, alteration or modification has been approved
by the issuer of any related PMI policy and the title
insurer, to the extent required by the policy, and its terms
are reflected on the Mortgage Loan Schedule. No Mortgagor has
been released, in whole or in part, except in connection with
an assumption agreement approved by the issuer of any related
PMI policy and the title insurer, to the extent required by
the policy, and which assumption agreement is part of the
Mortgage Loan File delivered to the Custodian and the terms
of which are reflected in the Mortgage Loan Schedule;
(e) No Defenses.
The Mortgage Loan is not subject to any right of rescission,
set-off, counterclaim or defense, including without
limitation the defense of usury, nor will the operation of
any of the terms of the Mortgage Note or the Mortgage, or the
exercise of any right thereunder, render either the Mortgage
Note or the Mortgage unenforceable, in whole or in part, or
subject to any right of rescission, set-off, counterclaim or
defense, including without limitation the defense of usury,
and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto;
(f) No Satisfaction of Mortgage.
Neither the Mortgage nor the Mortgage Note has been
satisfied, canceled, subordinated or rescinded, in whole or
in part, and the Mortgaged Property has not been released
from the lien of the Mortgage, in whole or in part, nor has
any instrument been executed that would effect any such
release, cancellation, subordination or rescission;
(g) Validity of Mortgage Documents.
The Mortgage Note and the Mortgage and related documents are
genuine, and each is the legal, valid and binding obligation
of the maker thereof enforceable in accordance with its
terms. All parties to the Mortgage Note, the Mortgage and any
other related document had legal capacity to enter into the
Mortgage Loan and to execute and deliver the Mortgage Note,
the Mortgage and any other related document, and the Mortgage
Note, the Mortgage and any other related document have been
duly and properly executed by such parties. The Company has
reviewed all of the documents constituting the Mortgage File
and has made such inquiries as it deems necessary to make and
confirm the accuracy of the representations set forth herein;
(h) No Fraud.
All the documents executed in connection with the Mortgage
Loan including, but not limited to, the Mortgage Note and the
Mortgage are free of fraud and any misrepresentation, are
signed by the persons they purport to be signed by, and
witnessed or, as appropriate, notarized by the persons whose
signatures appear as witnesses or notaries, and each such
document constitutes the valid and binding legal obligation
of the signatories and is enforceable in accordance with its
terms;;
(i) Compliance with Applicable Laws.
Any and all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws applicable to the
Mortgage Loan have been complied with, and the Company shall
maintain in its possession, available for the Purchaser's
inspection, and shall deliver to the Purchaser upon demand,
evidence of compliance with all such requirements. The
consummation of the transactions contemplated hereby will not
violate any such laws or regulations. All inspections,
licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property
and, with respect to the use and occupancy of the same,
including, but not limited to, certificates of occupancy and
fire underwriting certificates, have been made or obtained
from the appropriate authorities;
(j) Location and Type of Mortgaged Property.
The Mortgaged Property is located in the state identified in
the Mortgage Loan Schedule and consists of a single,
contiguous parcel of real property with a detached single
family residence erected thereon, or a two- to four-family
dwelling, or an individual condominium unit in a condominium
project, or an individual unit in a planned unit development
or a townhouse, and no residence or dwelling is a mobile
home. As of the respective appraisal date for each Mortgaged
Property, no portion of the Mortgaged Property was being used
for commercial purposes, except as allowed under the
Underwriting Guidelines. If the Mortgaged Property is a
condominium unit or a planned unit development (other than a
de minimus planned unit development) such condominium or
planned unit development meets the requirements under the
Underwriting Guidelines;
(k) Valid First Lien.
The Mortgage is a valid, subsisting and enforceable first
lien on the Mortgaged Property, including all buildings on
the Mortgaged Property and all installations and mechanical,
electrical, plumbing, heating and air conditioning systems
located in or annexed to such buildings, and all additions,
alterations and replacements made at any time with respect to
the foregoing. The lien of the Mortgage is subject only to:
(1) the lien of current real property taxes and
assessments not yet due and payable;
(2) covenants, conditions and restrictions, rights of
way, easements and other matters of the public
record as of the date of recording acceptable to
mortgage lending institutions generally and
specifically referred to in the lender's title
insurance policy delivered to the originator of the
Mortgage Loan and (i) referred to or otherwise
considered in the appraisal made for the originator
of the Mortgage Loan and (ii) which do not adversely
affect the Appraised Value of the Mortgaged Property
set forth in such appraisal; and
(3) other matters to which like properties are commonly
subject which do not materially interfere with the
benefits of the security intended to be provided by
the mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with the
Mortgage Loan establishes and creates a valid, subsisting and
enforceable first lien and first priority security interest
on the property described therein and the Company has full
right to sell and assign the same to the Purchaser;
(l) Full Disbursement of Proceeds.
The Mortgage Loan has been closed and the proceeds of the
Mortgage Loan have been fully disbursed, except for Mortgage
Loans with escrow holdbacks established or created due to
seasonal weather conditions, as allowed under the
Underwriting Guidelines, and there is no requirement for
future advances thereunder. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the
recording of the Mortgage were paid, and the Mortgagor is not
entitled to any refund of any amounts paid or due under the
Mortgage Note or Mortgage;
(m) Consolidation of Future Advances.
Any future advances made prior to the Cut-off Date, have been
consolidated with the outstanding principal amount secured by
the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single
repayment term reflected on the Mortgage Loan Schedule. The
lien of the Mortgage securing the consolidated principal
amount is expressly insured as having first lien priority by
a title insurance policy, an endorsement to the policy
insuring the mortgagee's consolidated interest or by other
title evidence acceptable to FNMA or FHLMC; the consolidated
principal amount does not exceed the original principal
amount of the Mortgage Loan; the Seller shall not make future
advances after the Cut-Off Date;
(n) Ownership.
The Company is the sole owner of record and holder of the
Mortgage Loan and the related Mortgage Note and the Mortgage
are not assigned or pledged, and the Company has good and
marketable title thereto and has full right and authority to
transfer and sell the Mortgage Loan to the Purchaser. The
Company is transferring the Mortgage Loan free and clear of
any and all encumbrances, liens, pledges, equities,
participation interests, claims, charges or security
interests of any nature encumbering such Mortgage Loan;
(o) Origination/Doing Business.
The Mortgage Loan was originated by a savings and loan
association, a savings bank, a commercial bank, a credit
union, an insurance company, or similar institution which is
supervised and examined by a federal or state authority or by
a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National
Housing Act. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or
otherwise, are (or, during the period in which they held and
disposed of such interest, were) (1) in compliance with any
and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2)
organized under the laws of such state, or (3) qualified to
do business in such state, or (4) federal savings and loan
associations or national banks having principal offices in
such state, or (5) not doing business in such state;
(p) Title Insurance.
The Mortgage Loan is covered by an ALTA lender's title
insurance policy or other generally acceptable form of policy
of insurance acceptable to FNMA or FHLMC, issued by a title
insurer acceptable to FNMA or FHLMC and qualified to do
business in the jurisdiction where the Mortgaged Property is
located, insuring the Company, its successors and assigns, as
to the first priority lien of the Mortgage in the original
principal amount of the Mortgage Loan, subject only to the
exceptions contained in clauses (1), (2) and (3) of Paragraph
(k) of this Section 3.02, and against any loss by reason of
the invalidity or unenforceability of the lien resulting from
the provisions of the Mortgage providing for adjustment to
the Mortgage Interest Rate and Monthly Payment. The Company
is the sole insured of such lender's title insurance policy,
and such lender's title insurance policy is in full force and
effect and will be in force and effect upon the consummation
of the transactions contemplated by this Agreement. No claims
have been made under such lender's title insurance policy,
and no prior holder of the Mortgage, including the Company,
has done, by act or omission, anything which would impair the
coverage of such lender's title insurance policy;
(q) No Defaults.
There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note
or related documents and no event which, with the passage of
time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or
event of acceleration, and neither the Company nor its
predecessors have waived any default, breach, violation or
event of acceleration;
(r) No Mechanics' Liens.
There are no mechanics' or similar liens or claims which have
been filed for work, labor or material (and no rights are
outstanding that under the law could give rise to such liens)
affecting the related Mortgaged Property which are or may be
liens prior to, or equal or coordinate with, the lien of the
related Mortgage which are not insured against by the title
insurance policy referenced in Paragraph (q) above;
(s) Location of Improvements; No Encroachments.
All improvements which were considered in determining the
Appraised Value of the Mortgaged Property lay wholly within
the boundaries and building restriction lines of the
Mortgaged Property and except as insured against by the title
insurance policy referenced in Paragraph (q) above, no
improvements on adjoining properties encroach upon the
Mortgaged Property. No improvement located on or being part
of the Mortgaged Property is in violation of any applicable
zoning law or regulation;
(t) Payment Terms.
The Mortgage Loans have an original term to maturity of not
more than 30 years, with interest payable in arrears on the
first day of each month. As to each Mortgage Loan on each
applicable Adjustment Date, the Mortgage Interest Rate will
be adjusted to equal the sum of the Index plus the applicable
Gross Margin, rounded up or down to the nearest multiple of
0.125% indicated by the Mortgage Note; provided that the
Mortgage Interest Rate will not increase or decrease by more
than the Periodic Interest Rate Cap on any Adjustment Date,
and will in no event exceed the maximum Mortgage Interest
Rate or be lower than the minimum Mortgage Interest Rate
listed on the Mortgage Loan Schedule for such Mortgage Loan.
Each Mortgage Note requires a monthly payment which is
sufficient, during the period prior to the first adjustment
to the Mortgage Interest Rate, to fully amortize the
outstanding principal balance as of the first day of such
period over the then remaining term of such Mortgage Note and
to pay interest at the related Mortgage Interest Rate. As to
each Mortgage Loan, if the related Mortgage Interest Rate
changes on an Adjustment Date, the then outstanding principal
balance will be reamortized over the remaining life of such
Mortgage Loan. No Mortgage Loan contains terms or provisions
which would result in negative amortization;
(u) Customary Provisions.
The Mortgage and related Mortgage Note contain customary and
enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for the realization
against the Mortgaged Property of the benefits of the
security provided thereby, including, (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale,
and (ii) otherwise by judicial foreclosure and upon the
exercise of such rights and remedies under the law, the
holder of the Mortgage and Mortgage Note will be able to
deliver good and merchantable title to the Mortgaged
Property. There is no homestead or other exemption available
to a Mortgagor which would interfere with the right to sell
the Mortgaged Property at a trustee's sale or the right to
foreclose the Mortgage;
(v) Occupancy of the Mortgaged Property.
As of the date of origination, the Mortgaged Property was
lawfully occupied under applicable law;
(w) No Additional Collateral.
The Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien
of the corresponding Mortgage and the security interest of
any applicable security agreement or chattel mortgage
referred to in (k) above;
(x) Deeds of Trust.
In the event the Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves
and is named in the Mortgage, and no fees or expenses are or
will become payable by the Mortgagee to the trustee under the
deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(y) Transfer of Mortgage Loans.
The Assignment upon the insertion of the name of the assignee
and recording information is in recordable form and is
acceptable for recording under the laws of the jurisdiction
in which the Mortgaged Property is located;
(z) Mortgaged Property Undamaged.
The Mortgaged Property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or
other casualty so as to affect adversely the value of the
Mortgaged Property as security for the Mortgage Loan or the
use for which the premises were intended;
(aa) Collection Practices; Escrow Deposits.
The origination and collection practices used with respect to
the Mortgage Loan have been in accordance with Accepted
Servicing Practices, and have been in all material respects
legal and proper. With respect to escrow deposits and Escrow
Payments, all such payments are in the possession of the
Company and there exist no deficiencies in connection
therewith for which customary arrangements for repayment
thereof have not been made. All Escrow Payments have been
collected in full compliance with state and federal law. No
escrow deposits or Escrow Payments or other charges or
payments due the Company have been capitalized under the
Mortgage Note;
(bb) No Condemnation.
There is no proceeding pending or to the best of the
Company's knowledge threatened for the total or partial
condemnation of the related Mortgaged Property;
(cc) The Appraisal.
The Mortgage Loan File contains an appraisal of the related
Mortgaged Property by an appraiser who is licensed in the
state where the Mortgaged Property is located, and who had no
interest, direct or indirect, in the Mortgaged Property or in
any loan made on the security thereof; and whose compensation
is not affected by the approval or disapproval of the
Mortgage Loan, and the appraisal and the appraiser both
satisfy the applicable requirements of Title XI of the
Financial Institution Reform, Recovery, and Enforcement Act
of 1989 and the regulations promulgated thereunder, all as in
effect on the date the Mortgage Loan was originated;
(dd) Insurance.
The Mortgaged Property securing each Mortgage Loan is insured
by an insurer acceptable to FNMA or FHLMC against loss by
fire and such hazards as are covered under a standard
extended coverage endorsement and such other hazards as are
customary in the area where the Mortgaged Property is located
pursuant to insurance policies conforming to the requirements
of Section 4.10, in an amount which is not less than the
lesser of 100% of the insurable value of the Mortgaged
Property and the outstanding principal balance of the
Mortgage Loan, but in no event less than the minimum amount
necessary to fully compensate for any damage or loss on a
replacement cost basis. If the Mortgaged Property is a
condominium unit, it is included under the coverage afforded
by a blanket policy for the project. If the improvements on
the Mortgaged Property are in an area identified in the
Federal Register by the Federal Emergency Management Agency
as having special flood hazards, a flood insurance policy
meeting the requirements of the current guidelines of the
Federal Insurance Administration is in effect with a
generally acceptable insurance carrier, in an amount
representing coverage not less than the least of (A) the
outstanding principal balance of the Mortgage Loan, (B) the
full insurable value and (C) the maximum amount of insurance
which was available under the Flood Disaster Protection Act
of 1973, as amended. All individual insurance policies
contain a standard mortgagee clause naming the Company and
its successors and assigns as mortgagee, and all premiums
thereon have been paid. The Mortgage obligates the Mortgagor
thereunder to maintain a hazard insurance policy at the
Mortgagor's cost and expense, and on the Mortgagor's failure
to do so, authorizes the holder of the Mortgage to obtain and
maintain such insurance at such Mortgagor's cost and expense,
and to seek reimbursement therefor from the Mortgagor. The
hazard insurance policy is the valid and binding obligation
of the insurer, is in full force and effect, and will be in
full force and effect and inure to the benefit of the
Purchaser upon the consummation of the transactions
contemplated by this Agreement. The Company has not acted or
failed to act so as to impair the coverage of any such
insurance policy or the validity, binding effect and
enforceability thereof;
(ee) Soldiers' and Sailors' Civil Relief Act.
The Mortgagor has not notified the Company, and the Company
has no knowledge of any relief requested or allowed to the
Mortgagor under the Soldiers' and Sailors' Civil Relief Act
of 1940, as amended;
(ff) No Balloon Payments, Graduated Payments, Contingent Interests
or Buy Down Provisions.
The Mortgage Loan is not a graduated payment mortgage loan
and the Mortgage Loan does not have a shared appreciation or
other contingent interest feature. Except as identified in
Exhibit D, hereto, no Mortgage Loan has a balloon payment
feature. The Mortgage Loan does not contain provisions
pursuant to which Monthly Payments are paid or partially paid
with funds deposited in any separate account established by
the Company, the Mortgagor, or any one on behalf of the
Mortgagor, or paid by any source other than the Mortgagor,
nor does it contain any other similar provisions currently in
effect which constitute a "buydown" provision;
(gg) No Construction Loans.
No Mortgage Loan was made in connection with (i) the
construction or rehabilitation of a Mortgage Property or (ii)
facilitating the trade-in or exchange of a Mortgaged Property
other than a construction-to-permanent loan which has
converted to a permanent Mortgage Loan;
(hh) Underwriting.
Each Mortgage Loan was underwritten in accordance with the
Underwriting Guidelines of the Company attached as Exhibit H;
and the Mortgage Note and Mortgage are on forms acceptable to
FHLMC or FNMA;
(ii) Bankruptcy.
No Mortgagor was a debtor in any state or federal bankruptcy
or insolvency proceeding as of the date the Mortgage Loan was
closed and the proceeds of the Mortgage Loan were
distributed.
(jj) Interest Rate Adjustments.
