EXHIBIT 4.2
EXECUTION COPY
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BEAR XXXXXXX ASSET BACKED SECURITIES, INC.,
as Depositor,
IHE FUNDING CORP. II,
as Transferor,
XXXXX UNION BANK AND TRUST COMPANY,
as Master Servicer,
XXXXX HOME EQUITY LOAN TRUST 2001-2,
as Issuer,
and
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
as Indenture Trustee
SALE AND SERVICING AGREEMENT
Dated as of August 31, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS..................................................1
Section 1.01. Definitions...................................1
Section 1.02. Interpretive Provisions.......................2
Section 1.03. Interest Calculations.........................2
ARTICLE II CONVEYANCE OF MORTGAGE LOANS.................................2
Section 2.01. Conveyance of Initial Mortgage Loans..........2
Section 2.02. Conveyance of Subsequent Mortgage Loans.......3
Section 2.03. Treatment of Transfer.........................6
Section 2.04. Mortgage File.................................8
Section 2.05. Representations and Warranties of
the Master Servicer...........................8
Section 2.06. Representations and Warranties of
the Issuer....................................9
Section 2.07. Representations and Warranties of the
Depositor....................................10
Section 2.08. Representations and Warranties of the
Transferor Regarding the Mortgage Loans;
Retransfer of Certain Mortgage Loans.........11
Section 2.09. Enforcement of Representations and
Warranties...................................12
Section 2.10. Future Advances..............................13
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS...........13
Section 3.01. Appointment of the Master Servicer..............13
Section 3.02. Subservicing Agreements Between the Master
Servicer and Subservicers.......................15
Section 3.03. Collection of Mortgage Loan Payments............17
Section 3.04. Permitted Withdrawals from the Collection
Account.........................................17
Section 3.05. Maintenance of Insurance........................18
Section 3.06. Fidelity Bond; Errors and Omissions Policy......20
Section 3.07. Enforcement of Due-on-Sale Clauses;
Assumption Agreements...........................20
Section 3.08. Realization upon Defaulted Mortgage Loans.......21
Section 3.09. Indenture Trustee to Cooperate; Release
of Mortgage Files; Trust Estates;
Related Documents...............................22
Section 3.10. Servicing Fee; Payment of Certain Expenses
by Master Servicer..............................24
Section 3.11. Access to Certain Documentation and
Information Regarding the Mortgage Loans........24
Section 3.12. Reserved........................................24
Section 3.13. Recordation of Assignments......................24
Section 3.14. Annual Statement as to Compliance...............25
Section 3.15. Annual Independent Public Accountants'
Servicing Report................................25
Section 3.16. Reserved........................................25
Section 3.17. Indemnification; Third-Party Claims.............25
Section 3.18. Maintenance of Existence and Licenses; Merger
or Consolidation of the Master Servicer.........26
Section 3.19. Excluded Amounts................................26
Section 3.20. Letters of Credit...............................26
ARTICLE IV SERVICING CERTIFICATE....................................28
Section 4.01. Servicing Certificate...........................28
ARTICLE V THE ACCOUNTS.............................................30
Section 5.01. Accounts........................................30
Section 5.02. Collection Account..............................31
Section 5.03. Trustee Collection Account......................32
Section 5.04. Pre-Funding Account.............................33
Section 5.05. Funding Account.................................33
Section 5.06. Capitalized Interest Account....................34
Section 5.07. Reserved........................................35
ARTICLE VI THE MASTER SERVICER......................................35
Section 6.01. Liability of the Master Servicer................35
Section 6.02. Merger or Consolidation or Assumption of the
Obligations of the Master Servicer..............35
Section 6.03. Limitation on Liability of the Master
Servicer and Others.............................36
Section 6.04. Master Servicer Not to Resign...................36
Section 6.05. Delegation of Duties............................37
Section 6.06. Indenture Trustee Fees and Expenses;
Indemnification.................................37
Section 6.07. Indemnification of Owner Trustee by Master
Servicier.......................................38
ARTICLE VII DEFAULT..................................................39
Section 7.01. Default.........................................39
Section 7.02. Indenture Trustee to Act; Appointment of
Successor.......................................41
Section 7.03. Notification to Securityholders.................42
ARTICLE VIII MISCELLANEOUS PROVISIONS.................................42
Section 8.01. Amendment.......................................42
Section 8.02. Governing Law...................................43
Section 8.03. Notices.........................................43
Section 8.04. Severability of Provisions......................43
Section 8.05. Third-Party Beneficiaries.......................43
Section 8.06. Counterparts....................................44
Section 8.07. Effect of Headings and Table of Contents........44
Section 8.08. Termination; Clean-Up Call......................44
Section 8.09. Certain Matters Affecting the Indenture
Trustee.........................................44
Section 8.10. Owner Trustee Not Liable for Mortgage
Documents or Related Documents..................45
Section 8.11. Reserved........................................45
Section 8.12. Limitation of Liability of Owner Trustee........45
EXHIBITS
Exhibit A Mortgage Loan Schedule................................A-1
Exhibit B Limited Power of Attorney.............................B-1
Exhibit C Request for Release of Documents......................C-1
Exhibit D Form of Subsequent Transfer Agreement.................D-1
Exhibit E Form of Initial/Final Certification of Trustee........E-1
This Sale and Servicing Agreement (the "Agreement"), dated as of August 31,
2001, is among Bear Xxxxxxx Asset Backed Securities, Inc., as depositor (the
"Depositor"), IHE Funding Corp. II, as Transferor (the "Transferor"), Xxxxx
Union Bank and Trust Company, as master servicer (the "Master Servicer"), Xxxxx
Home Equity Loan Trust 2001-2, as issuer (the "Issuer"), and Xxxxx Fargo Bank
Minnesota, National Association, as indenture trustee (the "Indenture Trustee").
WITNESSETH:
WHEREAS, pursuant to the terms of the Mortgage Loan Sale Agreement, Xxxxx
Union Bank and Trust Company will sell to IHE Funding Corp. II and pursuant to
the terms of the Purchase and Sale Agreement, IHE Funding Corp. II will sell to
Bear Xxxxxxx Asset Backed Securities, Inc. the Initial Mortgage Loans, together
with the applicable Mortgage Documents and Related Documents on the Closing
Date, and thereafter, until the end of the Managed Amortization Period, all
Additional Balances relating thereto created on or after the Initial Cut-Off
Date;
WHEREAS, the Depositor will sell the Initial Mortgage Loans and all of its
rights under the Purchase and Sale Agreement to the Issuer, together with the
applicable Mortgage Documents and Related Documents on the Closing Date and
thereafter, until the end of the Managed Amortization Period, all Additional
Balances relating thereto created on or after the Initial Cut-Off Date;
WHEREAS, pursuant to the terms of one or more Subsequent Transfer
Agreements, until the end of the Pre-Funding Period, the Transferor will sell to
the Issuer Subsequent Mortgage Loans, together with the applicable Mortgage
Documents and Related Documents on one or more Subsequent Transfer Dates and
thereafter, until the end of the Managed Amortization Period, all Additional
Balances relating thereto created on or after the Initial Cut-Off Date;
WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer will
issue the Certificate;
WHEREAS, pursuant to the terms of the Indenture, the Issuer will issue the
Notes; and
WHEREAS, pursuant to the terms of this Agreement, the Master Servicer will
service the Mortgage Loans directly or through one or more Subservicers.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. For all purposes of this Agreement, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in Appendix A to the indenture dated as of August 31,
2001 (the "Indenture"), between the Issuer and the Indenture Trustee, which is
incorporated by reference herein. All other capitalized terms used herein shall
have the meanings specified herein.
Section 1.02. INTERPRETIVE PROVISIONS. Unless the context otherwise
requires, (i) a term has the meaning assigned to it; (ii) an accounting term not
otherwise defined has the meaning assigned to it in accordance with generally
accepted accounting principles as in effect from time to time; (iii) "or"
includes "and/or"; (iv) "including" means including without limitation; (v)
words in the singular include the plural and words in the plural include the
singular; (vi) the term "proceeds" has the meaning ascribed thereto in the UCC;
(vii) any agreement, instrument or statute defined or referred to herein or in
any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; and (viii)
references to a Person are also to such Person's permitted successors and
assigns.
Section 1.03. INTEREST CALCULATIONS. All calculations of interest hereunder
that are made in respect of any HELOC originated by the Master Servicer shall be
made on an average daily balance basis using a 365/366 day year. All
calculations of interest hereunder that are made in respect of substantially all
HELOCs originated by Providian National Bank, any High LTV Mortgage Loan or any
HEL originated before January 1, 2000 shall be made on a daily basis using a
365/366-day year; provided, that all calculations on HELs and High LTV Mortgage
Loans originated on or after January 1, 2000 shall be made on the basis of a
360-day year assumed to consist of twelve 30-day months, except upon loan
payoff, when interest is calculated on an actual 365/366 day basis. All
calculations of interest on the Class IA-1 Notes, the Class IIA-1 Notes, the
Class IIIA-1 Notes, the Subordinate Notes and the Variable Funding Notes shall
be made on the basis of the actual number of days in the related Interest Period
and a year assumed to consist of 360 days. All calculations of interest on any
other Security shall be made on the basis of a 360-day year assumed to consist
of twelve 30-day months. The calculation of the Servicing Fee shall be made on
the basis of the actual number of days in the related Interest Period and a
360-day year.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS
Section 2.01. CONVEYANCE OF INITIAL MORTGAGE LOANS. In consideration of the
Issuer's delivery to or upon the order of the Depositor of executed and
authenticated Notes and Certificate, in authorized denominations and in
aggregate amounts equal to the aggregate Initial Note Balance, the Depositor
does hereby sell, transfer, assign and otherwise convey to the Issuer, in trust
for the benefit of the Securityholders, without recourse, subject to the
Depositor's obligations herein:
(a) all right, title and interest of the Depositor in and to the Initial
Mortgage Loans listed in Schedule A hereto and all interest accrued after the
Initial Cut-Off Date and principal received relating to the Initial Cut-Off Date
Principal Balances of the Initial Mortgage Loans, and any Additional Balances
relating thereto;
(b) all right, title and interest of the Depositor in the Lien on the
Mortgaged Properties created by the related Mortgage Documents;
(c) all right, title and interest of the Depositor in any Liquidation
Proceeds and Insurance Proceeds covering the Initial Mortgage Loans or the
related Mortgaged Properties or Mortgagors;
(d) all right, title and interest (but none of the obligations) of the
Depositor under the Purchase and Sale Agreement; and
(e) any proceeds of the foregoing and all other assets included or to be
included in the Trust for the benefit of the Securityholders.
Section 2.02. CONVEYANCE OF SUBSEQUENT MORTGAGE LOANS.
(a) Subject to the conditions set forth in Section 2.02(b), in
consideration of the Issuer's delivery to or upon the order of the Transferor of
the purchase price for the Subsequent Mortgage Loans, in each case as described
below and set forth in the related Subsequent Transfer Agreement, the Transferor
shall, on each Subsequent Transfer Date, sell, transfer, assign and otherwise
convey to the Issuer, in trust for the benefit of the Securityholders, without
recourse, subject to the Transferor's obligations herein and in the Purchase and
Sale Agreement:
(i) all right, title and interest of the Transferor in and to the
Subsequent Mortgage Loans listed on the Mortgage Loan Schedule to the
related Subsequent Transfer Agreement, and all interest accrued after the
related Subsequent Cut-Off Date and principal received relating to the
Principal Balances of the Subsequent Mortgage Loans as of the related
Subsequent Cut-Off Date, and any Additional Balances relating thereto;
(ii) all right, title and interest of the Transferor in the Lien on
the related Mortgaged Properties created by the related Mortgage Documents;
(iii) all right, title and interest of the Transferor in any
Liquidation Proceeds and Insurance Proceeds relating to the Subsequent
Mortgage Loans or the related Mortgagors; and
(iv) any proceeds of the foregoing and all other assets included or to
be included in the Trust for the benefit of the Securityholders.
The purchase price to be paid by the Trust on each Subsequent Transfer Date
for the Subsequent Mortgage Loans so sold and the allocation of such purchase
price among monies reserved for Group I, Group II, and Group III shall be set
forth in the related Subsequent Transfer Agreement, and shall be paid from
monies released from the Pre-Funding Account pursuant to Section 5.04 hereof or
the Funding Account pursuant to Section 5.05 hereof. Such purchase price shall
equal the aggregate Principal Balance of such Subsequent Mortgage Loans as of
the related Subsequent Cut-Off Date.
(b) The Transferor shall transfer to the Issuer, and the Issuer shall
accept transfer of, Subsequent Mortgage Loans and the other property and rights
relating thereto described in paragraph (a) above on the related Subsequent
Transfer Date only upon the satisfaction of each of the following conditions:
(i) on or prior to such Subsequent Transfer Date, the Transferor shall
have delivered to the Issuer an executed Subsequent Transfer Agreement
substantially in the form of Exhibit D hereto, which shall include a list
of the Subsequent Mortgage Loans to be so transferred;
(ii) on or prior to such Subsequent Transfer Date, the Transferor
shall have delivered to the Rating Agencies a data file with respect to the
Subsequent Mortgage Loans, which shows that the composition of the Mortgage
Loans in the aggregate following such proposed Subsequent Transfer Date is
substantially similar to the composition of the Mortgage Loans in the
aggregate as of the Closing Date;
(iii) the Rating Agencies shall have confirmed the ratings of the
Notes;
(iv) the Transferor shall have caused the Master Servicer to deposit
into the Collection Account all collections on or in respect of such
Subsequent Mortgage Loans accrued after the related Subsequent Cut-Off Date
but received prior to the related Subsequent Transfer Date;
(v) as of the related Subsequent Transfer Date, neither the Master
Servicer nor the Transferor shall be insolvent nor shall either of them be
made insolvent by such transfer nor is either of them aware of any pending
insolvency;
(vi) such addition shall not result in a material adverse federal tax
consequence to the Trust or the Securityholders;
(vii) with respect to the Pre-Funded Subsequent Mortgage Loans, the
Pre-Funding Period shall not have ended;
(viii) the Transferor shall have delivered to the Issuer and the
Indenture Trustee an Officer's Certificate confirming the satisfaction of
each condition precedent specified in this paragraph and in Section 7 of
the related Subsequent Transfer Agreement;
(ix) the Transferor shall have delivered to the Issuer and the
Indenture Trustee an Opinion of Counsel relating to all Subsequent Mortgage
Loans transferred to the Trust;
(x) the Transferor shall have taken all actions required to maintain
the ownership interest of the Trust in the Trust Estate, including such
Subsequent Mortgage Loans;
(xi) the Transferor or the Issuer shall not have been advised in
writing by any Rating Agency (after prior notice thereto) on or before the
related Subsequent Transfer Date that the conveyance of such Subsequent
Mortgage Loans would result in a Rating Event;
(xii) the Transferor shall have provided the Issuer with a supplement
to the Mortgage Loan Schedule setting forth the Subsequent Mortgage Loans
to be transferred on such Subsequent Transfer Date;
(xiii) as of any Subsequent Transfer Date, taking into account the
Subsequent Mortgage Loans being transferred, no more than 45% (by aggregate
Principal Balance) of the Mortgage Loans in Group II and no more than 45%
(by aggregate Principal Balance) of all of the Mortgage Loans in Groups I,
II and III constitute "real estate mortgages" for the purposes of Treasury
Regulation ss. 301.7701(i)-1(d) under the Code. For this purpose a Mortgage
Loan constitutes a "real estate mortgage" if it satisfies either test set
out in paragraph (1) or paragraph (2) below:
(1) The fair market value of the interest in real property
securing the obligation was at least equal to 80 percent of the
adjusted issue price of the obligation at the time the obligation
was originated (or, if later, the time the obligation was
significantly modified). For purposes of this paragraph (1), the
fair market value of the real property interest must be first
reduced by the amount of any lien on the real property interest
that is senior to the obligation being tested, and must be
further reduced by a proportionate amount of any lien that is in
parity with the obligation being tested. The adjusted issue price
of an obligation is its issue price plus the amount of accrued
original issue discount, if any, as of the date of determination;
(2) Substantially all of the proceeds of the obligation were used
for one or more of the following purposes: (i) to acquire an
interest in real property; (ii) to improve an interest in real
property; or (iii) to protect an interest in real property, that,
at the origination date, is the only security for the obligation.
For this purpose only, substantially all of the proceeds of the
obligations means two-thirds or more of the gross proceeds. For
purposes of this paragraph (2), the use of the proceeds of the
related Mortgage Loan to retire an existing lien against the
related Mortgaged Property is considered use of the proceeds to
protect an interest in real property;
(xiv) the Transferor will not select Mortgage Loans in a manner that it
believes to be adverse to the interests of the Noteholders;
(xv) as of the applicable Cut-Off Date, each such Mortgage Loan will
satisfy the following criteria: (a) the Mortgage Loan may not be 60 or more days
delinquent as of the related Cut-Off Date; (b) the original term to stated
maturity of the Mortgage Loan will not be less than 60 months and will not
exceed 360 months; (c) the Mortgage Loan may not provide for negative
amortization; (d) any Mortgage Loan to be allocated to Group I will not have a
Combined Loan-to-Value Ratio greater than 100.00%; (e) the Mortgage Loans will
have, as of the Cut-Off Date, a weighted average term since origination not in
excess of 12 months; (f) the Mortgage Loan shall have been serviced by the
Master Servicer or Subservicer since origination or purchase by the Originator;
(g) the Mortgage Loan must have a first payment date occurring on or before May
31, 2002; (h) any Mortgage Loan to be allocated to Group III will have a Gross
Margin not less than minus 1.00%; (i) any Mortgage Loan to be allocated to Group
III will have a maximum Mortgage Interest Rate pursuant to the lifetime rate cap
of not less than 9.00%; (j) any Mortgage Loan to be allocated to Group III will
have a minimum Mortgage Interest Rate not less than 4.00% and (k) the Mortgage
Loan shall have been underwritten or acquired in accordance with the criteria
set forth under "Description of the Mortgage Loans - Underwriting Standards" in
the Prospectus Supplement; provided that the Mortgage Loans may have different
characteristics, if consented to by Rating agencies; and
(xvi) following the purchase of Subsequent Mortgage Loans by the Trust, the
Mortgage Loans will as of the applicable Cut-Off Date: (a) have a weighted
average original term to stated maturity of not more than 300 months; (b) have a
weighted average Mortgage Interest Rate of not less than 10.00% and not more
than 15.00%; (c) have a weighted average Combined Loan-to-Value Ratio of not
more than 125%, (d) have no Mortgage Loan with a Principal Balance in excess of
$500,000, in each case, as applicable, by aggregate Principal Balance of the
Mortgage Loans as of the applicable Cut-Off-Date and (e) the Mortgage Loans in
Group III will as of the applicable Cut-Off-Date, have a weighted average Gross
Margin not less than 4.00%, by aggregate Principal Balance of the Group III
Mortgage Loans as of the applicable Cut-Off Date; provided that the Mortgage
Loans may have different characteristics, if consented to by Rating agencies.
