EXHIBIT 99.4
EXECUTION VERSION
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RESIDENTIAL FUNDING CORPORATION,
THE COMPANY,
AND
LUMINENT MORTGAGE CAPITAL, INC.,
MERCURY MORTGAGE FINANCE STATUTORY TRUST AND
MAIA MORTGAGE FINANCE STATUTORY TRUST
THE INITIAL OWNERS
STANDARD TERMS AND PROVISIONS OF
SALE AND SERVICING AGREEMENT
DATED AS OF MARCH 30, 2006
ADJUSTABLE RATE MORTGAGE LOANS
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS................................................ 1
Section 1.01. Definitions........................................... 1
Section 1.02. Calculations Respecting Accrued Interest.............. 11
ARTICLE II CONVEYANCE OF MORTGAGE LOANS............................... 12
Section 2.01. Conveyance of Mortgage Loans; Possession of Mortgage
Files................................................. 12
Section 2.02. Acceptance by the Initial Owners...................... 14
Section 2.03. Assignment of Mortgage Loans.......................... 15
Section 2.04. Representations and Warranties of the Company......... 16
Section 2.05. Representations, Warranties and Covenants of the
Initial Owners........................................ 26
Section 2.06. Protection of Confidential Information and Consumer
Information........................................... 27
Section 2.07. First Payment Default................................. 28
Section 2.08. Prepayment Protection................................. 28
Section 2.09. Delivery of Collateral Documents...................... 29
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS............. 29
Section 3.01. Company to Act as Servicer............................ 29
Section 3.02. Agreements Between Company and Subservicer............ 30
Section 3.03. Collection of Certain Mortgage Loan Payments and
Liquidation of Mortgage Loans......................... 31
Section 3.04. Principal and Interest Accounts....................... 31
Section 3.05. Escrow Accounts....................................... 31
Section 3.06. Custodial Account..................................... 31
Section 3.07. Permitted Withdrawals From the Custodial Account...... 32
Section 3.08. Permitted Instruments................................. 33
Section 3.09. Primary Insurance Policies............................ 34
Section 3.10. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage....................... 34
Section 3.11. Enforcement of Due-On-Sale Clauses.................... 35
Section 3.12. Realization Upon Defaulted Mortgage Loans............. 36
Section 3.13. Owner to Cooperate: Release of Mortgage Files......... 37
Section 3.14. Reports to the Owners................................. 38
Section 3.15. REO Property.......................................... 38
Section 3.16. Compensating Interest................................. 39
Section 3.17. Filing Requirements................................... 39
Section 3.18. Reconstitution........................................ 40
Section 3.19. Reserved.............................................. 43
Section 3.20. Compliance with Regulation AB......................... 43
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TABLE OF CONTENTS
(continued)
PAGE
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ARTICLE IV PAYMENTS TO THE OWNERS..................................... 43
Section 4.01. Distributions......................................... 43
Section 4.02. Statements to the Owners.............................. 43
Section 4.03. Distribution Reports; Monthly Advances by the
Company............................................... 44
Section 4.04. Reports and Returns to be Filed by the Company........ 44
Section 4.05. Format of Reports and Statements...................... 45
Section 4.06. Records; Audit........................................ 45
ARTICLE V THE COMPANY................................................ 45
Section 5.01. Indemnification....................................... 45
Section 5.02. Liability of the Company and Others................... 46
Section 5.03. Merger or Consolidation of the Company................ 47
Section 5.04. Limitation on Resignation and Assignment by Company... 47
Section 5.05. Right to Examine Company Records...................... 47
ARTICLE VI DEFAULT.................................................... 48
Section 6.01. Events of Default of the Company...................... 48
Section 6.02. Waiver of Defaults.................................... 49
ARTICLE VII TERMINATION................................................ 49
Section 7.01. Termination........................................... 49
ARTICLE VIII MISCELLANEOUS PROVISIONS................................... 50
Section 8.01. Successor to the Company.............................. 50
Section 8.02. Entire Agreement: Amendment........................... 50
Section 8.03. Governing Law......................................... 50
Section 8.04. Notices............................................... 51
Section 8.05. Severability of Provisions............................ 51
Section 8.06. No Partnership........................................ 51
Section 8.07. Exhibits.............................................. 52
Section 8.08. Counterparts; Successors and Assigns.................. 52
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EXHIBIT A - FORM OF REFERENCE AGREEMENT.................................. A-1
EXHIBIT B - FORM OF CUSTODIAL AGREEMENT.................................. B-1
EXHIBIT C - FORM OF SUBSERVICING AGREEMENT............................... C-1
EXHIBIT D - FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT.................. D-1
EXHIBIT E - FORM OF CERTIFICATION........................................ E-1
EXHIBIT F - FORM OF REQUEST FOR RELEASE.................................. F-1
EXHIBIT G - FORMAT FOR REPORTS AND STATEMENTS............................ X-0
XXXXXXX X - XXXXXXXXXX XX COMPLIANCE ADDENDUM............................ H-1
EXHIBIT I - FORM OF SPECIAL FORECLOSURE RIGHTS SECTION................... I-1
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STANDARD TERMS AND PROVISIONS OF SALE AND SERVICING AGREEMENT
This is a STANDARD TERMS AND PROVISIONS OF SALE AND SERVICING
AGREEMENT for adjustable rate mortgage loans, dated and effective as of March
30, 2006, by and between RESIDENTIAL FUNDING CORPORATION, as seller and master
servicer (the "Company") and Luminent Mortgage Capital, Inc., Mercury Mortgage
Finance Statutory Trust and Maia Mortgage Finance Statutory Trust, as the
initial owner (the "Initial Owners"), together with all amendments hereof and
supplements hereto (as it pertains to the Mortgage Pool and as incorporated by
reference in and made a part of a Reference Agreement (as defined below), this
"Agreement").
PRELIMINARY STATEMENT
The Initial Owners have agreed to purchase from time to time from the
Company and the Company has agreed to sell to the Initial Owners, on a servicing
retained basis and without recourse, pools of adjustable rate Mortgage Loans.
Each pool of Mortgage Loans will have the characteristics set forth herein and
in a reference agreement, which shall be in the form attached hereto as Exhibit
A (each, a "Reference Agreement"). The sale of the Mortgage Loans in each
Mortgage Pool will be governed by the applicable Reference Agreement together
with this Agreement, which will be incorporated by reference into and made a
part of such Reference Agreement.
In consideration of the premises and the mutual agreements hereinafter
set forth, and intending to be legally bound, each Initial Owner and the Company
agree hereby as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
Accrued Interest: With respect to each Remittance Date, one month's
interest accrued at the then applicable Pass-Through Rate on the aggregate
Principal Balance of the Mortgage Loans in the Mortgage Pool as of the close of
business on the immediately preceding Remittance Date (or in the case of the
first Remittance Date, the applicable Cut-off Date). Accrued Interest will be
calculated on the basis of a 360-day year consisting of twelve 30-day months. In
each case Accrued Interest will be adjusted in accordance with Section 1.02.
Acquisition Date: As defined in Section 3.15.
Adjustment Date: As to each Mortgage Loan, each date set forth in the
related Mortgage Note on which an adjustment to the interest rate on such
Mortgage Loan becomes effective.
Agency: Xxxxxx Xxx and/or Xxxxxxx Mac.
Appraised Value: With respect to any Mortgaged Property, generally,
the lesser of (a) the appraised value of such Mortgaged Property based on an
appraisal made at the time of the origination or modification of the related
Mortgage Loan by an appraiser who met the minimum requirements of Xxxxxx Xxx and
Xxxxxxx Mac and (b) the sales price of the Mortgaged Property at such time of
origination; except in the case of a Mortgaged Property securing a refinanced or
modified Mortgage Loan as to which it is either the appraised value determined
above or the appraised value determined in an appraisal at the time of
refinancing or modification, as the case may be by an appraiser who met the
minimum requirements of Xxxxxx Mae and Xxxxxxx Mac.
Assignment: An assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage.
Bankruptcy Code: The Bankruptcy Code of 1978, as amended.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of Minnesota, the State of
California or the State of Illinois (or such other state or states in which the
Custodial Account is at the time located) are required or authorized by law or
executive order to be closed.
Cash Receipts: As defined in Section 3.15.
Closing Date: With respect to each Mortgage Pool, as defined in the
Reference Agreement for such Mortgage Pool.
Code: The Internal Revenue Code of 1986, as amended.
Commission: The United States Securities and Exchange Commission.
Company: Residential Funding Corporation, a Delaware corporation, or
its successor in interest, or any successor as herein provided.
Compensating Interest: With respect to any Remittance Date, an amount
equal to Prepayment Interest Shortfalls resulting from Full Prepayments during
the related Prepayment Period and Partial Prepayments during the prior calendar
month, but, except as otherwise agreed by the Company and the relevant Initial
Owner in the commitment letter with respect to any Mortgage Loan, not more than
the sum of the Servicing Fee and all income and gain on amounts held in the
Custodial Account with respect to the Mortgage Loans and such Remittance Date.
Confidential Information: As defined in Section 2.06.
Consumer Information: Information, including, but not limited to, all
personal information about the Mortgagors that is supplied to any Initial Owner
by or on behalf of the Company.
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Converted Mortgage Loan: Any Convertible Mortgage Loan with respect to
which the interest rate borne by such Mortgage Loan has been converted from an
adjustable interest rate to a fixed interest rate.
Convertible Mortgage Loan: Any Mortgage Loan which by its terms grants
to the related Mortgagor the option to convert the interest rate borne by such
Mortgage Loan from an adjustable interest rate to a fixed interest rate.
Converting Mortgage Loan: Any Convertible Mortgage Loan with respect
to which the related Mortgagor has given notice of his intent to convert from an
adjustable interest rate to a fixed interest rate and prior to the conversion of
such Mortgage Loan.
Custodial Account: The custodial account created and maintained
pursuant to Section 3.06.