With respect to any Mortgage Loan that provides that the
Mortgage Interest Rate on the principal balance of the
Mortgage Loan may be adjusted all such adjustments have been
made in accordance with the terms of the related Mortgage
Note and all applicable laws.
(kk) Leasehold Estates.
With respect to Mortgage Loans that are secured by a
leasehold estate, the lease is valid, in full force and
effect, and conforms to the Underwriting Guidelines for
leasehold estates;
(ll) Due on Sale.
The Mortgage or Mortgage Note contains an enforceable
provision, to the extent not prohibited by federal law, for
the acceleration of the payment of the unpaid principal
balance of the Mortgage Loan in the event that the Mortgaged
Property is sold or transferred without the prior written
consent of the Mortgagee thereunder, provided that, with
respect to Mortgage Notes which bear an adjustable rate of
interest, such provision shall not be enforceable if the
Mortgagor causes to be submitted to the Company to evaluate
the intended transferee as if a new Mortgage Loan were being
made to such transferee, and the Company reasonably
determines that the security will not be impaired by such
Mortgage Loan assumption and that the risk of breach of any
covenant or agreement in such Mortgage is acceptable to the
Purchaser;
(mm) The Mortgagor.
The Mortgagor is one or more natural persons and/or trustees
for an Illinois land trust or a trustee under a "living
trust" and such "living trust" is in compliance with the
Underwriting Guidelines;
(nn) No Prior Rejection.
No Mortgage Loan has been previously submitted for purchase
by the Company to the Purchaser and reviewed and rejected by
the Purchaser for underwriting reasons;
(oo) Recordation.
Each original Mortgage has been, or is in the process of
being, duly recorded in the appropriate recording office, and
all subsequent assignments of the original Mortgage (other
than the assignment to the Purchaser) have been recorded, are
in the process of being recorded or will be recorded (in the
event the original mortgage has not been returned by the
applicable recording office), in the appropriate
jurisdictions wherein such recordation is necessary to
perfect the lien thereof as against creditors of the Company;
(pp) No Violation of Environmental Laws.
There is no pending action or proceeding directly involving
any Mortgaged Property of which the Company is aware in which
compliance with any environmental law, rule or regulation is
an issue; and to the best of the Company's knowledge, nothing
further remains to be done to satisfy in full all
requirements of each such law, rule or regulation
constituting a prerequisite to use, value and enjoyment of
said property;
(qq) Primary Mortgage Insurance.
For each Mortgage Loan with an LTV of 80% or greater, the
excess over 79% is and will be insured as to payment defaults
by a PMI Policy. All provisions of such PMI Policy have been
and are being complied with, such policy is in full force and
effect, and all premiums due thereunder have been paid. Any
Mortgage Loan subject to a PMI policy obligates the Mortgagor
thereunder to maintain the PMI policy and to pay all premiums
and charges in connection therewith until terminated pursuant
to the Homeowners Protection Act of 1998, 12 USC ss. 4901, et
seq. The Mortgage Interest Rate for the Mortgage Loan as set
forth on the Mortgage Loan Schedule is net of any such
insurance premium;
(rr) Servicing.
From and after the date of origination, each Mortgage Loan
has been serviced in accordance with the terms of all
federal, state and local laws and regulations, the terms of
the Mortgage Note and Accepted Servicing Practices in all
respects;
(ss) Xxxxxx Act.
None of the Mortgage Loans are classified as "high cost"
Mortgage Loans under Section 32 of the Home Ownership and
Equity Protection Act of 1994;
(tt) No Cooperative Shares.
No Mortgage Loan is secured by shares in a cooperative
corporation.
(uu) Manufactured Homes.
With respect to each Mortgage Loan secured by a Manufactured
Home: (a) the manufactured home is permanently affixed to a
foundation which is suitable for the soil conditions of the
site; (b) any wheels, axles and trailer hitches are removed
from the manufactured home; (c) the Mortgage Loan is covered
under a standard real estate title insurance policy or
attorney's title opinion certificate that identifies the
manufactured home as part of the real property and insures or
indemnifies against any loss if the manufactured home is
determined not to be part of the real property; and
(vv) Delivery of Mortgage Files.
The Mortgage and any other documents required to be delivered
by the Company under the Custodial Agreement attached as
Exhibit C hereto for the Mortgage Loans have been delivered
to the Custodian. The Company is in possession of a complete,
true and accurate Mortgage File in compliance with Exhibit B,
except for such documents the originals of which have been
delivered to the Custodian.
Section 3.03 Repurchase.
It is understood and agreed that the representations and warranties
set forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage
Loans to the Purchaser and the delivery of the Mortgage Loan Documents to the
Custodian and shall inure to the benefit of the Purchaser, notwithstanding any
restrictive or qualified endorsement on any Mortgage Note or Assignment of
Mortgage or the examination or failure to examine any Mortgage File. Upon
discovery by either the Company or the Purchaser of a breach of any of the
foregoing representations and warranties which materially and adversely affects
the value of the Mortgage Loans or the interest of the Purchaser (or which
materially and adversely affects the interests of Purchaser in the related
Mortgage Loan in the case of a representation and warranty relating to a
particular Mortgage Loan) (in the case of any of the foregoing, a "Breach"),
the party discovering such Breach shall give prompt written notice to the
other.
Within 60 days of the earlier of either discovery by or notice to the
Company of any Breach of a representation or warranty which materially and
adversely affects the value of the Mortgage Loans, the Company shall use its
best efforts promptly to cure such Breach in all material respects and, if such
Breach cannot be cured, the Company shall, at the Purchaser's option,
repurchase such Mortgage Loan at the Repurchase Price. In the event that a
Breach shall involve any representation or warranty set forth in Section 3.01,
and such Breach cannot be cured within 60 days of the earlier of either
discovery by or notice to the Company of such Breach, all of the Mortgage Loans
shall, at the Purchaser's option, be repurchased by the Company at the
Repurchase Price. However, if the Breach shall involve a representation or
warranty set forth in Section 3.02 and the Company discovers or receives notice
of any such Breach within 120 days of the Closing Date, the Company shall, if
the Breach cannot be cured, at the Purchaser's option and provided that the
Company has a Qualified Substitute Mortgage Loan, rather than repurchase the
Mortgage Loan as provided above, remove such Mortgage Loan (a "Deleted Mortgage
Loan") and substitute in its place a Qualified Substitute Mortgage Loan or
Loans, provided that any such substitution shall be effected not later than 120
days after the Closing Date. If the Company has no Qualified Substitute
Mortgage Loan, it shall repurchase the deficient Mortgage Loan within 60 days
of the written notice of the Breach or the failure to cure, whichever is later.
Any repurchase of a Mortgage Loan or Loans pursuant to the foregoing provisions
of this Section 3.03 shall be accomplished by deposit in the Custodial Account
of the amount of the Repurchase Price for distribution to Purchaser on the next
scheduled Remittance Date, after deducting therefrom any amount received in
respect of such repurchased Mortgage Loan or Loans and being held in the
Custodial Account for future distribution.
At the time of repurchase or substitution, the Purchaser and the
Company shall arrange for the reassignment of the Deleted Mortgage Loan to the
Company and the delivery to the Company of any documents held by the Custodian
relating to the Deleted Mortgage Loan. In the event of a repurchase or
substitution, the Company shall, simultaneously with such reassignment, give
written notice to the Purchaser that such repurchase or substitution has taken
place, amend the Mortgage Loan Schedule to reflect the withdrawal of the
Deleted Mortgage Loan from this Agreement, and, in the case of substitution,
identify a Qualified Substitute Mortgage Loan and amend the Mortgage Loan
Schedule to reflect the addition of such Qualified Substitute Mortgage Loan to
this Agreement. In connection with any such substitution, the Company shall be
deemed to have made as to such Qualified Substitute Mortgage Loan the
representations and warranties set forth in this Agreement except that all such
representations and warranties set forth in this Agreement shall be deemed made
as of the date of such substitution. The Company shall effect such substitution
by delivering to the Custodian for such Qualified Substitute Mortgage Loan the
documents required by Section 2.03, with the Mortgage Note endorsed as required
by Section 2.03. No substitution will be made in any calendar month after the
Determination Date for such month. The Company shall deposit in the Custodial
Account the Monthly Payment less the Servicing Fee due on such Qualified
Substitute Mortgage Loan or Loans in the month following the date of such
substitution. Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the month of substitution shall be retained by the Company.
With respect to any Deleted Mortgage loan, distributions to Purchaser shall
include the Monthly Payment due on any Deleted Mortgage Loan in the month of
substitution, and the Company shall thereafter be entitled to retain all
amounts subsequently received by the Company in respect of such Deleted
Mortgage Loan.
For any month in which the Company substitutes a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan, the Company shall determine the
amount (if any) by which the aggregate principal balance of all Qualified
Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all Deleted Mortgage Loans (after
application of scheduled principal payments due in the month of substitution).
The amount of such shortfall shall be distributed by the Company in the month
of substitution pursuant to Section 5.01. Accordingly, on the date of such
substitution, the Company shall deposit from its own funds into the Custodial
Account an amount equal to the amount of such shortfall.
In addition to such repurchase or substitution obligation, the Company
shall indemnify the Purchaser and hold it harmless against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and other costs and expenses resulting from any claim,
demand, defense or assertion based on or grounded upon, or resulting from, a
Breach of the Company representations and warranties contained in this
Agreement. It is understood and agreed that the obligations of the Company set
forth in this Section 3.03 to cure, substitute for or repurchase a defective
Mortgage Loan and to indemnify the Purchaser as provided in this Section 3.03
constitute the sole remedies of the Purchaser respecting a Breach of the
foregoing representations and warranties.
Any cause of action against the Company relating to or arising out of
the Breach of any representations and warranties made in Sections 3.01 and 3.02
shall accrue as to any Mortgage Loan upon (i) discovery of such Breach by the
Purchaser or notice thereof by the Company to the Purchaser, (ii) failures by
the Company to cure such Breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Company by the Purchaser for compliance with
this Agreement.
Section 3.04 First Payment Default.
In the event any Mortgage Loan has a First Payment Default (as defined
below), the Company agrees to promptly repurchase such Mortgage Loan in
accordance with Section 3.03 hereof without regard to any cure period except
what is stated in this Section 3.04. First Payment Default is defined as any
Mortgage Loan which the Mortgagor fails to make its first scheduled Monthly
Payment due on the Mortgage Loan and such default continues for 30 days from
the Due Date of such first scheduled Monthly Payment.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer.
The Company, as an independent contractor, shall service and
administer the Mortgage Loans and shall have full power and authority, acting
alone or through the utilization of a third party servicing provider, to do any
and all things in connection with such servicing and administration which the
Company may deem necessary or desirable, consistent with the terms of this
Agreement and with Accepted Servicing Practices.
Consistent with the terms of this Agreement, the Company may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in the Company's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser, provided, however, that the Company shall not make any future
advances with respect to a Mortgage Loan, and (unless the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment
of the Company, imminent and the Company has obtained the prior written consent
of the Purchaser) the Company shall not permit any modification with respect to
any Mortgage Loan that would change the Mortgage Interest Rate, defer or
forgive the payment of principal (except for actual payments of principal) or
change the final maturity date on such Mortgage Loan. In the event of any such
modification which permits the deferral of interest or principal payments on
any Mortgage Loan, the Company shall, on the Business Day immediately preceding
the Remittance Date in any month in which any such principal or interest
payment has been deferred, deposit in the Custodial Account from its own funds,
in accordance with Section 5.03, the difference between (a) such month's
principal and one month's interest at the Mortgage Loan Remittance Rate on the
unpaid principal balance of such Mortgage Loan and (b) the amount paid by the
Mortgagor. The Company shall be entitled to reimbursement for such advances to
the same extent as for all other advances made pursuant to Section 5.03.
Without limiting the generality of the foregoing, the Company shall continue,
and is hereby authorized and empowered, to execute and deliver on behalf of
itself and the Purchaser, all instruments of satisfaction or cancellation, or
of partial or full release, discharge and all other comparable instruments,
with respect to the Mortgage Loans and with respect to the Mortgaged
Properties. If reasonably required by the Company, the Purchaser shall furnish
the Company with any powers of attorney and other documents necessary or
appropriate to enable the Company to carry out its servicing and administrative
duties under this Agreement.
To the extent consistent with the terms of this Agreement, the Company
may waive any prepayment charge or fee if such waiver would, in the reasonable
judgment of the Company, maximize recovery of total proceeds, taking into
account the value of such prepayment charge or fee and the related Mortgage
Loan, and the Company has obtained the written consent of the Purchaser.
In servicing and administering the Mortgage Loans, the Company shall
employ procedures (including collection procedures) and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account, giving due consideration to Accepted
Servicing Practices where such practices do not conflict with the requirements
of this Agreement, and the Purchaser's reliance on the Company.
Section 4.02 Liquidation of Mortgage Loans.
In the event that any payment due under any Mortgage Loan and not
postponed pursuant to Section 4.01 is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Company shall take such action as (1) the Company
would take under similar circumstances with respect to a similar mortgage loan
held for its own account for investment, (2) shall be consistent with Accepted
Servicing Practices, (3) the Company shall determine prudently to be in the
best interest of Purchaser, and (4) is consistent with any related PMI Policy.
In the event that any payment due under any Mortgage Loan is not postponed
pursuant to Section 4.01 and remains delinquent for a period of 90 days or any
other default continues for a period of 90 days beyond the expiration of any
grace or cure period, the Company shall commence foreclosure proceedings. In
the event the Purchaser objects to such foreclosure action, the Company shall
not be required to make Monthly Advances with respect to such Mortgage Loan,
pursuant to Section 5.03, and the Company's obligation to make such Monthly
Advances shall terminate on the 90th day referred to above. In such connection,
the Company shall from its own funds make all necessary and proper Servicing
Advances, provided, however, that the Company shall not be required to expend
its own funds in connection with any foreclosure or towards the restoration or
preservation of any Mortgaged Property, unless it shall determine (a) that such
preservation, restoration and/or foreclosure will increase the proceeds of
liquidation of the Mortgage Loan to Purchaser after reimbursement to itself for
such expenses and (b) that such expenses will be recoverable by it either
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Custodial Account pursuant to Section 4.05) or
through Insurance Proceeds (respecting which it shall have similar priority).
Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure,
in the event the Company has reasonable cause to believe that a Mortgaged
Property is contaminated by hazardous or toxic substances or wastes, or if the
Purchaser otherwise requests an environmental inspection or review of such
Mortgaged Property, such an inspection or review is to be conducted by a
qualified inspector. The cost for such inspection or review shall be borne by
the Purchaser. Upon completion of the inspection or review, the Company shall
promptly provide the Purchaser with a written report of the environmental
inspection.
After reviewing the environmental inspection report, the Purchaser
shall determine how the Company shall proceed with respect to the Mortgaged
Property. In the event (a) the environmental inspection report indicates that
the Mortgaged Property is contaminated by hazardous or toxic substances or
wastes and (b) the Purchaser directs the Company to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Company shall be reimbursed
for all reasonable costs associated with such foreclosure or acceptance of a
deed in lieu of foreclosure and any related environmental clean up costs, as
applicable, from the related Liquidation Proceeds, or if the Liquidation
Proceeds are insufficient to fully reimburse the Company, the Company shall be
entitled to be reimbursed from amounts in the Custodial Account pursuant to
Section 4.05 hereof. In the event the Purchaser directs the Company not to
proceed with foreclosure or acceptance of a deed in lieu of foreclosure, the
Company shall be reimbursed for all Servicing Advances made with respect to the
related Mortgaged Property from the Custodial Account pursuant to Section 4.05
hereof.
Section 4.03 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on
all Mortgage Loans are paid in full, the Company shall proceed diligently to
collect all payments due under each of the Mortgage Loans when the same shall
become due and payable and shall take special care in ascertaining and
estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Loan and the Mortgaged Property, to the
end that the installments payable by the Mortgagors will be sufficient to pay
such charges as and when they become due and payable.
Section 4.04 Establishment of and Deposits to Custodial Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand accounts, titled "Xxxxx Fargo Home
Mortgage, Inc., in trust for the Purchaser and/or subsequent purchasers of
Mortgage Loans, and various Mortgagors - P & I." The Custodial Account shall be
established with a Qualified Depository. Any funds deposited in the Custodial
Account shall at all times be insured to the fullest extent allowed by
applicable law. Funds deposited in the Custodial Account may be drawn on by the
Company in accordance with Section 4.05. The creation of any Custodial Account
shall be evidenced by a certification in the case of an account established
with the Company, or by a letter agreement in the case of an account held by a
depository other than the Company each in the forms attached hereto as Exhibit
E. A copy of such certification or letter agreement shall be furnished to the
Purchaser or any subsequent purchaser, upon request.