Neither the Issuer nor the Indenture Trustee shall be required to
investigate or otherwise verify compliance with the conditions specified above,
except in respect of its own receipt of documents specified above, and shall be
entitled to rely upon the Officer's Certificates and Opinions of Counsel to be
delivered pursuant to clauses (viii) and (ix) above for such purposes.
Section 2.03. TREATMENT OF TRANSFER. It is the intention of the Depositor
that the transfer and assignment contemplated by this Agreement shall
constitute, as of its execution, a sale of all of its right, title and interest
in and to the Initial Mortgage Loans and other property of the Trust Estate from
the Depositor to the Issuer and the beneficial interest in and title to the
Initial Mortgage Loans and the other property shall not be part of the
Depositor's estate in the event of the filing of a bankruptcy petition by or
against the Depositor under any bankruptcy law. In the event that,
notwithstanding the intent of the Depositor, the transfer and assignment
contemplated hereby is held not to be a sale, this Agreement shall be deemed to
have constituted a grant of a security interest in the property referred to in
this Section for the benefit of the Securityholders.
Notwithstanding the characterization of the Notes as debt for federal,
state and local income and franchise tax purposes, the parties hereto intend to
treat the transfer of the Initial Mortgage Loans to the Trust as provided herein
as a sale, for certain non-tax purposes, of all the Depositor's right, title and
interest in and to the Initial Mortgage Loans, whether now existing or hereafter
created, and the other property described above and all proceeds thereof. In the
event such transfer is deemed not to be a sale for such purposes, the Depositor
shall be deemed to have granted to the Trust a security interest in all of the
Depositor's right, title and interest in, to and under the Initial Mortgage
Loans, whether now existing or hereafter created, and the other property
described above and all proceeds thereof; and this Agreement shall constitute a
security agreement under applicable law.
It is the express intent of the parties hereto that the conveyance of the
Mortgage Loans by the Transferor to the Depositor as contemplated by the
Purchase Agreement is, and is to be treated for all purposes as, a sale by the
Transferor to the Depositor of the Mortgage Loans and that as stated above, the
Depositor intends to, and does, sell all its right, title and interest in what
it received from the Transferor to the Issuer. However, in the event that,
notwithstanding the intent of the parties, the Mortgage Loans, or any portion
thereof, are held to continue to be property of the Transferor then (a) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the Uniform Commercial Code; (b) the transfer of the
Mortgage Loans provided for herein shall be deemed to be a grant by the
Transferor to the Depositor and the Issuer of, and the Transferor hereby does
grant, a security interest in all of the Transferor's right, title and interest
in and to the Mortgage Loans and all amounts payable on the Mortgage Loans in
accordance with the terms thereof and all proceeds of the conversion, voluntary
or involuntary, of the foregoing into cash, instruments, securities or other
property to secure a loan from the Issuer in the amount equal to the Principal
Balance of such Mortgage Loans; (c) the possession by the Indenture Trustee on
behalf of the Issuer of the Mortgage Notes and such other items of property as
constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be "possession by the secured party" for purposes of perfecting the
security interest pursuant to Section 9-313 of the Uniform Commercial Code; and
(d) notifications to persons holding such property, and acknowledgments,
receipts or confirmations from persons holding such property, shall be deemed
notifications to, or acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of the Depositor and the
Issuer for the purpose of perfecting such security interest under applicable
law. Any assignment of the interest of the Depositor in the Mortgage Loans
pursuant to any provision hereof shall also be deemed to be an assignment of any
security interest created hereby or by the Purchase Agreement. The Transferor,
the Depositor and the Issuer shall, to the extent consistent with this
Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of this Agreement.
Issuer hereby appoints the Indenture Trustee as its custodian for purposes
of taking possession of the Trust Estate in order to perfect any security
interest arising as a result of the operation of this Section 2.03.
Section 2.04. MORTGAGE FILE. In connection with such transfer and
assignment, the Master Servicer shall deliver to the Indenture Trustee the
Mortgage File with respect to each Initial Mortgage Loan on the Closing Date,
and shall deliver the Mortgage File with respect to each Subsequent Mortgage
Loan on the related Subsequent Transfer Date. In connection with the transfer of
the Initial Mortgage Loans on the Closing Date, the Indenture Trustee will
deliver an initial certification, certifying that it has received a Mortgage
File containing a Mortgage Note for each such Mortgage Loan listed on the
Mortgage Loan Schedule to the Depositor. The Indenture Trustee shall not
distribute the initial certification to any other party. Within 120 days
following each such delivery of Mortgage Files, the Indenture Trustee shall
review each such Mortgage File to ascertain that the Mortgage Documents are
contained therein and that such Mortgage Documents relate to the Mortgage Loans
identified on the Mortgage Loan Schedule. Furthermore, the Indenture Trustee
shall review the following data elements contained in the Mortgage Loan Schedule
(a) the Originator's loan number, (b) the Mortgagor's name, (c) the address
(including city and state) of the related Mortgaged Property, (d) the original
principal balance, (e) the initial interest rate and (f) the maturity of the
related Mortgage Note. In so doing, the Indenture Trustee may rely on the
purported due execution and genuineness of any signature thereon. If, within
such 120 day period, the Indenture Trustee finds any Mortgage Document (other
than a Mortgage Note for which the Indenture Trustee has received a lost note
affidavit pursuant to Section 2.05 of the Mortgage Loan Sale Agreement)
constituting a part of a Mortgage File not to have been executed or received or
to be unrelated to the Mortgage Loan identified in the Mortgage Loan Schedule,
the Indenture Trustee shall, promptly upon the conclusion of its review, notify
the Transferor in the form of the certificate attached as Exhibit F hereto. The
list of noted exceptions included on such Exhibit F or of any exceptions still
existing after delivery of the initial certification shall not be provided by
the Indenture Trustee to any Securityholder (or beneficial owner thereof). The
Transferor shall within 120 days of its receipt of such notice correct or cure
any such defect or to cause such defect to be corrected or cured or repurchase
the affected Mortgage Loan pursuant to Section 3.04 of the Purchase Agreement.
The Indenture Trustee shall have no responsibility for reviewing any
Mortgage File except as expressly provided in this Section. In reviewing any
Mortgage File pursuant to this Section, the Indenture Trustee shall have,
without limitation, no responsibility for determining whether any document is
valid and binding, whether the text of any assignment or endorsement is in
proper or recordable form (except, if applicable, to determine if the Indenture
Trustee is the assignee or endorsee thereof), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction,
whether a blanket assignment is permitted in any applicable jurisdiction,
whether any Person executing any document is authorized to do so or whether any
signature thereon is genuine, but shall only be required to determine whether a
document has been executed and that it appears to be what it purports to be.
Section 2.05. REPRESENTATIONS AND WARRANTIES OF THE MASTER SERVICER. The
Master Servicer represents and warrants to the Issuer and for the benefit of the
Indenture Trustee, as pledgee of the Mortgage Loans, as of the Closing Date and
as of each Subsequent Transfer Date:
(a) the Master Servicer is a bank duly organized and validly existing under
the laws of the State of Indiana, and has full power and authority to own its
assets and to transact the business in which it is currently engaged. The Master
Servicer is duly qualified to do business and is in good standing in each
jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the
failure to so qualify would have a material adverse effect on the business,
properties, assets or condition (financial or otherwise) of the Master Servicer;
(b) the Master Servicer has full power and authority to make, execute,
deliver and perform this Agreement and all of the transactions contemplated
hereunder, and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement;
(c) the Master Servicer is not required to obtain the consent of any other
Person or any consent, license, approval or authorization from, or registration
or declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement, except for such consent, license, approval or authorization or
registration or declaration as shall have been obtained or filed, as the case
may be;
(d) the execution and delivery of this Agreement and the performance of the
transactions contemplated hereby by the Master Servicer will not violate any
material provision of any existing law or regulation or any order or decree of
any court applicable to the Master Servicer or any provision of the articles or
bylaws of the Master Servicer, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Master Servicer is a party
or by which it may be bound; and
(e) no Proceeding of or before any court, tribunal or governmental body is
currently pending or, to the knowledge of the Master Servicer, threatened
against the Master Servicer or any of its properties or with respect to this
Agreement or the Securities that in the opinion of the Master Servicer has a
reasonable likelihood of resulting in a material adverse effect on the
transactions contemplated by this Agreement.
The foregoing representations and warranties shall survive the transfer of
the Mortgage Loans to the Trust and any termination of the Master Servicer
hereunder. Upon discovery of a breach of any representation or warranty that
materially and adversely affects the interests of the Securityholders, the party
discovering such breach shall give prompt written notice to the other parties
hereto. Within 90 days of its discovery or its receipt of notice of such breach
or, with the prior written consent of a Responsible Officer of the Indenture
Trustee, such longer period specified in such consent, the Master Servicer shall
cure such breach in all material respects.
Section 2.06. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer
hereby represents and warrants to the Master Servicer, the Transferor and for
the benefit of Indenture Trustee, as pledgee of the Mortgage Loans, as of the
Initial Cut-Off Date and each Subsequent Cut-Off Date, that:
(a) the Issuer is a business trust duly formed and in good standing under
the laws of the State of Delaware and has full power, authority and legal right
to execute and deliver this Agreement and to perform its obligations under this
Agreement, and has taken all necessary action to authorize the execution,
delivery and performance by it of this Agreement; and
(b) the execution and delivery by the Issuer of this Agreement and the
performance by the Issuer of its obligations under this Agreement will not
violate any provision of any law or regulation governing the Issuer or any
order, writ, judgment or decree of any court, arbitrator or governmental
authority or agency applicable to the Issuer or any of its assets. Such
execution, delivery, authentication and performance will not require the
authorization, consent or approval of, the giving of notice to, the filing or
registration with, or the taking of any other action with respect to, any
governmental authority or agency regulating the activities of business trusts.
Such execution, delivery, authentication and performance will not conflict with,
or result in a breach or violation of, any mortgage, deed of trust, lease or
other agreement or instrument to which the Issuer is a party or by which it may
be bound.
Section 2.07. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR. The
Depositor represents and warrants to the Indenture Trustee, as of the Closing
Date and as of each Subsequent Transfer Date, that:
(a) Depositor is a corporation, validly existing and in good standing under
the laws of the State of Delaware, and has full power and authority to own its
assets and to transact the business in which it is currently engaged. The
Depositor is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the character of the business
transacted by it or any properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets or condition (financial or
otherwise) of the Depositor;
(b) Depositor has full power and authority to make, execute, deliver and
perform this Agreement and all of the transactions contemplated hereunder, and
has taken all necessary corporate action to authorize the execution, delivery
and performance of this Agreement. When executed and delivered, this Agreement
will constitute the legal, valid and binding obligation of the Depositor
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, and by the
availability of equitable remedies;
(c) Depositor is not required to obtain the consent of any other Person or
any consent, license, approval or authorization from, or registration or
declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement;
(d) the execution, delivery and performance of this Agreement by the
Depositor will not violate any provision of any existing law or regulation or
any order decree of any court applicable to the Depositor or any provision of
the articles of incorporation or bylaws of the Depositor, or constitute a
material breach of any mortgage, indenture, contract or other agreement to which
the Depositor is a party or by which it may be bound;
(e) no Proceeding of or before any court, tribunal or governmental body is
currently pending or, to the knowledge of the Depositor, threatened against the
Depositor or any of its properties or with respect to this Agreement or the
Securities; and
(f) this Agreement (i) constitutes a valid transfer and assignment to the
Trust of all right, title and interest of the Depositor in and to the Initial
Mortgage Loans, all monies due or to become due with respect thereto, all
proceeds of such Initial Mortgage Loans, such funds as are from time to time on
deposit in the Collection Account or Trustee Collection Account and all other
property specified in the definition of "Trust Estate" as being part of the
Trust Estate; and upon payment for Additional Balances relating thereto, if any,
will constitute a valid transfer and assignment to the Trust of all right, title
and interest of the Depositor in and to such Additional Balances, all monies due
or to become due with respect thereto, all proceeds of such Additional Balances
and all other property relating thereto that is specified in the definition of
"Trust Estate" relating to Additional Balances or (ii) constitutes a grant of a
security interest, as defined in the UCC as in effect in the State of New York,
in such property in favor of the Trust or the Owner Trustee on behalf of the
Trust; provided, that if the Indenture Trustee obtains and maintains possession
of the Mortgage File for each Mortgage Loan, the Trust shall have a first
priority perfected security interest in such property.
The representations and warranties set forth in this Section shall survive
the sale and assignment of the Mortgage Loans to the Trust. Upon discovery of a
breach of any representation or warranty that materially and adversely affects
the interests of the Securityholders, the party discovering such breach shall
give prompt written notice to the other parties hereto. Within 90 days of its
discovery or its receipt of notice of such breach or, with the prior written
consent of a Responsible Officer of the Indenture Trustee, such longer period
specified in such consent, the Depositor shall cure such breach in all material
respects.
Section 2.08. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR REGARDING
THE MORTGAGE LOANS; RETRANSFER OF CERTAIN MORTGAGE LOANS.
(a) The Transferor hereby reaffirms, for the benefit of the Depositor and
the Issuer, the representations and warranties as to the Mortgage Loans
contained in Section 3.01 and Section 3.02 of the Purchase and Sale Agreement,
which are hereby incorporated by reference herein, and upon which the Issuer is
deemed to have relied in acquiring the Mortgage Loans. Such representations and
warranties shall speak as of the execution and delivery of this Agreement and,
unless otherwise specified, as of the Closing Date in the case of the Initial
Mortgage Loans and as of the related Subsequent Transfer Date in the case of the
Subsequent Mortgage Loans and any Eligible Substitute Mortgage Loans, but shall
survive the sale, transfer and assignment of the Mortgage Loans to the Issuer
(and, in the case of the Initial Mortgage Loans, the Depositor) and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
With respect to the representations and warranties set forth in this
Section or incorporated by reference herein that are made to the best of
Transferor's knowledge or as to which the Transferor has no knowledge, if it is
discovered by the Depositor, the Master Servicer or a Responsible Officer of the
Indenture Trustee that the substance of such representation or warranty is
inaccurate, and such inaccuracy materially and adversely affects the value of
the related Mortgage Loan, then, notwithstanding the Transferor's lack of
knowledge with respect to the substance of such representation or warranty being
inaccurate at the time such representation or warranty was made, such inaccuracy
shall be deemed to be a breach of such representation or warranty. Upon
discovery by the Transferor or upon notice from the Depositor, the Issuer, the
Owner Trustee, the Indenture Trustee, or any Custodian, as applicable, of a
breach of any representation or warranty referred to in paragraph (a) above that
materially and adversely affects the interests of the Issuer, or the
Securityholders in any Initial Mortgage Loan (or upon the occurrence of a
Repurchase Event), the Transferor shall, within 90 days of its discovery or its
receipt of notice thereof (notice of which shall be given to the Issuer by the
Transferor, if it discovers the same), (i) cure such breach or Repurchase Event
in all material respects or (ii) (A) repurchase such Initial Mortgage Loan from
the Issuer at the Repurchase Price thereof or (B) substitute one or more
Eligible Substitute Mortgage Loans for such Initial Mortgage Loan, in each case
in the manner and subject to the conditions and limitations set forth in Section
3.04 of the Purchase and Sale Agreement.
(b) The representations and warranties set forth in this Section shall
survive delivery of the Mortgage Files to the Indenture Trustee pursuant to
Section 2.04 and the termination of the rights and obligations of the Master
Servicer pursuant to Section 6.04 or Article VII.
Section 2.09. ENFORCEMENT OF REPRESENTATIONS AND WARRANTIES. The Master
Servicer, on behalf of and subject to the direction of the Indenture Trustee, as
pledgee of the Mortgage Loans, or the Issuer, shall enforce the representations
and warranties of the Transferor in Section 3.01 and Section 3.02 of the
Purchase and Sale Agreement. Upon the discovery by the Transferor, the
Depositor, the Master Servicer, the Issuer, the Indenture Trustee, or the
Custodian of a breach of any of the representations and warranties made by the
Transferor in such Section in respect of any Mortgage Loan that materially and
adversely affects the interests of any Securityholder, the Person discovering
such breach shall give prompt written notice to the other foregoing Persons. The
Master Servicer shall promptly demand of the Transferor that it (i) cure such
breach in all material respects within, with respect to a breach of the
representations and warranties contained in Section 3.01 of the Purchase and
Sale Agreement, 90 days, and with respect to a breach of the representations and
warranties contained in Section 3.02 of the Purchase and Sale Agreement, 90
days, in each case from the date the Transferor was notified of such breach or
(ii) purchase the related Mortgage Loan from the Issuer or substitute an
Eligible Substitute Mortgage Loan (and remit to the Trustee Collection Account
any related Substitution Adjustment Amount), in each case in the manner set
forth in Section 3.02 of the Purchase and Sale Agreement.
The obligation of the Transferor to accept a retransfer of a Mortgage Loan
as to which a breach has occurred and is continuing and to make any required
deposit into the Collection Account or Trustee Collection Account or to
substitute an Eligible Substitute Mortgage Loan, as the case may be, shall
constitute the sole and exclusive remedy hereunder against the Transferor
respecting such breach available therefor; provided, that the Transferor shall
defend and indemnify the Issuer, the Owner Trustee and the Indenture Trustee
against all reasonable costs and expenses, and all losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel and the amount of
any settlement entered into with the consent of the Transferor, such consent not
to be unreasonably withheld, that may be asserted against or incurred by any of
them as a result of any third-party action arising out of any breach of any such
representation or warranty. Notwithstanding the foregoing, with regard to any
breach of the representation and warranty set forth in Section 3.02(y) of the
Purchase and Sale Agreement, the sale and assignment of the affected Mortgage
Loans to the Trust shall be deemed void, and the Transferor shall pay to the
Trust the sum of (i) the amount of the related Principal Balances, plus accrued
and unpaid interest thereon at the applicable Mortgage Interest Rate to the date
of payment, and (ii) the amount of any loss suffered by the Securityholders with
respect to the affected Mortgage Loans.