Custodial Agreement: A Custodial Agreement among the Initial Owners
and the Custodian.
Custodian: A custodian, which shall not be an Owner, appointed by the
Owner pursuant to a Custodial Agreement.
Cut-off Date: With respect to each Mortgage Pool, as defined in the
Reference Agreement for such Mortgage Pool.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction
in the scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction
constituting a Deficient Valuation or any reduction that results in a permanent
forgiveness of principal.
Deficient Valuation: With respect to any Mortgage Loan, a valuation by
a court of competent jurisdiction of the Mortgaged Property in an amount less
than the then outstanding indebtedness under the Mortgage Loan, or any reduction
in the amount of principal to be paid in connection with any scheduled Monthly
Payment that constitutes a permanent forgiveness of principal, which valuation
or reduction results from a proceeding under the Bankruptcy Code.
Determination Date: With respect to any Remittance Date, the 16th day
(or if such 16th day is not a Business Day, the Business Day immediately
succeeding such 16th day) of the month in which such Remittance Date occurs.
Due Date: With respect to any Remittance Date, the first day of the
month in which such Remittance Date occurs.
Due Period: With respect to any Remittance Date, the period commencing
on the second day of the month preceding the month of such Remittance Date and
ending on the related Due Date.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
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Event of Default: As defined in Section 6.01.
Xxxxxx Mae: Federal National Mortgage Association, a federally
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
Fitch: Fitch, Inc. or its successor in interest.
Xxxxxxx Mac: Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
Full Prepayment: Any payment of the entire principal balance of a
Mortgage Loan which is received in advance of its scheduled Due Date and is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.
Gross Margin: As to each Mortgage Loan, the fixed percentage set forth
in the related Mortgage Note and indicated on the Mortgage Loan Schedule as the
"NOTE MARGIN", which percentage is added to the Index on each Adjustment Date to
determine (subject to rounding in accordance with the related Mortgage Note, the
applicable Periodic Cap, Maximum Interest Rate and Minimum Interest Rate) the
interest rate to be borne by such Mortgage Loan until the next Adjustment Date
thereof.
Index: With respect to each Mortgage Pool, as defined in the Reference
Agreement for such Mortgage Pool.
Insurance Proceeds: Proceeds paid in respect of any Mortgage Loan
pursuant to any insurance policy covering such Mortgage Loan to the extent such
proceeds are payable to the mortgagee under the Mortgage, any Subservicer or the
Company and are not applied to the restoration of the related Mortgaged Property
or released to the Mortgagor in accordance with the procedures set forth in the
Program Guide.
Insured Expenses: Expenses that are covered or will be paid by any
mortgage insurance policy, any replacement insurance policy or policies or any
other insurance policy.
Interim Certification: As defined in Section 2.02.
Lender-Paid Mortgage Insurance Policy: A policy of primary mortgage
guaranty insurance pursuant to which the related premium is to be paid by the
servicer of the related Mortgage Loan from payments of interest made by the
Mortgagor in an amount as is set forth in the related Mortgage Loan Schedule.
Liquidated Mortgage Loan: A Mortgage Loan as to which payment has been
made to the Company of all Liquidation Proceeds and other payments or recoveries
which the Company deems to be finally recoverable.
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Liquidation Expenses: Expenses which are incurred by the Company in
connection with the liquidation of any defaulted Mortgage Loan (to the extent
such amount is reimbursable under the terms of this Agreement or the Program
Guide) and not recovered by the Company under any insurance policy for reasons
other than the Company's failure to comply with Section 3.09 or 3.10.
Liquidation Proceeds: Cash (including Insurance Proceeds and
condemnation proceeds) received in connection with the liquidation of defaulted
Mortgage Loans, whether through trustee's sale, condemnation, foreclosure sale
or otherwise, net of Liquidation Expenses and Insured Expenses.
Loan-to-Value Ratio: As of any date, the fraction, expressed as a
percentage, the numerator of which is the principal balance of the related
Mortgage Loan at the date of determination and the denominator of which is the
Appraised Value of the related Mortgaged Property.
Maximum Interest Rate: As to any Mortgage Loan, the maximum interest
rate that may be borne by such Mortgage Loan as set forth in the related
Mortgage Note and indicated in the related Mortgage Loan Schedule as the "NOTE
CEILING," which rate may be applicable to such Mortgage Loan at any time during
the life of such Mortgage Loan.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS(R) System: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number of Mortgage Loans registered
with MERS on the MERS(R) System.
Minimum Interest Rate: As to any Mortgage Loan, the greater of (i) the
Gross Margin and (ii) the rate indicated in the related Mortgage Loan Schedule
as the "NOTE FLOOR," which rate may be applicable to such Mortgage Loan at any
time during the life of such Mortgage Loan.
Minimum Monthly Payment: With respect to a Pay Option ARM Mortgage
Loan, the minimum Monthly Payment calculated in accordance with the terms of the
related Mortgage Note.
MOM Loan: Any Mortgage Loan where MERS acts as the mortgagee of record
of such Mortgage Loan, solely as nominee for the originator of such Mortgage
Loan and its successors and assigns, at the origination thereof.
Monthly Advance: The aggregate of the advances made by the Company
with respect to any Remittance Date pursuant to Section 4.03, the amount of any
such Monthly Advance being equal to the aggregate of the principal portion of
such Monthly Payments on the Mortgage Loans which were due on the related Due
Date but extended pursuant to Section 3.03 or delinquent (in whole or in part)
as of the close of business on the Business Day next preceding
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the related Remittance Date, plus the interest portion of such Monthly Payments
adjusted to the related Mortgage Loan Remittance Rates, and less the amount of
any advances which the Company has determined would constitute Nonrecoverable
Monthly Advances, if made.
Monthly Payment: With respect to any Mortgage Loan and any month, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by a Mortgagor in such month under the related Mortgage Note.
Moody's: Xxxxx'x Investors Service, Inc. or its successor in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first lien on a fee simple interest or leasehold interest in real property
securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan which shall be delivered to the
Custodian, as the duly appointed agent of the Owners, or as otherwise agreed by
the parties to this Agreement and the Custodian, if any, in writing and any
additional documents required to be added to the Mortgage File pursuant to this
Agreement.
Mortgage Interest Rate: The annual rate at which interest accrues on
any Mortgage Loan. The Mortgage Interest Rate for each Mortgage Loan as of the
applicable Cut-off Date will be the rate indicated as the "CURR RATE" on the
Mortgage Loan Schedule and, with respect to any adjustable rate Mortgage Loan,
will be adjusted on each Adjustment Date to a rate equal to the sum of the Index
applicable to such Adjustment Date and the Gross Margin, rounded to the nearest
multiple of 0.125%, subject to the application of the applicable Periodic Cap,
Maximum Interest Rate and Minimum Interest Rate.
Mortgage Loan: An individual mortgage loan which is the subject of
this Agreement and identified on the Mortgage Loan Schedule including, without
limitation, each related Mortgage Note, Mortgage and Mortgage File and all
rights appertaining hereto, but excluding the servicing rights with respect
thereto as provided herein.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan and
Due Date occurring prior to the first Adjustment Date for such Mortgage Loan
occurring after the applicable Cut-off Date, the rate designated as the "NET MTG
RT" for such Mortgage Loan on the related Mortgage Loan Schedule. With respect
to each Mortgage Loan and each Due Date occurring on or after each Adjustment
Date, a rate equal to the then-applicable Mortgage Interest Rate minus the sum
of the then-applicable Servicing Fee Rate and Subservicing Fee Rate.
Mortgage Loan Schedule: Each schedule of Mortgage Loans attached to a
Reference Agreement.
Mortgage Note: The originally executed note evidencing the
indebtedness of a Mortgagor under a Mortgage Loan and any modification thereto.
Mortgage Pool: Each pool of Mortgage Loans conveyed by the Company to
the an Initial Owner from time to time pursuant to a Reference Agreement
referencing this Agreement.
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Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Nonrecoverable Monthly Advance: Any Monthly Advance previously made or
proposed to be made by the Company which, in the judgment of the Company, is not
or, in the case of a proposed Monthly Advance, would not be ultimately
recoverable by the Company from Liquidation Proceeds or otherwise.
Negative Amortization: With respect to a Pay Option ARM Mortgage Loan,
any portion of interest accrued at the Mortgage Interest Rate in any month which
exceeds the Monthly Payment on the related Mortgage Loan for such month and
which, pursuant to the terms of the Mortgage Note, is added to the principal
balance of the Mortgage Loan.
Opinion of Counsel: A written opinion of counsel, who may, unless
otherwise provided herein, be counsel for the Company.
Outside Conversion Date: The latest date on which a Mortgagor may
elect, in accordance with the terms of the related Mortgage Note, to convert the
interest rate borne by the related Convertible Mortgage Loan from an adjustable
interest rate to a fixed interest rate.
Owner: Any Person from time to time having an Ownership Interest in
the Mortgage Loans.
Ownership Interest: The undivided ownership interest in the Mortgage
Pool.
Partial Prepayment: Any payment of principal on a Mortgage Loan, other
than a Full Prepayment, which is received in advance of its scheduled Due Date
and is not accompanied by an amount of interest representing scheduled interest
due on any date or dates in any month or months subsequent to the month of
prepayment.
Pass-Through Rate: As to any Remittance Date, a rate equal to the
weighted average, expressed as a percentage, of the Mortgage Loan Remittance
Rates of all Mortgage Loans in the Mortgage Pool as of the close of business on
the Due Date in the month preceding the month in which such Remittance Date
occurs, weighted on the basis of the respective Principal Balances of such
Mortgage Loans, which Principal Balances shall be the Principal Balances of such
Mortgage Loans immediately prior to such Remittance Date.
Pay Option ARM Mortgage Loan: Any Mortgage Loan that lets Mortgagors
choose one of various different payments each month which may include, but not
be limited to, a Minimum Monthly Payment, an interest-only payment, full
principal and interest amortized over thirty (30) years, or full principal and
interest amortized over fifteen (15) years.