The Company shall deposit in the Custodial Account within one (1)
Business Day of Company's receipt, and retain therein, the following
collections received by the Company and payments made by the Company after the
Cut-off Date, other than payments of principal and interest due on or before
the Cut-off Date, or received by the Company prior to the Cut-off Date but
allocable to a period subsequent thereto:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
(ii) any Principal Prepayment charges received in connection with
a Mortgage Loan;
(iii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate;
(iv) all Liquidation Proceeds;
(v) all Insurance Proceeds including amounts required to be
deposited pursuant to Section 4.10 (other than proceeds to be
held in the Escrow Account and applied to the restoration or
repair of the Mortgaged Property or released to the Mortgagor
in accordance with Section 4.14), Section 4.11 and Section
4.15;
(vi) all Condemnation Proceeds which are not applied to the
restoration or repair of the Mortgaged Property or released
to the Mortgagor in accordance with Section 4.14;
(vii) any amount required to be deposited in the Custodial Account
pursuant to Section 4.01, 5.03, 6.01 or 6.02;
(viii) any amounts payable in connection with the repurchase of any
Mortgage Loan pursuant to Section 3.03 and all amounts
required to be deposited by the Company in connection with a
shortfall in principal amount of any Qualified Substitute
Mortgage Loan pursuant to Section 3.03;
(ix) with respect to each Principal Prepayment an amount (to be
paid by the Company out of its funds) which, when added to
all amounts allocable to interest received in connection with
the Principal Prepayment, equals one month's interest on the
amount of principal so prepaid at the Mortgage Loan
Remittance Rate;
(x) any amounts required to be deposited by the Company pursuant
to Section 4.11 in connection with the deductible clause in
any blanket hazard insurance policy;
any amounts received with respect to or related to any REO Property and all REO
Disposition Proceeds pursuant to Section 4.16.
The foregoing requirements for deposit into the Custodial Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges and
assumption fees, to the extent permitted by Section 6.01, need not be deposited
by the Company into the Custodial Account. Any interest paid on funds deposited
in the Custodial Account by the depository institution shall accrue to the
benefit of the Company and the Company shall be entitled to retain and withdraw
such interest from the Custodial Account pursuant to Section 4.05.
Section 4.05 Permitted Withdrawals From Custodial Account.
The Company shall, from time to time, withdraw funds from the
Custodial Account for the following purposes:
(i) to make payments to the Purchaser in the amounts and in the
manner provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances of the Company's
funds made pursuant to Section 5.03, the Company's right to
reimburse itself pursuant to this subclause (ii) being
limited to amounts received on the related Mortgage Loan
which represent late payments of principal and/or interest
respecting which any such advance was made, it being
understood that, in the case of any such reimbursement, the
Company's right thereto shall be prior to the rights of
Purchaser, except that, where the Company is required to
repurchase a Mortgage Loan pursuant to Section 3.03 or 6.02,
the Company's right to such reimbursement shall be subsequent
to the payment to the Purchaser of the Repurchase Price
pursuant to such sections and all other amounts required to
be paid to the Purchaser with respect to such Mortgage Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances, and
for any unpaid Servicing Fees, the Company's right to
reimburse itself pursuant to this subclause (iii) with
respect to any Mortgage Loan being limited to related
Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds and such other amounts as may be collected by the
Company from the Mortgagor or otherwise relating to the
Mortgage Loan, it being understood that, in the case of any
such reimbursement, the Company's right thereto shall be
prior to the rights of Purchaser, except that where the
Company is required to repurchase a Mortgage Loan pursuant to
Section 3.03 or 6.02, in which case the Company's right to
such reimbursement shall be subsequent to the payment to the
Purchaser of the Repurchase Price pursuant to such sections
and all other amounts required to be paid to the Purchaser
with respect to such Mortgage Loan;
(iv) to pay itself interest on funds deposited in the Custodial
Account;
(v) to reimburse itself for expenses incurred and reimbursable to
it pursuant to Section 8.01;
(vi) to pay any amount required to be paid pursuant to Section
4.16 related to any REO Property, it being understood that,
in the case of any such expenditure or withdrawal related to
a particular REO Property, the amount of such expenditure or
withdrawal from the Custodial Account shall be limited to
amounts on deposit in the Custodial Account with respect to
the related REO Property;
(vii) to reimburse itself for any Servicing Advances or REO
expenses after liquidation of the Mortgaged Property not
otherwise reimbursed above;
(viii) to remove funds inadvertently placed in the Custodial Account
by the Company; and
(ix) to clear and terminate the Custodial Account upon the
termination of this Agreement.
In the event that the Custodial Account is interest bearing, on each
Remittance Date, the Company shall withdraw all funds from the Custodial
Account except for those amounts which, pursuant to Section 5.01, the Company
is not obligated to remit on such Remittance Date. The Company may use such
withdrawn funds only for the purposes described in this Section 4.05.
Section 4.06 Establishment of and Deposits to Escrow Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart
from any of its own funds and general assets and shall establish and maintain
one or more Escrow Accounts, in the form of time deposit or demand accounts,
titled, "Xxxxx Fargo Home Mortgage, Inc., in trust for the Purchaser and/or
subsequent purchasers Residential Mortgage Loans, and various Mortgagors - T &
I." The Escrow Accounts shall be established with a Qualified Depository, in a
manner which shall provide maximum available insurance thereunder.. Funds
deposited in the Escrow Account may be drawn on by the Company in accordance
with Section 4.07. The creation of any Escrow Account shall be evidenced by a
certification in the case of an account established with the Company, or by a
letter agreement in the case of an account held by a depository other than the
Company each in the forms attached as Exhibit F. A copy of such certification
or letter agreement shall be furnished to the Purchaser or any subsequent
purchaser, upon request.
The Company shall deposit in the Escrow Account or Accounts within one
(1) Business Day of Company's receipt , and retain therein:
(i) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any
such items as required under the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or Condemnation
Proceeds which are to be applied to the restoration or repair
of any Mortgaged Property.
The Company shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 4.07. The Company shall be entitled to retain any interest paid on
funds deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Company shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing
or that interest paid thereon is insufficient for such purposes.
Section 4.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the
Company only:
(i) to effect timely payments of ground rents, taxes,
assessments, water rates, mortgage insurance premiums,
condominium charges, fire and hazard insurance premiums or
other items constituting Escrow Payments for the related
Mortgage;
(ii) to reimburse the Company for any Servicing Advances made by
the Company pursuant to Section 4.08 with respect to a
related Mortgage Loan, but only from amounts received on the
related Mortgage Loan which represent late collections of
Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess of
the amounts required under the terms of the related Mortgage
Loan;
(iv) for transfer to the Custodial Account and application to
reduce the principal balance of the Mortgage Loan in
accordance with the terms of the related Mortgage and
Mortgage Note;
(v) for application to the restoration or repair of the Mortgaged
Property in accordance with the procedures outlined in
Section 4.14;
(vi) to pay to the Company, or any Mortgagor to the extent
required by law, any interest paid on the funds deposited in
the Escrow Account;
(vii) to remove funds inadvertently placed in the Escrow Account by
the Company;
(viii) to clear and terminate the Escrow Account on the termination
of this Agreement.
Section 4.08 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Company shall maintain
accurate records reflecting the status of ground rents, taxes, assessments,
water rates, sewer rents, and other charges which are or may become a lien upon
the Mortgaged Property and the status of PMI Policy premiums and fire and
hazard insurance coverage and shall obtain, from time to time, all bills for
the payment of such charges (including renewal premiums) and shall effect
payment thereof prior to the applicable penalty or termination date, employing
for such purpose deposits of the Mortgagor in the Escrow Account which shall
have been estimated and accumulated by the Company in amounts sufficient for
such purposes, as allowed under the terms of the Mortgage. The Company assumes
full responsibility for the timely payment of all such bills and shall effect
timely payment of all such charges irrespective of each Mortgagor's faithful
performance in the payment of same of the making of the Escrow Payments, and
the Company shall make advances from its own funds to effect such payments.
Section 4.09 Protection of Accounts.
The Company may transfer the Custodial Account or the Escrow Account
to a different Qualified Depository from time to time and shall provide the
Purchaser with notice of such transfer. The Company shall bear any expenses,
losses or damages sustained by the Purchaser because the Custodial Account
and/or the Escrow Account are not demand deposit accounts.
Section 4.10 Maintenance of Hazard Insurance.
The Company shall cause to be maintained for each Mortgage Loan hazard
insurance such that all buildings upon the Mortgaged Property are insured by an
insurer acceptable to FNMA or FHLMC against loss by fire, hazards of extended
coverage and such other hazards as are customary in the area where the
Mortgaged Property is located, in an amount which is at least equal to the
lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan and (ii) the greater of (a) the outstanding principal balance of
the Mortgage Loan and (b) an amount such that the proceeds thereof shall be
sufficient to prevent the Mortgagor or the loss payee from becoming a
co-insurer. In the event a hazard insurance policy shall be in danger of being
terminated, or in the event the insurer shall cease to be acceptable to FNMA or
FHLMC, the Company shall notify the Purchaser and the related Mortgagor, and
shall use its best efforts, as permitted by applicable law, to obtain from
another qualified insurer a replacement hazard insurance policy substantially
and materially similar in all respects to the original policy. In no event,
however, shall a Mortgage Loan be without a hazard insurance policy at any
time, subject only to Section 4.11 hereof.
If upon origination of the Mortgage Loan, the related Mortgaged
Property was located in an area identified by the Flood Emergency Management
Agency as having special flood hazards (and such flood insurance has been made
available) a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration is in effect with a
generally acceptable insurance carrier acceptable to FNMA or FHLMC in an amount
representing coverage equal to the lesser of (i) the minimum amount required,
under the terms of coverage, to compensate for any damage or loss on a
replacement cost basis (or the unpaid balance of the mortgage if replacement
cost coverage is not available for the type of building insured) and (ii) the
maximum amount of insurance which is available under the Flood Disaster
Protection Act of 1973, as amended. If at any time during the term of the
Mortgage Loan, the Company determines in accordance with the applicable law and
pursuant to the FNMA guide, that the Mortgaged Property is located in a special
flood hazard area and is not covered by flood insurance meeting the
requirements of the Flood Disaster Protection Act of 1973, as amended, the
Company shall notify the related Mortgagor that they must obtain such flood
insurance coverage and if the Mortgagor fails to provide proof of such coverage
within forty-five (45) days of such notice, the Company shall force place the
required flood insurance on the Mortgagor's behalf. If a Mortgage is secured by
a unit in a condominium project, the Company shall verify that the coverage
required of the owner's association, including hazard, flood, liability, and
fidelity coverage, is being maintained in accordance with then current FNMA
requirements, and secure from the owner's association its agreement to notify
the Company promptly of any change in the insurance coverage or of any
condemnation or casualty loss that may have a material effect on the value of
the Mortgaged Property as security.
In the event that any Purchaser or the Company shall determine that
the Mortgaged Property should be insured against loss or damage by hazards and
risks not covered by the insurance required to be maintained by the Mortgagor
pursuant to the terms of the Mortgage, the Company shall communicate and
consult with the Mortgagor with respect to the need for such insurance and
bring to the Mortgagor's attention the desirability of protection of the
Mortgaged Property.
All policies required hereunder shall name the Company as loss payee
and shall be endorsed with standard or union mortgagee clauses, without
contribution, which shall provide for at least 30 days prior written notice of
any cancellation, reduction in amount or material change in coverage.
The Company shall not interfere with the Mortgagor's freedom of choice
in selecting either his insurance carrier or agent, provided, however, that the
Company shall not accept any such insurance policies from insurance companies
unless such companies are acceptable to FNMA and FHLMC and are licensed to do
business in the jurisdiction in which the Mortgaged Property is located. The
Company shall determine that such policies provide sufficient risk coverage and
amounts, that they insure the property owner, and that they properly describe
the property address.
Pursuant to Section 4.04, any amounts collected by the Company under
any such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property, or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Company's normal servicing procedures as
specified in Section 4.14) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.05.
Section 4.11 Maintenance of Mortgage Impairment Insurance.
In the event that the Company shall obtain and maintain a blanket
policy insuring against losses arising from fire and hazards covered under
extended coverage on all of the Mortgage Loans, then, to the extent such policy
provides coverage in an amount equal to the amount required pursuant to Section
4.10 and otherwise complies with all other requirements of Section 4.10, it
shall conclusively be deemed to have satisfied its obligations as set forth in
Section 4.10. The Company shall prepare and make any claims on the blanket
policy as deemed necessary by the Company in accordance with prudent servicing
practices. Any amounts collected by the Company under any such policy relating
to a Mortgage Loan shall be deposited in the Custodial Account subject to
withdrawal pursuant to Section 4.05. Such policy may contain a deductible
clause, in which case, in the event that there shall not have been maintained
on the related Mortgaged Property a policy complying with Section 4.10, and
there shall have been a loss which would have been covered by such policy, the
Company shall deposit in the Custodial Account at the time of such loss the
amount not otherwise payable under the blanket policy because of such
deductible clause, such amount to be deposited from the Company's funds,
without reimbursement therefor. Upon request of any Purchaser, the Company
shall cause to be delivered to such Purchaser a certified true copy of such
policy and a statement from the insurer thereunder that such policy shall in no
event be terminated or materially modified without 30 days' prior written
notice to such Purchaser.
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions
Insurance.
The Company shall maintain with responsible companies, at its own
expense, a blanket Fidelity Bond and an Errors and Omissions Insurance Policy,
with broad coverage on all officers, employees or other persons acting in any
capacity requiring such persons to handle funds, money, documents or papers
relating to the Mortgage Loans ("Company Employees"). Any such Fidelity Bond
and Errors and Omissions Insurance Policy shall be in the form of the Mortgage
Banker's Blanket Bond and shall protect and insure the Company against losses,
including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such Company Employees. Such Fidelity Bond and Errors and
Omissions Insurance Policy also shall protect and insure the Company against
losses in connection with the release or satisfaction of a Mortgage Loan
without having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 4.12 requiring such Fidelity Bond and Errors and
Omissions Insurance Policy shall diminish or relieve the Company from its
duties and obligations as set forth in this Agreement. The minimum coverage
under any such Fidelity Bond and Errors and Omissions Insurance Policy shall be
at least equal to the amounts acceptable to FNMA or FHLMC. Upon the request of
any Purchaser, the Company shall cause to be delivered to such Purchaser a
certificate of insurance for such Fidelity Bond and Errors and Omissions
Insurance Policy and a statement from the surety and the insurer that such
Fidelity Bond and Errors and Omissions Insurance Policy shall in no event be
terminated or materially modified without 30 days' prior written notice to the
Purchaser.
Section 4.13 Inspections.
If any Mortgage Loan is delinquent, the Company shall inspect the
Mortgaged Property and shall conduct subsequent inspections in accordance with
FNMA or Accepted Servicing Practices or as may be required by the primary
mortgage guaranty insurer. The Company shall produce a report of each such
inspection upon written request by the Purchaser.
Section 4.14 Restoration of Mortgaged Property.
The Company need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to
be applied to the restoration or repair of the Mortgaged Property if such
release is in accordance with Accepted Servicing Practices. For claims greater
than $15,000, at a minimum the Company shall comply with the following
conditions in connection with any such release of Insurance Proceeds or
Condemnation Proceeds:
(i) The Company shall receive satisfactory independent
verification of completion of repairs and issuance of any
required approvals with respect thereto;
(ii) the Company shall take all steps necessary to preserve the
priority of the lien of the Mortgage, including, but not
limited to requiring waivers with respect to mechanics' and
materialmen's liens;
(iii) the Company shall verify that the Mortgage Loan is not in
default; and
(iv) pending repairs or restoration, the Company shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow
Account.
If the Purchaser is named as an additional loss payee, the Company is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.
Section 4.15 Maintenance of PMI Policy; Claims.