In connection with the purchase or substitution of any Mortgage Loan, the
Issuer shall assign to the Transferor all of its right, title and interest in
and to such Mortgage Loan. Upon receipt of the Repurchase Price, or upon the
completion of such substitution, the Master Servicer shall notify the Custodian
thereof, and the Custodian shall deliver the Mortgage Files to the Master
Servicer, together with all relevant endorsements and assignments prepared by
the Master Servicer that the Indenture Trustee shall execute.
Section 2.10. FUTURE ADVANCES. With respect to the HELOCs, notwithstanding
Section 2.01 or 2.02, neither the Indenture Trustee nor the Trust assumes any
obligation under any Loan Agreement that provides for the funding of future
advances to any Mortgagor thereunder, and neither the Trust nor the Indenture
Trustee shall be obligated or permitted to fund any such future advances.
Additional Balances that do not constitute Excluded Amounts shall be part of the
related Principal Balance of such HELOCs as they are created and are hereby
transferred to the Trust as part of the Trust Estate on the Closing Date and as
of each related Subsequent Transfer Date pursuant to this Section.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. APPOINTMENT OF THE MASTER SERVICER.
(a) Xxxxx Union Bank and Trust Company agrees to act as the Master Servicer
and to perform all servicing duties under this Agreement, subject to the terms
hereof.
(b) The Master Servicer shall service and administer the Mortgage Loans in
a manner consistent with the terms of this Agreement and as shall be normal and
usual in its general mortgage servicing activities, and shall have full power
and authority, acting alone or through Subservicers, to do any and all things
in connection with such servicing and administration as it may deem necessary or
desirable; provided, that the Master Servicer shall at all times remain
responsible to the Issuer and the Indenture Trustee, as pledgee of the Mortgage
Loans, for the performance of its duties and obligations hereunder in accordance
with the terms hereof. Without limiting the generality of the foregoing, the
Master Servicer shall continue, and is hereby authorized and empowered by the
Issuer and the Indenture Trustee, as pledgee of the Mortgage Loans, to execute
and deliver, on behalf of itself, the Issuer, the Indenture Trustee or any of
them, any and all instruments of satisfaction or cancellation, or of partial or
full release or discharge, and all other comparable instruments with respect to
the Mortgage Loans and the Mortgaged Properties. The Issuer, the Indenture
Trustee and the Custodian, as applicable, shall furnish the Master Servicer with
any powers of attorney or other documents necessary or appropriate to enable the
Master Servicer to carry out its servicing and administrative duties hereunder.
In addition, the Master Servicer may, at its own discretion and on behalf of the
Issuer, obtain credit information in the form of a "credit score" from a credit
repository. On the Closing Date, the Indenture Trustee shall deliver to the
Master Servicer a limited power of attorney substantially in the form of Exhibit
B hereto.
In servicing and administering the Mortgage Loans, the Master Servicer (i)
shall employ procedures consistent with the Master Servicer's normal servicing
practices and in a manner consistent with recovery under any insurance policy
required to be maintained by a Mortgagor pursuant to the related Mortgage
Documents or by the Master Servicer pursuant to this Agreement, and (ii) may
take reasonable actions to encourage or effect the termination of Loan
Agreements that have not had an outstanding Principal Balance for at least 6
months.
The Master Servicer may, without prior approval from any Person, increase
the Credit Limit on any HELOC in a manner consistent with the Master Servicer's
customary servicing practices.
The relationship of the Master Servicer, and of any successor to the Master
Servicer as master servicer hereunder, to the Issuer under this Agreement is
intended by the parties to be that of an independent contractor and not that of
a joint venturer, partner or general agent.
In connection with the Mortgage Loans assigned to Group III, the Master
Servicer shall make any Mortgage Interest Rate adjustments on each Interest
Adjustment Date in compliance with applicable regulatory adjustable mortgage
loan requirements and the related Loan Agreements. The Master Servicer shall
establish procedures to monitor the Interest Adjustment Dates in order to ensure
that it uses a published interest rate in determining an interest rate change,
and it will comply with such procedures. In the event that a published interest
rate is no longer available, the Master Servicer shall choose a new comparable
published interest rate in accordance with the provisions hereof, the related
Loan Agreements and the Master Servicer's normal servicing practices, and shall
provide the related Mortgagor, the Issuer, and the Indenture Trustee with notice
of the new published interest rate sufficient under law and the related Loan
Agreement. The Master Servicer shall execute and deliver all appropriate notices
required by the applicable adjustable mortgage loan laws and regulations and the
related Loan Agreements regarding such adjustments. If the Master Servicer fails
to make a timely Mortgage Interest Rate adjustment in accordance with the terms
of the related Loan Agreement, the Master Servicer shall use its own funds to
satisfy any shortfall in Collections resulting therefrom for so long as such
shortfall shall continue. Any such amount paid by the Master Servicer shall be
reimbursable to it from any subsequent amounts collected on account of the
related Mortgage Loan with respect to such adjustments.
Any expenses incurred by the Master Servicer in effectuating the timely
payment of taxes and assessments on Mortgaged Property and foreclosure costs may
be added by the Master Servicer to the amount owing in respect of the related
Mortgage Loan where the terms of the related Mortgage Documents so permit;
provided, that the addition of any such expenses shall not be taken into account
for purposes of calculating the Principal Balance of such Mortgage Loan or
distributions to be made to the Securityholders. Such expenses shall be
recoverable by the Master Servicer pursuant to Section 3.04(c). Notwithstanding
any other provision of this Agreement, the Master Servicer shall at all times
service the Mortgage Loans in a manner consistent with the provisions of this
paragraph.
(c) On and after such time as the Owner Trustee receives the resignation
of, or notice of the removal of, the Master Servicer from its rights and
obligations under this Agreement, and with respect to a resignation pursuant to
Section 6.04, after receipt by the Owner Trustee of the Opinion of Counsel
required pursuant to Section 6.04, the Indenture Trustee or its designee shall
assume all of the rights and obligations of the Master Servicer, subject to
Section 7.02. The Master Servicer shall, upon request of the Indenture Trustee
and at the expense of the Master Servicer, deliver to the Indenture Trustee all
documents and records relating to the Mortgage Loans and an accounting of
amounts collected and held by the Master Servicer, and shall otherwise use its
best efforts to effect the orderly and efficient transfer of servicing rights
and obligations to the assuming Person.
(d) The Master Servicer shall deliver a list of Servicing Officers to the
Issuer and the Indenture Trustee by the Closing Date, which list may from time
to time be amended, modified or supplemented by the subsequent delivery to the
Issuer and the Indenture Trustee of any superseding list of Servicing Officers.
Section 3.02. SUBSERVICING AGREEMENTS BETWEEN THE MASTER SERVICER AND
SUBSERVICERS.
(a) The Master Servicer may enter into Subservicing Agreements with
Subservicers for the servicing and administration of certain of the Mortgage
Loans and for the performance of any and all other activities of the Master
Servicer hereunder. References in this Agreement to actions taken or to be taken
by the Master Servicer in servicing the Mortgage Loans include actions taken or
to be taken by a Subservicer on behalf of the Master Servicer, and any amount
actually received by such Subservicer in respect of a Mortgage Loan shall be
deemed to have been received by the Master Servicer, whether or not actually
received by the Master Servicer. Each Subservicing Agreement shall be upon such
terms and conditions as are not inconsistent with this Agreement and as the
Master Servicer and the Subservicer shall have agreed. With the approval of the
Master Servicer, a Subservicer may delegate its servicing obligations to
third-party servicers, but such Subservicers shall remain obligated under the
related Subservicing Agreements. The Master Servicer and the related
Subservicers may enter into amendments to the Subservicing Agreements; provided,
that any such amendments shall not cause the Mortgage Loans to be serviced in a
manner that would be materially inconsistent with the standards set forth in
this Agreement. The Master Servicer shall be entitled to terminate any
Subservicing Agreement in accordance with the terms and conditions thereof and
without any limitation by virtue of this Agreement; provided, that in the event
of the termination of any Subservicing Agreement by the Master Servicer or the
related Subservicer, the Master Servicer shall either act as servicer of the
related Mortgage Loans or enter into a Subservicing Agreement with a successor
Subservicer that will be bound by the terms of the related Subservicing
Agreement. The Master Servicer shall be entitled to enter into any agreement
with a Subservicer for indemnification of the Master Servicer, and nothing
contained herein shall be deemed to limit or modify such indemnification.
Each Subservicer shall be (i) a depository institution the accounts of
which are insured by the FDIC or (ii) another entity that engages in the
business of originating, acquiring or servicing mortgage loans, and in either
case shall be authorized to transact business in those States in which (x) the
related Mortgaged Properties are situated and (y) qualification is required to
conduct a subservicing business operation. In addition, each Subservicer shall
obtain and preserve its qualifications 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, the Securities or any
Mortgage Loan, and to perform or cause to be performed its duties under the
related Subservicing Agreement, which shall provide that the Subservicer's
rights will automatically terminate upon the termination, resignation or other
removal of the Master Servicer under this Agreement. Each account used by any
Subservicer for the deposit of payments on any Mortgage Loan shall be an
Eligible Account. Xxxxx Home Equity Corporation shall be the initial
Subservicer.
(b) Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer and a Subservicer or any references to actions taken through a
Subservicer or otherwise, the Master Servicer shall remain obligated and
primarily liable to the Issuer and the Indenture Trustee for the servicing and
administration of the Mortgage Loans in accordance with the provisions of this
Agreement, without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
related Subservicer, and to the same extent and under the same terms and
conditions as if the Master Servicer alone were servicing and administering the
Mortgage Loans.
As part of its servicing activities hereunder, the Master Servicer, for the
benefit of the Issuer and the Indenture Trustee, shall use reasonable efforts to
enforce the obligations of each Subservicer under the related Subservicing
Agreement to the extent that the non-performance of any such obligation would
have a material adverse effect on any Mortgage Loan. Such enforcement, including
the legal prosecution of claims, termination of Subservicing Agreements and the
pursuit of other appropriate remedies, shall be in such form and carried out to
such an extent and at such time as the Master Servicer, in its good faith
business judgment, would require were it the owner of the related Mortgage
Loans. The Master Servicer shall pay the costs of such enforcement at its own
expense, and shall be reimbursed therefor only from (i) a general recovery
resulting from such enforcement to the extent, if any, that such recovery
exceeds all amounts due in respect of the related Mortgage Loan or (ii) a
specific recovery of costs, expenses or attorneys' fees against the Person
against whom such enforcement is directed.
In the event the Master Servicer shall for any reason no longer be the
Master Servicer, the Indenture Trustee or its designee may (i) assume all of the
rights and obligations of the Master Servicer under each Subservicing Agreement
that the Master Servicer may have entered into, which assumption shall not
violate the terms of the related Subservicing Agreement, (ii) notwithstanding
anything to the contrary contained in each such Subservicing Agreement,
terminate the related Subservicer without being required to pay any fee in
connection therewith or (iii) assume the terminated Master Servicer's rights and
obligations under such subservicing arrangements, which termination or
assumption shall not violate the terms of the related Subservicing Agreement.
(c) Prior to the close of business on the twentieth calendar day of each
month in which the related Payment Date is to occur, the Master Servicer shall
furnish a statement to the Indenture Trustee, in writing or in an electronic
format as the Indenture Trustee shall reasonably request, setting forth all
information reasonably necessary to allow the Indenture Trustee to make the
distributions contemplated by Section 3.05 of the Indenture and to deliver the
statement required to be delivered pursuant to Section 3.25 of the Indenture and
Section 4.01 hereof.
Section 3.03. COLLECTION OF MORTGAGE LOAN PAYMENTS. The Master Servicer
shall use its best efforts to collect all payments called for under the terms
and provisions of the Mortgage Documents and shall, to the extent such
procedures shall be consistent with this Agreement and any applicable primary
mortgage insurance policy, follow such collection procedures as shall constitute
the Master Servicer's normal servicing practices. Consistent with the foregoing,
and without limiting the generality of the foregoing, the Master Servicer may in
its discretion (i) waive any late payment charge, overlimit fee or other fees
that may be collected in the ordinary course of servicing a Mortgage Loan and
(ii) arrange with a Mortgagor a schedule for the payment of principal and
interest due and unpaid; provided, that such arrangement is consistent with the
Master Servicer's policies with respect to mortgage loans; and provided further,
that notwithstanding such arrangement, such Mortgage Loans shall be included in
the information regarding delinquent Mortgage Loans set forth in the Servicing
Certificate. The Master Servicer may also extend the due date for payment due on
a Mortgage Loan in accordance with its normal servicing practices; provided,
that the Master Servicer shall first determine that any such waiver or extension
will not materially adversely affect the Lien of the related Mortgage Documents
or the interests of the Issuer or the Indenture Trustee. Consistent with the
terms of this Agreement, the Master Servicer may waive, modify or vary any term
of any Mortgage Loan, subject, if applicable, to the second paragraph of Section
3.01(b).
Consistent with the terms of this Agreement, the Master Servicer may
consent to the postponement of strict compliance with any such term or in any
manner grant indulgence to any Mortgagor; provided, that in the Master
Servicer's determination, such waiver, modification, postponement or indulgence
relates to a reasonable business purpose; and provided further, that such
waiver, modification, postponement or indulgence shall not materially and
adversely affect the interests of the Securityholders. In addition, and without
limitation, if a HELOC is in default or, in the judgment of the Master Servicer,
such default is reasonably foreseeable, the Master Servicer may, through
modification, convert such HELOC to a fully amortizing HEL.
Section 3.04. PERMITTED WITHDRAWALS FROM THE COLLECTION ACCOUNT. The Master
Servicer is hereby authorized from time to time to make withdrawals from the
Collection Account for the following purposes:
(a) on each Master Servicer Remittance Date, to deposit the amount required
by Section 5.03 hereof for the related Payment Date into the Trustee Collection
Account;
(b) on each Master Servicer Remittance Date prior to the end of the Managed
Amortization Period for Group III to deposit Principal Collections with respect
to Mortgage Loans assigned to Group III into the Funding Account to be applied
toward the purchase from Transferor of Additional Balances to be assigned to
Group III; provided, that the aggregate amount so paid to the Seller in respect
of Additional Balances at any time during any related Collection Period shall
not exceed the amount of Principal Collections for Mortgage Loans assigned to
Group III received during such Collection Period;
(c) to the extent deposited into the Collection Account, to reimburse
itself or the related Subservicer for previously unreimbursed expenses incurred
in maintaining insurance policies pursuant to Section 3.05, for Liquidation
Expenses paid pursuant to Section 3.08 or for expenses otherwise reimbursable
pursuant to the terms of this Agreement to the extent not payable pursuant to
Section 3.08; such withdrawal right being limited to amounts received in respect
of the Mortgage Loans, other than any Repurchase Price in respect thereof, that
represent late recoveries of the payments for which such advances were made, or
from Liquidation Proceeds or the proceeds of the purchase of such Mortgage
Loans;
(d) to pay to itself out of each payment received in respect of interest on
a Mortgage Loan as contemplated by the last paragraph of Section 3.08, an amount
equal to the Servicing Fee, to the extent not retained pursuant to Section 5.02;
(e) to pay to the Transferor, with respect to any Mortgage Loan or
Mortgaged Property that has been purchased or otherwise transferred to the
Transferor, all amounts received thereon that are not required to be distributed
to the Securityholders as of the date on which the related Purchase Price or
Repurchase Price is determined; and
(f) to withdraw any other amount deposited into the Collection Account that
was not required to be deposited therein pursuant to Section 5.02.
On each Master Servicer Remittance Date, the Master Servicer shall transfer
from the Collection Account to the Trustee Collection Account the amount
necessary for the Indenture Trustee to make the required distributions pursuant
to Section 3.05(a) of the Indenture. The Master Servicer shall keep and maintain
separate accounting on a loan-by-loan basis for the purpose of justifying any
withdrawal from the Collection Account pursuant to the foregoing paragraphs.
Notwithstanding any other provision of this Agreement, the Master Servicer shall
be entitled to reimburse itself for any previously unreimbursed expenses
relating to a Mortgage Loan incurred pursuant to Section 3.08 or otherwise
reimbursable pursuant to the terms of this Agreement that the Master Servicer
determines to be otherwise nonrecoverable, except with respect to any Mortgage
Loan as to which the Purchase Price or Repurchase Price shall have been paid, by
withdrawal from the Collection Account, on any Business Day prior to the Payment
Date succeeding the date of such determination, of amounts on deposit therein
attributable to the Mortgage Loan.
Section 3.05. MAINTENANCE OF INSURANCE.
(a) With respect to each Mortgage Loan, the Master Servicer shall maintain
accurate records reflecting the fire and casualty insurance coverage maintained
by the related Mortgagors with respect to the Mortgaged Properties in accordance
with its normal servicing practices. The Master Servicer shall, if it has
received notice of a default or deficiency in respect of the payment of any
ground rents, taxes, assessments, water rates or casualty insurance premiums or
other charges that are or may become a Lien upon the related Mortgaged Property,
notify the related Mortgagor and the holder of the first Lien on the related
Mortgaged Property.
(b) To the extent permitted under the related Mortgage Documents, and to
the extent the Master Servicer receives notice that a hazard insurance policy
has been cancelled, the Master Servicer shall, to the extent consistent with its
normal servicing practices, cause to be maintained for each Mortgage Loan hazard
insurance naming the Master Servicer or the related Subservicer as loss payee
thereunder, and providing extended coverage in an amount at least equal to the
lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan from time to time or (ii) the principal balance owing on such
Mortgage Loan from time to time. The Master Servicer shall monitor the
maintenance of any such hazard insurance so obtained in accordance with its
normal servicing practices.