Periodic Cap: With respect to each Mortgage Loan, the maximum increase
or decrease in the Mortgage Interest Rate on any Adjustment Date, which shall be
an increase or decrease of not more than 2.00% per annum.
Permitted Instrument: As defined in Section 3.08.
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Person: Any individual, corporation, partnership, joint venture,
limited liability company, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Plan: As defined in Section 2.03.
Prepayment Interest Shortfall: As to any Remittance Date and any
Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that was
the subject of (a) a Full Prepayment during the portion of the related
Prepayment Period that falls during the prior calendar month, an amount equal to
the excess of one month's interest at the Mortgage Loan Remittance Rate on the
Principal Balance of such Mortgage Loan over the amount of interest (adjusted to
the Mortgage Loan Remittance Rate) paid by the Mortgagor for such month to the
date of such Full Prepayment or (b) a Partial Prepayment during the prior
calendar month, an amount equal to one month's interest at the Mortgage Loan
Remittance Rate on the amount of such Partial Prepayment.
Prepayment Penalty: Any prepayment charge or penalty interest required
to be paid by a Mortgagor in connection with a prepayment of the related
Mortgage Loan, as provided in the related Mortgage Note or Mortgage, to which
the Company is entitled and which is sold by the Company hereunder, and as
specified on the related Mortgage Loan Schedule.
Prepayment Period: As to any Remittance Date and a Full Prepayment,
the prior calendar month.
Primary Insurance Policy: Each primary policy of mortgage guaranty
insurance or any replacement policy thereof.
Principal Balance: As to each Mortgage Loan, as of the time of any
determination, (i) the principal balance remaining to be paid by the Mortgagor
at the close of business on the applicable Cut-off Date, after deduction of all
payments due on or before the applicable Cut-off Date whether or not paid, minus
(ii) all amounts distributed to the Owner with respect to such Mortgage Loan and
reported to the Owner as allocable to principal, including the principal
component of any Monthly Advances and any losses incurred with respect to such
Mortgage Loan, plus (iii) without duplication of amounts described in clause (i)
above, the cumulative amount of any Negative Amortization.
Principal Remittance Amount: With respect to any Remittance Date, the
sum of (a) the principal component of any Monthly Advance for such Remittance
Date; (b) any amount required to be deposited in the Custodial Account pursuant
to Section 3.10(a); and (c) the amount on deposit in the Custodial Account as of
the close of business on the Determination Date immediately preceding such
Remittance Date which is allocable to payments on account of principal of the
Mortgage Loans, which amount shall not include (i) Full Prepayments and Partial
Prepayments and the principal portion of any Liquidation Proceeds, Insurance
Proceeds or proceeds of the purchase of any Mortgage Loan pursuant to Sections
2.02 and 2.04 received in the month in which such Remittance Date occurs (other
than such Liquidation Proceeds, Insurance Proceeds or proceeds of the purchase
of any Mortgage Loan pursuant to Sections 2.02 and 2.04 that the Company has
deemed to have been received in the preceding month), (ii)
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payments which represent receipt of scheduled payments of principal due on a
date or dates subsequent to the related Due Date and (iii) late payments of
principal which have been the subject of a previous Monthly Advance and which
are eligible for withdrawal pursuant to clauses (ii) or (vii) of Section 3.07.
Program Guide: Collectively, the Client Guide and the Servicer Guide
for Residential Funding Corporation's mortgage loan purchase and conduit
servicing program and all supplements and amendments thereto published by
Residential Funding Corporation from time to time.
Rating Agencies: Fitch, Moody's and S&P.
Reconstitution: As defined in Exhibit H.
Record Date: With respect to each Remittance Date, the close of
business on the last Business Day of the month next preceding the month in which
the related Remittance Date occurs.
Reference Agreement: As defined in the preliminary statement hereto.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation
AB), 17 C.F.R. Sections 229.1100-229.1123, as such may be amended from time to
time, and subject to such clarification and interpretation as have been provided
by the Commission in the adopting release (Asset-Backed Securities, Securities
Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the
staff of the Commission, or as may be provided by the Commission or its staff
from time to time.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to
a REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter 1,
Subtitle A of the Code, and related provisions, and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Amount: With respect to any Remittance Date, an amount
equal to, subject to Section 1.02, (i) the Principal Remittance Amount (if any)
for such Remittance Date, plus (ii) the Accrued Interest for such Remittance
Date, minus (iii) any amounts payable to the Company pursuant to Section 3.07
that are not taken into account in the adjustment of Accrued Interest pursuant
to Section 1.02, plus (iv) the amount of any Compensating Interest with respect
to that Remittance Date, plus (v) any Prepayment Penalties collected during the
related Prepayment Period.
Remittance Date: The 18th day of any month, beginning in the month
following the month in which the applicable Cut-off Date occurs, or if such 18th
day is not a Business Day, the first Business Day immediately following.
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REO Acquisition: The acquisition by the Company on behalf of an
Initial Owner of any REO Property pursuant to Section 3.12.
REO Property: A Mortgaged Property acquired by an Owner or the Company
on behalf of an Owner through foreclosure or deed in lieu of foreclosure.
Repurchase Price: With respect to any Mortgage Loan, a price equal to
(i) the principal balance of the Mortgage Loan (including any Negative
Amortization), plus (ii) interest on such principal balance at the Mortgage
Interest Rate from the date on which interest has last been paid and distributed
to the relevant Initial Owner to the date of repurchase, less amounts received,
if any, plus amounts advanced, if any, by any servicer, in respect of such
repurchased Mortgage Loan, plus (iii) any costs and damages incurred with
respect to the Mortgage Loan in connection with any violation by such Mortgage
Loan of any predatory or abusive-lending law and plus (iv) if the repurchase
occurs within 12 months of the Closing Date, any premium paid by the relevant
Initial Owner for the Mortgage Loan or minus any discount paid by the relevant
Initial Owner for the Mortgage Loan as set forth in the related Mortgage Loan
Schedule or commitment letter; provided, that, if, on the date of repurchase,
the Principal Balance of the relevant Mortgage Loan is greater than the
Principal Balance of such Mortgage Loan on the applicable Closing Date, then the
premium shall be calculated on the Principal Balance of such Mortgage Loan as of
such Closing Date.
Request for Release: A request for release, the form of which is
attached as Exhibit F hereto, or an electronic request in a form acceptable to
the Custodian.
Retention Period: As defined in Section 4.05.
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction: As defined in Exhibit H.
Seller: As to any Mortgage Loan, a Person that executed a Seller's
Agreement applicable to such Mortgage Loan.
Seller's Agreement: An agreement for the origination and sale of
Mortgage Loans in the form referred to in the Program Guide.
Servicing Fee: As to each Mortgage Loan, the annual fee, payable
monthly to the Company out of the interest portion of the Monthly Payment
received on each Mortgage Loan.
Servicing Fee Rate: With respect to each Mortgage Loan, as defined in
the Reference Agreement for such Mortgage Loan and the related Mortgage Loan
Schedule.
Standard & Poor's: Standard & Poor's, a division of the XxXxxx-Xxxx
Companies, Inc., or its successor in interest.
Subservicer: Any Person, including any successor, with whom the
Company has entered into a Subservicing Agreement pursuant to the Program Guide.
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Subservicing Agreement: The written contract between the Company and a
Subservicer as may be amended from time to time, a representative form of which
is attached hereto as Exhibit C.
Subservicing Fee: The annual fee, payable monthly to the Subservicer
out of the interest portion of the Monthly Payment received on each Mortgage
Loan.
Subservicing Fee Rate: As to each Mortgage Loan, the rate per annum
set forth in the Mortgage Loan Schedule as the "SUBSERV FEE."
Successor Servicer: Any successor servicer appointed pursuant to
Section 8.01.
Whole Loan Transfer: As defined in Exhibit H.
SECTION 1.02. CALCULATIONS RESPECTING ACCRUED INTEREST.
(a) The Accrued Interest on any Remittance Date shall be reduced by
the amount of any Prepayment Interest Shortfalls with respect to that Remittance
Date (to the extent not offset by the Company with a payment of Compensating
Interest).
(b) In the event that the Liquidation Proceeds with respect to any
Mortgage Loan (net of amounts payable or reimbursable therefrom pursuant to
Sections 3.07(iii) and 3.07(iv)) are less than the Principal Balance of such
Mortgage Loan, together with one month's interest thereon at the applicable
Mortgage Loan Remittance Rate, the Accrued Interest on the Remittance Date in
the next succeeding month shall be reduced by the amount of such insufficiency.
In the event that such Liquidation Proceeds exceed the sum of the Principal
Balance of such Mortgage Loan plus one month's interest thereon at the
applicable Mortgage Interest Rate, such excess shall be payable to the relevant
Owner.
(c) In the event that any amount or amounts shall be withdrawn from
amounts attributable to the Mortgage Loans on deposit in the Custodial Account
pursuant to clauses (ii), (iii) (other than for servicing compensation), (iv),
(v), (vi), (vii), (viii) or (ix) of Section 3.07 and the related withdrawal or
withdrawals shall not be reflected in any adjustment required pursuant to
subsections (a) and (b) above, the Accrued Interest on the immediately
succeeding Remittance Date shall be reduced by the total of such amounts so
withdrawn to the extent such amounts would result in a shortfall of Accrued
Interest.
(d) In the event that as of the end of any Due Period, for any reason
(including, without limitation, acquisition of title to the underlying Mortgaged
Property through foreclosure or acceptance of a deed in lieu of foreclosure,
application of the Servicemembers' Civil Relief Act or similar legislation or
regulations as in effect from time to time, or a Debt Service Reduction or a
Deficient Valuation), less than the full amount of the interest portion of the
Monthly Payment at the Mortgage Loan Remittance Rate due on the Due Date in such
Due Period on any Mortgage Loan is deposited in the Custodial Account and no
Monthly Advance is made or required to be made in respect thereof, the Accrued
Interest on the immediately succeeding Remittance Date shall be reduced by the
amount of such insufficiency.