With respect to each Mortgage Loan with an LTV of 80% or greater at
the time of origination , the Company shall, without any cost to the Purchaser
maintain or cause the Mortgagor to maintain in full force and effect a PMI
Policy insuring that portion of the Mortgage Loan over 79% of value until
terminated pursuant to the Homeowners Protection Act of 1998, 12 UCS ss. 4901,
et seq. In the event that such PMI Policy shall be terminated other than as
required by law, the Company shall obtain from another Qualified Insurer a
comparable replacement policy, with a total coverage equal to the remaining
coverage of such terminated PMI Policy. If the insurer shall cease to be a
Qualified Insurer, the Company shall determine whether recoveries under the PMI
Policy are jeopardized for reasons related to the financial condition of such
insurer, it being understood that the Company shall in no event have any
responsibility or liability for any failure to recover under the PMI Policy for
such reason. If the Company determines that recoveries are so jeopardized, it
shall notify the Purchaser and the Mortgagor, if required, and obtain from
another Qualified Insurer a replacement insurance policy. The Company shall not
take any action which would result in noncoverage under any applicable PMI
Policy of any loss which, but for the actions of the Company would have been
covered thereunder. In connection with any assumption or substitution agreement
entered into or to be entered into pursuant to Section 6.01, the Company shall
promptly notify the insurer under the related PMI Policy, if any, of such
assumption or substitution of liability in accordance with the terms of such
PMI Policy and shall take all actions which may be required by such insurer as
a condition to the continuation of coverage under such PMI Policy. If such PMI
Policy is terminated as a result of such assumption or substitution of
liability, the Company shall obtain a replacement PMI Policy as provided above.
In connection with its activities as servicer, the Company agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any PMI Policy in a timely fashion in accordance with the terms
of such PMI Policy and, in this regard, to take such action as shall be
necessary to permit recovery under any PMI Policy respecting a defaulted
Mortgage Loan. Pursuant to Section 4.04, any amounts collected by the Company
under any PMI Policy shall be deposited in the Custodial Account, subject to
withdrawal pursuant to Section 4.05.
Section 4.16 Title, Management and Disposition of REO Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser or the Purchaser's designee, or in
the event the Purchaser is not authorized or permitted to hold title to real
property in the state where the REO Property is located, or would be adversely
affected under the "doing business" or tax laws of such state by so holding
title, the deed or certificate of sale shall be taken in the name of such
Person or Persons as shall be consistent with an Opinion of Counsel obtained by
the Company from any attorney duly licensed to practice law in the state where
the REO Property is located. The Person or Persons holding such title other
than the Purchaser shall acknowledge in writing that such title is being held
as nominee for the Purchaser.
The Purchaser shall have the option to manage and operate any REO
Property it chooses, provided the Purchaser gives written notice of its
intention to do so within sixty (60) days after such REO Property is acquired
in foreclosure or by deed in lieu of foreclosure. The election by the Purchaser
to manage REO Property shall not constitute a termination of any rights of the
Company pursuant to Section 11.02.
If the Purchaser does not elect to manage and operate the REO
Property, the Company shall manage, conserve, protect and operate each REO
Property for the Purchaser solely for the purpose of its prompt disposition and
sale. The Company, either itself or through an agent selected by the Company,
shall manage, conserve, protect and operate the REO Property in the same manner
that it manages, conserves, protects and operates other foreclosed property for
its own account, and in the same manner that similar property in the same
locality as the REO Property is managed. The Company shall attempt to sell the
same (and may temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the Company
deems to be in the best interest of the Purchaser.
The Company shall use its best efforts to dispose of the REO Property
as soon as possible and shall sell such REO Property in any event within one
year after title has been taken to such REO Property, unless (i) a REMIC
election has not been made with respect to the arrangement under which the
Mortgage Loans and the REO Property are held, and (ii) the Company determines
that a longer period is necessary for the orderly liquidation of such REO
Property. If a period longer than one year is permitted under the foregoing
sentence and is necessary to sell any REO Property, (i) the Company shall
report monthly to the Purchaser as to the progress being made in selling such
REO Property and (ii) if a purchase money mortgage is taken in connection with
such sale, such purchase money mortgage shall name the Company as mortgagee,
and such purchase money mortgage shall not be held pursuant to this Agreement,
but instead a separate participation agreement among the Company and Purchaser
shall be entered into with respect to such purchase money mortgage.
The Company shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
The disposition of REO Property shall be carried out by the Company at
such price, and upon such terms and conditions, as the Company deems to be in
the best interests of the Purchaser. The proceeds of sale of the REO Property
shall be promptly deposited in the Custodial Account. As soon as practical
thereafter the expenses of such sale shall be paid and the Company shall
reimburse itself for any related unreimbursed Servicing Advances, unpaid
Servicing Fees and unreimbursed advances made pursuant to Section 5.03. On the
Remittance Date immediately following the Principal Prepayment Period in which
such sale proceeds are received the net cash proceeds of such sale remaining in
the Custodial Account shall be distributed to the Purchaser.
The Company shall withdraw from the Custodial Account in accordance
with Section 4.05, the funds necessary for the proper operation management and
maintenance of the REO Property, including the cost of maintaining any hazard
insurance pursuant to Section 4.10 and the fees of any managing agent of the
Company, or the Company itself. The REO management fee shall be $1000.00 per
Mortgage Loan. The Company shall make monthly distributions on each Remittance
Date to the Purchaser of the net cash flow from the REO Property (which shall
equal the revenues from such REO Property net of the expenses described in this
Section 4.16 and of any reserves reasonably required from time to time to be
maintained to satisfy anticipated liabilities for such expenses).
Section 4.17 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 5.02, the
Company shall furnish to the Purchaser on or before the Remittance Date each
month a statement with respect to any REO Property covering the operation of
such REO Property for the previous month and the Company's efforts in
connection with the sale of such REO Property and any rental of such REO
Property incidental to the sale thereof for the previous month. That statement
shall be accompanied by such other information as the Purchaser shall
reasonably request.
Section 4.18 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed in lieu of foreclosure, the Company
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged
Property.
Following the foreclosure sale or abandonment of any Mortgaged
Property, the Company shall report such foreclosure or abandonment as required
pursuant to Section 6050J of the Code. The Company shall file information
reports with respect to the receipt of mortgage interest received in a trade or
business and information returns relating to cancellation of indebtedness
income with respect to any Mortgaged Property as required by the Code. Such
reports shall be in form and substance sufficient to meet the reporting
requirements imposed by the Code.
Section 4.20 Notification of Adjustments.
With respect to each adjustable rate Mortgage Loan, the Company shall
adjust the Mortgage Interest Rate on the related Adjustment Date in compliance
with the requirements of applicable law and the related Mortgage and Mortgage
Note. The Company shall execute and deliver any and all necessary notices
required under applicable law and the terms of the related Mortgage Note and
Mortgage regarding the Mortgage Interest Rate adjustments. Upon the discovery
by the Company or the receipt of notice from the Purchaser that the Company has
failed to adjust a Mortgage Interest Rate in accordance with the terms of the
related Mortgage Note, the Company shall immediately deposit in the Custodial
Account from its own funds the amount of any interest loss or deferral caused
the Purchaser thereby.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances.
On each Remittance Date the Company shall remit by wire transfer of
immediately available funds to the Purchaser (a) all amounts deposited in the
Custodial Account as of the close of business on the Determination Date (net of
charges against or withdrawals from the Custodial Account pursuant to Section
4.05), plus (b) all amounts, if any, which the Company is obligated to
distribute pursuant to Section 5.03, minus (c) any amounts attributable to
Principal Prepayments received after the applicable Principal Prepayment Period
which amounts shall be remitted on the following Remittance Date, together with
any additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayment in accordance with Section 4.04(ix);
minus (d) any amounts attributable to Monthly Payments collected but due on a
Due Date or Dates subsequent to the first day of the month of the Remittance
Date. All cash flows from prepayment penalties shall be passed through to the
Purchaser and shall not be waived by the Seller
With respect to any remittance received by the Purchaser after the
second Business Day following the Business Day on which such payment was due,
the Company shall pay to the Purchaser interest on any such late payment at an
annual rate equal to the Prime Rate, adjusted as of the date of each change,
plus three percentage points, but in no event greater than the maximum amount
permitted by applicable law. Such interest shall be deposited in the Custodial
Account by the Company on the date such late payment is made and shall cover
the period commencing with the day following such second Business Day and
ending with the Business Day on which such payment is made, both inclusive.
Such interest shall be remitted along with the distribution payable on the next
succeeding Remittance Date. The payment by the Company of any such interest
shall not be deemed an extension of time for payment or a waiver of any Event
of Default by the Company.
Section 5.02 Statements to Purchaser.
Not later than the tenth calendar day of the month , the Company shall
furnish in an agreed upon electronic format to the Purchaser or its designee, a
monthly loan level scheduled remittance advice, trial balance report and
payment and payoff activity detail, as to the preceding remittance and the
period ending on the last day of the preceding month.
Section 5.03 Monthly Advances by Company.
On the Business Day immediately preceding each Remittance Date, the
Company shall deposit in the Custodial Account from its own funds or from
amounts held for future distribution an amount equal to all Monthly Payments
(with interest adjusted to the Mortgage Loan Remittance Rate) which were due on
the Mortgage Loans during the applicable Due Period and which were delinquent
at the close of business on the immediately preceding Determination Date or
which were deferred pursuant to Section 4.01. Any amounts held for future
distribution and so used shall be replaced by the Company by deposit in the
Custodial Account on or before any future Remittance Date if funds in the
Custodial Account on such Remittance Date shall be less than payments to the
Purchaser required to be made on such Remittance Date. The Company's obligation
to make such Monthly Advances as to any Mortgage Loan will continue through the
last Monthly Payment due prior to the payment in full of the Mortgage Loan, or
through the earlier of: (i) the last Remittance Date prior to the Remittance
Date for the distribution of all Liquidation Proceeds and other payments or
recoveries (including Insurance Proceeds and Condemnation Proceeds) with
respect to the Mortgage Loan; and (ii) the Remittance Date prior to the date
the Mortgage Loan is converted to REO Property, provided however, that if
requested by a Rating Agency (hereinafter defined) or a guarantor in connection
with a securitization, the Company shall be obligated to make such advances
through the Remittance Date prior to the date on which cash is received in
connection with the liquidation of REO Property; provided, however, that such
obligation shall cease if the Company determines, in its sole reasonable
opinion, that advances with respect to such Mortgage Loan are non-recoverable
by the Company from Liquidation Proceeds, Insurance Proceeds, Condemnation
Proceeds, or otherwise with respect to a particular Mortgage Loan. In the event
that the Company determines that any such advances are non-recoverable, the
Company shall provide the Purchaser with a certificate signed by two officers
of the Company evidencing such determination. For purposes of this paragraph,
"Rating Agency" shall mean Xxxxx'x Investors Services, Inc., Standard & Poor's
Ratings Services, Fitch IBCA, Inc., or any other nationally recognized
statistical credit rating agency.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Transfers of Mortgaged Property.
The Company shall use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note and to deny assumption by
the person to whom the Mortgaged Property has been or is about to be sold
whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains liable on the Mortgage and the Mortgage Note. When the
Mortgaged Property has been conveyed by the Mortgagor, the Company shall, to
the extent it has knowledge of such conveyance, exercise its rights to
accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause
applicable thereto, provided, however, that the Company shall not exercise such
rights if prohibited by law from doing so or if the exercise of such rights
would impair or threaten to impair any recovery under the related PMI Policy,
if any.
If the Company reasonably believes it is unable under applicable law
to enforce such "due-on-sale" clause, the Company shall enter into (i) an
assumption and modification agreement with the person to whom such property has
been conveyed, pursuant to which such person becomes liable under the Mortgage
Note and the original Mortgagor remains liable thereon or (ii) in the event the
Company is unable under applicable law to require that the original Mortgagor
remain liable under the Mortgage Note and the Company has the prior consent of
the primary mortgage guaranty insurer, a substitution of liability agreement
with the purchaser of the Mortgaged Property pursuant to which the original
Mortgagor is released from liability and the purchaser of the Mortgaged
Property is substituted as Mortgagor and becomes liable under the Mortgage
Note. If an assumption fee is collected by the Company for entering into an
assumption agreement the fee will be retained by the Company as additional
servicing compensation. In connection with any such assumption, neither the
Mortgage Interest Rate borne by the related Mortgage Note, the term of the
Mortgage Loan, the outstanding principal amount of the Mortgage Loan nor any
other materials terms shall be changed without Purchaser's consent.
To the extent that any Mortgage Loan is assumable, the Company shall
inquire diligently into the credit worthiness of the proposed transferee, and
shall use the underwriting criteria for approving the credit of the proposed
transferee which are used with respect to underwriting mortgage loans of the
same type as the Mortgage Loans. If the credit worthiness of the proposed
transferee does not meet such underwriting criteria, the Company diligently
shall, to the extent permitted by the Mortgage or the Mortgage Note and by
applicable law, accelerate the maturity of the Mortgage Loan.
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Company of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Company shall notify the Purchaser in the
Monthly Remittance Advice as provided in Section 5.02, and may request the
release of any Mortgage Loan Documents.
If the Company satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage or should
the Company otherwise prejudice any rights the Purchaser may have under the
mortgage instruments, upon written demand of the Purchaser, the Company shall
repurchase the related Mortgage Loan at the Repurchase Price by deposit thereof
in the Custodial Account within 2 Business Days of receipt of such demand by
the Purchaser. The Company shall maintain the Fidelity Bond and Errors and
Omissions Insurance Policy as provided for in Section 4.12 insuring the Company
against any loss it may sustain with respect to any Mortgage Loan not satisfied
in accordance with the procedures set forth herein.
Section 6.03 Servicing Compensation.
As compensation for its services hereunder, the Company shall be
entitled to retain from the interest payment the amount of its Servicing Fee.
The Servicing Fee shall be payable monthly and shall be computed on the basis
of the same unpaid scheduled principal balance and for the period respecting
which any related interest payment on a Mortgage Loan is computed. The
obligation of the Purchaser to pay the Servicing Fee is limited to, and payable
solely from, the interest portion of such Monthly Payments.
Additional servicing compensation in the form of assumption fees, to
the extent provided in Section 6.01, and late payment charges shall be retained
by the Company to the extent not required to be deposited in the Custodial
Account. The Company shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement thereof except as specifically provided for herein.
Section 6.04 Annual Statement as to Compliance.
The Company shall deliver to the Purchaser, on or before May 31, each
year beginning May 31, 2001, an Officer's Certificate, stating that (i) a
review of the activities of the Company during the preceding calendar year and
of performance under this Agreement or similar agreements has been made under
such officer's supervision, and (ii) to the best of such officer's knowledge,
based on such review, the Company has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and the action being taken by the
Company to cure such default.
Section 6.05 Annual Independent Public Accountants' Servicing Report.
On or before May 31, of each year beginning May 31, 2001, the Company,
at its expense, shall cause a firm of independent public accountants which is a
member of the American Institute of Certified Public Accountants to furnish a
statement to each Purchaser to the effect that such firm has examined certain
documents and records relating to the servicing of the mortgage loans similar
in nature and that such firm is of the opinion that the provisions of this or
similar Agreements have been complied with, and that, on the basis of such
examination conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers, nothing has come to their attention
which would indicate that such servicing has not been conducted in compliance
therewith, except for (i) such exceptions as such firm shall believe to be
immaterial, and (ii) such other exceptions as shall be set forth in such
statement. By providing Purchaser a copy of a Uniform Single Attestation
Program Report from their independent public accountant's on an annual basis,
Company shall be considered to have fulfilled its obligations under this
Section 6.05.
Section 6.06 Right to Examine Company Records.
The Purchaser, or its designee, shall have the right to examine and
audit any and all of the books, records, or other information of the Company,
whether held by the Company or by another on its behalf, with respect to or
concerning this Agreement or the Mortgage Loans, during business hours or at
such other times as may be reasonable under applicable circumstances, upon
reasonable advance notice. The Purchaser shall pay its own travel expenses
associated with such examination.
Section 6.07 Compliance with REMIC Provisions.
If a REMIC election has been made with respect to the arrangement
under which the Mortgage Loans and REO Property are held, the Company shall not
take any action, cause the REMIC to take any action or fail to take (or fail to
cause to be taken) any action that, under the REMIC Provisions, if taken or not
taken, as the case may be, could (i) endanger the status of the REMIC as a
REMIC or (ii) result in the imposition of a tax upon the REMIC (including but
not limited to the tax on "prohibited transactions" as defined Section 860 (a)
(2) of the Code and the tax on "contributions" to a REMIC set forth in Section
860(d) of the Code) unless the Company has received an Opinion of Counsel (at
the expense of the party seeking to take such action) to the effect that the
contemplated action will not endanger such REMIC status or result in the
imposition of any such tax.