(c) The Master Servicer shall cause to be maintained with respect to any
REO Property fire insurance with extended coverage in an amount at least equal
to the amount necessary to avoid the application of any co-insurance clause
contained in the related hazard insurance policy. Amounts collected by the
Master Servicer under any such policies, other than amounts to be applied to the
restoration or repair of Mortgaged Property or REO Property or amounts released
to the Mortgagor in accordance with the Master Servicer's normal servicing
practices, shall be deposited into the Collection Account to the extent provided
in Section 5.02.
(d) If, upon the origination of a Mortgage Loan, the related Mortgaged
Property was in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, and flood insurance
has been made available, the Master Servicer shall cause to be maintained, to
the extent required by the related Mortgage Documents, a flood insurance policy
meeting the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable insurance carrier, in an amount
representing coverage at least equal to the lesser of (i) the unpaid Principal
Balance of such Mortgage Loan, (ii) the full insurable value of such Mortgaged
Property or (iii) the maximum amount of insurance available under the Flood
Disaster Protection Act of 1973, as amended. With respect to any REO Property,
the Master Servicer shall also maintain, if applicable, flood insurance in an
amount at least equal to the lesser of (i) the maximum insurable value of the
improvements that are a part of such property and (ii) the Principal Balance
owing on the related Mortgage Loan at the time of foreclosure or grant of deed
in lieu of foreclosure plus accrued interest and related Liquidation Expenses.
(e) Pursuant to Section 3.03, any amounts collected by the Master Servicer
under any insurance policy maintained pursuant to this Section, other than
amounts to be applied to the restoration or repair of Mortgaged Property or
released to a Mortgagor in accordance with the Master Servicer's normal
servicing practices, shall be deposited into the Collection Account, subject to
withdrawal pursuant to Section 3.04. Any cost incurred by the Master Servicer in
maintaining any such insurance shall be added to the amount owing under the
related Mortgage Loan where the terms of the related Mortgage Documents so
permit; provided, that the addition of any such cost shall not be taken into
account for purposes of calculating the Principal Balance of such Mortgage Loan
or distributions to be made to Securityholders. Such costs shall be recoverable
by the Master Servicer pursuant to Section 3.04.
(f) The Master Servicer shall be under no obligation to maintain or require
any Mortgagor to maintain earthquake, title or other additional insurance, and
shall be under no obligation itself to maintain any such additional insurance on
property acquired in respect of any Mortgage Loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance.
Section 3.06. FIDELITY BOND; ERRORS AND OMISSIONS POLICY.
(a) The Master Servicer shall maintain with a responsible company, and at
its own expense, a banker's blanket fidelity bond (a "Fidelity Bond") and a
mortgage errors and omissions insurance policy (an "Errors and Omissions
Policy"), in amounts as required by FNMA and FHLMC and as are commercially
available and at costs that are not generally regarded as excessive by industry
standards. Any fidelity bond shall protect against dishonest act of officers and
employees. Any such Fidelity Bond or Errors and Omissions Policy shall not be
canceled or modified by the Master Servicer in a manner materially adverse to
the Securityholders without the prior written consent of the Issuer and the
Indenture Trustee.
(b) The Master Servicer shall be deemed to have complied with this
provision if any of its Affiliates has such a Fidelity Bond and Errors and
Omissions Policy and, by the terms of such policy, the coverage afforded
thereunder extends to the Master Servicer. The Master Servicer shall cause each
Subservicer to maintain an Errors and Omissions Policy and a Fidelity Bond
meeting the requirements of this Section.
Section 3.07. ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS. In
any case in which a Mortgaged Property is about to be conveyed by the related
Mortgagor, whether by absolute conveyance, contract of sale or otherwise, and
whether or not such Mortgagor remains liable thereon, and the Master Servicer
has knowledge of such prospective conveyance, the Master Servicer shall effect
assumptions in accordance with the terms of any due-on-sale provision contained
in the related Mortgage Documents. The Master Servicer shall enforce any
due-on-sale provision contained in such Mortgage Documents to the extent the
requirements thereunder for an assumption of the related Mortgage Loan have not
been satisfied, to the extent permitted by such Mortgage Documents, unless such
provision is not exercisable under applicable law or governmental regulations
or, in the Master Servicer's judgment, such exercise is reasonably likely to
result in legal action by such Mortgagor, or such conveyance is in connection
with a permitted assumption of such Mortgage Loan.
The Master Servicer or the related Subservicer, as the case may be, shall
be entitled to (i) execute assumption agreements, substitution agreements and
instruments of satisfaction or cancellation or of partial or full release or
discharge, or any other document contemplated by this Agreement or other
comparable instruments with respect to the Mortgage Loans and the related
Mortgaged Properties; and the Issuer and the Indenture Trustee each shall
promptly execute any such documents upon the request of the Master Servicer, and
(ii) approve the granting of an easement on Mortgaged Property in favor of
another Person, any alteration or demolition of such Mortgaged Property or other
similar matters, if it has determined, exercising its good faith business
judgment in the same manner as it would if it were the owner of the related
Mortgage Loan, that the security for, and the timely and full collection of,
such Mortgage Loan would not be adversely affected thereby. The Master Servicer
shall notify the Indenture Trustee that any such assumption or substitution
agreement has been completed by forwarding to the Indenture Trustee the original
copy of such assumption or substitution agreement, which the Indenture Trustee
shall add to the related Mortgage File and which shall, for all purposes, be
considered part of such Mortgage File to the same extent as all other documents
and instruments constituting a part thereof. The Master Servicer shall retain as
servicing compensation any fee collected by the Master Servicer for entering
into an assumption or substitution of liability agreement. A partial release
pursuant to this Section shall be permitted only if the Combined Loan-to-Value
Ratio for the related Mortgage Loan after such partial release does not exceed
the Combined Loan-to-Value Ratio for such Mortgage Loan as of the related
Cut-Off Date.
Notwithstanding the provisions of this Section or any other provision of
this Agreement, the Master Servicer shall not be deemed to be in default, breach
or violation of any of its obligations hereunder by reason of any conveyance by
a Mortgagor of the related Mortgaged Property or any assumption of a Mortgage
Loan by operation of law with respect to which the Master Servicer determines in
good faith that it may be restricted by law from preventing, for any reason
whatsoever, or if the exercise of such right would impair or threaten to impair
any recovery under any applicable insurance policy or, in the Master Servicer's
judgment, would be reasonably likely to result in legal action by such
Mortgagor.
Section 3.08. REALIZATION UPON DEFAULTED MORTGAGE LOANS. With respect to
each Mortgage Loan that comes into and continues in default, the Master Servicer
shall exercise its reasonable judgment to determine whether to (a) foreclose on
the related Mortgaged Property, (b) write off the unpaid Principal Balance
thereof as bad debt, (c) take a deed in lieu of foreclosure, (d) accept a short
sale, (e) arrange for a repayment plan, (f) agree to a modification thereof in
accordance with this Agreement or (g) take an unsecured note in each case
subject to the rights of any related senior lienholder; provided, that in
connection with the foregoing, if the Master Servicer has actual knowledge that
any Mortgaged Property is affected by hazardous or toxic wastes or substances
and that the acquisition of such Mortgaged Property would not be commercially
reasonable, then the Master Servicer shall not cause the Issuer or the Indenture
Trustee to acquire title to such Mortgaged Property in foreclosure or any
similar Proceeding. In connection with such decision, the Master Servicer shall
follow such practices and procedures, including, in the case of any default on a
related senior mortgage loan, the advancing of funds to correct such default if
deemed to be appropriate by the Master Servicer, as it shall deem necessary or
advisable and as shall be normal and usual in its general mortgage servicing
activities; provided, that the Master Servicer shall not be liable in any
respect hereunder if it is acting in connection with any such foreclosure or
attempted foreclosure or other conversion that is not completed in a manner that
is consistent with the provisions of this Agreement; and provided further, that
the Master Servicer shall in no event expend funds in connection with any
foreclosure or attempted foreclosure that is not completed or towards the
correction of any default on a related senior mortgage loan or restoration of
any property if it shall determine that such expenditure would not increase the
related Liquidation Proceeds. In the event of a determination by the Master
Servicer that any such expenditure previously made pursuant to this Section will
not be reimbursable from Liquidation Proceeds, the Master Servicer shall be
entitled to reimbursement of its funds so expended pursuant to Section 3.04(c).
Notwithstanding any other provision of this Agreement, a defaulted Mortgage
Loan may be deemed to be finally liquidated if substantially all amounts
expected by the Master Servicer to be received in connection therewith have been
received; provided, that any subsequent collections with respect to any such
Mortgage Loan shall be deposited into the Collection Account. For purposes of
determining the amount of any Liquidation Proceeds or Insurance Proceeds, or
other unscheduled collections, the Master Servicer may take into account amounts
of additional receipts it expects to receive or any estimated additional
Liquidation Expenses it expects to incur in connection with such Mortgage Loan.
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 issued to the Master Servicer, which shall hold the same on behalf of
the Issuer. Notwithstanding any such acquisition of title and cancellation of
the related Mortgage Loan, such Mortgaged Property shall, except as otherwise
expressly provided herein, be considered to be an outstanding Mortgage Loan held
as part of the Trust Estate until such time as such Mortgaged Property shall be
sold. Consistent with the foregoing, for purposes of all calculations hereunder,
so long as such Mortgaged Property shall be considered to be an outstanding
Mortgage Loan, it shall be assumed that, notwithstanding that the indebtedness
evidenced by the related Mortgage Documents shall have been discharged, such
Mortgage Documents in effect at the time of any such acquisition of title before
any adjustment thereto by reason of any bankruptcy or similar Proceeding or any
moratorium or similar waiver or grace period will remain in effect.
Any proceeds from foreclosure Proceedings or the purchase or repurchase of
any Mortgage Loan pursuant to the terms of this Agreement and any recovery
resulting from a collection of Liquidation Proceeds or Insurance Proceeds, shall
be applied in the following order of priority: (a) to reimburse the Master
Servicer or the related Subservicer in accordance with this Section; (b) to pay
to the Master Servicer or the related Subservicer all Servicing Fees payable
therefrom; (c) as accrued and unpaid interest on such Mortgage Loan at the
related Mortgage Interest Rate to the Payment Date in respect of which such
amounts are to be deposited into the Trustee Collection Account; and (d) as a
recovery of principal on such Mortgage Loan.
Section 3.09. INDENTURE TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES;
TRUST ESTATES; RELATED DOCUMENTS.
(a) On or before each Payment Date, the Master Servicer shall notify the
Indenture Trustee or the Custodian (with a copy to the Issuer) of the
termination or payment in full of any Mortgage Loan during the preceding
Collection Period. Upon receipt of payment in full, the Master Servicer shall be
authorized to execute, pursuant to the authorization contained in the first
paragraph of Section 3.01(b), if the Assignments of Mortgage have been recorded
if required pursuant hereto or pursuant to the Mortgage Loan Sale Agreement or
Purchase Agreement, an instrument of satisfaction regarding the related Mortgage
Documents, which instrument of satisfaction shall be recorded by the Master
Servicer if required by applicable law, and shall be delivered to the Person
entitled thereto. Any expenses incurred in connection with such instrument of
satisfaction or transfer shall be reimbursable from amounts on deposit in the
Collection Account. From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Indenture Trustee or the Custodian shall,
upon request of the Master Servicer and delivery to the Indenture Trustee or the
Custodian (with a copy to the Issuer) of two copies of a Request for Release in
the form of Exhibit C hereto, which shall be signed by a Servicing Officer or be
in a mutually agreeable electronic format that, in lieu of being manually signed
by a Servicing Officer, emanate from a Servicing Officer, release or cause to be
released the related Mortgage File to the Master Servicer, and the Issuer and
the Indenture Trustee or the Custodian shall promptly execute such documents, in
the forms provided by the Master Servicer, as shall be necessary for the
prosecution of any such Proceedings or the taking of other servicing actions.
The Request for Release shall obligate the Master Servicer to return such
Mortgage File to the Indenture Trustee or the Custodian (as specified therein)
when the need therefor by the Master Servicer no longer exists, unless such
Mortgage Loan shall have been liquidated.
If an Assignment of Mortgage has been recorded, in order to facilitate the
foreclosure of the Mortgaged Property securing a Mortgage Loan that is in
default following such recordation, the Indenture Trustee or the Issuer shall,
if so requested in writing by the Master Servicer, promptly execute an
appropriate assignment in the form provided by the Master Servicer to assign
such Mortgage Loan for the purpose of collection to the Master Servicer, and any
such assignment shall unambiguously indicate that such assignment is for the
purpose of collection only. Upon such assignment, the Master Servicer, as
assignee for collection, will thereupon bring all required actions in its own
name and otherwise enforce the terms of such Mortgage Loan and deposit into or
credit to the Collection Account any Liquidation Proceeds received with respect
thereto. In the event that all delinquent payments due under any such Mortgage
Loan are paid by the related Mortgagor and any other defaults are cured, then
the Master Servicer, as assignee for collection, shall promptly reassign such
Mortgage Loan to the Indenture Trustee and return all Mortgage Documents and
Related Documents to the place where the related Mortgage File was being
maintained.
The Indenture Trustee, as pledgee of the Mortgage Loans and as assignee of
record of the Mortgage Loans on behalf of the Issuer pursuant to Section 3.13 of
the Indenture, shall, on behalf of the Issuer, take all such actions on behalf
of the Issuer and promptly execute and return all instruments reasonably
required by the Master Servicer in connection therewith; provided, that if the
Master Servicer requests a signature of the Indenture Trustee on behalf of the
Issuer, the Master Servicer shall deliver to the Indenture Trustee an Officer's
Certificate stating that such signature is necessary or appropriate to enable
the Master Servicer to carry out its servicing and administrative duties under
this Agreement.
(b) Where the Issuer or the Indenture Trustee is required by this Agreement
to execute instruments to release property from the terms of the Trust Agreement
or the Indenture, as applicable, or convey the Issuer's or the Indenture
Trustee's interests in the same, the Issuer or the Indenture Trustee, as
applicable, shall do so in a manner and under circumstances that are not
inconsistent with the provisions of this Agreement. No Person relying upon any
instrument executed by the Issuer or the Indenture Trustee shall be bound to
ascertain the Issuer's or the Indenture Trustee's authority in connection
therewith, inquire into the satisfaction of any conditions precedent or see to
the application of any monies.
(c) If from time to time the Master Servicer shall deliver to the Custodian
copies of any written assurance, assumption agreement or substitution agreement
or other similar agreement pursuant to Section 3.07, the Custodian shall check
that each of such documents purports to be an original executed copy or, if the
original executed copy has been submitted for recordation and has not yet been
returned, a copy of the original executed document; and if so, shall file such
documents, and upon receipt of the original executed copy from the applicable
recording office or receipt of a copy thereof certified by the applicable
recording office, shall file such originals or certified copies in the related
Mortgage File. If any such documents submitted by the Master Servicer shall not
meet the above qualifications, then the Custodian shall promptly give the Master
Servicer written notice of such occurrence or return such documents to the
Master Servicer, with a direction to the Master Servicer to forward the correct
documentation.
(d) Upon receipt of two copies of a Request for Release from the Master
Servicer, substantially in the form of Exhibit C hereto, to the effect that a
Mortgage Loan has been the subject of a final payment or a prepayment in full
and has been terminated or that substantially all Liquidation Proceeds
determined by the Master Servicer in its reasonable judgment to be finally
recoverable have been recovered, and upon deposit into the Collection Account of
such final payment, prepayment in full or Liquidation Proceeds, the Custodian
shall promptly release the related Mortgage File to the Master Servicer, and the
Indenture Trustee shall execute the same, along with such documents as the
Master Servicer or the related Mortgagor may request to evidence satisfaction
and discharge of such Mortgage Loan.
Section 3.10. SERVICING FEE; PAYMENT OF CERTAIN EXPENSES BY MASTER
SERVICER. The Master Servicer shall be entitled to receive the Servicing Fee in
accordance with Section 3.04(d) as compensation for its services in connection
with servicing the Mortgage Loans. Moreover, additional servicing compensation
in the form of late payment charges and other receipts not required to be
deposited into the Collection Account as specified in Section 5.02 may be
retained by the Master Servicer. The Master Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder,
including payment of all fees and expenses not expressly stated hereunder to be
for the account of the Securityholders, and shall not be entitled to
reimbursement therefor. The Issuer shall pay the initial fees and expenses of
the Indenture Trustee from the proceeds of the Notes.
Section 3.11. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE
MORTGAGE LOANS. Whenever required by statute or regulation, the Master Servicer
shall provide each Securityholder or any regulator therefor or the Indenture
Trustee with reasonable access to all documentation relating to the Mortgage
Loans, such access being afforded without charge but only upon reasonable
request and during normal business hours at the offices of the Master Servicer
or any Subservicer. Nothing in this Section shall limit the obligation of the
Master Servicer to observe any applicable law prohibiting disclosure of
information regarding Mortgagors, and the failure of the Master Servicer to
provide access as provided in this Section as a result of such obligation shall
not constitute a breach of this Section.
Section 3.12. RESERVED.
Section 3.13. RECORDATION OF ASSIGNMENTS. The Master Servicer shall, at its
own expense, complete and submit for recordation in the appropriate public
office for real property records the Assignment of Mortgage for each Mortgage
Loan where the related Mortgaged Property is located in Florida within 120 days
of the Closing Date or the related Subsequent Transfer Date, as the case may be.
While such assignment is being recorded, the Custodian shall retain a photocopy
thereof. If any assignment is lost or returned unrecorded to the Custodian
because of any defect therein, the Master Servicer shall prepare a substitute
assignment or cure such defect, and the Master Servicer shall cause such
assignment to be recorded in accordance with this Section.
Section 3.14. ANNUAL STATEMENT AS TO COMPLIANCE. The Master Servicer shall
deliver to the Issuer, the Indenture Trustee, and each Rating Agency, not later
than May 31 of each year, commencing in 2003, an Officer's Certificate stating
as to each signer thereof that (i) a review of the activities of the Master
Servicer during the preceding calendar year and of its performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Master Servicer has
fulfilled all of 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. The statement required pursuant to Section 3.15 shall accompany such
Officer's Certificate.