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(e) In the event that on or in the month of any Due Date (after
adjustment for the Subservicing Fee and the Servicing Fee) more than one month's
interest at the applicable Mortgage Loan Remittance Rate on the Principal
Balance of any Mortgage Loan is deposited in the Custodial Account as a result
of late recoveries of interest in respect of which no Monthly Advance was made
in respect of such amount, the Accrued Interest on the immediately succeeding
Remittance Date shall be increased by the amount of such excess.
(f) All references to the Principal Balance of any Mortgage Loan in
this Section 1.02 are to the Principal Balance of such Mortgage Loan as of the
close of business on the Remittance Date immediately preceding the Remittance
Date in respect of which the Accrued Interest thereon is being adjusted pursuant
to the applicable subsection of this Section 1.02 or, in the case of the first
Remittance Date, as of the applicable Cut-off Date.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS
SECTION 2.01. CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE
FILES.
(a) The Company, simultaneously with the execution and delivery of a
Reference Agreement, shall sell, transfer and assign, without recourse, to the
relevant Initial Owner, the Ownership Interest comprising all right, title and
interest of the Company in and to the Mortgage Loans, including all interest at
the applicable Mortgage Loan Remittance Rate and principal received on or with
respect to the Mortgage Loans after the applicable Cut-off Date set forth in the
applicable Reference Agreement (other than payments of principal and interest
due on the Mortgage Loans on or before the applicable Cut-off Date) on a
servicing retained basis.
(b) In connection with the Company's sale of the Mortgage Loans to the
relevant Initial Owner pursuant to a Reference Agreement, the Company shall
deliver to, and deposit with, the Custodian, as the duly appointed agent of the
Owners for such purpose, the following original documents or instruments (or
copies thereof as permitted by this Section) with respect to each Mortgage Loan
so assigned:
(i) The original Mortgage Note, endorsed in blank by the Company
without recourse, and showing an unbroken chain of endorsements from the
originator thereof to the Company or, for no more than 1.0% of the related
Mortgage Pool (measured by the Cut-Off Date Principal Balance), an original
lost note affidavit from the related Seller or the Company stating that the
original Mortgage Note was lost, misplaced or destroyed, together with a
copy of the related Mortgage Note;
(ii) Unless the Mortgage Loan is registered on the MERS(R)
System, an unrecorded original Assignment of the Mortgage from the Company
in blank;
(iii) The original Mortgage, noting the presence of the MIN of
the Mortgage Loan and language indicating that the Mortgage Loan is a MOM
Loan if the Mortgage Loan is a MOM Loan, with evidence of recording
indicated thereon or a copy of the Mortgage with evidence of recording
indicated thereon;
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(iv) The original recorded assignment or assignments of the
Mortgage showing an unbroken chain of title from the originator thereof to
the Company (or to MERS, if the Mortgage Loan is registered on the MERS(R)
System and noting the presence of a MIN) with evidence of recordation noted
thereon or attached thereto, or a copy of such assignment or assignments of
the Mortgage with evidence of recording indicated thereon;
(v) The original of each modification, assumption agreement or
preferred loan agreement, if any, relating to such Mortgage Loan with
evidence of recording thereon or a certified copy of each modification,
assumption agreement or preferred loan agreement;
(vi) The original of any guarantee executed in connection with
such Mortgage Loan, if any;
(vii) Relating to a Mortgage Note or Mortgage that is executed by
an attorney-in-fact, an original or certified copy of the fully executed
power of attorney; and
(viii) The original policy of title insurance, including riders
and endorsements thereto, or if the policy has not yet been issued, a
written commitment or interim binder or preliminary report of title issued
by the title insurance or escrow company.
The Company may, in lieu of delivery of the original of the documents
set forth in Section 2.01(b)(iii) through (viii) (or copies thereof as permitted
by Section 2.01(b)) to the Custodian, retain such documents and hold such
documents in trust for the use and benefit of all present and future Owners
until 10 Business Days following the receipt of the original of all of the
documents or instruments set forth in Section 2.01(b)(iii) through (viii) (or
copies thereof as permitted by such Section) for any Mortgage Loan. At such
time, the Company shall deliver a complete set of such documents to the
Custodian as the duly appointed agent of the Owners.
In the event that the Company has been notified by the Custodian that
it has delivered to the Custodian any Mortgage Note endorsed in blank or
Assignment of Mortgage in blank by a party other than the Company, the Company
shall complete the endorsement of the Mortgage Note and Assignment of Mortgage
into the name of the Company and deliver an endorsement in blank by the Company
and an Assignment of the Mortgage from the Company in blank in conjunction with
the Interim Certification issued by the Custodian as contemplated by Section
2.02.
(c) Notwithstanding the provisions of Section 2.01(b), in the event
that in connection with any Mortgage Loan the Company cannot deliver the
original of the Mortgage, any assignment, modification, assumption agreement or
preferred loan agreement (or a copy thereof as permitted by Section 2.01(b))
with evidence of recording thereon concurrently with the execution and delivery
of this Agreement because of a delay caused by a public recording office where
such Mortgage, assignment, modification, assumption agreement or preferred loan
agreement as the case may be, has been delivered for recordation, the Company
shall deliver to the Custodian a copy of such Mortgage, assignment,
modification, assumption agreement or
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preferred loan agreement. The Company shall promptly deliver to the Custodian
such Mortgage, assignment, modification, assumption agreement or preferred loan
agreement with evidence of recording indicated thereon in accordance with
Section 2.01(b).
In connection with the assignment of any Mortgage Loan registered on
the MERS(R) System, the Company further agrees that it will, at the relevant
Initial Owners' request, cause the MERS(R) System to indicate that such Mortgage
Loans have been assigned by the Company to such Initial Owner by including (or,
if applicable, deleting, in the case of Mortgage Loans which are repurchased in
accordance with this Agreement) in such computer files the code in the field
"Pool Field" which identifies the series in which such loans were sold. The
Company further agrees that it will not alter the code referenced in this
paragraph with respect to any Mortgage Loan during the term of this Agreement
unless and until such Mortgage Loan is repurchased in accordance with the terms
of this Agreement.
(d) Any documents required to be delivered to the Custodian by the
Company pursuant to this Section 2.01 which are in the possession or control of
the Company or a Subservicer and which are not delivered to the Custodian or are
requested from the Custodian in connection with the servicing of the Mortgage
Loans are and shall be held by the Company, either directly or through the
related Subservicer, in trust for the benefit of the Owners.
The sale of each Mortgage Loan shall be reflected on the Company's
balance sheet and other financial statements as a sale of assets by the Company.
The Company shall be responsible for maintaining, and shall maintain records for
each Mortgage Loan which shall be clearly marked to reflect the ownership of
each Mortgage Loan by the Owners.
SECTION 2.02. ACCEPTANCE BY THE INITIAL OWNERS. The relevant Initial
Owner, upon its receipt of the Initial Certification (as found on Exhibit One of
the applicable Custodial Agreement) from the Custodian, shall acknowledge
receipt by the Custodian as the duly appointed agent of the Owners of the
documents referred to in Section 2.01 above and declares that the Custodian as
its agent, holds and will hold such documents and the other documents
constituting a part of the Mortgage Files delivered to the Custodian as its
agent, in trust for the use and benefit of such Initial Owner and any other
future Owner. The Custodian, being so obligated under the applicable Custodial
Agreement, shall, for the benefit of the Owners, review each Mortgage File
delivered to it within 45 days after the applicable Closing Date to ascertain
that all required documents have been executed and received, and that such
documents relate to the Mortgage Loans identified on an exhibit to the
applicable Reference Agreement, and deliver to the Owners a certificate (the
"Interim Certification") to the effect that all documents required to be
delivered pursuant to Section 2.01(b) have been executed and received and that
such documents relate to the Mortgage Loans identified on the Mortgage Loan
Schedule, except for any exceptions listed on Schedule A attached to such
Interim Certification. Pursuant to the applicable Custodial Agreement, the
Custodian shall notify the relevant Initial Owner and the Company if any
document or documents constituting a part of the Mortgage File are missing or
defective in respect of the items reviewed by it pursuant to the applicable
Custodial Agreement. The relevant Initial Owner shall notify the Company and the
Custodian of any such omission or defect which it finds in respect of any
Mortgage Loan. If such omission or defect materially and adversely affects the
interests of an Owner, the Company shall promptly notify the related Subservicer
or Seller of such omission or defect and shall request that such Subservicer or
Seller
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correct or cure such omission or defect within 60 days from the date the Company
was notified of such omission or defect. If such Subservicer or Seller does not
correct or cure such omission or defect within such period, the Company shall
use reasonable efforts to cause such Subservicer or Seller to purchase such
Mortgage Loan from the Owners within 75 days from the date the Company was
notified of such omission or defect by depositing in the Custodial Account or
otherwise delivering the Repurchase Price for such Mortgage Loan to the Company;
provided, however, if such Subservicer or Seller fails to purchase such Mortgage
Loan from the Owners within such 75 day period, the Company shall purchase, from
its own funds, such Mortgage Loan at the Repurchase Price within 15 Business
Days of the expiration of such 75 day period. The Company shall exercise
reasonable efforts to enforce the related Subservicer's or Seller's obligation
to purchase such Mortgage Loan from the Owners. The Repurchase Price for such
Mortgage Loan shall be deposited by the Company in the Custodial Account. Upon
receipt by the relevant Initial Owner of written notification of such deposit
signed by an officer of the Company, the Custodian shall release to the Company
the related Mortgage File and the Owners shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as shall
be necessary to vest in the Company, Seller or its designee or the Subservicer
or its designee, as the case may be, any Mortgage Loan released pursuant hereto.