ARTICLE VII
COMPANY TO COOPERATE
Section 7.01 Provision of Information.
During the term of this Agreement, the Company shall furnish to the
Purchaser such periodic, special, or other reports or information, and copies
or originals of any documents contained in the Servicing File for each Mortgage
Loan provided for herein. All other special reports or information not provided
for herein as shall be necessary, reasonable, or appropriate with respect to
the Purchaser or any regulatory agency will be provided at the Purchaser's
expense. All such reports, documents or information shall be provided by and in
accordance with all reasonable instructions and directions which the Purchaser
may give.
The Company shall execute and deliver all such instruments and take
all such action as the Purchaser may reasonably request from time to time, in
order to effectuate the purposes and to carry out the terms of this Agreement.
Section 7.02 Financial Statements; Servicing Facility.
In connection with marketing the Mortgage Loans, the Purchaser may
make available to a prospective Purchaser a Consolidated Statement of
Operations of the Company for the most recently completed two fiscal years for
which such a statement is available, as well as a Consolidated Statement of
Condition at the end of the last two fiscal years covered by such Consolidated
Statement of Operations. The Company also shall make available any comparable
interim statements to the extent any such statements have been prepared by or
on behalf of the Company (and are available upon request to members or
stockholders of the Company or to the public at large).
The Company also shall make available to Purchaser or prospective
Purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions respecting recent developments affecting the Company or the
financial statements of the Company, and to permit any prospective Purchaser to
inspect the Company's servicing facilities for the purpose of satisfying such
prospective Purchaser that the Company has the ability to service the Mortgage
Loans as provided in this Agreement.
ARTICLE VIII
THE COMPANY
Section 8.01 Indemnification; Third Party Claims.
The Company shall indemnify the Purchaser and hold it harmless against
any and all claims, losses, damages, penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs, judgments, and any other costs,
fees and expenses that the Purchaser may sustain in any way related to the
failure of the Company to perform its duties and service the Mortgage Loans in
strict compliance with the terms of this Agreement. The Company immediately
shall notify the Purchaser if a claim is made by a third party with respect to
this Agreement or the Mortgage Loans, assume (with the prior written consent of
the Purchaser) the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or the Purchaser in respect
of such claim. The Company shall follow any written instructions received from
the Purchaser in connection with such claim. The Purchaser promptly shall
reimburse the Company for all amounts advanced by it pursuant to the preceding
sentence except when the claim is in any way related to the Company's
indemnification pursuant to Section 3.03, or the failure of the Company to
service and administer the Mortgage Loans in strict compliance with the terms
of this Agreement.
Section 8.02 Merger or Consolidation of the Company.
The Company shall keep in full effect its existence, rights and
franchises as a corporation, and shall obtain and preserve its qualification to
do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform
its duties under this Agreement.
Any person into which the Company may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Company shall be a party, or any Person succeeding to the business of the
Company, shall be the successor of the Company hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, provided, however,
that the successor or surviving Person shall be an institution (i) having a net
worth of not less than $15,000,000 and (ii) which is a FNMA/FHLMC-approved
company in good standing. Furthermore, in the event the Company transfers or
otherwise disposes of all or substantially all of its assets to an affiliate of
the Company, such affiliate shall satisfy the condition above, and shall also
be fully liable to the Purchaser for all of the Company's obligations and
liabilities hereunder.
Section 8.03 Limitation on Liability of Company and Others.
Neither the Company nor any of the directors, officers, employees or
agents of the Company shall be under any liability to the Purchaser for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment, provided, however, that
this provision shall not protect the Company or any such person against any
Breach of warranties or representations made herein, or failure to perform its
obligations in strict compliance with any standard of care set forth in this
Agreement or any other liability which would otherwise be imposed under this
Agreement. The Company and any director, officer, employee or agent of the
Company may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Company shall not be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement and which in its opinion may involve it
in any expense or liability, provided, however, that the Company may, with the
consent of the Purchaser, undertake any such action which it may deem necessary
or desirable in respect to this Agreement and the rights and duties of the
parties hereto. In such event, the Company shall be entitled to reimbursement
from the Purchaser of the reasonable legal expenses and costs of such action.
Section 8.04 Limitation on Resignation and Assignment by Company.
The Purchaser has entered into this Agreement with the Company and
subsequent purchasers will purchase the Mortgage Loans in reliance upon the
independent status of the Company, and the representations as to the adequacy
of its servicing facilities, personnel, records and procedures, its integrity,
reputation and financial standing, and the continuance thereof. Therefore, the
Company shall neither assign this Agreement or the servicing hereunder or
delegate its rights or duties hereunder or any portion hereof or sell or
otherwise dispose of all of its property or assets without the prior written
consent of the Purchaser, which consent shall not be unreasonably withheld.
The Company shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Company and the Purchaser or upon
the determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Company. Any such
determination permitting the resignation of the Company shall be evidenced by
an Opinion of Counsel to such effect delivered to the Purchaser which Opinion
of Counsel shall be in form and substance acceptable to the Purchaser. No such
resignation shall become effective until a successor shall have assumed the
Company's responsibilities and obligations hereunder in the manner provided in
Section 12.01.
Without in any way limiting the generality of this Section 8.04, in
the event that the Company either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof or sell or otherwise dispose of all or substantially all of its
property or assets, without the prior written consent of the Purchaser, then
the Purchaser shall have the right to terminate this Agreement upon notice
given as set forth in Section 10.01, without any payment of any penalty or
damages and without any liability whatsoever to the Company or any third party.
ARTICLE IX
PASS-THROUGH TRANSFER
Section 9.01 Removal of Mortgage Loans from Inclusion Under this Agreement
Upon the Pass-Through
The Purchaser and the Company agree that with respect to some or all
of the Mortgage Loans, the Purchaser, at its sole option, shall effect up to
four Whole Loan Transfers or Pass-Through Transfers, retaining the Company as
the servicer thereof or subservicer if a master servicer is employed, or as
applicable the "seller/servicer." On the Reconstitution Date, the Mortgage
Loans transferred shall cease to be covered by this Agreement; provided,
however, that, in the event that any Mortgage Loan transferred pursuant to this
Section 9 is rejected by the transferee, the Company shall continue to service
such rejected Mortgage Loan on behalf of the Purchaser in accordance with the
terms and provisions of this Agreement.
The Company shall cooperate with the Purchaser in connection with each
Whole Loan Transfer or Pass-Through Transfer in accordance with this Section 9.
In connection therewith the Company shall:
(a) make all representations and warranties with respect to the
Mortgage Loans as of the Closing Date and with respect to the
Company itself as of the closing date of each Whole Loan
Transfer or Pass-Through Transfer;
(b) negotiate in good faith and execute any seller/servicer
agreements required by the shelf registrant to effectuate the
foregoing provided such agreements create no greater
obligation or cost on the part of the Company than otherwise
set forth in this Agreement;
(c) provide as applicable:
(i) any and all information and appropriate verification
of information which may be reasonably available to
the Company, whether through letters of its auditors
and counsel or otherwise, as the Purchaser shall
request;
(ii) such additional representations, warranties,
covenants, opinions of counsel, letters from
auditors, and certificates of public officials or
officers of the Company as are reasonably believed
necessary by the trustee, any rating agency,
guarantor or the Purchaser, as the case may be, in
connection with such Whole Loan Transfers or
Pass-Through Transfers. The Purchaser shall pay all
third party costs associated with the preparation of
such information. The Company shall execute any
seller/servicer agreements required within a
reasonable period of time after receipt of such
seller/servicer agreements which time shall be
sufficient for the Seller and Seller's counsel to
review such seller/servicer agreements. Under this
Agreement, the Company shall retain a servicing fee
at a rate per annum equal to no less than 0.50% per
Mortgage Loan;
(d) indemnify the Purchaser for any material misstatements
contained in the information provided pursuant to (c) above;
(e) execute a Loss Mitigation Advisory Agreement in the form of
Exhibit I; and
(f) in the event the Mortgage Loans become subject to a FHLMC
securitization, negotiate in good faith the terms of such
reconstitution agreements as may be required.
In the event the Purchaser has elected to have the Company hold record
title to the Mortgages, prior to the Reconstitution Date the Company shall
prepare an Assignment in blank or to the trustee from the Company acceptable to
the trustee for each Mortgage Loan that is part of the Whole Loan Transfers or
Pass-Through Transfers. The Purchaser shall pay all preparation and recording
costs associated therewith, unless the Assignment is the initial Assignment
delivered pursuant to Section 2.03. The Company shall execute each Assignment,
track such Assignments to ensure they have been recorded and deliver them as
required by the trustee upon the Company's receipt thereof. Additionally, the
Company shall prepare and execute, at the direction of the Purchaser, any note
endorsements in connection with any and all seller/servicer agreements.
All Mortgage Loans not sold or transferred pursuant to Whole Loan
Transfers or Pass-Through Transfers shall remain subject to this Agreement and
shall continue to be serviced in accordance with the terms of this Agreement
and with respect thereto this Agreement shall remain in full force and effect.
ARTICLE X
DEFAULT
Section 10.01 Events of Default.
Each of the following shall constitute an Event of Default on the part
of the Company:
(i) any failure by the Company to remit to the Purchaser any
payment required to be made under the terms of this Agreement
which continues unremedied for a period of five days after
the date upon which written notice of such failure, requiring
the same to be remedied, shall have been given to the Company
by the Purchaser; or
(ii) failure by the Company duly to observe or perform in any
material respect any other of the covenants or agreements on
the part of the Company set forth in this Agreement or in the
Custodial Agreement which continues unremedied for a period
of 30 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been
given to the Company by the Purchaser or by the Custodian; or
(iii) failure by the Company to maintain its license to do business
in any jurisdiction where the Mortgaged Property is located
if such license is required; or
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, including bankruptcy, marshaling of
assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been
entered against the Company and such degree or order shall
have remained in force undischarged or unstayed for a period
of 60 days; or
(v) the Company shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of
debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Company or of or relating
to all or substantially all of its property; or
(vi) the Company shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take
advantage of any applicable insolvency, bankruptcy or
reorganization statute, make an assignment for the benefit of
its creditors, voluntarily suspend payment of its obligations
or cease its normal business operations for three Business
Days; or
(vii) the Company ceases to meet the qualifications of a FNMA/FHLMC
servicer; or
(viii) the Company attempts to assign its right to servicing
compensation hereunder or to assign this Agreement or the
servicing responsibilities hereunder or to delegate its
duties hereunder or any portion thereof in violation of
Section 8.04.
In each and every such case, so long as an Event of Default shall not
have been remedied, in addition to whatever rights the Purchaser may have at
law or equity to damages, including injunctive relief and specific performance,
the Purchaser, by notice in writing to the Company, may terminate all the
rights and obligations of the Company under this Agreement and in and to the
Mortgage Loans and the proceeds thereof.
Upon receipt by the Company of such written notice, all authority and
power of the Company under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in the successor appointed
pursuant to Section 12.01. Upon written request from any Purchaser, the Company
shall prepare, execute and deliver to the successor entity designated by the
Purchaser any and all documents and other instruments, place in such
successor's possession all Mortgage Files, and do or cause to be done all other
acts or things necessary or appropriate to effect the purposes of such notice
of termination, including but not limited to the transfer and endorsement or
assignment of the Mortgage Loans and related documents, at the Company's sole
expense. The Company shall cooperate with the Purchaser and such successor in
effecting the termination of the Company's responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Company to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Section 10.02 Waiver of Defaults.
By a written notice, the Purchaser may waive any default by the
Company in the performance of its obligations hereunder and its consequences.
Upon any waiver of a past default, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon except to the extent
expressly so waived.
ARTICLE XI
TERMINATION
Section 11.01 Termination.
This Agreement shall terminate upon either: (i) the later of the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or the disposition of any REO Property with respect to the last
Mortgage Loan and the remittance of all funds due hereunder; or (ii) mutual
consent of the Company and the Purchaser in writing.
Section 11.02 Termination Without Cause.
The Purchaser may terminate, at its sole option, any rights the
Company may have hereunder, without cause as provided in this Section 11.02.
Any such notice of termination shall be in writing and delivered to the Company
by registered mail as provided in Section 12.05.
The Company shall be entitled to receive, as such liquidated damages,
upon the transfer of the servicing rights, an amount equal to 1.50% of the
aggregate outstanding principal amount of the Mortgage Loans as of the
termination date paid by the Purchaser to the Company with respect to all of
the Mortgage Loans for which a servicing fee rate of .50% is paid per annum.
Section 11.03 Termination of Distressed Mortgage Loans.
Notwithstanding Section 11.02, the Purchaser may terminate, at its
sole option, this Agreement with respect to the servicing of those Mortgage
Loans that are determined to be Distressed Mortgage Loans as of the Notice
Date. At such time as the aggregate unpaid principal balance of all Mortgage
Loans delinquent in payment for a period of 91 days or more, divided by the
aggregate unpaid principal balance of all Mortgage Loans equals or exceeds six
percent (6%), the servicing of all Distressed Mortgage Loans shall transfer to
the Special Servicer.
On each Notice Date, the Company shall send by facsimile or electronic
mail a Transfer Notice to the Special Servicer and Purchaser's designee (if so
requested) and shall mail to the Mortgagor of each Mortgage Loans listed in
such Transfer Notice a letter advising each such Mortgagor of the transfer of
the servicing of the related Mortgage Loan to the Special Servicer, in
accordance with the Xxxxxxxx Xxxxxxxx National Affordable Housing Act of 1990;
provided, however, the content and format of such letter shall have the prior
approval of the Special Servicer. The Company shall promptly provide the
Special Servicer with copies of all such notices. On each Transfer Date, the
Company shall transfer the servicing of Distressed Mortgage Loans to the
Special Servicer.
Not later than two (2) Business Days immediately following the
Transfer Date, the Company shall deliver to the Special Servicer, with respect
to the Distressed Mortgage Loans that were transferred to the Special Servicer
on such Transfer Date, all related Servicing Files and a loan level tape or
other electronic media containing loan set-up information in form reasonably
acceptable to the Special Servicer. Within five (5) Business Days following
such Transfer Date, the Company shall deliver a final trial balance (subject to
invoices received after such date for Servicing Advances previously paid by the
Company) in form reasonably acceptable to the Special Servicer, and
commensurate with generally acceptable industry standards, detailing the amount
of any unreimbursed Monthly Advances, Servicing Advances and accrued and unpaid
Servicing Fees on a loan level basis. Should the Special Servicer desire a loan
level tape or other electronic media containing information which is not
readily extractable from the Company's servicing system, the Company shall
reasonably cooperate to make such loan level data available to the Special
Servicer. In addition, no more than five (5) Business Days after the Transfer
Date, the Company shall transfer to the Special Servicer any funds held in an
Escrow Account or Custodial Account related to the Distressed Mortgage Loans
listed in the related Transfer Notice. Upon reasonable compliance by the
Company with the provisions of this Section regarding the transfer of servicing
for Distressed Mortgage Loans, the Special Servicer shall reimburse the Company
within five Business Days of the related Transfer Date for any unreimbursed
Monthly Advances, Servicing Advances and accrued and unpaid Servicing Fees with
respect to such Distressed Mortgage Loans which have been properly documented.
Notwithstanding anything herein to the contrary, the transfer of servicing for
Distressed Mortgage Loans shall not require the payment of a termination fee
therefor.
In connection with the transfer of any Distressed Mortgage Loan, the
Company will be responsible for servicing the Distressed Mortgage Loan until
the effective date of transfer of servicing to the Special Servicer, but shall
have no right or obligation to service such Distressed Mortgage Loan from and
after the effective date of the transfer of servicing to the Special Servicer.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Company.