Section 3.15. ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT. Not
later than May 31 of each year, commencing in 2003, the Master Servicer shall
deliver or cause to be delivered to the Issuer and the Indenture Trustee a
report, prepared by the Independent Accountants of the Master Servicer, stating
that such Independent Accountants (i) have conducted an examination of certain
documents and records of the Master Servicer (or an appropriate Affiliate
thereof) relating to the servicing of the mortgage loans being serviced by the
Master Servicer under servicing agreements similar to this Agreement (which
agreements shall be described in a schedule to such report) substantially as
required by the Uniform Single Attestation Program for Mortgage Bankers and (ii)
did not discover any exceptions or errors relating to the servicing activities
of the Master Servicer (including the servicing of Mortgage Loans subject to
this Agreement) that, in the opinion of such Independent Accountants, are
material, except for such exceptions as shall be set forth in such report. In
the event such firm requires the Indenture Trustee to agree to the procedures
performed by such firm, the Master Servicer shall direct the Indenture Trustee
in writing to so agree; it being understood and agreed that the Indenture
Trustee shall deliver such letter of agreement in conclusive reliance upon the
direction of the Master Servicer, and the Indenture Trustee need not make any
independent inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency, validity or correctness of such
procedures.
Section 3.16. RESERVED.
Section 3.17. INDEMNIFICATION; THIRD-PARTY CLAIMS. Each of the Master
Servicer and the Transferor (solely for the purpose of this Section, the
"Indemnifying Parties") agrees to indemnify and to hold each of the Depositor,
the Issuer, the Owner Trustee and the Indenture Trustee (solely for the purpose
of this Section, the "Indemnified Parties") harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, fees and expenses that the Indemnified Parties may sustain
in any way related to the failure of any one or more of the Indemnifying Parties
to perform their respective duties in compliance with the terms of this
Agreement. Each Indemnified Party and the Master Servicer shall immediately
notify the other Indemnified Parties if a claim is made by a third party with
respect to this Agreement, and the Master Servicer shall assume the defense of
any such claim and pay all expenses in connection therewith, including
reasonable attorneys' fees, and promptly pay, discharge and satisfy any judgment
or decree that may be entered against the Indemnified Parties in respect of such
claim. The Indenture Trustee shall reimburse the Master Servicer out of the
Trust Estate in accordance with Section 3.04(c) for all amounts advanced by it
pursuant to the preceding sentence, except where a claim relates directly to the
failure of the Master Servicer to service and administer the Mortgage Loans in
compliance with the terms hereof; provided, that the Master Servicer's indemnity
hereunder shall not be in any manner conditioned upon the availability of funds
for such reimbursement. If the Master Servicer or the Transferor is unable to
pay any such amounts owed to the Indenture Trustee, such amounts shall be paid
to the Indenture Trustee out of the Trust Estate pursuant to Section 3.05(a)(xi)
of the Indenture. Solely to the extent that the Holders of the Certificate fail
to indemnify the Owner Trustee as required by Section 7.02 of the Trust
Agreement, the Master Servicer shall undertake such indemnification in
accordance with the terms of Section 7.02 of the Trust Agreement.
Section 3.18. MAINTENANCE OF EXISTENCE AND LICENSES; MERGER OR
CONSOLIDATION OF THE MASTER Servicer. The Master Servicer shall keep in full
force and effect its existence, rights and franchises, shall obtain and preserve
its qualification to do business in each jurisdiction necessary to protect the
validity and enforceability of this Agreement or any Mortgage Loan and to
perform its duties hereunder, and shall otherwise operate its business so as to
cause the representations and warranties under Section 2.05 to be true and
correct at all times.
Section 3.19. EXCLUDED AMOUNTS. After the end of the Managed Amortization
Period, the portion of the principal balance of any HELOC attributable to Draws
made subsequent to the end of the Managed Amortization Period (each, an
"Excluded Amount") shall not be transferred to the Trust, and the portion of the
Principal Collections and Interest Collections on such HELOC for each Collection
Period shall be allocated to the Excluded Amount pro rata between the Excluded
Amount and the Principal Balance of such HELOC in proportion to the respective
amounts outstanding as of the end of the calendar month preceding such
Collection Period.
Section 3.20. LETTERS OF CREDIT.
(a) At any time and from time to time the Master Servicer may cause to be
delivered to the Indenture Trustee, upon written notice to the Rating Agencies,
one or more Letters of Credit for deposit into the Capitalized Interest Account,
to be held by the Indenture Trustee in lieu of cash or Permitted Investments
otherwise required to be on deposit therein or in replacement of any other
Letter of Credit. The Indenture Trustee shall accept any such Letter of Credit
only if such Letter of Credit is accompanied by (i) an Opinion of Counsel to the
issuer thereof reasonably satisfactory to the Indenture Trustee and the Rating
Agencies to the effect that (A) such Letter of Credit has been duly authorized,
executed and delivered by the issuer thereof and constitutes a valid and binding
obligation of such issuer, subject only to laws affecting creditors' rights
generally, (B) such Letter of Credit does not require registration under the
Securities Act and (C) payments by the Indenture Trustee in respect of the
Securities, as provided in the Indenture, derived from a draw by the Indenture
Trustee under the Letter of Credit and held in non-commingled funds would not
constitute transfers avoidable under 11 U.S.C. Section 547(b) and recoverable
from the Indenture Trustee or the Securityholders under 11 U.S.C. Section 550(a)
should the account party be a debtor in a case under the United Stated
Bankruptcy Code (U.S.C. Title 11) and (ii) an opinion of tax counsel reasonably
acceptable to the Indenture Trustee to the effect that delivery of such Letter
of Credit either in lieu of cash of Permitted Investments, or in replacement of
any other Letter of Credit, as the case may be, will not cause any tax to be
imposed upon the Trust Estate, including any tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code.
The Indenture Trustee may from time to time accept cash in replacement of
any Letter of Credit, but only upon the prior written consent of the Rating
Agencies, and upon delivery of any Opinion of Counsel that may be required by
the Rating Agencies, which Opinion of Counsel shall be furnished by, and shall
be an expense of, the Master Servicer.
Upon receipt of such Letter of Credit and Opinions of Counsel, the amount
available to be drawn under the Letter of Credit shall be deemed to be on
deposit in the Capitalized Interest Account, as applicable, for all purposes of
this Agreement. As soon as practicable after the delivery of any Letter of
Credit, or, in any event within two Business Days after the effective date
thereof, the Indenture Trustee shall surrender to the issuer of any Letter of
Credit being replaced, such Letter of Credit that is being replaced, or, if such
Letter of Credit is being delivered in replacement of amounts (other than
amounts represented by Letters of Credit) then on deposit in the Capitalized
Interest Account, withdraw from the Capitalized Interest Account, and pay to
Master Servicer an amount equal to the amount then available to be drawn under
such Letter of Credit, up to the amount then on deposit in the Capitalized
Interest Account.
(b) If, as of any date that is five Business Days prior to the stated
expiration date of any such Letter of Credit, a Letter of Credit (which may be a
renewal or extension of the expiring Letter of Credit) in the same amount as the
amount then available for drawing under the expiring Letter of Credit has not
been delivered to the Indenture Trustee, the Indenture Trustee shall, on the
next Business Day thereafter, cause to be presented to the issuer of the
expiring Letter of Credit a draft in proper form for payment thereunder and
otherwise in conformity with the terms thereof for the full amount then
available to be drawn thereunder. Proceeds received in payment of each such
draft shall be deposited and held in the Capitalized Interest Account, at the
direction of the Indenture Trustee upon consultation with the Master Servicer.
(c) Upon discovery by the Master Servicer or the Indenture Trustee that the
short-term or long-term debt obligations, if any, of any Letter of Credit Bank
have a rating lower than that required pursuant to the definition of the term
"Letter of Credit", the Person discovering such rating shall give prompt written
notice to the others of such Persons. If, within 15 days of its giving or
receipt of such notice, as the case may be, the Indenture Trustee has not
received a substitute Letter of Credit meeting the requirements of this
Agreement in replacement of such Letter of Credit, the Indenture Trustee shall
cause to be presented to the issuer of such Letter of Credit a draft in proper
form for payment thereunder and otherwise in conformity with the terms thereof
for the full amount available to be drawn thereunder. Proceeds received in
payment of each such draft shall be deposited and held in the Capitalized
Interest Account.
(d) If any notice of acceleration pursuant to the terms of any Letter of
Credit is delivered, (i) the Master Servicer shall replace or cause to be
replaced such accelerated Letter of Credit with a replacement Letter of Credit
(and the Indenture Trustee shall cause to be presented to the issuer of such
Letter of Credit a draft in proper form for payment thereunder and otherwise in
conformity with the terms thereof for the full amount available to be drawn
thereunder) within ten Business Days of its receipt of such acceleration notice
or its notification thereof by the Rating Agencies or (ii) a draw shall be made
on the accelerated Letter of Credit by the Indenture Trustee, and the Indenture
Trustee shall deposit the amount of such draw in the Capitalized Interest
Account.
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01. SERVICING CERTIFICATE. With respect to each Payment Date, on
the Business Day following the related Determination Date, the Master Servicer
shall forward to the Depositor and the Indenture Trustee, and the Indenture
Trustee, pursuant to Section 3.25 of the Indenture, shall make available to each
Securityholder, the Owner Trustee, each Paying Agent (if other than the
Indenture Trustee) and each Rating Agency, a Servicing Certificate setting forth
the following information, to the extent applicable:
(a) the aggregate amount of Collections received on the Mortgage Loans
during the related Collection Period;
(b) the aggregate amount of (i) Interest Collections and (ii) Principal
Collections and, in the case of the Managed Amortization Period, Net Principal
Collections (in each case stated separately for each Group and also in the
aggregate) for such Collection Period;
(c) the Principal Collection Distribution Amount for such Collection
Period;
(d) the amount distributable to each Class of Term Notes and the Variable
Funding Notes in respect of interest;
(e) the amount of any Interest Carry-Forward Amounts;
(f) reserved;
(g) the amount, if any, to be distributed to the Certificateholders;
(h) any accrued and unpaid Servicing Fees for previous Collection Periods
and the Servicing Fee for such Collection Period;
(i) the Excess Spread, if any, for such Collection Period;
(j) the Liquidation Loss Amount and Principal Balance of Liquidated
Mortgage Loans (in each case stated separately for each Group and also in the
aggregate) for (i) such Collection Period, (ii) such Collection Period and the
immediately preceding eleven Collection Periods and (iii) such Collection Period
and all previous Collection Periods and any Overcollateralization Increase
Amounts and Overcollateralization Release Amounts for such Collection Period;
(k) the Pool Balance (stated separately for each Group and also in the
aggregate) as of the end of the preceding Collection Period and as of the end of
the second preceding Collection Period;
(l) the Term Note Balance and the Variable Funding Balance for each Class
of Notes after giving effect to any distribution on such Payment Date and to any
reduction on account of Liquidation Loss Amounts;
(m) the Overcollateralization Amount and the Overcollateralization Target
Amount and whether the Loss and Delinquency Test has not been satisfied;
(n) the number and aggregate Principal Balances of Mortgage Loans (in each
case stated separately for each Group and also in the aggregate) (i) as to which
the related Monthly Payment is delinquent for 30-59 days, 60-89 days and 90 or
more days, respectively, those Mortgage Loans in foreclosure, and those Mortgage
Loans as to which the related Mortgagor has commenced bankruptcy proceedings and
(ii) that have become related to REO Property, in each case as of the end of
the preceding Collection Period; in addition, with respect to the High LTV
Mortgage Loans, the number and aggregate Principal Balance of Mortgage Loans as
to which the related monthly Payment is delinquent for 30-59 days, 60-89 days,
90-119 days, 120-149 days, 150-179 days and 180 days or more separately
identifying for each bucket those Mortgage Loans subject to bankruptcy
proceedings, those Mortgage Loans that have become related to REO Property and
the remaining ("purely delinquent") Mortgage Loans.
(o) prior to the end of the Managed Amortization Period with respect to
Group III, the aggregate amount of Additional Balances, if any, (i) created and
(ii) purchased during the preceding Collection Period;
(p) whether an Amortization Event, specifying such event, has occurred
since the prior Determination Date;
(q) whether a Servicing Default has occurred since the prior Determination
Date, specifying such Servicing Default;
(r) the amount of any Interest Rate Cap Agreement Payments;
(s) reserved;
(t) reserved;
(u) the Net Mortgage Interest Rate, and the Group III Net Mortgage Interest
Rate for the related Collection Period;
(v) the number, Group and Principal Balances of any Mortgage Loans removed
from the Trust; and
(w) during the Pre-Funding Period, the amount on deposit in the Pre-Funding
Account (including the allocation thereof among Group I, Group II, and Group
III) as of such Payment Date and any transfers of funds in connection therewith.
The Indenture Trustee shall conclusively rely upon the information contained in
a Servicing Certificate for purposes of making distributions pursuant to Section
3.05 of the Indenture, shall have no duty to inquire into such information and
shall have no liability in so relying. The format and content of the Servicing
Certificate may be modified by the mutual agreement of the Master Servicer and
the Indenture Trustee. The Master Servicer shall give notice of any such change
to each Rating Agency.
The amounts furnished pursuant to clauses (d) above shall be expressed as
an aggregate dollar amount per each Class of Term Notes or Variable Funding
Notes, as the case may be, with a $1,000 denomination.
The Master Servicer shall forward to the Indenture Trustee any other
information reasonably requested by the Indenture Trustee to make distributions
pursuant to Section 3.05 of the Indenture. Prior to the close of business on
the Business Day next succeeding each Determination Date, the Master Servicer
shall furnish a written statement to the Paying Agent and the Indenture Trustee
setting forth the aggregate amounts required to be withdrawn from the
Pre-Funding Account (including the allocation of such withdrawal among amounts
reserved for Group I Mortgage Loans, Group II Mortgage Loans, and Group III
Mortgage Loans), the Funding Account and the Collection Account. The
determination by the Master Servicer of such amounts shall be presumptively
deemed to be correct for all purposes hereunder, and the Owner Trustee and the
Indenture Trustee shall be protected in relying upon the same without any
independent verification thereof. In addition, upon the Issuer's written
request, the Master Servicer shall promptly furnish information reasonably
requested by the Issuer that is reasonably available to the Master Servicer to
enable the Issuer to perform its federal and state income tax reporting
obligations.
ARTICLE V
THE ACCOUNTS
Section 5.01. ACCOUNTS. Prior to the Closing Date, the Master Servicer
shall establish or cause to be established the following accounts, each of which
shall be an Eligible Account:
(a) an account (the "Collection Account") bearing a designation clearly
indicating that the funds on deposit therein are held for the benefit of the
Issuer, the Indenture Trustee, and the Securityholders;
(b) an account in the name of the Indenture Trustee (the "Capitalized
Interest Account"), bearing a designation clearly indicating that the funds on
deposit therein are held for the benefit of the Securityholders;
(c) an account in the name of the Indenture Trustee (the "Pre-Funding
Account"), bearing a designation clearly indicating that funds on deposit
therein are held for the benefit of the Issuer, the Indenture Trustee, and the
Securityholders;
(d) an account in the name of the Indenture Trustee (the "Funding
Account"), bearing a designation clearly indicating that funds on deposit
therein are held for the benefit of the Issuer, the Indenture Trustee, and the
Securityholders;
(e) reserved;
(f) an account in the name of the Indenture Trustee (the "Certificate
Distribution Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Certificateholders; and
(g) an account in the name of the Indenture Trustee (the "Trustee
Collection Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Securityholders.
Section 5.02. COLLECTION ACCOUNT. The Master Servicer shall deposit or
cause to be deposited any amounts representing payments and collections in
respect of the Mortgage Loans received by it subsequent to the related Cut-Off
Date, other than in respect of the payments referred to in the following
paragraph, into the Collection Account within one Business Day following receipt
thereof or otherwise on or prior to the Closing Date, including the following
payments and collections received or made by it:
(a) all payments of principal, interest and prepayment penalties in respect
of the Mortgage Loans received by the Master Servicer from the Mortgagors or the
related Subservicer (net of any portion of the interest thereof retained by such
Subservicer as subservicing fees);
(b) the aggregate Purchase Price or Repurchase Price of any Mortgage Loans
purchased by the Transferor pursuant to Section 2.09 or 3.12;
(c) any Liquidation Proceeds and Insurance Proceeds; and
(d) any Substitution Adjustment Amounts;
provided, that with respect to each Collection Period, the Master Servicer
shall be permitted to retain from payments in respect of interest on the
Mortgage Loans, the Servicing Fee for such Collection Period.
The foregoing requirements respecting deposits into the Collection Account
are exclusive; provided, that without limiting the generality of the foregoing,
the Master Servicer need not deposit into the Collection Account any amounts
representing fees or late charges payable by Mortgagors. In the event that any
amount not required to be deposited into the Collection Account is so deposited,
the Master Servicer may at any time withdraw such amount from the Collection
Account, any provision herein to the contrary notwithstanding. Notwithstanding
such commingling of funds, the Master Servicer shall keep records that
accurately reflect the funds on deposit in the Collection Account that have been
identified by it as being attributable to the Mortgage Loans and shall hold all
collections in the Collection Account to the extent they represent collections
on the Mortgage Loans for the benefit of the Issuer, the Indenture Trustee, and
the Securityholders.
The Master Servicer shall direct in writing the institution maintaining the
Collection Account to invest funds therein only in Permitted Investments. No
Permitted Investment may be sold or disposed of at a gain prior to maturity,
unless the Master Servicer shall have obtained an Opinion of Counsel at the
Master Servicer's expense that such sale or disposition will not cause the Trust
to be to be treated as an association (or a publicly-traded partnership) taxable
as a corporation for federal income tax purposes. All net income, other than any
gain from a sale or disposition of the type referred to in the preceding
sentence, received from any such Permitted Investment shall be paid to the
Master Servicer as additional servicing compensation. The amount of any losses
incurred in respect therewith shall be deposited into the Collection Account by
the Master Servicer out of its own funds immediately as incurred.
The Master Servicer shall require each Subservicer to hold all funds
constituting collections on the Mortgage Loans, pending remittance thereof to
the Master Servicer, in one or more accounts meeting the requirements of an
Eligible Account (and amounts on deposit therein shall be invested in Permitted
Investments), unless all such collections are remitted on a daily basis to the
Master Servicer for deposit into the Collection Account.
The Collection Account may, upon written notice to the Issuer, and the
Indenture Trustee, be transferred to a different institution, provided that such
transfer is to an Eligible Account.