In furtherance of the foregoing, if the Subservicer or the Seller that is
obligated to purchase a Mortgage Loan under this Section 2.02 is not a member of
MERS, and the Mortgage is registered on the MERS(R) System, the Company shall
cause MERS to execute and deliver an Assignment in recordable form to transfer
the Mortgage from MERS to such Subservicer or Seller and shall cause such
Mortgage to be removed from registration on the MERS(R) System in accordance
with MERS' rules and regulations. The obligation of the Seller, the Subservicer
or the Company, as the case may be, under this Section 2.02 to cure any material
and adverse omissions or defects with respect to any Mortgage Loan or to
purchase any Mortgage Loan as to which a material and adverse defect in or
omission of a constituent document exists shall constitute the sole remedy
respecting such defect or omission available to the Owners.
SECTION 2.03. ASSIGNMENT OF MORTGAGE LOANS. The Initial Owners shall
have the right to assign its interest under this Agreement with respect to a
Mortgage Pool in whole or in part and designate any person to exercise any
rights of an Owner hereunder with respect to such Mortgage Pool, and the
assignee or designee shall accede to the rights and obligations hereunder of an
Owner with respect to such Mortgage Pool; provided, however, that (i) such
Mortgage Pool shall at all times be subject to the terms of this Agreement; and
(ii) with respect to any Mortgage Pool, there will be no more than three Owners
at one time, and provided further that the Company shall be given 20 days' prior
written notice before any such assignment shall be effective. Prior to assigning
its interests under this Agreement, the relevant Initial Owner shall deliver a
copy of this Agreement to such assignee or designee. Each assignee or designee
may assign its interest in a Mortgage Pool owned by it in whole or in part to no
more than three Persons; provided, however, that at no time will there be more
than three Owners with respect to any Mortgage Pool. No sale or transfer of a
Mortgage Loan or assignment of this Agreement shall be binding upon the Company
for any purpose under this Agreement unless the Owner proposing to make such
sale, transfer or assignment and its prospective assignee have executed and
delivered to the Company (with a copy to the Custodian) an assignment and
assumption agreement substantially in the form of Exhibit D annexed hereto and
the Company has acknowledged such agreement. No sale of the Mortgage Loans shall
be made to any employee benefit plan or other plan that is subject to ERISA or
Section 4975 of the Code (each, a "Plan")
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or to any person or entity that is investing on behalf of or with "plan assets"
of any Plan or to any insurance company, other than an insurance company
investing with funds held in its general account (if such funds do not include
"plan assets" of any Plan), unless an Owner's prospective assignee provides the
Company with a certification or Opinion of Counsel or both, which establishes to
the Company's satisfaction that such disposition will not constitute or result
in a non-exempt prohibited transaction under Section 406 of ERISA and Section
4975 of the Code. The Company shall not be required to pay any costs or expenses
incurred in connection with obtaining such Opinion of Counsel. The Company may
require that such prospective assignee certify to the Company in writing the
facts establishing that such disposition will not violate the prohibited
transaction provisions of Section 406 of ERISA and Section 4975 of the Code.
The sale of the Mortgage Loans has not been registered or qualified
under the Securities Act or any state securities law. No sale, transfer, pledge
or other disposition of the Mortgage Loans or any interest therein shall be made
unless such disposition is made pursuant to an effective registration statement
under the Securities Act and effective registration or qualification under
applicable state securities laws, or is made in a transaction which does not
require such registration or qualification. If an Owner proposes to make a
disposition (by sale, hypothecation, pledge or otherwise) without registration
or qualification, the Company shall require, in order to assure compliance with
such laws, that the Owner desiring to effect the disposition, and an Owner's
prospective transferee, certify to the Company in writing the facts surrounding
the disposition. Unless the Company requests otherwise, such certification of
facts shall be in the form of an assignment and assumption agreement annexed
hereto as Exhibit D. In the event that such certification of facts does not on
its face establish that registration or qualification is not required, the
Company may require an Opinion of Counsel satisfactory to it that the transfer
may be made without such registration or qualification. Any such Opinion of
Counsel shall not be an expense of the Company. The Company is not obligated to
register or qualify the Mortgage Loans under the Securities Act or any other
securities law or to take any action not otherwise required under this Agreement
to permit the transfer of the Mortgage Loans without registration or
qualification.
Upon compliance with the foregoing conditions and receipt of an
assignment and assumption agreement executed by an Owner and its prospective
assignee and acknowledged by the Company, the Company shall make the appropriate
notations in its books to reflect the sale of the affected Mortgage Loans to
such assignee, such assignee shall accede to the rights and the obligations of
such Owner hereunder with respect to such Mortgage Loans, and such Owner shall
be released from its obligations hereunder with respect to such Mortgage Loans
that have been sold in accordance with this Agreement. For the purposes of this
Agreement, the Company shall be under no obligation to deal with any Person with
respect to this Agreement or the Mortgage Loans unless the books and records of
the Company show such Person as an Owner of such Mortgage Loans. The Company
shall not be responsible for expenses incurred by an Owner or any transferee in
connection with any sale or transfer pursuant to this Section 2.03.
SECTION 2.04. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) With respect to each Mortgage Loan, Company hereby represents and
warrants to the relevant Initial Owner that as of each Closing Date or such
other date specifically provided for herein, unless otherwise specified in a
Reference Agreement:
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(i) Each Primary Insurance Policy insures the named insured and
its successors and assigns, and the issuer of the Primary Insurance Policy
is an insurance company whose claims-paying ability is currently acceptable
to any nationally recognized rating agency;
(ii) There is no default, breach, violation or event of
acceleration existing under any Mortgage Note or Mortgage and no event
which, with notice and expiration of any grace or cure period, would
constitute a default, breach, violation or event of acceleration, and no
such default, breach, violation or event of acceleration has been waived by
any Seller or Subservicer or by any other entity involved in originating or
servicing a Mortgage Loan.
(iii) No Mortgagor has any right of offset, defense or
counterclaim as to the related Mortgage Note or Mortgage except as may be
provided under the Servicemembers Civil Relief Act;
(iv) The improvements upon the Mortgaged Properties are insured
against loss by fire and other hazards as required by the Program Guide
including flood insurance if required under the National Flood Insurance
Act of 1968, as amended. The Mortgage requires the Mortgagor to maintain
such casualty insurance at the Mortgagor's expense, and on the Mortgagor's
failure to do so, authorize the holder of the Mortgage to obtain and
maintain such insurance at the Mortgagor's expense and to seek
reimbursement therefore from the Mortgagor;
(v) No Mortgage Loan is secured by a leasehold estate;
(vi) The Mortgage Loans are secured by one- to four-family
dwelling units. No Mortgage Loan is secured by a mobile or manufactured
home. No portion of the Mortgaged Property has been used for commercial or
mixed-use purposes;
(vii) All parties to the Mortgage Note and the Mortgage had legal
capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have
been duly and properly executed by such parties. The Mortgagor is a natural
person, the identity of such natural person was fully verified by the
originator and such Mortgagor is not in violation of any laws regarding
identity theft;
(viii) (A) The terms of the Mortgage and the Mortgage Note have
not been impaired, waived, altered or modified and (B) no instrument of
release or waiver has been executed in connection with the Mortgage Loans,
and no Mortgagor has been released, in whole or in part from its
obligations in connection with a Mortgage Loan, except in either case of
(A) or (B) above by a written instrument which has been recorded, if
necessary, to protect the interest of the Owners and which has been
delivered in accordance with this Agreement. The substance of any such
alteration or modification is reflected on the Mortgage Loan Schedule and,
to the extent necessary, has been approved by the primary mortgage insurer,
if any, and the insurer under the applicable mortgage title insurance
policy;
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(ix) With respect to each Mortgage Loan, either (i) the Mortgage
Loan is assumable pursuant to the terms of the Mortgage Note, or (ii) the
Mortgage Loan contains a customary provision for the acceleration of the
payment of the unpaid principal balance of the Mortgage Loan in the event
the related Mortgaged Property is sold without the prior consent of the
mortgagee thereunder;
(x) Any escrow arrangements established with respect to any
Mortgage Loan are in compliance with all applicable local, state and
federal laws and are in compliance with the terms of the related Mortgage
Note;
(xi) Each Mortgage Loan constitutes a qualified mortgage under
Section 860G(a)(3)(A) of the Code and Treasury Regulations Section
1.860G-2(a)(1);
(xii) There are no toxic materials or other environmental hazards
on, in or that could affect any Mortgaged Property in any material respect;
(xiii) No Mortgage Loan secured by a property located in the
State of Georgia was originated on or after October 1, 2002 and before
March 7, 2003;
(xiv) None of the Mortgage Loans are loans that, under applicable
state or local law in effect at the time of origination of the loan, are
referred to as (1) "high cost," "covered," "high risk home," or "predatory"
loans or (2) any other similar designation if the law imposes greater
restrictions or additional legal liability for residential mortgage loans