Prior to termination of the Company's responsibilities and duties
under this Agreement pursuant to Sections 8.04, 10.01, 11.01 (ii) or pursuant
to Section 11.02 the Purchaser shall, (i) succeed to and assume all of the
Company's responsibilities, rights, duties and obligations under this
Agreement, or (ii) appoint a successor having the characteristics set forth in
Section 8.02 and which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Company under this Agreement
prior to the termination of Company's responsibilities, duties and liabilities
under this Agreement. In connection with such appointment and assumption, the
Purchaser may make such arrangements for the compensation of such successor out
of payments on Mortgage Loans as it and such successor shall agree. In the
event that the Company's duties, responsibilities and liabilities under this
Agreement should be terminated pursuant to the aforementioned sections, the
Company shall discharge such duties and responsibilities during the period from
the date it acquires knowledge of such termination until the effective date
thereof with the same degree of diligence and prudence which it is obligated to
exercise under this Agreement, and shall take no action whatsoever that might
impair or prejudice the rights or financial condition of its successor. The
resignation or removal of the Company pursuant to the aforementioned sections
shall not become effective until a successor shall be appointed pursuant to
this Section 12.01 and shall in no event relieve the Company of the
representations and warranties made pursuant to Sections 3.01 and 3.02 and the
remedies available to the Purchaser under Section 3.03, it being understood and
agreed that the provisions of such Sections 3.01, 3.02, and 3.03 shall be
applicable to the Company notwithstanding any such sale, assignment,
resignation or termination of the Company, or the termination of this
Agreement.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Company and to the Purchaser an instrument accepting such
appointment, wherein the successor shall make the representations and
warranties set forth in Section 3.01, except for subsections (h), (i) and (k)
thereof, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Company, with like effect as if originally named as a party to this Agreement.
Any termination or resignation of the Company or termination of this Agreement
pursuant to Section 8.04, 10.01, 11.01 or 11.02 shall not affect any claims
that any Purchaser may have against the Company arising out of the Company's
actions or failure to act prior to any such termination or resignation.
The Company shall deliver promptly to the successor servicer the funds
in the Custodial Account and Escrow Account and all Mortgage Files and related
documents and statements held by it hereunder and the Company shall account for
all funds and shall execute and deliver such instruments and do such other
things as may reasonably be required to more fully and definitively vest in the
successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Company.
Upon a successor's acceptance of appointment as such, the Company
shall notify by mail the Purchaser of such appointment in accordance with the
procedures set forth in Section 12.05.
Section 12.02 Amendment.
This Agreement may be amended from time to time by the Company and by
written agreement signed by the Company and the Purchaser.
Section 12.03 Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
Each of the Company and the Purchaser hereby knowingly, voluntarily
and intentionally waives any and all rights it may have to a trial by jury in
respect or any litigation based on, or arising out of, under, or in connection
with, this Agreement, or any other documents and instruments executed in
connection herewith, or any course of conduct, course of dealing, statements
(whether oral or written), or actions of the Company or the Purchaser. This
provision is a material inducement for the Purchaser to enter into this
Agreement.
Section 12.04 Duration of Agreement.
This Agreement shall continue in existence and effect until terminated
as herein provided. This Agreement shall continue notwithstanding transfers of
the Mortgage Loans by the Purchaser.
Section 12.05 Notices.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered at or
mailed by registered mail, postage prepaid, addressed as follows:
(i) if to the Company:
Xxxxx Fargo Home Mortgage, Inc.
0 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000-0000
Attention: General Counsel
MAC # X2406-011
or such other address as may hereafter be furnished to the
Purchaser in writing by the Company;
(ii) if to Purchaser:
Xxxxxx Brothers Bank, FSB
3 World Financial Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attention: Contract Finance
Section 12.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement.
Section 12.07 Relationship of Parties.
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of the
Company shall be rendered as an independent contractor and not as agent for the
Purchaser.
Section 12.08 Execution; Successors and Assigns.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Section 8.04, this Agreement
shall inure to the benefit of and be binding upon the Company and the Purchaser
and their respective successors and assigns.
Section 12.09 Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Company's expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option.
Section 12.10 Assignment by Purchaser.
The Purchaser shall have the right, without the consent of the Company
but subject to the limit set forth in Section 2.02 hereof, to assign, in whole
or in part, its interest under this Agreement with respect to some or all of
the Mortgage Loans, and designate any person to exercise any rights of the
Purchaser hereunder, by executing an Assignment and Assumption Agreement
substantially in the form attached as Exhibit G_, and the assignee or designee
shall accede to the rights and obligations hereunder of the Purchaser with
respect to such Mortgage Loans. All references to the Purchaser in this
Agreement shall be deemed to include its assignee or designee.
Section 12.11 Solicitation of Mortgagor.
The Purchaser, its affiliates, successors or assigns shall not,
without the prior written consent of the Company, take any action to solicit or
make direct contact with the Mortgagor under any Mortgage Loan except to the
extent required by the Company's breach of this Agreement or as required under
applicable law or regulatory authority. It is understood and agreed that
promotions undertaken by the Purchaser which are directed to the general public
at large, including, without limitation, mass mailings based upon commercially
acquired mailing lists, newspaper, radio, television advertisements or from
servicing needs of a Mortgagor who, without solicitation, contacts the
Purchaser, shall not constitute solicitation under this Section. This Section
shall not prohibit the Company from soliciting any Mortgagor to provide other
services including but not limited to credit cards, insurance investments and
banking related services. Notwithstanding any provision of this Agreement to
the contrary, in the event the Purchaser, its affiliates, successors or assigns
fails to obtain such written consent, the Company shall be entitled, in its
sole discretion, to terminate its obligations and duties under this Agreement.
Upon transfer of the servicing rights and obligations under this Agreement to
the Purchaser or Purchaser's designee, the Company shall be entitled to receive
as liquidated damages, an amount equal to 1.50% of the aggregate outstanding
principal amount of the Mortgage Loans as of the termination date paid by the
Purchaser to the Company with respect to all of the Mortgage Loans for which a
servicing fee rate of .50% is paid per annum.
The Company agrees that, after the Closing Date, it will not take any
action to solicit the refinancing of any Mortgage Loan. It is understood and
agreed that promotions undertaken by the Company or any affiliate of the
Company which are directed to the general public at large, including, without
limitation, mass mailings based upon commercially acquired mailing lists,
newspaper, radio, television advertisements or from servicing the refinancing
needs of a Mortgagor who, without solicitation, contacts the Company in
connection with the refinance of such Mortgage or Mortgage Loan, shall not
constitute solicitation under this Section. Notwithstanding anything to the
contrary, this Section shall not prohibit the Company from soliciting any
Mortgagor to provide other services including but not limited to credit cards,
insurance investments and banking related services.
[Intentionally Blank - Next Page Signature Page]
IN WITNESS WHEREOF, the Company and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
XXXXXX BROTHERS BANK, FSB XXXXX FARGO HOME MORTGAGE, INC.
Purchaser Company
By: _________________________________ By: _________________________________
Name: _______________________________ Name: _______________________________
Title: ______________________________ Title: ______________________________
STATE OF )
) ss:
COUNTY OF ___________ )
On the _____ day of _______________, 20___ before me, a Notary Public
in and for said State, personally appeared ___________________________________,
known to me to be ___________________________________________ of Xxxxx Fargo
Home Mortgage, Inc., the corporation that executed the within instrument and
also known to me to be the person who executed it on behalf of said
corporation, and acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal
the day and year in this certificate first above written.
_________________________________
Notary Public
My Commission expires ____________
STATE OF )
) ss:
COUNTY OF )
On the _____ day of _______________, 20___ before me, a Notary Public
in and for said State, personally appeared ___________________________________,
known to me to be the ____________________________ of ________________________,
the corporation that executed the within instrument and also known to me to be
the person who executed it on behalf of said corporation, and acknowledged to
me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal
the day and year in this certificate first above written.
__________________________________
Notary Public
My Commission expires ____________
EXHIBIT A
MORTGAGE LOAN SCHEDULE EXHIBIT A-1
Electronic Data File
(1) the Seller's Mortgage Loan identifying number;
(2) the Mortgagor's and Co-Mortgagor's name;
(3) the Mortgagor's and Co-Mortgagor's (if applicable) social security
numbers;
(4) the Mortgagor's and Co-Mortgagor's (if applicable) FICO score;
(5) the street address of the Mortgaged Property including the city,
state, county and zip code;
(6) intentionally blank;
(7) a code indicating whether the Mortgaged Property is a single family
residence, a 2-4 family dwelling, a PUD, a townhouse, a unit in a
condominium project, or a mobile home;
(8) a code indicating whether the Mortgaged Loan is a 2/28, 3/27, CMT, 6
month Libor, or a fixed rate;
(9) a code indicating whether the loan is a balloon Mortgage Loan;
(10) a code indicating the Credit Grade of the Mortgage Loan;
(11) a code indicating the Prepayment Penalty Term;
(12) a code indicating the method of calculation of the Prepayment Penalty;
(13) the original months to maturity or the remaining months to maturity
from the Cut-off Date;
(14) the Loan to Value Ratio at origination;
(15) the Combined Loan to Value Ratio at origination;
(16) the Mortgage Interest Rate as of the Cut-off Date;
(17) the first payment date of the Mortgage Loan;
(18) the stated maturity date;
(19) the amount of the Monthly Principal and Interest Payment as of the
Cut-off Date;
(20) the actual next due date of the Mortgage Loan;
(21) the original principal amount of the Mortgage Loan;
(22) the scheduled principal balance of the Mortgage Loan as of the close
of business on the Cut-off Date, after deduction of payments of
principal due on or before the Cut-off Date;
(23) the Mortgage Loan purpose type;
(24) the occupancy status of the Mortgaged Property;
(25) the Index;
(26) the next Interest Rate Adjustment Date;
(27) next Payment Adjustment Date;
(28) the Gross Margin;
(29) the lifetime Mortgage Interest Rate cap under the terms of the
Mortgage Note;
(30) the Mortgagor's Mailing address (if different then the #'s above);
(31) the total monthly payment (includes taxes and insurance);
(32) a code indicating whether the Mortgage Loan the documentation type (
full, limited etc.);
(33) the origination date of the Mortgage Loan;
(34) the Purchase Price of the property (if a purchase);
(35) the Appraisal value;
(36) the number of units;
(37) the Mortgagor's and Co-Mortgagor's race;
(38) the Mortgagor's and Co-Mortgagor's gender;
(39) the qualifying monthly income of the Mortgagor or Co-Mortgagor;
(40) the total debt to income (DTI) ratio;
(41) the application date;
(42) A code indicating whether the loan was originated through a
correspondent, retail or wholesale channel;
(43) The year in which the Mortgaged Property was built;
(44) Intentionally blank;
(45) The Mortgage Interest Rate at the time of origination;
(46) The amount of the monthly principal and interest payment at the time
of origination;
(47) The initial Interest Rate Adjustment Date;
(48) The initial Payment Adjustment Date;
(49) The minimum Mortgage Interest Rate under the terms of the Mortgage
Note;
(50) The rounding provisions under the terms of the Mortgage Note;
(51) A code indicating the Mortgage Insurance provider and percent of
coverage, if applicable;
(52) The Mortgage Insurance Certificate Number; a code indicating the
method of payment for Mortgage Insurance Premiums and cost (Lender
Paid MI), if applicable;
(53) Number of borrowers;
(54) Borrower date of birth;
(55) Co-Borrower date of birth;
(56) Combined annual income;
(57) A code indicating first time buyer;
(58) the monthly servicing fee;
(59) the lookback provisions (# of days) under the terms of the Mortgage
Note;
(60) the Mortgage Interest Rate adjustment cap at the initial Interest Rate
Adjustment Date; and
(61) the Mortgage Interest Rate adjustment cap at all subsequent Interest
Rate Adjustment Dates.
EXHIBIT B
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser and any prospective Purchaser, and which shall be retained by the
Company in the Servicing File or delivered to the Custodian pursuant to
Sections 2.01 and 2.03 of the Seller's Warranties and the Servicing Agreement
to which this Exhibit is attached (the "Agreement"):
1. The original Mortgage Note bearing all intervening
endorsements, endorsed "Pay to the order ______________ of
without recourse" and signed in the name of the Company by an
authorized officer (in the event that the Mortgage Loan was
acquired by the Company in a merger, the signature must be in
the following form: "[Company], successor by merger to [name
of predecessor]"; and in the event that the Mortgage Loan was
acquired or originated by the Company while doing business
under another name, the signature must be in the following
form: "[Company], formerly know as [previous name]").
2. The original of any guarantee executed in connection with the
Mortgage Note (if any).
3. The original Mortgage, with evidence of recording thereon or
a certified true and correct copy of the Mortgage sent for
recordation. If in connection with any Mortgage Loan, the
Company cannot deliver or cause to be delivered the original
Mortgage with evidence of recording thereon on or prior to
the Closing Date because of a delay caused by the public
recording office where such Mortgage has been delivered for
recordation or because such Mortgage has been lost or because
such public recording office retains the original recorded
Mortgage, the Company shall deliver or cause to be delivered
to the Custodian, a photocopy of such Mortgage, together with
(i) in the case of a delay caused by the public recording
office, an Officer's Certificate of the Company stating that
such Mortgage has been dispatched to the appropriate public
recording office for recordation and that the original
recorded Mortgage or a copy of such Mortgage certified by
such public recording office to be a true and complete copy
of the original recorded Mortgage will be promptly delivered
to the Custodian upon receipt thereof by the Company; or (ii)
in the case of a Mortgage where a public recording office
retains the original recorded Mortgage or in the case where a
Mortgage is lost after recordation in a public recording
office, a copy of such Mortgage certified by such public
recording office or by the title insurance company that
issued the title policy to be a true and complete copy of the
original recorded Mortgage.
4. the originals or certified true copies of any document sent
for recordation of all assumption, modification,
consolidation or extension agreements, with evidence of
recording thereon.
5. The original Assignment of Mortgage for each Mortgage Loan,
in form and substance acceptable for recording (except for
the insertion of the name of the assignee and recording
information). The Assignment of Mortgage must be duly
recorded only if recordation is either necessary under
applicable law or commonly required by private institutional
mortgage investors in the area where the Mortgaged Property
is located or on direction of the Purchaser. If the Mortgage
Loan was acquired by the Company in a merger, the Assignment
of Mortgage must be made by "[Company], successor by merger
to [name of predecessor]." If the Mortgage Loan was acquired
or originated by the Company while doing business under
another name, the Assignment of Mortgage must be by
"[Company], formerly know as [previous name]."
6. Originals or certified true copies of documents sent for
recordation of all intervening assignments of the Mortgage
with evidence of recording thereon, or if any such
intervening assignment has not been returned from the
applicable recording office or has been lost or if such
public recording office retains the original recorded
assignments of mortgage, the Company shall deliver or cause
to be delivered to the Custodian, a photocopy of such
intervening assignment, together with (i) in the case of a
delay caused by the public recording office, an Officer's
Certificate of the Company stating that such intervening
assignment of mortgage has been dispatched to the appropriate
public recording office for recordation and that such
original recorded intervening assignment of mortgage or a
copy of such intervening assignment of mortgage certified by
the appropriate public recording office or by the title
insurance company that issued the title policy to be a true
and complete copy of the original recorded intervening
assignment of mortgage will be promptly delivered to the
Custodian upon receipt thereof by the Company; or (ii) in the
case of an intervening assignment where a public recording
office retains the original recorded intervening assignment
or in the case where an intervening assignment is lost after
recordation in a public recording office, a copy of such
intervening assignment certified by such public recording
office to be a true and complete copy of the original
recorded intervening assignment.
7. The original mortgagee policy of title insurance or evidence
of title.
8. Any security agreement, chattel mortgage or equivalent
executed in connection with the Mortgage.
EXHIBIT C
CUSTODIAL AGREEMENT
EXHIBIT D
MORTGAGE LOAN SCHEDULE OF BALLOON LOANS
EXHIBIT E
FORMS OF CUSTODIAL ACCOUNT CERTIFICATIONS
CUSTODIAL ACCOUNT CERTIFICATION
____________________, 20__
Xxxxx Fargo Home Mortgage, Inc. hereby certifies that it has
established the account described below as a Custodial Account pursuant to
Section 4.04 of the Seller's Warranties and Servicing Agreement, dated as of
________________________, 20__.
Title of Account: Xxxxx Fargo Home Mortgage, Inc. in trust for the
Purchaser and/or subsequent purchasers of Mortgage
Loans, and various Mortgagors - P & I
Address of office or branch
of the Company at which
Account is maintained: _________________________________
_________________________________
_________________________________
_________________________________
XXXXX FARGO HOME MORTGAGE, INC.