Section 5.03. TRUSTEE COLLECTION ACCOUNT. On each Master Servicer
Remittance Date, the Master Servicer shall transfer from the Collection Account
to the Trustee Collection Account the amount necessary for the Indenture Trustee
to make the required distributions pursuant to Section 3.05(a) of the Indenture.
On each Master Servicer Remittance Date the Master Servicer shall deposit into
the Trustee Collection Account from its own funds an amount equal to the lesser
of (i) the Prepayment Interest Shortfalls for the related collection period and
(ii) its Servicing Fee for the related Collection Period prior to any reduction
thereof on account of any Prepayment Interest Shortfall. Such requirement
respecting deposits into the Trustee Collection Account is exclusive. In the
event that any amount not required to be deposited into the Trustee Collection
Account is so deposited, the Master Servicer may at any time direct the
Indenture Trustee to withdraw such amount from the Trustee Collection Account
and deliver it to or at the direction of Master Servicer, any provision herein
to the contrary notwithstanding.
The Indenture Trustee may, but need not, invest funds in the Trustee
Collection Account, and if such funds are invested, they shall be invested only
in Permitted Investments. No Permitted Investment may be sold or disposed of at
a gain prior to maturity, unless the Indenture Trustee shall have obtained an
Opinion of Counsel at the Indenture Trustee's expense that such sale or
disposition will not cause the Trust to be to be treated as an association (or a
publicly-traded partnership) taxable as a corporation for federal income tax
purposes. All net income shall be for the account of the Indenture Trustee. The
amount of any losses incurred in respect therewith shall be deposited into the
Trustee Collection Account by the Indenture Trustee out of its own funds
immediately as incurred.
Section 5.04. PRE-FUNDING ACCOUNT.
(a) On the Closing Date, the Transferor shall deposit into the Pre-Funding
Account an amount equal to the Initial Pre-Funded Amount from the proceeds of
the sale of the Securities. The Transferor shall designate $102,887,198.77 of
such amount as allocated to Group I, $101,266,193.16 of such amount as allocated
to Group II, $22,425,166.48 of such amount as allocated to Group III. On each
related Subsequent Transfer Date, the Master Servicer shall instruct the
Indenture Trustee in writing to (i) withdraw from the Pre-Funding Account an
amount equal to the aggregate Principal Balance as of the related Subsequent
Cut-Off Date of the Subsequent Mortgage Loans to be sold to the Trust on such
Subsequent Transfer Date, (ii) allocate such withdrawal among amounts reserved
for Group I, Group II, and Group III as indicated by the Master Servicer and
(iii) pay such amount to or upon the order of the Transferor upon satisfaction
of the conditions set forth in this Agreement and in the related Subsequent
Transfer Agreement with respect thereto.
(b) The Master Servicer may cause the institution maintaining the
Pre-Funding Account to invest any funds therein in Permitted Investments having
a maturity of up to 180 days or maturing or otherwise available not later than
the Business Day preceding the related date on which funds are scheduled to be
withdrawn to purchase Subsequent Mortgage Loans; provided, that any investment
in an obligation of the institution with which the Pre-Funding Account is
maintained may mature on or before 10:30 a.m., New York time, on such date; and
provided further, that no such investment may be sold or disposed of prior to
maturity. Notwithstanding the foregoing, in the event investment earnings have
not matured on any Subsequent Transfer Date, the amount of such earnings accrued
as of such Subsequent Transfer Date may be advanced by the Master Servicer for
deposit into the Pre-Funding Account (which advance shall be reimbursed to the
Master Servicer from such investment earnings at maturity). At any time when the
Indenture Trustee is maintaining the Pre-Funding Account, any request by the
Master Servicer to invest funds on deposit therein shall be in writing,
delivered to the Indenture Trustee at or before 10:30 a.m., New York time, if
such investment is to be made on such day. The Master Servicer shall certify
that the requested investment is a Permitted Investment maturing at or prior to
the time required hereby. Any such investment shall be registered in the name of
the Indenture Trustee or its nominee, and to the extent that any such investment
is certificated, such investment shall be maintained with the Indenture Trustee
at its Corporate Trust Office. All net income or other gain received from any
such investment shall be deposited into or credited to the Capitalized Interest
Account, and may be withdrawn therefrom in accordance with Section 5.06 hereof.
The amount of any net losses incurred in respect of the principal amount of any
such investment shall be deposited into the Pre-Funding Account by the Master
Servicer out of its own funds immediately as realized.
Section 5.05. FUNDING ACCOUNT.
(a) On each Payment Date during the Managed Amortization Period with
respect to Group III, the Master Servicer shall withdraw from the Collection
Account and deposit into the Funding Account the lesser of (i) the aggregate
amount of Additional Balances created during the related Collection Period and
(ii) Principal Collections with respect to Mortgage Loans assigned to Group III.
(b) The Master Servicer may cause the institution maintaining the Funding
Account to invest any funds therein in Permitted Investments having a maturity
of up to 90 days or maturing or otherwise available not later than the Business
Day preceding the related date on which funds are scheduled to be withdrawn to
purchase Additional Balances; provided, that any investment in an obligation of
the institution with which the Funding Account is maintained may mature on or
before 10:30 a.m., New York time, on such Subsequent Transfer Date; and provided
further, that no such investment may be sold or disposed of prior to maturity.
At any time when the Indenture Trustee is maintaining the Funding Account, any
request by the Master Servicer to invest funds on deposit therein shall be in
writing, delivered to the Indenture Trustee at or before 10:30 a.m., New York
time, if such investment is to be made on such day. The Master Servicer shall
certify that the requested investment is a Permitted Investment maturing at or
prior to the time required hereby. Any such investment shall be registered in
the name of the Indenture Trustee or its nominee, and to the extent that any
such investment is certificated, such investment shall be maintained with the
Indenture Trustee at its Corporate Trust Office. All net income or other gain
received from any such investment shall be deposited into or credited to the
Funding Account, and shall be distributed in accordance with this Section. The
amount of any net losses incurred in respect of the principal amount of any such
investment shall be deposited into the Funding Account by the Master Servicer
out of its own funds immediately as realized.
(c) On any date during the Managed Amortization Period with respect to
Mortgage Loans assigned to Group III (but not, in either case, more frequently
than once each month), the Master Servicer shall, to the extent on deposit in
the Funding Account, direct the Indenture Trustee to withdraw and deliver to the
Seller, as payment for Additional Balances, an amount equal to such Additional
Balances. On the first Payment Date after the end of the Managed Amortization
Period, the Master Servicer shall transfer all amounts on deposit in the Funding
Account and allocated to Group III to the Trustee Collection Account for payment
to the Class IIIA-1 Noteholders and on the Variable Funding Note pursuant to
Section 3.05(a) of the Indenture.
Section 5.06. CAPITALIZED INTEREST ACCOUNT. The Master Servicer shall
direct the Indenture Trustee to invest funds on deposit in the Capitalized
Interest Account in Permitted Investments or such other investment as may be
acceptable to the Rating Agencies. No such investment in the Capitalized
Interest Account shall mature later than the Business Day immediately preceding
the next succeeding Payment Date (except if such investment is an obligation of,
or is managed or advised by, the Indenture Trustee, in which case such
investment shall mature not later than such Payment Date, or such other date as
may be approved by the Rating Agencies). The Indenture Trustee shall identify by
book entry to its appropriate records the status of the Trust as secured party
with respect to the investments made with funds deposited into the Capitalized
Interest Account. Any net investment income on the Capitalized Interest Account
shall be deposited into or credited to the Capitalized Interest Account as
received. On the Closing Date, the Transferor shall make a cash deposit from the
proceeds of the sale of the Term Notes into the Capitalized Interest Account
(which amount may be evidenced by a Letter of Credit delivered pursuant to
Section 3.19, and which Letter of Credit may also be used in connection with
Section 5.07(b)).
On each Payment Date, the Indenture Trustee shall, to the extent of funds
on deposit in the Capitalized Interest Account, withdraw the Capitalized
Interest Requirement, as specified by the Master Servicer in a notice to the
Indenture Trustee for such purpose, from the Capitalized Interest Account and
deposit the Capitalized Interest Requirement into the Trustee Collection Account
to be distributed in accordance with Section 3.05(a) of the Indenture. Following
the withdrawal of the Capitalized Interest Requirement as set forth in the
immediately preceding sentence on each Payment Date, the Indenture Trustee
shall, to the extent of funds on deposit in the Capitalized Interest Account,
withdraw the Overfunded Capitalized Interest Amount from the Capitalized
Interest Account and pay it to or at the direction of the Transferor. At the end
of the Pre-Funding Period, following any required transfer pursuant to the two
immediately preceding sentences, the Indenture Trustee shall, to the extent of
funds on deposit in the Capitalized Interest Account, withdraw all the entire
amount then on deposit in the Capitalized Interest Account and pay it to or at
the direction of the Transferor.
Section 5.07. Reserved
ARTICLE VI
THE MASTER SERVICER
Section 6.01. LIABILITY OF THE MASTER SERVICER. The Master Servicer shall
be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by it hereunder.
Section 6.02. MERGER OR CONSOLIDATION OR ASSUMPTION OF THE OBLIGATIONS OF
THE MASTER SERVICER. Any Person into which the Master Servicer may be merged or
converted or with which it may be consolidated, any Person resulting from any
merger, conversion or consolidation to which the Master Servicer shall be a
party or any Person succeeding to the business of the Master Servicer, shall be
the successor of the Master Servicer hereunder, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
The Master Servicer may assign its rights and delegate its duties and
obligations under this Agreement; provided, that the Person accepting such
assignment or delegation shall be a Person qualified to service the Mortgage
Loans, shall be reasonably satisfactory to the Issuer; and the Indenture
Trustee, as pledgee of the Mortgage Loans, shall be willing to service the
Mortgage Loans and shall execute and deliver to the Indenture Trustee and the
Issuer an agreement, in form and substance reasonably satisfactory to the
Indenture Trustee and the Issuer, containing an assumption by such Person of the
due and punctual performance and observance of each covenant and condition to be
performed or observed by the Master Servicer under this Agreement; and provided
further, that no Rating Agency, after notice thereto, shall have notified the
Indenture Trustee in writing that such assignment and delegation would result in
a Rating Event; and provided further, that the Owner Trustee shall have received
an Opinion of Counsel to the effect that such assignment or delegation would not
cause the Trust to be treated as an association (or a publicly-traded
partnership) taxable as a corporation for federal income tax purposes.
Section 6.03. LIMITATION ON LIABILITY OF THE MASTER SERVICER AND OTHERS.
Neither the Master Servicer nor any of its directors, officers, employees or
agents shall be under any liability to the Issuer, the Owner Trustee, the
Indenture Trustee or the Securityholders for any action taken or for refraining
from the taking of any action in good faith pursuant to this Agreement;
provided, that this provision shall not protect the Master Servicer or any such
Person against any liability that would otherwise be imposed on it by reason of
its willful misfeasance, bad faith or gross negligence in the performance of its
duties hereunder or by reason of its reckless disregard thereof. The Master
Servicer and any director, officer, employee or agent thereof may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder. The Master Servicer and
any director, officer, employee or agent thereof shall be indemnified by the
Issuer and held harmless against any loss, liability or expense incurred in
connection with any Proceeding relating to this Agreement or the Securities,
including any amount paid to the Indenture Trustee pursuant to Section 6.06(b),
other than any loss, liability or expense incurred by reason of its willful
misfeasance, bad faith or gross negligence in the performance of its duties
hereunder or by reason of its reckless disregard thereof. The Master Servicer
shall be under no obligation to appear in, prosecute or defend any legal action
not incidental to its duties to service the Mortgage Loans in accordance with
this Agreement, and that in its opinion may involve it in any expense or
liability; provided, that the Master Servicer may in its sole discretion
undertake any action that it may deem necessary or desirable in respect of this
Agreement, the rights and duties of the parties hereto and the interests of the
Securityholders. In such event, the reasonable legal expenses and costs of such
action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Issuer, and the Master Servicer shall be entitled to
reimbursement therefor. The Master Servicer's right to indemnity or
reimbursement pursuant to this Section shall survive any resignation or
termination of the Master Servicer pursuant to Section 6.04 or Article VII in
respect to any losses, expenses, costs or liabilities arising prior to such
resignation or termination or from events that occurred prior to such
resignation or termination.
Section 6.04. MASTER SERVICER NOT TO RESIGN. Subject to the provisions of
Section 6.02, the Master Servicer shall not assign this Agreement or resign from
the obligations and duties hereby imposed upon it except (a) upon a
determination that the performance of its obligations or duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with other activities carried on by it or any Affiliate thereof,
the other activities of the Master Servicer so causing such a conflict being of
a type and nature carried on by the Master Servicer or such Affiliate at the
date of this Agreement or (b) upon the satisfaction of the following conditions:
(i) the Master Servicer shall have proposed a successor master servicer to the
Issuer and the Indenture Trustee in writing, and such proposed successor master
servicer shall be reasonably acceptable to the Issuer and the Indenture Trustee;
and (ii) each Rating Agency, after prior notice thereto, shall have delivered a
letter to the Issuer and the Indenture Trustee prior to the appointment of such
proposed successor master servicer stating that such proposed appointment would
not result in a Rating Event; provided, that no such resignation by the Master
Servicer shall become effective until such successor master servicer shall have
assumed the Master Servicer's responsibilities and obligations hereunder or the
Indenture Trustee shall have designated a successor master servicer in
accordance with Section 7.02. An Opinion of Counsel delivered to the Issuer and
the Indenture Trustee and shall be required in connection with any such
determination permitting the resignation of the Master Servicer.
Section 6.05. DELEGATION OF DUTIES. In the ordinary course of its business,
the Master Servicer may at any time delegate any of its duties hereunder to any
Person (including any Affiliate of the Master Servicer), that agrees to conduct
such duties in accordance with standards comparable to those applicable to the
Master Servicer hereunder. Such delegation shall not relieve the Master Servicer
of liability or responsibility with respect to such duties, and shall not
constitute a resignation of the Master Servicer pursuant to Section 6.04.
Section 6.06. INDENTURE TRUSTEE FEES AND EXPENSES; INDEMNIFICATION.
(a) After the Closing Date, the Master Servicer covenants and agrees to
pay, in accordance with Section 6.07 of the Indenture, from amounts on deposit
in the Collection Account, to the Indenture Trustee and any co-trustee from time
to time, and the Indenture Trustee and any such co-trustee shall be entitled to
compensation in an amount equal to investment earnings, net of losses on amounts
on deposit in the Trustee Collection Account for the two calendar days preceding
the related Payment Date, which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust, for all services
rendered by each of them in the execution of the trusts created under the
Indenture and in the exercise and performance of any of the powers and duties
under the Indenture of the Indenture Trustee and any such co-trustee. The
Indenture Trustee and any such co-trustee shall be entitled to payment or
reimbursement in accordance with the Indenture from amounts on deposit in the
Collection Account, upon request therefrom for all reasonable expenses,
disbursements and advances incurred or made by the Indenture Trustee or any such
co-trustee, respectively, in accordance with any of the provisions of this
Agreement or the other Basic Documents, except any such expenses, disbursements
or advances as may arise from the negligence, willful misfeasance or bad faith
of the Indenture Trustee or such co-trustee, as the case may be. The Indenture
Trustee shall be entitled to be reimbursed by the Master Servicer (or, if the
Master Servicer is unable to fulfill such obligation, in accordance with Section
3.05(a)(xiii) of the Indenture) for all costs associated with the transfer of
servicing from the Master Servicer to the Indenture Trustee, including without
limitation, any costs or expenses associated with the complete transfer of all
servicing data and the completion, correction or manipulation of such servicing
data as may be required by the Indenture Trustee to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Indenture
Trustee to service the Mortgage Loans properly and effectively. If the Indenture
Trustee or an Affiliate thereof becomes the successor Master Servicer, any
custody fees and expenses shall also be paid pursuant to Section 3.05(a)(xiii)
of the Indenture.
(b) The Indenture Trustee shall be indemnified and held harmless by the
Master Servicer for any loss, liability or expense incurred without negligence,
bad faith or willful misconduct on the part of the Indenture Trustee, arising
out of or in connection with the performance of its duties under the Basic
Documents (but not with respect to the performance of any of its duties under
the Administration Agreement), including the costs and expenses (including
reasonable attorneys' fees and expenses) of defending the Indenture Trustee
against any claim in connection with the exercise or performance of any of its
powers or duties under any Basic Document; provided, that:
(i) with respect to any such claim, the Indenture Trustee shall have
given the Master Servicer written notice thereof promptly after the
Indenture Trustee shall have actual knowledge thereof;
(ii) while maintaining control over its own defense, the Indenture
Trustee shall cooperate and consult fully with the Master Servicer in
preparing such defense; and
(iii) notwithstanding anything herein to the contrary, the Master
Servicer shall not be liable for the settlement of any claim by the
Indenture Trustee entered into without the prior written consent of the
Master Servicer.
No termination of this Agreement shall affect the obligations created by
this Section of the Master Servicer to indemnify the Indenture Trustee under the
conditions and to the extent set forth herein.
Notwithstanding the foregoing, the indemnification provided pursuant to
this paragraph shall not pertain to any loss, liability or expense of the
Indenture Trustee, including the costs and expenses of defending itself against
any claim, incurred in connection with (i) any actions taken by the Indenture
Trustee at the direction of the Securityholders pursuant to the terms of the
Basic Documents unless consented to by the Master Servicer or (ii) any actions
taken by the Indenture Trustee in its capacity as administrator under the
Administration Agreement.