with high interest rates, points and/or fees;
(xv) No Mortgage Loan originated on or after October 1, 2002
provides for the payment of a Prepayment Premium beyond the three year term
following the origination of the Mortgage Loan. No Mortgage Loan originated
prior to such date provides for the payment of a Prepayment Premium beyond
the five-year term following the origination of the Mortgage Loan;
(xvi) The Company has fully furnished, in accordance with the
Fair Credit Reporting Act and its implementing regulations, accurate and
complete information (i.e., favorable and unfavorable) on its borrower
credit files to Equifax, Experian, and Trans Union Credit Information
Company (three of the credit repositories), on a monthly basis;
(xvii) Article XVI, Section 50(a)(6) of the Texas Constitution is
not applicable to the Mortgage Loan or the origination thereof. If the
Mortgage Loan was originated in Texas, it is not a cash-out refinancing;
(xviii) The Debt-to-Income Ratio of the Mortgage Loan is
accurately reflected in the Mortgage Loan Schedule;
(xix) With respect to any Mortgage Loan originated on or after
August 1, 2004, neither the related Mortgage nor the related Mortgage Note
requires the Mortgagor to submit to arbitration to resolve any dispute
arising thereunder or in connection with the origination of such Mortgage
Loan;
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(xx) The Loan-to-Value Ratio of the Mortgage Loan is accurately
reflected in the Mortgage Loan Schedule;
(xxi) No Mortgage Loan is a High Cost Loan or Covered Loan, as
applicable (as such terms are defined in S&P's current edition of its
LEVELS Glossary, Appendix E);
(xxii) All fees and charges (including finance charges) and
whether or not financed, assessed, collected or to be collected with the
origination and servicing of each Mortgage Loan has been disclosed in
writing to the Mortgagor in accordance with applicable state and federal
law and regulation;
(xxiii) No Mortgage Loans have been prepaid in full prior to the
related Closing Date;
(xxiv) Neither the origination of the Mortgage Loan nor the
purchase thereof by the Initial Owner will cause the Mortgage Loan or the
Initial Owner to fail to comply with the OCC Guidelines Establishing
Standards for Residential Mortgage Lending Practices;
(xxv) The credit score of such Mortgage Loan is accurately
reflected in the Mortgage Loan Schedule and each credit score was obtained
from Experian, Transunion or Credit Repository;
(xxvi) None of the Mortgage Loans are buy-down loans, graduated
payment loans or have a shared appreciation or other contingent interest
feature;
(xxvii) Reserved;
(xxviii) The interest only period with respect to any Interest
Only Mortgage Loan shall be for a fixed period not to exceed ten years; and
(xxix) Interest on each Mortgage Loan is calculated on the basis
of a 360-day year consisting of twelve 30-day months, with Monthly Payments
due on the first of the month and interest payable in arrears;
(xxx) No Mortgage Loan is one month or more delinquent in payment
of principal and interest and, unless otherwise agreed by the Company and
the relevant Initial Owner in the commitment letter with respect to such
Mortgage Loan, has not been so delinquent more than once in the 12-month
period immediately prior to the applicable Closing Date;
(xxxi) There is no delinquent tax or assessment lien against any
Mortgaged Property;
(xxxii) There are no delinquent insurance premiums affecting any
Mortgaged Property;
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(xxxiii) The information set forth in the Mortgage Loan Schedule
(including, without limitation, any information with respect to any
Lender-Paid Mortgage Insurance Policy) with respect to each Mortgage Loan
or the Mortgage Loans, as the case may be, is true and correct in all
material respects at the date or dates respecting which such information is
furnished;
(xxxiv) As of the applicable Closing Date, the Mortgage Loans
were originated and have been serviced in all material respects in
accordance with the Program Guide;
(xxxv) Each Mortgage Loan has been closed and fully disbursed,
and immediately prior to the sale of the Mortgage Loans to such Initial
Owner, the Company had good title to, and was the sole owner of, each
Mortgage Loan and the sale of each Mortgage Loan by the Company validly
transfers such Mortgage Loan to such Initial Owner free and clear of any
pledge, lien, encumbrance or security interest (other than rights to
servicing and related compensation) and no action has been taken or failed
to be taken by the Company that would materially adversely affect the
enforceability of any Mortgage Loan or the interests therein of such
Initial Owner;
(xxxvi) No misrepresentation, fraud or similar occurrence in
respect of a Mortgage Loan has taken place on the part of any person,
including without limitation, the Mortgagor, any appraiser or any party
involved in the origination of the Mortgage Loan or in the application for
any insurance in relation to such Mortgage Loan that might result in a
denial, contesting, failure or impairment of full and timely coverage under
any insurance policies required to be obtained with respect to the Mortgage
Loans;
(xxxvii) Each Mortgage constitutes a valid first lien on the
related Mortgaged Property subject only to (1) the lien of current real
property taxes and assessments, (2) covenants, conditions and restrictions,
rights of way, easements and other matters of public record as of the date
of recording of the Mortgage, and such other permissible title exceptions
as are listed in the Program Guide, and (3) other matters to which like
properties are commonly subject which do not materially adversely affect
the value, use, enjoyment and marketability of the Mortgaged Property;
(xxxviii) The Mortgaged Property is free of damage and is in good
repair, and no notice of condemnation has been given with respect thereto
and the Company knows of nothing involving any Mortgaged Property that
could reasonably be expected to adversely affect the value or marketability
of any Mortgaged Property;
(xxxix) There are no mechanics' liens or claims for work, labor
or material affecting any Mortgaged Property which are or may be a lien
prior to, or equal with, the lien of the related Mortgage, except such
liens that are insured or indemnified against by a title insurance policy
described under clause (xlviii) below;
(xl) Each Mortgage Loan was originated by the Company in
accordance with the Program Guide except for such variances as were
justified by
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compensating factors identified in writing at the time of origination of
such Mortgage Loan;
(xli) Each Mortgage Loan as of the time of its origination
complied with all applicable local, state and federal laws, including, but
not limited to, all applicable predatory lending laws;
(xlii) None of the Mortgage Loans are "high cost loans", subject
to the Home Ownership and Equity Protection Act of 1994, as amended or
"high cost", covered or predatory loans under other applicable state
federal or local law;
(xliii) Each Mortgage Loan was originated (1) by a savings and
loan association, savings bank, commercial bank, credit union, insurance
company or similar institution that is supervised and examined by a federal
or state authority, (2) by a mortgagee approved by the Secretary of HUD
pursuant to Sections 203 and 211 of the National Housing Act, as amended,
or (3) by a mortgage broker in a manner such that any mortgage backed
securities representing interests in the Mortgage Loans would not fail to
qualify as "mortgage related securities" within the meaning of Section
3(a)(41) of the Securities Exchange Act of 1934, as amended;
(xliv) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder adequate to
realize the benefits of the security against the Mortgaged Property,
including (1) in the case of a Mortgage that is a deed of trust, by
trustee's sale, (2) by summary foreclosure, if available under applicable
law, and (3) otherwise by foreclosure, and there is no homestead or other
exemption or dower, courtesy or other rights or interests available to the
Mortgagor or the Mortgagor's spouse that would interfere with such right to
sell at a trustee's sale or right to foreclosure, subject in each case to
applicable federal and state laws and judicial precedents with respect to
bankruptcy and rights of redemption;
(xlv) No Mortgage Loan was made in connection with (1) the
construction or rehabilitation of a Mortgaged Property or (2) facilitating
the trade-in or exchange of a Mortgaged Property or an REO Property;
(xlvi) With respect to each Mortgage that is a deed of trust, a
trustee duly qualified under applicable law to serve as such is properly
named, designated and serving;
(xlvii) Except in connection with a trustee's sale after default
by a Mortgagor, no fees or expenses are payable by the Company or the
Subservicer to the trustee under any Mortgage that is a deed of trust;
(xlviii) A policy of title insurance in the form and amount
required by the Program Guide was effective as of the closing of each
Mortgage Loan, is valid and binding and remains in full force and effect,
unless the Mortgaged Property is located in the State of Iowa and an
attorney's certificate has been provided as described in the Program Guide;
with respect to any Pay Option ARM Mortgage Loan, such policy of title
insurance includes a negative amortization endorsement and insures the
Company against
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any loss by reason of the invalidity or the unenforceability of the lien
resulting from the provisions of the Mortgage providing for the adjustment
of the mortgage interest rate and/or the monthly payment including any
Negative Amortization thereunder;
(xlix) There is no requirement for future advances under the
Mortgage Loan and any and all requirements as to completion of any on-site
or off-site improvements and as to disbursements of any escrow funds
therefor (including any escrow funds held to make Monthly Payments pending
completion of such improvements) have been complied with. All costs, fees
and expenses incurred in making, closing or recording the Mortgage Loans
were paid.
(l) Each Mortgage Note constitutes a legal, valid and binding
obligation of the Mortgagor enforceable in accordance with its terms except
as limited by bankruptcy, insolvency or other similar laws affecting
generally the enforcement of creditors' rights;
(li) The Mortgage Note is not and has not been secured by any
collateral, pledged account, or other security except the lien of the
Mortgage;
(lii) The Mortgagor has not notified the Company or a
Subservicer, and no relief has been requested or allowed to the Mortgagor,
under the Servicemembers' Civil Relief Act.