Company
By:______________________________
Name:____________________________
Title:___________________________
CUSTODIAL ACCOUNT LETTER AGREEMENT
____________________, 20__
To: ___________________________
___________________________
___________________________
(the "Depository")
As Company under the Seller's Warranties and Servicing Agreement,
dated as of , 20 , (the "Agreement"), we hereby authorize and request you to
establish an account, as a Custodial Account pursuant to Section 4.04 of the
Agreement, to be designated as "Xxxxx Fargo Home Mortgage, Inc., in trust for
the Purchaser and/or subsequent purchasers of Mortgage Loans, and various
Mortgagors - P & I". All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Company.. This letter is submitted to you in
duplicate. Please execute and return one original to us.
XXXXX FARGO HOME MORTGAGE, INC.
Company
By:______________________________
Name:____________________________
Title:___________________________
Date:____________________________
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number ______________, at
the office of the Depository indicated above, and agrees to honor withdrawals
on such account as provided above.
_________________________________
Depository
By:______________________________
Name:____________________________
Title:___________________________
Date:____________________________
EXHIBIT F
FORMS OF ESCROW ACCOUNT CERTIFICATIONS
ESCROW ACCOUNT CERTIFICATION
____________________, 20__
Xxxxx Fargo Home Mortgage, Inc. hereby certifies that it has
established the account described below as an Escrow Account pursuant to
Section 4.06 of the Seller's Warranties and Servicing Agreement, dated as of
__________________________, 20__.
Title of Account: Xxxxx Fargo Home Mortgage, Inc. in trust for the
Purchaser and/or subsequent purchasers of Mortgage
Loans, and various Mortgagors - T & I
Address of office or branch
of the Company at which
Account is maintained: _________________________________
_________________________________
_________________________________
_________________________________
XXXXX FARGO HOME MORTGAGE, INC.
Company
By:______________________________
Name:____________________________
Title:___________________________
ESCROW ACCOUNT LETTER AGREEMENT
____________________, 20__
To: _____________________________
_____________________________
_____________________________
(the "Depository")
As Company under the Seller's Warranties and Servicing Agreement,
dated as of ______________, 20__, (the "Agreement"), we hereby authorize and
request you to establish an account, as an Escrow Account pursuant to Section
4.06 of the Agreement, to be designated as "Xxxxx Fargo Home Mortgage, Inc., in
trust for the Purchaser and/or subsequent purchasers of Mortgage Loans, and
various Mortgagors - T & I". All deposits in the account shall be subject to
withdrawal therefrom by order signed by the Company. This letter is submitted
to you in duplicate. Please execute and return one original to us.
XXXXX FARGO HOME MORTGAGE, INC.
Company
By:______________________________
Name:____________________________
Title:___________________________
Date:____________________________
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number , at the office of
the Depository indicated above, and agrees to honor withdrawals on such account
as provided above..
_________________________________
Depository
By:______________________________
Name:____________________________
Title:___________________________
Date:____________________________
EXHIBIT G
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION
____________, 2000
ASSIGNMENT AND ASSUMPTION, dated ___________________, 2000 between
_________________, a _________________ corporation having an office at
_________________ ("Assignor") and _________________, having an office at
_________________ ("Assignee"):
For and in consideration of the sum of one dollar ($1.00) and other
valuable consideration the receipt and sufficiency of which are hereby
acknowledge, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to Assignee all
of the right, title and interest of Assignor, as Purchaser, in, to and under
that certain Seller's Warranties and Servicing Agreement, (the "Seller's
Warranties and Servicing Agreement"), dated as of _________________, by and
between _________________ (the "Purchaser"), and _________________ (the
"Company"), and the Mortgage Loans delivered thereunder by the Company to the
Assignor, and that certain Custodial Agreement, (the "Custodial Agreement"),
dated as of _________________, by and among the Company, the Purchaser and
_________________ (the "Custodian").
2. The Assignor warrants and represents to, and covenants with, the
Assignee that:
a. The Assignor is the lawful owner of the Mortgage Loans
with the full right to transfer the Mortgage Loans free from any and all claims
and encumbrances whatsoever;
b. The Assignor has not received notice of, and has no
knowledge of, any offsets, counterclaims or other defenses available to the
Company with respect to the Seller's Warranties and Servicing Agreement or the
Mortgage Loans;
c. The Assignor has not waived or agreed to any waiver under,
or agreed to any amendment or other modification of, the Seller's Warranties
and Servicing Agreement, the Custodial Agreement or the Mortgage Loans,
including without limitation the transfer of the servicing obligations under
the Seller's Warranties and Servicing Agreement. The Assignor has no knowledge
of, and has not received notice of, any waivers under or amendments or other
modifications of, or assignments of rights or obligations under, the Seller's
Warranties and Servicing Agreement or the Mortgage Loans; and
d. Neither the Assignor nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Mortgage
Loans, any interest in the Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other disposition of
the Mortgage Loans, any interest in the Mortgage Loans or any other similar
security from, or otherwise approached or negotiated with respect to the
Mortgage Loans, any interest in the Mortgage Loans or any other similar
security with, any person in any manner, or made any general solicitation by
means of general advertising or in any other manner, or taken any other action
which would constitute a distribution of the Mortgage Loans under the
Securities Act of 1933 (the "33 Act") or which would render the disposition of
the Mortgage Loans a violation of Section 5 of the 33 Act or require
registration pursuant thereto.
3. That Assignee warrants and represent to, and covenants with, the
Assignor and the Company pursuant to Section 12.10 of the Seller's Warranties
and Servicing Agreement that:
a. The Assignee agrees to be bound, as Purchaser, by all of
the terms, covenants and conditions of the Seller's Warranties and Servicing
Agreement, the Mortgage Loans and the Custodial Agreement, and from and after
the date hereof, the Assignee assumes for the benefit of each of the Company
and the Assignor all of the Assignor's obligations as purchaser thereunder;
b. The Assignee understands that the Mortgage Loans have not
been registered under the 33 Act or the securities laws of any state;
c. The purchase price being paid by the Assignee for the
Mortgage Loans are in excess of $250,000.00 and will be paid by cash remittance
of the full purchase price within 60 days of the sale;
d. The Assignee is acquiring the Mortgage Loans for
investment for its own account only and not for any other person. In this
connection, neither the Assignee nor any person authorized to act therefor has
offered to Mortgage Loans by means of any general advertising or general
solicitation within the meaning of Rule 502(c) of US Securities and Exchange
Commission Regulation D, promulgated under the 1933 Act;
e. The Assignee considers itself a substantial sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Mortgage Loans;
f. The Assignee has been furnished with all information
regarding the Mortgage Loans that it has requested from the Assignor or the
Company;
g. Neither the Assignee nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Mortgage
Loans, any interest in the Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other disposition of
the Mortgage Loans, any interest in the Mortgage Loans or any other similar
security from, or otherwise approached or negotiated with respect to the
Mortgage Loans, any interest in the Mortgage Loans or any other similar
security with, any person in any manner which would constitute a distribution
of the Mortgage Loans under the 33 Act or which would render the disposition of
the Mortgage Loans a violation of Section 5 of the 33 Act or require
registration pursuant thereto, nor will it act, nor has it authorized or will
it authorize any person to act, in such manner with respect to the Mortgage
Loans; and
h. Either (1) the Assignee is not an employee benefit plan
("Plan") within the meaning of section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or a plan (also "Plan") within the
meaning of section 4975(e)(1) of the Internal Revenue Code of 1986 ("Code"),
and the Assignee is not directly or indirectly purchasing the Mortgage Loans on
behalf of, investment manager of, as named fiduciary of, as Trustee of, or with
assets of, a Plan; or (2) the Assignee's purchase of the Mortgage Loans will
not result in a prohibited transaction under section 406 of ERISA or section
4975 of the Code.
i. The Assignee's address for purposes of all notices and
correspondence related to the Mortgage Loans and the Seller's Warranties and
Servicing Agreements is:
___________________________________
___________________________________
___________________________________
Attention: ________________________
The Assignee's wire transfer instructions for purposes of all
remittances and payments related to the Mortgage Loans and the Seller's
Warranties and Servicing Agreement is:
___________________________________
___________________________________
___________________________________
Attention: ________________________
[Signatures Follow]
IN WITNESS WHEREOF, the parties have caused this Assignment and
Assumption to be executed by their duly authorized officers as of the date
first above written.
_____________________________________ _____________________________________
Assignor Assignee
By: _________________________________ By: _________________________________
Name: _______________________________ Name: _______________________________
Its: ________________________________ Its: ________________________________
Tax Payer Identification No.: Tax Payer Identification No.:
_____________________________________ _____________________________________
EXHIBIT H
UNDERWRITING GUIDELINES
MORTGAGE LOAN PURCHASE AGREEMENT
This is a Purchase Agreement (the "Agreement"), dated as of December
1, 2000 by and between Xxxxxx Brothers Bank, FSB, having an office at 3 World
Financial Center, New York, NY (the "Purchaser") and Xxxxx Fargo Home Mortgage,
Inc., having an xxxxxx xx 0 Xxxx Xxxxxx, Xxx Xxxxxx, Xxxx 00000-0000 (the
"Seller").
W I T N E S S E T H
WHEREAS, the Seller agrees to sell, and the Purchaser agrees to
purchase, certain fixed and adjustable rate mortgage loans (the "Mortgage
Loans") on a servicing retained basis as described herein:
WHEREAS, the Mortgage Loans shall be delivered as whole loans; and
WHEREAS, the parties intend hereby to set forth the terms and
conditions upon which the proposed transactions will be effected.
NOW THEREFORE, in consideration of the promises and the mutual
agreements set forth herein, the parties hereto agree as follows:
SECTION 1. All capitalized terms not otherwise defined herein have the
respective meanings set forth in the Seller's Warranties and Servicing
Agreement, dated as of the date herewith (the "Seller's Warranties and
Servicing Agreement"). The following terms are defined as follows (except as
otherwise agreed by the parties):
Cut-off Date: December 1, 2000
Closing Date: December 20, 2000
First Remittance Date: January 18, 2001
Servicing Fee Rate: .50%
SECTION 2. Agreement to Purchase. The Seller agrees to sell, and the
Purchaser agrees to purchase, Mortgage Loans having an aggregate principal
balance on the Cut-off Date in an amount as set forth in the Commitment Letter,
dated as of November 9, 2000 (the "Commitment Letter"), or in such other amount
as agreed by the Purchaser and the Seller as evidenced by the actual aggregate
principal balance of the Mortgage Loans accepted by the Purchaser on the
Closing Date. The Mortgage Loans will be delivered pursuant to a Seller's
Warranties and Servicing Agreement, between the Purchaser and the Seller.
SECTION 3. Mortgage Schedules. The Seller has provided the Purchaser
with certain information constituting a listing of the Mortgage Loans to be
purchased under this Agreement (the "Mortgage Loan Schedule") substantially in
the form attached hereto as Exhibit 1. The Mortgage Loan Schedule shall conform
to the definition of "Mortgage Loan Schedule" under the Seller's Warranties and
Servicing Agreement.
SECTION 4. Purchase Price. The purchase price for the Mortgage Loans
(the "Purchase Price") shall be the percentage of par as stated in the
Commitment Letter, multiplied by the aggregate principal balance, as of the
Cut-off Date, of the Mortgage Loans listed on the related Mortgage Loan
Schedule, after application of scheduled payments of principal due on or before
the Cut-off Date whether or not collected. The Purchase Price may be adjusted
as stated in the Commitment Letter.
In addition to the Purchase Price as described above, the Purchaser
shall pay to the Seller, at closing, accrued interest on the initial principal
amount of the Mortgage Loans at the weighted average Mortgage Loan Remittance
Rate from the Cut-off Date through the day prior to the Closing Date,
inclusive.
The Purchaser shall be entitled to (1) all scheduled principal due
after the Cut-off Date, (2) all other recoveries of principal collected after
the Cut-off Date (provided, however, that all scheduled payments of principal
due on or before the Cut-off Date and collected by the Seller after the Cut-off
Date shall belong to the Seller), and (3) all payments of interest on the
Mortgage Loans at the Mortgage Loan Remittance Rate (minus that portion of any
such payment which is allocable to the period prior to the Cut-off Date). The
principal balance of each Mortgage Loan as of the Cut-off Date is determined
after application of payments of principal due on or before the Cut-off Date
whether or not collected. Therefore, payments of scheduled principal and
interest prepaid for a Due Date beyond the Cut-off Date shall not be applied to
the principal balance as of the Cut-off Date. Such prepaid amounts (minus
interest at the Servicing Fee Rate) shall be the property of the Purchaser. The
Seller shall deposit any such prepaid amounts into the Custodial Account, which
account is established for the benefit of the Purchaser for subsequent
remittance by the Seller to the Purchaser.
SECTION 5. Examination of Mortgage Files. Prior to the Closing Date,
the Seller shall (a) deliver to the Purchaser in escrow, for examination, the
Mortgage File for each Mortgage Loan, including a copy of the Assignment of
Mortgage, pertaining to each Mortgage Loan, or (b) make the Mortgage Files
available to the Purchaser for examination at the Seller's offices or such
other location as shall otherwise be agreed upon by the Purchaser and the
Seller. Such examination may be made by the Purchaser, or by any prospective
purchaser of the Mortgage Loans from the Purchaser, at any time before or after
the Closing Date upon prior reasonable notice to the Seller. The fact that the
Purchaser or any prospective purchaser of the Mortgage Loans has conducted or
has failed to conduct any partial or complete examination of the Mortgage Files
shall not affect the Purchaser's (or any of its successor's) rights to demand
repurchase, substitution or other relief or remedy as provided under the
related Seller's Warranties and Servicing Agreement.
SECTION 6. Representations, Warranties and Agreements of Seller. The
Seller agrees and acknowledges that it shall, as a condition to the
consummation of the transactions contemplated hereby, make the representations
and warranties specified in Section 3.01 and 3.02 of the Seller's Warranties
and Servicing Agreement, as of the Closing Date. The meaning of the term
"Agreement" as used in Sections 3.01 and 3.02 of the Seller's Warranties and
Servicing Agreement shall include this Agreement. The Seller, without conceding
that the Mortgage Loans are securities, hereby makes the following additional
representations, warranties and agreements which shall be deemed to have been
made as of the Closing Date:
a) neither the Seller nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of any Mortgage
Loans, any interest in any Mortgage Loans or any other similar
security to, or solicited any offer to buy or accept a transfer,
pledge or other disposition of any Mortgage Loans, any interest in any
Mortgage Loans or any other similar security from, or otherwise
approached or negotiated with respect to any Mortgage Loans, any
interest in any Mortgage Loans or any other similar security with, any
person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action
which would constitute a distribution of the Mortgage Loans under the
Securities Act of 1933 (the "1933 Act") or which would render the
disposition of any Mortgage Loans a violation of Section 5 of the 1933
Act or require registration pursuant thereto, nor will it act, nor has
it authorized or will it authorize any person to act, in such manner
with respect to the Mortgage Loans; and
b) the Seller has not dealt with any broker or agent or anyone else
who might be entitled to a fee or commission in connection with this
transaction other than the Purchaser.
SECTION 7. Representation, Warranties and Agreement of Purchaser. The
Purchaser, without conceding that the Mortgage Loans are securities, hereby
makes the following representations, warranties and agreements, which shall
have been deemed to have been made as of the Closing Date.
a) the Purchaser understands that the Mortgage Loans have not been
registered under the 1933 Act or the securities laws of any state;
b) the Purchaser is acquiring the Mortgage Loans for its own account
only and not for any other person;
c) the Purchaser considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in
financial and business matters that it is capable of evaluating the
merits and risks of investment in the Mortgage Loans;
d) the Purchaser has been furnished with all information regarding the
Mortgage Loans which it has requested from the Seller or the Company;
and
e) neither the Purchaser nor anyone acting on its behalf offered,
transferred, pledged, sold or otherwise disposed of any Mortgage Loan,
any interest in any Mortgage Loan or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of any Mortgage Loan, any interest in any Mortgage Loan or
any other similar security from, or otherwise approached or negotiated
with respect to any Mortgage Loan, any interest in any Mortgage Loan
or any other similar security with, any person in any manner, or made
any general solicitation by means of general advertising or in any
other manner, or taken any other action which would constitute a
distribution of the Mortgage Loans under the 1933 Act or which would
render the disposition of any Mortgage Loan a violation of Section 5
of the 1933 Act or require registration pursuant thereto, nor will it
act, nor has it authorized or will it authorize any person to act, in
such manner with respect to the Mortgage Loans.