Section 6.07. INDEMNIFICATION OF OWNER TRUSTEE BY MASTER SERVICER. The
Owner Trustee and its successors, assigns, agents and servants (collectively the
"Indemnified Parties") shall be indemnified, defended and held harmless by the
Master Servicer for any liabilities, obligations, losses, damages, taxes,
claims, actions and suits, and any and all reasonable costs, expenses and
disbursements (including reasonable attorney's fees and expenses) of any kind
and nature whatsoever (collectively, "Expenses") that may at any time be imposed
on, incurred by, or asserted against the Owner Trustee or any Indemnified Party
in any way relating to or arising out of the Basic Documents, the Trust Estate
or the administration of the Trust Estate or the action or inaction of the Owner
Trustee, provided that:
(a) The Master Servicer shall not be liable for or required to indemnify an
Indemnified Party from and against Expenses arising or resulting from the Owner
Trustee's gross negligence with respect to the handling of funds, or with
respect to any other acts, willful misconduct, negligence or bad faith, or as a
result of any inaccuracy of an express representation or warranty contained in
Section 6.03 of the Trust Agreement;
(b) With respect to any such claim, the Indemnified Party shall have given
the Master Servicer written notice thereof promptly after the Indemnified Party
shall have actual knowledge thereof;
(c) While maintaining control over its own defense, the Indemnified Party
shall cooperate and consult fully with the Master Servicer in preparing such
defense;
(d) Notwithstanding anything to the contrary, the Master Servicer shall not
be liable for the settlement of any claim by an Indemnified Party entered into
without the prior written consent of the Master Servicer.
No termination of this Agreement shall affect the obligation created by
this Section of the Master Servicer to indemnify the Owner Trustee and the
Indemnified Parties under the conditions and to the extent set forth herein.
ARTICLE VII
DEFAULT
Section 7.01. DEFAULT. If any one of the following events (each, a
"Servicing Default") shall occur and be continuing:
(a) any failure by the Master Servicer to deposit into any Collection
Account or the Trustee Collection Account any deposit required to be made under
the terms of this Agreement that continues unremedied for a period of five
Business Days after the date upon which written notice of such failure shall
have been given to the Master Servicer by the Issuer or the Indenture Trustee;
(b) any failure on the part of the Master Servicer to duly observe or
perform in any material respect any other covenants or agreements of the Master
Servicer set forth in this Agreement, which failure materially and adversely
affects the interests of any Securityholder, and which failure continues
unremedied for a period of 45 days after the date on which written notice of
such failure, requiring the same to be remedied, and stating that such notice is
a "Notice of Default" hereunder, shall have been given to the Master Servicer by
the Issuer or the Indenture Trustee;
(c) the entry against the Master Servicer of a decree or order by a court,
agency or supervisory authority having jurisdiction in the premises for the
appointment of a trustee, conservator, receiver or liquidator in any insolvency,
conservatorship, receivership, readjustment of debt, marshalling of assets and
liabilities or similar Proceeding, or for the winding up or liquidation of its
affairs; and the continuance of any such decree or order unstayed and in effect
for a period of 60 consecutive days; or
(d) the Master Servicer shall voluntarily go into liquidation or consent to
the appointment of a conservator, receiver, liquidator or similar person in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar Proceeding of or relating to the Master Servicer or all or substantially
all of its property, or a decree or order of a court, agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator, receiver, liquidator or similar person in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
Proceeding, or for the winding-up or liquidation of the Master Servicer's
affairs, shall have been entered against the Master Servicer, and such decree or
order shall have remained in force undischarged, unbonded and unstayed for a
period of 60 days, or the Master Servicer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take advantage
of any applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors or voluntarily suspend payment of its obligations;
then, in each case, the Master Servicer shall immediately notify the Indenture
Trustee and the Owner Trustee in writing thereof and, for so long as such
Servicing Default shall not have been remedied by the Master Servicer, then
Issuer or the Indenture Trustee, by notice then given in writing to the Master
Servicer, may terminate all rights and obligations of the Master Servicer
hereunder, other than the Master Servicer's right to receive servicing
compensation and reimbursement of expenses hereunder during any period prior to
the date of such termination; and the Indenture Trustee or the Owner Trustee may
exercise any and all other remedies available at law or in equity. Any such
notice to the Master Servicer shall also be given to each Rating Agency and the
Issuer. Subject to Section 7.02, on or after receipt by the Master Servicer of
such written notice, all authority and power of the Master Servicer under this
Agreement shall pass to and be vested in the Indenture Trustee as pledgee of the
Mortgage Loans pursuant to this Section. Without limitation, the Indenture
Trustee is hereby authorized and empowered to execute and deliver, on behalf of
the Master Servicer, as attorney in-fact or otherwise, any and all documents or
other instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of each Mortgage Loan or the related
Mortgage Documents or Related Documents, or otherwise. The Master Servicer
agrees to cooperate fully with the Owner Trustee and the Indenture Trustee in
effecting the termination of the rights and responsibilities of the Master
Servicer hereunder, including the transfer to the Indenture Trustee (or other
applicable successor) for the administration by it of all cash relating to the
Mortgage Loans that shall at the time be held by the Master Servicer for deposit
into the Collection Account, or that have been thereafter received by the Master
Servicer with respect to the Mortgage Loans. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with amending this Agreement
to reflect such succession as Master Servicer pursuant to this Section shall be
paid by the predecessor Master Servicer (or if the predecessor Master Servicer
is the Indenture Trustee, the initial Master Servicer and, in any event, if the
initial Master Servicer cannot pay any such amount, in accordance with Section
3.05 of the Indenture) upon presentation of reasonable documentation of such
costs and expenses.
Notwithstanding any termination of the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to receive, out of any late
collection of a payment on a Mortgage Loan that was due prior to the notice
terminating the Master Servicer's rights and obligations hereunder and received
after such notice, that portion thereof to which the Master Servicer would have
been entitled hereunder, its Servicing Fee in respect thereof and any other
amounts payable to the Master Servicer hereunder the entitlement to which arose
prior to such termination.
Notwithstanding the foregoing, a delay in or failure of performance under
paragraph (a) or (b) above, after the expiration of the applicable grace
periods, shall not constitute a Servicing Default if such delay or failure could
not have been prevented by the exercise of reasonable diligence by the Master
Servicer and such delay or failure was caused by an Act of God, any act of the
public enemy, declared or undeclared war, public disorder, rebellion or
sabotage, or epidemic, landslide, lightning, fire, hurricane, earthquake or
flood. The preceding sentence shall not relieve the Master Servicer from using
reasonable efforts to perform its obligations hereunder in a timely manner in
accordance with the terms hereof, and the Master Servicer shall provide the
Owner Trustee and the Indenture Trustee with notice of such failure or delay by
it, together with a description of its efforts to so perform its obligations.
Section 7.02. INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) Within 90 days after the date the Master Servicer and the Indenture
Trustee receive a notice of termination pursuant to Section 7.01 or sends a
resignation notice pursuant to Section 6.04, the Indenture Trustee, as pledgee
of the Mortgage Loans, shall be the successor in all respects to the Master
Servicer in its capacity as Master Servicer hereunder and with respect to the
transactions set forth herein, and shall be subject to all responsibilities,
duties and liabilities relating thereto placed on the Master Servicer by the
terms hereof. Nothing in any Basic Document shall be construed to permit or
require the Indenture Trustee to (i) be responsible or accountable for any act
or omission of any prior Master Servicer prior to the issuance of the related
notice of termination hereunder, (ii) in its capacity as successor Master
Servicer, purchase, repurchase or substitute any Mortgage Loan or fund any
Additional Balances with respect thereto, (iii) fund any losses on any Permitted
Investment directed by any prior Master Servicer hereunder or (iv) be
responsible for the representations or warranties of any such prior Master
Servicer. As compensation therefor, the Indenture Trustee shall be entitled to
such compensation as the Master Servicer would have been entitled to hereunder
if no such notice of termination had been given. If the Indenture Trustee is (i)
unwilling to act as successor Master Servicer or (ii) legally unable so to act,
then the Indenture Trustee may appoint, or may petition a court of competent
jurisdiction to appoint any established mortgage loan servicing institution
having a net worth of not less than $10,000,000 as the successor to the Master
Servicer hereunder with respect to all or any part of the Master Servicer's
responsibilities, duties or liabilities hereunder; provided, that no Rating
Agency, after prior notice thereto, shall have notified the Indenture Trustee in
writing that the appointment of such successor Master Servicer would result in a
Rating Event. Notwithstanding the foregoing, pending the appointment of a
successor Master Servicer hereunder, unless the Indenture Trustee is prohibited
by law from so acting, the Indenture Trustee shall act in such capacity as
provided above. In connection with such appointment and assumption, the
successor shall be entitled to receive compensation out of payments on Mortgage
Loans in an amount equal to the compensation that the Master Servicer would
otherwise have received pursuant to Section 3.10 (or such lesser compensation as
the Indenture Trustee and such successor shall agree). The appointment of a
successor Master Servicer shall not affect any liability of the predecessor
Master Servicer that may have arisen under this Agreement prior to its
termination as Master Servicer, nor shall any successor Master Servicer be
liable for any acts or omissions of any predecessor Master Servicer or for any
breach by such Master Servicer of any of its representations or warranties
contained herein or in any other Basic Document. The Indenture Trustee and such
successor Master Servicer shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
(b) Any successor Master Servicer, including the Indenture Trustee shall
not be deemed to be in default or to have breached its duties hereunder if the
predecessor Master Servicer shall fail to make any required deposit into the
Collection Account or otherwise cooperate with any required servicing transfer
or succession hereunder.
Section 7.03. NOTIFICATION TO SECURITYHOLDERS. Upon any termination of or
appointment of a successor Master Servicer hereunder, the Indenture Trustee
shall give prompt written notice thereof to the Issuer, the Indenture Trustee
and each Rating Agency.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. AMENDMENT. This Agreement may be amended from time to time by
the parties hereto (i) to cure any ambiguity, correct or supplement any
provision of this Agreement that may be inconsistent with any other provision of
this Agreement, add any provision that provides additional rights to the
Certificateholders or Noteholders or ensure that the Trust is not classified as
an association (or a publicly traded partnership) taxable as a corporation for
federal income tax purposes; provided, that (A) (i) such amendment will not, in
the good faith judgment of the parties thereto, materially and adversely affect
the interest of any Certificateholder or Noteholder and (ii) an Opinion of
Counsel is delivered to the effect that such amendment will not materially and
adversely affect the interest of any Certificateholder or Noteholder or (B) to
the extent affected thereby, with the consent of the Holders of Notes evidencing
not less than a majority of the Note Balance of the Notes and, to the extent
affected thereby, the consent of the Holders of Certificates evidencing not less
than a majority of the Percentage Interests of the Certificates for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders or the Certificateholders; provided that no such amendment shall (a)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Mortgage Loans or distributions that shall
be required to be made for the benefit of the Noteholders or the
Certificateholders or (b) reduce the aforesaid percentage of the Note Balance of
the Notes and the Percentage Interests of the Certificates required to consent
to any such amendment, without the consent of the Holders of all the outstanding
Notes and Holders of all outstanding Certificates.
Promptly after the execution of any such amendment or consent, the Master
Servicer shall furnish written notification of the substance of such amendment
or consent to each Certificateholder and the Indenture Trustee. It shall not be
necessary for the consent of the Certificateholder or Noteholder pursuant to
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of the
Certificateholder or Noteholders provided for in this Agreement or in any other
Basic Document) and of evidencing the authorization of the execution thereof by
the Certificateholder or Noteholders shall be subject to such reasonable
requirements as the Owner Trustee or Indenture Trustee may prescribe from time
to time.
Section 8.02. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT CONSIDERATION OF THE
CHOICE OF LAW PRINCIPLES THEREOF, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 8.03. NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered or mailed by certified mail, return receipt requested or by facsimile,
(a) if to the Depositor, to 000 Xxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Asset Backed Securities Group (b) if to the Master Servicer,
to 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000, Attention: Xxxxx Xxxxxx, Esq.
and Xxxxxx Xxxxx (with a copy to the Transferor and to Xxxxx Xxxxxx, Xxxx
Xxxxxxx and Xxxx Xxxxxxx, Esq. 00000 Xxxxxxx Xxxx., Xxxxx 000, Xxx Xxxxx,
Xxxxxxxxxx 00000); (c) if to the Transferor, to 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxx 00000, Attention: Xxxxx Xxxxxx, Esq. and Xxxxxx Xxxxx (with a copy to
the Master Servicer and to Xxxxx Xxxxxx, Xxxx Xxxxxxx and Xxxx Xxxxxxx, Esq.
00000 Xxxxxxx Xxxx., Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000); (d) if to Xxxxx'x,
to 00 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Home
Mortgage Loan Monitoring Group; (e) if to Standard & Poor's, to 00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Residential Mortgage Surveillance Group and
Structured Finance Residential Department; (f) if to Fitch, to 0 Xxxxx Xxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000; (g) if to the Owner Trustee, to Xxxxxx Square
North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention:
Xxxxx Home Equity Loan Trust 2001-2 (with a copy to each Rating Agency); (h) if
to the Issuer, to c/o Wilmington Trust Company, as Owner Trustee, Xxxxxx Square
North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention:
Xxxxx Home Equity Loan Trust 2001-2; (i) if to the Indenture Trustee, to 00000
Xxxxxx Xxxx Xxxxxxx, Xxxxxxxx, Xxxxxxxx 00000 (with a copy to the Indenture
Trustee at Xxxxx Fargo Center, MAC # 9311-161, Sixth and Marquette, Xxxxxxxxxxx,
Xxxxxxxxx 00000, Attention: Corporate Trust Services ); and (j) as to each of
the foregoing Persons, at such other address or facsimile numbers as shall be
designated by such Person in a written notice to the other foregoing Persons.
Section 8.04. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement, and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the Securities
or the rights of the Securityholders.
Section 8.05. THIRD-PARTY BENEFICIARIES. This Agreement shall inure to
the benefit of and be binding upon the parties hereto, the Securityholders, the
Owner Trustee, and their respective successors and permitted assigns. Except as
otherwise provided herein, no other Person shall have any right or obligation
hereunder.
Section 8.06. COUNTERPARTS. This instrument may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all of which shall together constitute but one and the same instrument.
Section 8.07. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and in the Table of Contents are for convenience of
reference only and shall not affect the construction hereof.
Section 8.08. TERMINATION; CLEAN-UP CALL.
(a) The respective obligations and responsibilities of the parties hereto
shall terminate upon the last action required to be taken by the Issuer pursuant
to the Trust Agreement and by the Indenture Trustee pursuant to the Indenture,
following the earlier of (i) the date on or before which the Indenture or the
Trust Agreement is terminated; or (ii) the purchase by the Transferor of all
Mortgage Loans pursuant to paragraph (b) below.
(b) Subject to the provisions of Paragraph (c) below, the Transferor shall
have the right to purchase the Mortgage Loans and the Trust Estate on any date
on which the aggregate of the Principal Balances of the Mortgage Loans is less
than 10% of the sum of the aggregate of the Principal Balances of the Mortgage
Loans as of the Initial Cut-Off Date plus the Initial Pre-Funded Amount, at a
price equal to 100% of the aggregate unpaid Principal Balance of all such
remaining Mortgage Loans, plus accrued and unpaid interest thereon at the
weighted average of the Mortgage Interest Rates thereon up to the date preceding
the Payment Date on which such amounts are to be distributed to the
Securityholders (and any unpaid Servicing Fee shall be deemed to have been paid
at such time) plus any unpaid amounts owed to the Indenture Trustee and the
Administrator, any Interest Carry-Forward Amount and interest owed thereon to
the Noteholders and if the Notes are redeemed prior to the Payment Date in March
2004, the Class A-IO Notes will be entitled to receive their adjusted issue
price, which will be approximately equal to the present value of the remaining
payments on the Class A-IO Notes, using a discount rate equal to the discount
rate reflected in the price paid by the initial purchaser of the Class A-IO
Notes on the Closing Date. If the Transferor exercises any such right, the
Transferor shall deposit the amount calculated above with the Indenture Trustee
for distribution to the Securityholders and, upon the receipt of such deposit,
the Indenture Trustee or the Custodian shall release the related Mortgage Files
to the Master Servicer.
(c) The Master Servicer, at its expense, shall prepare and deliver to the
Indenture Trustee for execution at the time the Mortgage Loans are to be
released to the Transferor, appropriate documents assigning each such Mortgage
Loan from the Indenture Trustee or the Issuer to the Transferor.
Section 8.09. CERTAIN MATTERS AFFECTING THE INDENTURE TRUSTEE. For all
purposes of this Agreement, in the performance of any of its duties or in the
exercise of any of its powers hereunder, the Indenture Trustee shall be subject
to and entitled to the benefits of Article VI of the Indenture.
Section 8.10. OWNER TRUSTEE NOT LIABLE FOR MORTGAGE DOCUMENTS OR RELATED
DOCUMENTS. The Owner Trustee makes no representations as to the validity or
sufficiency of this Agreement, any Basic Document, the Securities (other than
the signature of the Owner Trustee on the Certificate), or any Mortgage Document
or Related Document. The Owner Trustee shall at no time have any responsibility
or liability with respect to the sufficiency of the Trust Estate or its ability
to generate the payments to be distributed to the Securityholders, including the
compliance by the Transferor with any representation or warranty made in any
Basic Document or the accuracy of any such representation or warranty, or any
action of the Paying Agent, the Certificate Paying Agent, the Certificate
Registrar or the Indenture Trustee taken in the name of the Owner Trustee.
Section 8.11. RESERVED.
Section 8.12. LIMITATION OF LIABILITY OF OWNER TRUSTEE. Notwithstanding
anything contained herein to the contrary, this Agreement has been countersigned
by Wilmington Trust Company not in its individual capacity but solely in its
capacity as Owner Trustee, and in no event shall Wilmington Trust Company in its
individual capacity or any beneficial owner of the Issuer have any liability for
the representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder, as to all of which recourse shall be had solely to the
assets of the Issuer. For all purposes of this Agreement, in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
IN WITNESS WHEREOF, the Depositor, the Transferor, the Master Servicer, the
Issuer and the Indenture Trustee have caused this Agreement to be duly executed
by their respective officers or representatives as of the date and year first
above written.
BEAR XXXXXXX ASSET BACKED SECURITIES, INC.