(liii) No Mortgagor is the subject to any pending bankruptcy,
insolvency, reorganization or moratorium proceeding;
(liv) All improvements which were considered in determining the
Appraised Value of the Mortgaged Property lie wholly within the boundaries
and the building restriction lines of the Mortgaged Property, or the policy
of title insurance affirmatively insures against loss or damage by reason
of any violation, variation, encroachment or adverse circumstance that
either is disclosed or would have been disclosed by an accurate survey;
(lv) The Company is a member of MERS, in good standing, and
current in payment of all fees and assessments imposed by MERS, and has
complied with all rules and procedures of MERS in connection with its
assignment on the MERS(R) System to such Initial Owner;
(lvi) To the extent an appraisal of the Mortgaged Property was
made, the appraisal was made by an appraiser who meets the minimum
qualifications for appraisers as specified in the Program Guide;
(lvii) Each Mortgage Loan was underwritten and approved in
accordance with the Company's general procedures and standards in all
material respects;
(lviii) The servicing of each Mortgage Loan has been legal,
proper, prudent and customary and in accordance with the Program Guide;
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(lix) The Mortgaged Property is in material compliance with all
applicable environmental laws pertaining to environmental hazards
(including without limitation, asbestos) and neither the Company, nor to
the Company's knowledge, the related Mortgagor, has received any notice of
any violation or potential violation of such environmental laws;
(lx) No misrepresentation or fraud in respect of such Mortgage
Loan has taken place on the part of any Person in connection with the
origination and servicing of such Mortgage Loan;
(lxi) There is no mortgage loan in the trust that was originated
on or after March 7, 2003, which is a "high cost home loan" as defined
under the Georgia Fair Lending Act;
(lxii) No mortgage loan in the trust is a "high cost home,"
"covered" (excluding home loans defined as "covered home loans" in the New
Jersey Home Ownership Security Act of 2002 that were originated between
November 26, 2003 and July 7, 2004), "high risk home" or "predatory" loan
under any applicable state, federal or local law (or a similarly classified
loan using different terminology under a law imposing heightened regulatory
scrutiny or additional legal liability for residential mortgage loans
having high interest rates, points and/or fees);
(lxiii) With respect to each mortgage loan underlying the
Security, no borrower obtained a prepaid single-premium credit-life, credit
disability, credit unemployment or credit property insurance policy In
connection with the origination of the mortgage loan;
(lxiv) No subprime mortgage loan originated on or after October
1, 2002 underlying the Security will impose a prepayment premium for a term
in excess of three years. Any loans originated prior to such date, and any
non-subprime loans, will not impose prepayment penalties in excess of five
years;
(lxv) The servicer for each mortgage loan underlying the Security
will fully furnish, in accordance with the Fair Credit Reporting Act and
its implementing regulations, accurate and complete information (i.e.,
favorable and unfavorable) on its borrower credit files to Equifax,
Experian, and Trans Union Credit Information Company (three of the credit
repositories), on a monthly basis;
(lxvi) With respect to Pay Option ARM Mortgage Loans, the related
Mortgage Note requires a Monthly Payment which is a Minimum Monthly
Payment, an interest-only payment, full principal and interest amortized
over thirty (30) years, or full principal and interest amortized over
fifteen (15) years, and in each case, such Monthly Payment is in accordance
with the related Mortgage Note;
(lxvii) With respect to any Pay Option ARM Mortgage Loan, as of
any Adjustment Date, the Mortgagor is and was provided with any and all
disclosures and amortization schedules required by applicable law; and
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(lxviii) No Pay Option ARM Mortgage Loan has a Loan-to-Value
Ratio as of the Closing Date equal to or greater than 115%, and no Mortgage
Loan or Mortgage Note allows for a Loan-to-Value Ratio equal to or greater
than 115%.
(b) It is understood and agreed that the representations and
warranties set forth in Section 2.04(a) herein and any additional
representations and warranties set forth in a Reference Agreement shall survive
the sale of the Mortgage Loans and shall inure to the benefit of any Owners,
notwithstanding any restrictive or qualified endorsement or assignment. Upon
discovery by either the Company or an Owner of a breach of any of the
representations and warranties in Section 2.04(a) or any additional
representations and warranties set forth in a Reference Agreement, which
materially and adversely affects the interest of the Owners, including, but not
limited to, value and enforceability, in the related Mortgage Loan, the party
discovering such breach shall give prompt written notice to the other. Within 90
days of its discovery or its receipt of notice of any such breach, the Company
shall (i) cure such breach in all material respects or (ii) repurchase such
Mortgage Loan at the Repurchase Price provided that if the breach would cause
the Mortgage Loan to be other than a "qualified mortgage" as defined in Section
860G(a)(3) of the Code, any such cure or repurchase must occur within 90 days
from the date such breach was discovered. The Repurchase Price for the
repurchased Mortgage Loan shall be deposited by the Company in the Custodial
Account and, upon receipt by the Owners of such Repurchase Price, the Owners
shall cause the Custodian to promptly deliver the related Mortgage File to the
Company. If any breach of representation or warranty set forth in clauses (xxi),
(xli) and (xlii) of Section 2.04(a) gives rise to an obligation to repurchase a
Mortgage Loan pursuant to this Section 2.04(b), then the Company shall pay to
the Owner an amount equal to any liability, penalty or expense that is actually
incurred and paid by the Owner and that directly resulted from such breach. The
Company shall prepare the Assignment of the related Mortgage for execution by or
at the direction of the Owners, as applicable, and shall pay all costs and
expenses reasonably incurred by the Owners in effecting the reconveyance of a
repurchased Mortgage Loan including, without limitation, the cost of recording
the Assignment of the related Mortgage for any Mortgage Loan that is not
registered with MERS. Notwithstanding the foregoing, the Company shall indemnify
the Owner for any reasonable expense, cost, loss or liability (including but not
limited to reasonable attorney's fees) incurred by the Owner arising from any
breach of warranty or representation or covenant of the Company made herein that
materially and adversely affects the interests of the Owner in such Mortgage
Loan. It is understood and agreed that the obligation of the Company to cure
such breach or to so purchase such Mortgage Loan as to which such a breach has
occurred and is continuing and the obligation of the Company to indemnify the
Owner pursuant to the preceding sentence shall constitute the sole remedy
respecting such breach available to the Owners.
(c) The Company hereby represents and warrants to each Initial Owner
that as of each Closing Date:
(i) The Company is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence
and is or will be in compliance with the laws of each state in which any
Mortgaged Property is located to the extent necessary to ensure the
enforceability of each Mortgage Loan in accordance with the terms of this
Agreement;
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(ii) The execution, delivery and performance of this Agreement by
the Company have been duly authorized and its execution, delivery,
performance and compliance with the terms of this Agreement will not
violate the Company's Certificate of Incorporation or Bylaws or constitute
a default (or an event which, with notice or lapse of time, or both, would
constitute a material default) under, or result in the material breach of,
any material contract, agreement or other instrument to which the Company
is a party or which may be applicable to the Company or any of its assets;
(iii) This Agreement, assuming due authorization, execution and
delivery by each Initial Owner, constitutes a valid, legal and binding
obligation of the Company enforceable against it in accordance with the
terms hereof subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors' rights
generally and to general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law;
(iv) The Company is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of the Company or its properties or
might have consequences that would materially adversely affect its
performance hereunder;
(v) The Company believes that it can perform the covenants
contained in this Agreement in all material respects. The Company is
solvent and will not be rendered insolvent by the consummation of the
transactions contemplated by this Agreement;
(vi) The performance of the Company's obligations under this
Agreement and the consummation of the transactions contemplated hereby do
not require any consent, approval, authorization or order of, filing with
or notice to any State of Minnesota agency or other governmental body in
any other applicable jurisdiction, except such as have been obtained,
effected or given;
(vii) No litigation is pending or, to the best of the Company's
knowledge, threatened against the Company which would prohibit the Company
from entering into this Agreement or which would have a material adverse
effect on the Company's ability to perform its obligations under this
Agreement;
(viii) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Company, and the
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages
by the Company pursuant to this Agreement are not subject to the bulk
transfer or any similar statutory provisions in effect in any applicable
jurisdiction;
(ix) The Company has not dealt with any broker, investment
banker, agent or other person that may be entitled to any commission or
compensation in
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connection with the sale of the Mortgage Loans that will be borne by the
relevant Initial Owner;
(x) Except as previously disclosed to the Initial Owners in
writing (a) the financial statements of the Company delivered to the
Initial Owners for the fiscal year ended December 31, 2004 fairly present
the results of operations and changes in financial position of the Company
for such period and the financial position of the Company as of the end of
such period, and (b) such financial statements are true, correct and
complete as of their respective dates and have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods involved, except as set forth in the notes to such
financial statements.
(xi) No information, certificate of an officer, statement
furnished in writing or report delivered by the Company to the Initial
Owners will contain any untrue statement of a material fact;
(xii) Each Mortgage Loan was originated by a Seller that was in
good standing with the Company as a seller under the Program Guide at the
time of purchase of the Mortgage Loan by the Company;
(xiii) The electronic data file listing the Mortgage Loans and
characteristics thereof provided to the relevant Initial Owner by the
Company prior to the Closing Date is true and correct in all material
respects; and
(xiv) The Company has complied with all anti-money laundering
laws and regulations currently in effect and applicable to it.
SECTION 2.05. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INITIAL
OWNERS. Each Initial Owner hereby represents and warrants to and covenants with,
the Company that as of the applicable Closing Date:
(i) Such Initial Owner understands that the Mortgage Loans have
not been registered under the Securities Act or the securities laws of any
state. Such Initial Owner is acquiring the Mortgage Loans for investment
for its own account only and not with a view to or for sale or other
transfer in connection with any distribution of the Mortgage Loans in any
manner that would violate the Securities Act or any applicable state
securities law. Such Initial Owner considers itself a substantial,
sophisticated institutional investor having such knowledge and experience
in financial and business matters that it is capable of evaluating the
merits and risks of investment in the Mortgage Loans. Such Initial Owner
has been furnished with all information regarding the Mortgage Loans that
it has requested from the Company. Neither such Initial Owner nor anyone
acting on its behalf has offered, transferred, pledged, sold or otherwise
disposed of the Mortgage Loans or any interest in the Mortgage Loans to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of the Mortgage Loans or any interest in the Mortgage Loans
from, or otherwise approached or negotiated with respect to the Mortgage
Loans, any interest in the Mortgage Loans with, any Person in any manner,
or made any general solicitation by means of general advertising or in any
other manner or
26
taken any other action, which would constitute a distribution of the
Mortgage Loans under the Securities Act or which would render the
disposition of the Mortgage Loans a violation of Section 5 of the
Securities Act or require registration pursuant thereto, nor will it act,
nor has it authorized or will it authorize any person to act, in such
manner with respect to the Mortgage Loans;
(ii) Such Initial Owner is either (a) not a Plan that is subject
to ERISA or Section 4975 of the Code and not a Person acting, directly or
indirectly, on behalf of or investing with "plan assets" of any such Plan
or (b) an employee benefit plan that is subject to ERISA or Section 4975 of
the Code and the transaction contemplated herein does not constitute and
will not result in a non-exempt prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code;
(iii) Such Initial Owner has executed this Agreement, the
applicable Reference Agreement and the applicable Custodial Agreement
contemporaneously with the sale of the Mortgage Loans by the Company to
such Initial Owner and the transfer of the purchase price by such Initial
Owner to the Company. The appropriate credit and investment committees of
such Initial Owner has approved this Agreement, such Reference Agreement
and such Custodial Agreement and such committees have the corporate
authority to approve this Agreement, such Reference Agreement and such
Custodial Agreement;
(iv) Such Initial Owner shall maintain this Agreement, each
Reference Agreement and each Custodial Agreement continuously, from the
time of their execution, as an official record of such Initial Owner; and
(v) Such Initial Owner has the full corporate power and authority
to purchase the Mortgage Loans and to execute, deliver and perform and to
enter into and consummate all transactions contemplated by this Agreement,
the applicable Reference Agreement and applicable Custodial Agreement, has
duly authorized the execution and delivery of this Agreement, such
Reference Agreement and such Custodial Agreement, and this Agreement, such
Reference Agreement and such Custodial Agreement each constitute the legal,
valid and binding obligation of such Initial Owner, enforceable against it
in accordance with their respective terms, except as limited by bankruptcy,
insolvency or other similar laws affecting generally the enforcement of
creditors' rights and by general principles of equity regardless of whether
such enforcement is considered in a proceeding in equity or at law.