SECTION 8. Closing. The closing for the purchase and sale of the
Mortgage Loans, shall take place on the Closing Date. At the Purchaser's
option, the Closing shall be either: by telephone, confirmed by letter or wire
as the parties shall agree; or conducted in person, at such place as the
parties shall agree.
The closing shall be subject to each of the following conditions:
a) all of the representations and warranties of the Seller under this
Agreement and under the Seller's Warranties and Servicing Agreement
shall be true and correct as of the Closing Date and no event shall
have occurred which, with notice or the passage of time, would
constitute a default under this Agreement or an Event of Default under
the related Seller's Warranties and Servicing Agreement;
b) the Purchaser shall have received, or the Purchaser's attorneys
shall have received in escrow, all Closing Documents as specified in
Section 9 of this Agreement, in such forms as are agreed upon and
acceptable to the Purchaser, duly executed by all signatories other
than the Purchaser as required pursuant to the respective terms
thereof;
c) the Seller shall have delivered and released to the Custodian under
the Seller's Warranties and Servicing Agreement all documents required
pursuant to the related Custodial Agreement; and
d) all other terms and conditions of this Agreement and the Seller's
Warranties and Servicing Agreement shall have been complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the
Seller on the Closing Date the Purchase Price, plus accrued interest pursuant
to Section 4 of this Agreement, by wire transfer of immediately available funds
to the account designated by the Seller.
SECTION 9. Closing Documents. With respect to the Mortgage Loans, the
Closing Documents shall consist of fully executed originals of the following
documents:
1. The originally executed Escrow Agreement, in four counterparts;
2. the Seller's Warranties and Servicing Agreement, in three
counterparts;
3. this Agreement in three counterparts;
4. an originally executed Side Letter (the "Side Letter") regarding
repurchase price, by and between the Seller and the Purchaser,
dated as of December 20, 2000 in three counterparts;
5. the originally executed Custodial Assignment and Assumption
Agreement by and between the Purchase and Seller dated as of
December 20, 2000 in three counter-parts assigning the
Purchaser's rights as Initial Servicer under the Custodial
Agreement, dated as of September 1, 1999, by and between the
Purchaser, as owner and the Initial Servicer and US Bank
National Association (the "Custodian");
6. the Mortgage Loan Schedule, one copy to be attached to each
counterpart of the Seller's Warranties and Servicing Agreement,
to each counterpart of this Agreement, and to each counterpart
of the Custodial Agreement, as the Mortgage Loan Schedule
thereto;
7. an Officer's Certificate of the Seller;
8. a Receipt and Certification, as required under the Custodial
Agreement; and
9. an Opinion of Counsel of the Seller, in the form of Exhibit 2
hereto.
SECTION 10. Costs. The Purchaser shall pay any commissions due its
salesmen, the legal fees and expenses of its attorneys and the costs and
expenses associated with the Custodian. The Seller shall be responsible for
reasonable costs and expenses associated with any preparation and recording of
the initial Assignments of Mortgage. All other costs and expenses incurred in
connection with the transfer and delivery of the Mortgage Loans, including fees
for title policy endorsements and continuations and the Seller's attorney fees,
shall be paid by the Seller.
SECTION 11. Servicing The Mortgage Loans shall be serviced by the
Seller in accordance with the terms of the applicable Seller's Warranties and
Servicing Agreement. The Seller shall be entitled to servicing fees calculated
as provided therein, at the Servicing Fee Rate shown on the first page of this
Agreement unless otherwise agreed by the parties.
SECTION 12. Financial Statements. The Seller understands that in
connection with the Purchaser's marketing of the Mortgage Loans, the Purchaser
shall make available to prospective purchasers a Consolidated Statement of
Operations of the Seller for the most recently completed two fiscal years
respecting which such a statement is available, as well as a Consolidated
Statement of Condition at the end of the last two fiscal years covered by such
Consolidated Statement of Operations. The Purchaser shall also make available
any comparable interim statements to the extent any such statements have been
prepared by the Seller in a format intended or otherwise suitable for the
public at large. The Seller, if it has not already done so, agrees to furnish
promptly to the Purchaser copies of the statements specified above. The Seller
shall also make available information on its servicing performance with respect
to loans in its own portfolio and loans serviced for others (if any), including
loss and delinquency ratios.
The Seller also agrees to allow access to a knowledgeable (as shall be
determined by the Seller) financial or accounting officer for the purpose of
answering questions asked by any prospective purchaser regarding recent
developments affecting the Seller or the financial statements of the Seller.
SECTION 13. Mandatory Delivery. The sale and delivery on the Closing
Date of the Mortgage Loans described on the Mortgage Loan Schedule is
mandatory, it being specifically understood and agreed that each Mortgage Loan
is unique and identifiable on the date hereof and that an award of money
damages would be insufficient to compensate the Purchaser for the losses and
damages incurred by the Purchaser (including damages to prospective purchasers
of the Mortgage Loans) in the event of the Seller's failure to deliver the
Mortgage Loans on or before the Closing Date. All rights and remedies of the
Purchaser under this Agreement are distinct from, and cumulative with, any
other rights or remedies under this Agreement or afforded by law or equity and
all such rights and remedies may be exercised concurrently, independently or
successively.
SECTION 14. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed, by
registered or certified mail, return receipt requested, or, if by other means,
when received by the other party at the address shown on the first page hereof,
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice of communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 15. Severability Clause. Any part, provision, representation
or warranty of this Agreement which is prohibited or which is held to be void
or unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any
part, provision, representation or warranty of this Agreement which is
prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall be ineffective, as to such jurisdiction, to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which
prohibits or renders void or unenforceable any provision hereof. If the
invalidity of any part, provision, representation or warranty of this Agreement
shall deprive any party of the economic benefit intended to be conferred by
this Agreement, the parties shall negotiate, in good-faith, to develop a
structure the economic effect of which is as close as possible to the economic
effect of this Agreement without regard to such invalidity.
SECTION 16. Counterparts. This Agreement may be executed
simultaneously in any number of counterparts. Each counterpart shall be deemed
to be an original, and all such counterparts shall constitute one and the same
instrument.
SECTION 17. Place of Delivery and Governing Law. This Agreement shall
be deemed in effect when a fully executed counterpart thereof is received by
the Purchaser in the State of New York and shall be deemed to have been made in
The State of New York. The Agreement shall be construed in accordance with the
laws of the State of New York and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with the laws of the State
of New York, except to the extent preempted by Federal Law.
Each of the Seller and the Purchaser hereby knowingly, voluntarily and
intentionally waives any and all rights it may have to a trial by jury in
respect of any litigation based on, or arising out of, under, or in connection
with, this Agreement, or any other documents and instruments executed in
connection herewith, or any course of conduct, course of dealing, statements
(whether oral or written), or actions of the Seller or the Purchaser. This
provision is a material inducement for the Purchaser to enter into this
Agreement.
SECTION 18. Further Agreements. The Purchaser and the Seller each
agree to execute and deliver to the other such additional documents,
instruments or agreements as may be necessary or appropriate to effectuate the
purposes of this Agreement.
Without limiting the generality of the foregoing, the Seller shall
reasonably cooperate with the Purchaser in connection with the initial resales
of the Mortgage Loans by the Purchaser. In that connection, the Seller shall
provide to the Purchaser: (i) any and all information and appropriate
verification of information, whether through letters of its auditors and
counsel or otherwise, as the Purchaser shall reasonably request, and (ii) such
additional representations, warranties, covenants, opinions of counsel, letters
from auditors and certificates of public officials or officers of the Seller as
are reasonably believed necessary by the Purchaser in connection with such
resales. The requirement of the Seller pursuant to (ii) above shall terminate
on the Closing Date. Prior to incurring any out-of-pocket expenses pursuant to
this paragraph, the Seller shall notify the Purchaser in writing of the
estimated amount of such expense. The Purchaser shall reimburse the Seller for
any such expense following its receipt of appropriate details thereof.
SECTION 19. Intention of the Parties. It is the intention of the
parties that the Purchaser is purchasing, and the Seller is selling, an
undivided 100% ownership interest in the Mortgage Loans and not a debt
instrument of the Seller or another security. Accordingly, the parties hereto
each intend to treat the transaction for Federal income tax purposes as a sale
by the Seller, and a purchase by the Purchaser, of the Mortgage Loans. The
Purchaser shall have the right to review the Mortgage Loans and the related
Mortgage Loan Files to determine the characteristics of the Mortgage Loans
which shall affect the Federal income tax consequences of owning the Mortgage
Loans and the Seller shall cooperate with all reasonable requests made by the
Purchaser in the course of such review.
SECTION 20. Successors and Assigns; Assignment of Purchase Agreement.
This Agreement shall bind and inure to the benefit and be enforceable by the
Seller and the Purchaser and the respective successors and assigns of the
Seller and the Purchaser. This Agreement shall not be assigned, pledged or
hypothecated by the Seller to a third party without the consent of the
Purchaser.
SECTION 21. Waivers; Other Agreements. No term or provision of this
Agreement may be waived or modified unless such waiver or modification is in
writing and signed by the party against whom such waiver or modification is
sought to be enforced.
SECTION 22. Exhibits. The exhibits to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
SECTION 23. General Interpretive Principles. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular,
and the use of any gender herein shall be deemed to include the other
gender;
b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles;
c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document
are to designated Articles, Sections, Subsections, Paragraphs and
other subdivisions of this Agreement;
d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to
Paragraphs and other subdivisions;
e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular provision; and
f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
SECTION 24. Reproduction of Documents. This Agreement and all
documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements,
certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
[Signatures Follow]
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly
authorized as of the date first above written.
XXXXXX BROTHERS BANK, FSB
(Purchaser)
By: _____________________________
Name: ___________________________
Title: __________________________
XXXXX FARGO HOME MORTGAGE, INC.
(Seller)
By: ______________________________
Name: ____________________________
Title: ___________________________
EXHIBIT 1
MORTGAGE LOAN SCHEDULE
EXHIBIT 2
FORM OF OPINION OF COUNSEL
@
@
@
@
Re: Xxxxx Fargo Home Mortgage, Inc.
Mortgage Loan Series @
Dear Sir/Madam:
I am @ of Xxxxx Fargo Home Mortgage, Inc. and have acted as counsel to Xxxxx
Fargo Home Mortgage, Inc. (the "Company"), with respect to certain matters in
connection with the sale by the Company of the mortgage loans designated as
Mortgage Loan Series @ (the "Mortgage Loans") pursuant to that certain Seller's
Warranties and Servicing Agreement and Mortgage Loan Purchase Agreement by and
between the Company and @ (the "Purchaser"), dated as of @, 2000, (the
"Agreements"), which sale is in the form of whole Mortgage Loans. Capitalized
terms not otherwise defined herein have the meanings set forth in the Seller's
Warranties and Servicing Agreement.
I have examined the following documents:
1. the Seller's Warranties and Servicing Agreement;
2. the Mortgage Loan Purchase Agreement;
3. the Custodial Agreement;
4. the form of assignment of the Mortgage;
5. the form of endorsement of the Mortgage Notes; and
6. such other documents, records and papers as I have deemed necessary
and relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied upon the
representations and warranties of the Company contained in the Agreements. I
have assumed the authenticity of all documents submitted to me as originals,
the genuineness of all signatures, the legal capacity of natural persons and
the conformity to the originals of all documents.
Based upon the foregoing, it is my opinion that;
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the state of California and is
qualified to transact business.
2. The Company has the power to engage in the transactions contemplated
by the Agreements, the Custodial Agreement and all requisite power,
authority and legal right to execute and deliver the Agreements, the
Custodial Agreement and the Mortgage Loans, and to perform and observe
the terms and conditions of such instruments.
3. Each person who, as an officer or attorney-in-fact of the Company,
signed (a) the Agreements, each dated as of @, 2000, by and between
the Company and the Purchaser, and (b) any other document delivered
prior hereto or on the date hereof in connection with the sale and
servicing of the Mortgage Loans in accordance with the Agreements and
the person was, at the respective times of such signing and delivery,
and is, as of the date hereof, duly elected or appointed, qualified
and acting and as such officer or attorney-in-fact, and the signatures
of such persons appearing on such documents are their genuine
signatures.
4. Each of the Agreements, the Custodial Agreement, and the Mortgage
Loans, has been duly authorized, executed and delivered by the Company
and is a legal, valid and binding agreement enforceable in accordance
with its terms against the Company, subject to bankruptcy laws and
other similar laws of general application affecting rights of
creditors and subject to the application of the rules of equity,
including those respecting the availability of specific performance,
none of which will materially interfere with the realization of the
benefits provided thereunder or with the Purchaser's ownership of the
Mortgage Loans.
5. The Company has been duly authorized to allow any of its officers to
execute any and all documents by original signature in order to
complete the transactions contemplated by the Agreements and the
Custodial Agreement, and by original or facsimile signature in order
to execute the endorsements to the Mortgage Notes and the assignments
of the Mortgages, and the original or facsimile signature of the
officer at the Company executing the endorsements to the Mortgage
Notes and the assignments of the Mortgages represents the legal and
valid signature of said officer of the Company.
6. Either (i) no consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Company of or compliance by the Company with
the Agreements, the Custodial Agreement or the sale and delivery of
the Mortgage Loans or the consummation of the transactions
contemplated by the Agreements, and the Custodial Agreement; or (ii)
any required consent, approval, authorization or order has been
obtained by the Company.
7. Neither the consummation of the transactions contemplated by, nor the
fulfillment of the terms of the Agreements and the Custodial
Agreement, will conflict with or results in or will result in a breach
of or constitutes or will constitute a default under the charter or
by-laws of the Company, the terms of any indenture or other agreement
or instrument to which the Company is a party or by which it is bound
or to which it is subject, or violates any statute or order, rule,
regulations, writ, injunction or decree of any court, governmental
authority or regulatory body to which the Company is subject or by
which it is bound.
8. There is no action, suit, proceeding or investigation pending or, to
the best of my knowledge, threatened against the Company which, in my
opinion, either in any one instance or in the aggregate, may result in
any material adverse change in the business, operations, financial
condition, properties or assets of the Company or in any material
impairment of the right or ability of the Company to carry on its
business substantially as now conducted or in any material liability
on the part of the Company or which would draw into question the
validity of the Agreements, and the Custodial Agreement, or of any
action taken or to be taken in connection with the transactions
contemplated thereby, or which would be likely to impair materially
the ability of the Company to perform under the terms of the
Agreements and the Custodial Agreement.
9. For purposes of the foregoing, I have not regarded any legal or
governmental actions, investigations or proceedings to be "threatened"
unless the potential litigant or governmental authority has manifested
to the legal department of the Company or an employee of the Company
responsible for the receipt of process a present intention to initiate
such proceedings; nor have I regarded any legal or governmental
actions, investigations or proceedings as including those that are
conducted by state or federal authorities in connection with their
routine regulatory activities. The sale of each Mortgage Note and
Mortgage as and in the manner contemplated by the Agreements is
sufficient fully to transfer all right, title and interest of the
Company thereto as noteholder and mortgagee, apart from the rights to
service the Mortgage Loans pursuant to the Agreements.
10. The form of endorsement that is to be used with respect to the
Mortgage Loans is legally valid and sufficient to duly endorse the
Mortgage Notes to the Purchaser. Upon the completion of the
endorsement of the Mortgage Notes and the completion of the
assignments of the Mortgages, and the recording thereof, the
endorsement of the Mortgage Notes, the delivery to the Custodian of
the completed assignments of the Mortgages, and the delivery of the
original endorsed Mortgage Notes to the Custodian would be sufficient
to permit the entity to which such Mortgage Note is initially endorsed
at the Purchaser's direction, and to whom such assignment of Mortgages
is initially assigned at the Purchaser's direction, to avail itself of
all protection available under applicable law against the claims of
any present or future creditors of the Company, and would be
sufficient to prevent any other sale, transfer, assignment, pledge or
hypothecation of the Mortgages and the Mortgage Notes by the Company
from being enforceable.
This opinion is given to you for your sole benefit, and no other person or
entity is entitled to rely hereon except that the purchaser or purchasers to
which you initially and directly resell the Mortgage Loans may rely on this
opinion as if it were addressed to them as of its date.
Sincerely,