By:
-----------------------------------------
Name:
Title:
IHE FUNDING CORP. II, as Transferor
By:
-----------------------------------------
Name:
Title:
XXXXX UNION BANK AND TRUST
COMPANY, as Master Servicer
By:
-----------------------------------------
Name:
Title:
XXXXX HOME EQUITY LOAN TRUST 2001-2,
as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By:
-----------------------------------------
Name:
Title:
XXXXX FARGO BANK MINNESOTA
NATIONAL ASSOCIATION, not in its
individual capacity but solely as
Indenture Trustee
By:
-----------------------------------------
Name:
Title:
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[TO BE PROVIDED UPON REQUEST]
EXHIBIT B
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PREMISES:
That Xxxxx Fargo Bank Minnesota, National Association, as indenture trustee
(the "Indenture Trustee") under the indenture dated as of August 31, 2001 (the
"Indenture"), between Xxxxx Home Equity Loan Trust 2001-2 and the Indenture
Trustee, a national banking association existing under the laws of the United
States of America and having its principal office located at Xxxxx Fargo Center,
Sixth and Marquette, Xxxxxxxxxxx, Xxxxxxxxx 00000, hath made, constituted and
appointed, and does by these presents make, constitute and appoint Xxxxx Union
Bank and Trust Company ("Xxxxx"), a bank organized and existing under the laws
of the State of Indiana, as Master Servicer under the Sale and Servicing
Agreement (defined below) and Xxxxx Home Equity Corporation, an Indiana
corporation, as initial subservicer thereunder, its true and lawful
attorney-in-fact, with full power and authority to sign, execute, acknowledge,
deliver, file for recordation and record any instrument on its behalf and to
perform such other act or acts as may be customarily and reasonably necessary
and appropriate to effectuate the following enumerated transactions in respect
of any of the Mortgage Loans or the related Mortgaged Properties, Mortgage
Documents or Related Documents, for which the undersigned is acting as Indenture
Trustee (whether the undersigned is named therein as mortgagee or beneficiary or
has become mortgagee by virtue of endorsement of related Mortgage Documents) and
for which Xxxxx is acting as Master Servicer pursuant to the sale and servicing
agreement dated as of August 31, 2001 (the "Sale and Servicing Agreement").
Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in Appendix A to the Indenture.
This appointment shall apply to the following enumerated transactions only:
1. The modification or re-recording of a Mortgage Loan, where such
modification or re-recording is for the purpose of correcting the Mortgage
Loan to conform same to the original intent of the parties thereto or to
correct title errors discovered after such title insurance was issued and
such modification or re-recording, in either instance, does not adversely
affect the Lien of the Mortgage Loan as insured.
2. The subordination of the Lien of a Mortgage Loan to an easement in favor of
a public utility company or a government agency or unit with powers of
eminent domain; this paragraph shall include the execution of partial
satisfactions/releases, partial reconveyances or the execution of requests
to trustees to accomplish the same.
3. With respect to a Mortgage Loan, the foreclosure, the taking of a deed in
lieu of foreclosure, or the completion of judicial or non-judicial
foreclosure or termination, cancellation or rescission of any such
foreclosure, including any and all of the following acts:
a. the substitution of trustee(s) serving under a deed of trust, in
accordance with state law and such deed of trust;
b. statements of breach or non-performance;
c. notices of default;
d. cancellations/rescissions of notices of default and/or notices of
sale;
e. the taking of a deed in lieu of foreclosure; and
f. such other documents and actions as may be necessary under the terms
of the Mortgage Loan or state law to expeditiously complete such
transactions.
4. The conveyance of mortgaged properties to a mortgage insurer, or the
closing of the title to the property to be acquired as real estate owned,
or conveyance of title to real estate owned.
5. The completion of loan assumption agreements.
6. The full satisfaction and/or release of a Mortgage Loan or full
reconveyance upon payment and discharge of all sums secured thereby,
including cancellation of any related Mortgage Documents.
7. The assignment of any Mortgage Loan and the related Mortgage Documents in
connection with the repurchase of such Mortgage Loan.
8. The full assignment of a Mortgage Loan upon payment and discharge of all
sums secured thereby in conjunction with the refinancing thereof including,
without limitation, the endorsement of the related Mortgage Documents.
9. The subordination of the Lien of a Mortgage Loan, where such subordination
is in connection with any modification pursuant to Section 3.01(b) of the
Sale and Servicing Agreement, and the execution of partial satisfactions or
releases in connection with such Section.
10. The modification or re-recording of a Mortgage Loan, where such
modification or re-recording is for the purpose of any modification
pursuant to Section 3.03 of the Sale and Servicing Agreement.
11. Any other modification of the terms of a Mortgage Loan (including the
Mortgage Interest Rate thereon) made in accordance with the Sale and
Servicing Agreement.
The undersigned gives such attorneys-in-fact full power and authority to
execute such instruments and to do and perform all and every act and thing
necessary and proper to carry into effect the power or powers granted by or
under this Limited Power of Attorney as fully as the undersigned might or could
do, and does hereby ratify and confirm to all that such attorneys-in-fact shall
lawfully do or cause to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of Attorney, and may be satisfied that this
Limited Power of Attorney shall continue in full force and effect has not been
revoked unless an instrument of revocation shall have been made in writing by
the undersigned.
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, not in its individual
capacity but solely as Indenture Trustee
By:
-----------------------------------
Name:
Title:
EXHIBIT C
REQUEST FOR RELEASE OF DOCUMENTS
To: Xxxxx Fargo Bank Minnesota, N.A.
0000 00xx Xxxxxx X.X.
Xxxxxxxxxxx, XX 00000-0000
Attn: Inventory Control
Re: Sale and Servicing Agreement dated as of August 31, 2001, among Bear
Xxxxxxx Asset Backed Securities, Inc., Xxxxx Union Bank and Trust
Company, IHE Funding Corp. II, Xxxxx Home Equity Loan Trust 2001-2 and
Xxxxx Fargo Bank MINNESOTA, NATIONAL ASSOCIATION
In connection with the administration of the Mortgage Loans held by you as
Indenture Trustee pursuant to the above-captioned Agreement, we request the
release, and hereby acknowledge receipt, of the Mortgage File for the Mortgage
Loan described below, for the reason indicated.
MORTGAGE LOAN NUMBER:
MORTGAGOR NAME, ADDRESS & ZIP CODE:
Reason for Requesting Documents (check one):
_____ 1. Mortgage Paid in Full
_____ 2. Foreclosure
_____ 3. Substitution
_____ 4. Other Liquidation (Repurchased, etc.)
_____ 5. Nonliquidation Reason:_________________
Address to which Indenture Trustee should
Deliver the Mortgage File:
__________________________________
__________________________________
__________________________________
By: ________________________________
(authorized signer)
Issuer: ________________________________
Address: ________________________________
________________________________
Date: ________________________________
Xxxxx Fargo Bank Minnesota, National Association
Please acknowledge the execution of the above request by your signature and date
below:
__________________________________________ _______________
Signature Date
Documents returned to Indenture Trustee:
__________________________________________ _______________
Indenture Trustee Date
EXHIBIT D
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Transfer No. __ of Subsequent Mortgage Loans, dated as of ____________,
200__, among Xxxxx Union Bank and Trust Company, a bank organized under the laws
of the State of Indiana ("Xxxxx Union Bank"), as Seller (in such capacity, the
"Seller"), IHE Funding Corp. II, a Delaware corporation, as Transferor (the
"Transferor"), Xxxxx Home Equity Loan Trust 2001-2, as issuer (the "Issuer"),
and Xxxxx Fargo Bank Minnesota, National Association, as indenture trustee (in
such capacity, the "Indenture Trustee").
WITNESSETH:
WHEREAS, the Seller and the Transferor are parties to the Mortgage Loan
Sale Agreement dated as of August 31, 2001 (the "Mortgage Loan Sale Agreement"),
between the Seller and the Transferor;
WHEREAS, the Transferor and Bear Xxxxxxx Asset Backed Securities, Inc.
("Bear Xxxxxxx") are parties to the Purchase and Sale Agreement dated as of
August 31, 2001 (the "Purchase and Sale Agreement"), between Transferor and Bear
Xxxxxxx;
WHEREAS, the Transferor, Xxxxx Union Bank, the Issuer and the Indenture
Trustee are parties to the sale and servicing agreement dated as of August 31,
2001 (the "Sale and Servicing Agreement"), among the Transferor, Xxxxx Union
Bank, as master servicer (in such capacity, the "Master Servicer"), Bear
Xxxxxxx, as depositor (in such capacity, the "Depositor"), the Issuer and the
Indenture Trustee;
WHEREAS, pursuant to the Sale and Servicing Agreement and the Mortgage Loan
Sale Agreement, the Seller desires to convey certain Subsequent Mortgage Loans
(as hereinafter defined) to the Transferor and the Transferor desires to convey
such Subsequent Mortgage Loans to the Issuer; and
WHEREAS, pursuant to the Indenture , the Issuer desires to pledge such
Subsequent Mortgage Loans to the Indenture Trustee.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. DEFINED TERMS. Capitalized terms used herein that are not
otherwise defined shall have the meanings ascribed thereto in Appendix A to the
indenture dated as of August 31, 2001 (the "Indenture"), between the Depositor
and the Indenture Trustee.
"Agreement" means this Subsequent Transfer Agreement and all amendments
hereof and supplements hereto.
"Subsequent Cutoff Date" means, with respect to the Subsequent Mortgage
Loans conveyed hereby, ________, 200__.
"Subsequent Mortgage Loans" means the Mortgage Loans identified on the
Mortgage Loan Schedule specified in Section 2 hereof.
"Subsequent Transfer Date" means, with respect to the Subsequent Mortgage
Loans conveyed hereby, ________, 200__.
Section 2. MORTGAGE LOAN SCHEDULE. Annexed hereto is a supplement to
Schedule A to the Sale and Servicing Agreement listing the Subsequent Mortgage
Loans to be conveyed by the Seller to the Transferor, and by the Transferor to
the Trust pursuant to this Agreement on the Subsequent Transfer Date.
Section 3. CONVEYANCE OF SUBSEQUENT MORTGAGE LOANS BY THE SELLER. Subject
to the conditions set forth in Section 7, in consideration of the Transferor's
delivery to or upon the order of the Seller of an amount equal to
$____________________ , the Seller does hereby sell, transfer, assign and
otherwise convey to the Transferor, without recourse (subject to the Seller's
obligations hereunder):
(a) all right, title and interest of the Seller in and to the Subsequent
Mortgage Loans listed on the Mortgage Loan Schedule attached hereto, and all
interest accrued after the Subsequent Cut-Off Date and principal received
relating to the Principal Balances of the Subsequent Mortgage Loans as of the
Subsequent Cut-Off Date, and any Additional Balances relating thereto;
(b) all right, title and interest of the Seller in the Lien on the
Mortgaged Properties created by the related Mortgage Documents;
(c) all right, title and interest of the Seller in any Liquidation Proceeds
and Insurance Proceeds covering the Subsequent Mortgage Loans or the related
Mortgaged Properties or Mortgagors; and
(d) any proceeds of the foregoing and all other assets included or to be
included in the Trust for the benefit of the Securityholders.
Section 4. CONVEYANCE OF SUBSEQUENT MORTGAGE LOANS BY THE TRANSFEROR.
Subject to the conditions set forth in Section 7, in consideration of the
Indenture Trustee's delivery on behalf of the Trust to or upon the order of the
Transferor of an amount equal to $ ____________ (i.e., the aggregate Principal
Balance of the Subsequent Mortgage Loans as of the Subsequent Cut-Off Date), the
Transferor does hereby sell, transfer, assign and otherwise convey to the Trust,
without recourse (subject to the Transferor's obligations hereunder);
(a) all right, title and interest of the Transferor in and to the
Subsequent Mortgage Loans listed on the Mortgage Loan Schedule attached hereto,
and all interest accrued after the Subsequent Cut-Off Date and principal
received relating to the Principal Balances of the Subsequent Mortgage Loans as
of the Subsequent Cut-Off Date, and any Additional Balances relating thereto;
(b) all right, title and interest of the Transferor in the Lien on the
Mortgaged Properties created by the related Mortgage Documents; Servicing
Agreement
(c) all right, title and interest of the Transferor in any Liquidation
Proceeds and Insurance Proceeds covering the Subsequent Mortgage Loans or the
related Mortgaged Properties or Mortgagors; and
(d) any proceeds of the foregoing and all other assets included or to be
included in the Trust for the benefit of the Securityholders
Section 5. REPRESENTATIONS AND WARRANTIES OF SELLER. The Seller does hereby
reaffirm the representations and warranties set forth in Section 3.01 of the
Mortgage Loan Sale Agreement for the benefit of the other parties hereto, and
further represents and warrants that the statements set forth in Section 3.02
with respect to the Initial Mortgage Loans are true with respect to the
Subsequent Mortgage Loans; provided, that references therein to "Closing Date"
and "Initial Cut-Off Date" shall be deemed herein to be "Subsequent Transfer
Date" and "Subsequent Cut-Off Date". Such representations and warranties shall
survive the sale, transfer and assignment of the Subsequent Mortgage Loans to
the Trust and the pledge thereof to the Indenture Trustee.
Section 6. REPRESENTATIONS AND WARRANTIES OF TRANSFEROR. The Transferor
does hereby reaffirm the representations and warranties set forth in Section
3.01 of the Purchase and Sale Agreement for the benefit of the Trust and the
Indenture Trustee, and further represents and warrants that the statements set
forth in Section 3.02 with respect to the Initial Mortgage Loans are true with
respect to the Subsequent Mortgage Loans; provided, that references therein to
"Closing Date" and "Initial Cut-Off Date" shall be deemed herein to be
"Subsequent Transfer Date" and "Subsequent Cut-Off Date". Such representations
and warranties shall survive the sale, transfer and assignment of the Subsequent
Mortgage Loans to the Trust and the pledge thereof to the Indenture Trustee.
Section 7. CONDITIONS PRECEDENT. The obligation of the Trust to acquire the
Subsequent Mortgage Loans hereunder is subject to the satisfaction, on or prior
to the Subsequent Transfer Date, of the following conditions precedent: (i) each
of the representations and warranties made by the Seller in Section 5 and (ii)
each of the representations and warranties made by the Transferor in Section 6,
shall be true and correct as of the date of this Agreement and as of the
Subsequent Transfer Date. The Transferor hereby confirms that the conditions
specified in Section 2.02(b) have been satisfied.
The Indenture Trustee shall not be required to investigate or otherwise
verify satisfaction of the conditions listed above, but shall be entitled to
conclusively rely upon Opinions of Counsel and Officer's Certificates confirming
such fulfillment.
Section 8. REAFFIRMATION OF AGREEMENTS. All terms, conditions and
provisions of the Mortgage Loan Sale Agreement are hereby reaffirmed and
incorporated by reference by the Seller and the Transferor as to the Subsequent
Mortgage Loans, and all terms, conditions and provisions of the Sale and
Servicing Agreement are hereby reaffirmed and incorporated by reference by the
Transferor as to the Subsequent Mortgage Loans.
Section 9. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of New York without consideration of the choice of
laws principles thereof and the obligations, rights and remedies of the parties
under this Agreement shall be determined in accordance with such laws; provided,
however, the immunities, authority and standard of care of the Indenture Trustee
shall be governed by the jurisdiction in which its Corporate Trust Office is
located.
IN WITNESS WHEREOF, the Seller, the Transferor, the Issuer and the
Indenture Trustee have caused this Agreement to be duly executed and delivered
by their respective duly authorized officers as of the day and the year first
above written.
XXXXX UNION BANK AND TRUST COMPANY,
as Seller
By: _________________________________
Name:
Title:
IHE FUNDING CORP. II, as Transferor
By: _________________________________
Name:
Title:
XXXXX HOME EQUITY LOAN TRUST 2001-2,
as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: __________________________________
Name:
Title:
XXXXX FARGO BANK MINNESOTA NATIONAL ASSOCIATION,
as Indenture Trustee
By: __________________________________
Name:
Title:
EXHIBIT E
FORM OF INITIAL/FINAL CERTIFICATION OF TRUSTEE
Bear Xxxxxxx Asset Backed Securities, Inc.
Xxxxx Union Bank and Trust Company
IHE Funding Corp. II
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx XX
Re: XXXXX HOME EQUITY LOAN TRUST 2001-2
The undersigned, a duly authorized representative of Xxxxx Fargo Bank
Minnesota, National Association, as Indenture Trustee (the "Indenture Trustee")
and pursuant to the Sale and Servicing Agreement dated August 31, 2001, between
Bear Xxxxxxx Asset Backed Securities, Inc. as Depositor of the Trust, Xxxxx
Union Bank and Trust Company as Master Servicer, IHE Funding Corp. II as
Transferor, the Xxxxx Home Equity Loan Trust 2001-2 and Indenture Trustee,
(hereinafter as such agreement may have been, or may from time to time be,
amended, supplemented or otherwise modified, the "Sale and Servicing
Agreement"), does hereby certify as follows:
A. Capitalized terms used in this Certificate have their respective
meanings set forth in the Sale and Servicing Agreement. References herein to
certain subsections are references to the respective subsections of the Sale and
Servicing Agreement.
B. This Certificate is being delivered pursuant to Section 2.04.
C. The Undersigned is a Responsible Officer.
D. This Certificate is being delivered by the date specified in Section
2.04
E. [Pursuant to and in accordance with the limitations set forth in Section
2.04, the Indenture Trustee hereby certifies and declares that, with noted
exceptions on attached schedule, (i) all documents required to be delivered
pursuant to Section 2.04 are in its possession, (ii) each such document has been
reviewed by it and has not been mutilated, damaged, torn, or otherwise
physically altered (handwritten additions, changes or corrections shall not
constitute physical alteration if initialed by the Mortgagor), appears regular
on its face and relates to such Mortgage Loan.] [For each 120-day check-in -- in
place of Paragraph E.] [Pursuant to and in accordance with the limitations set
forth in Section 2.04, the Indenture Trustee hereby certifies and declares that,
with the exceptions noted on the attached schedule, that with respect to the
Mortgage Loan Documents relating to each Mortgage Loan listed on the attached
Mortgage Loan Schedule, the following data elements on such Mortgage Loan
Documents are the same as set forth on the Mortgage Loan Schedule for such
Mortgage Loan: (a) the Originator's loan number, (b) the Mortgagor's name, (c)
the address (including city and state) of the related Mortgaged Property, (d)
the original principal balance, (e) the initial interest rate, and (f) the
maturity of the related Mortgage Note.]
IN WITNESS WHEREOF, the Indenture Trustee has caused this Certificate to be
duly executed this _____ day of ___________, 20__.
XXXXX FARGO BANK MINNESOTA
NATIONAL ASSOCIATION,
as Indenture Trustee
By: ________________________________
Authorized Officer