The relevant Initial Owner shall indemnify the Company and hold it
harmless against any loss, liability or expense incurred in connection with any
claim, demand, defense or assertion based on or grounded upon, or resulting
from, a breach of such Initial Owner's representations, warranties and covenants
contained in this Section 2.05.
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SECTION 2.06. PROTECTION OF CONFIDENTIAL INFORMATION AND CONSUMER
INFORMATION.
(a) Each Owner agrees that the Sellers are customers of the Company
and that the relationships between the Company and such Sellers are confidential
(the "Confidential Information"). Each Owner agrees that it shall not directly
solicit the Sellers of Mortgage Loans for the purpose of purchasing loans
similar to the Mortgage Loans from any such Seller unless (i) such a
relationship already exists between such Owner or its affiliates and such
Seller, (ii) such a purchase of a mortgage loan is established by a broker or
agent of such Owner, which agent or broker is acting independently, and neither
such Owner nor its affiliates have provided such broker or agent with any
Confidential Information, or (iii) such a purchase of a mortgage loan is in such
Owner's ordinary course of business and is not based on the use of Confidential
Information. Each Owner shall keep confidential and shall not, without the
Company's prior written consent, divulge to any party the price paid by such
Owner for the Mortgage Loans, except to the extent that it is appropriate for
such Owner to do so in working with legal counsel, auditors, examiners, taxing
authorities or other governmental or regulatory agencies.
(b) Each Owner agrees that it (i) shall comply with any applicable
laws and regulations regarding the privacy and security of Consumer Information,
(ii) shall not use Consumer Information in any manner inconsistent with any
applicable laws and regulations regarding the privacy and security of Consumer
Information, (iii) shall not disclose Consumer Information to third parties
except as permitted or required by applicable law and regulations or at the
specific written direction of the Company, (iv) shall maintain adequate
physical, technical and administrative safeguards to protect Consumer
Information from unauthorized access, and (v) shall immediately notify the
Company of any actual or suspected breach of the confidentiality of Consumer
Information.
Each Owner agrees that it shall indemnify, defend and hold the Company
harmless from and against any loss, claim or liability the Company may suffer by
reason of such Owner's failure to perform the obligations set forth in this
Section 2.06(b).
(c) The Company agrees that (i) it shall not solicit any Mortgagors
(in writing or otherwise) to refinance any of the Mortgage Loans; provided that
mass advertising or mailings (such as placing advertisements on television, on
radio, in magazines or in newspapers or including messages in billing
statements) that are not exclusively directed towards the Mortgagors shall not
constitute solicitation and shall not violate this covenant and (ii) it shall
comply with any applicable laws and regulations regarding the privacy and
security of Consumer Information, it shall not use Consumer Information in any
manner inconsistent with any applicable laws and regulations regarding the
privacy and security of Consumer Information, it shall not disclose Consumer
Information to third parties except as permitted or required by applicable law
and regulations, it shall maintain adequate physical, technical and
administrative safeguards to protect Consumer Information from unauthorized
access and it shall immediately notify the Owner of any actual or suspected
breach of the confidentiality of Consumer Information.
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The Company shall indemnify, defend and hold the Owner harmless from
and against any loss, claim or liability the Owner may suffer by reason of the
Company's failure to perform the obligations set forth in this Section 2.06(c).
(d) The Company agrees and acknowledges that as to all nonpublic
personal information received or obtained by it with respect to any Mortgagor:
(a) such information is and shall be held by the Company in accordance with all
applicable law, including but not limited to the privacy provisions of the
Xxxxx-Xxxxx Xxxxxx Act; (b) such information is in connection with a proposed or
actual secondary market sale related to a transaction of the Mortgagor for
purposes of 16 C.F.R. section 313.14(a)(3); and (c) Company is hereby prohibited
from disclosing or using any such information other than to carry out the
express provisions of this Agreement, or as otherwise permitted by applicable
law.
(e) The agreements under this Section 2.06 shall survive any
termination of this Agreement.
SECTION 2.07. EARLY PAYMENT DEFAULT. If the related Mortgagor is
thirty (30) days or more delinquent with respect to the first Monthly Payment
(or, if the Company and the relevant Initial Owner expressly agree in any
commitment letter with respect to any Mortgage Loan, the second Monthly Payment)
under a Mortgage Loan due following the related Closing Date, the Company shall,
at the Initial Owner's option, repurchase such Mortgage Loan from the Initial
Owner at the Repurchase Price within forty-five (45) days of the Due Date
relating to such Monthly Payment; provided that the Company shall not be
required to repurchase such Mortgage Loan if it can demonstrate to the Initial
Owner's reasonable satisfaction within thirty (30) days of such reported
delinquency that the related Mortgagor timely made all payments required of the
Mortgagor but such payment was otherwise misapplied.
SECTION 2.08. PREPAYMENT PROTECTION. If any Mortgage Loan prepays in
full within the first two (2) months following the related Closing Date, then
the Company will pay to the Initial Owner an amount equal to the greater of
(without duplication of any prepayment penalty fees otherwise paid with respect
to such Mortgage Loan hereunder) (y) (1) the excess of the "purchase price
percentage" paid by the Initial Owner to the Company for such Mortgage Loan over
100% as set forth in the related Mortgage Loan Schedule and/or commitment
letter, times (2) the outstanding principal balance of the Mortgage Loan as of
the date of such prepayment in full and (z) the amount of any prepayment penalty
fees paid with respect to such Mortgage Loan. Such amount shall be deposited in
the Custodial Account maintained by the Company. In the event any Mortgage Loan
is paid in full after the related Cut-off Date and on or prior to the related
Closing Date, the Company shall also pay, in addition to the premium, the
accrued interest paid by the Initial Owner for such Mortgage Loan. Nothing
contained in this Section 2.08 shall in any way limit the rights of the Initial
Owner to all collections and recoveries of principal and interest received or
applied to any Mortgagor's account and the Company's obligation to remit such
recoveries of principal and interest to the Initial Owner.
SECTION 2.09. DELIVERY OF COLLATERAL DOCUMENTS. Upon request from the
Owner, the Company shall deliver no later than fifteen (15) days after such
request copies of any documents related to a Mortgage Loan that required to be
delivered pursuant to Section 2.01(b) but are held by the Company, to the Owner
at the direction of the Owner. If the Company fails
29
to furnish copies within the time period specified in this Section after the
Owner has requested such copies, the Company shall repurchase such Mortgage Loan
from the Owner in accordance with Section 2.04 hereof.
In connection with any Mortgage Loan that is a "Streamline Refi"
Mortgage Loan, upon request from the Owner, the Company shall deliver, no later
than fifteen (15) days after such request, copies of any documents related to
the original mortgage loan that was the subject of the refinancing; provided,
however, that any such document was required to be included in the related
mortgage loan file pursuant to the related underwriting guidelines which have
been provided to the Owner. If the Company fails to furnish such copies within
the time period specified in this Section after the Owner has requested such
copies, the Company shall repurchase such Mortgage Loan from the Owner in
accordance with Section 2.04 hereof.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
SECTION 3.01. COMPANY TO ACT AS SERVICER. The Company shall act as
master servicer, and in such capacity shall service and administer the Mortgage
Loans in accordance with this Agreement and the Program Guide, and in connection
therewith shall follow such procedures as it would employ in its good faith
business judgment and which are normal and usual in its general mortgage
servicing activities for mortgage loans similar to the Mortgage Loans, and as if
the Mortgage Loans were owned by the Company and that are in accordance with
accepted mortgage servicing practices of prudent mortgage lending institutions
which service mortgage loans of the same type as the Mortgage Loans. The Company
shall have full power and authority to the extent provided herein, acting alone
and/or through the Subservicer as provided in Section 3.02, to do or cause to be
done any and all things which it may deem necessary or prudent in connection
with such servicing and administration. The Company will perform its duties and
obligations as master servicer hereunder in accordance with all applicable laws
in all material respects. The Owner shall furnish the Company and any
Subservicer with any powers of attorney and other documents necessary or
appropriate to enable the Company to service and administer the Mortgage Loans.
SECTION 3.02. AGREEMENTS BETWEEN COMPANY AND SUBSERVICER. The Company
may enter into one or more Subservicing Agreements with one or more Subservicers
for the servicing and administration of the Mortgage Loans. Each Subservicer
shall be approved by the Company as a servicer in accordance with the terms and
conditions of the Program Guide and shall be entitled to receive and retain the
Subservicing Fee in respect of the related Mortgage Loans. References in this
Agreement to actions taken or to be taken by the Company in servicing the
Mortgage Loans include actions taken or to be taken by a Subservicer on behalf
of the Company. Each Subservicing Agreement will be upon such terms and
conditions as are required or permitted by the Program Guide and are not
inconsistent with this Agreement. Any Subservicing Agreement shall be deemed to
be between the Subservicer and the Company alone and the Owners shall not be
deemed a party thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Subservicer in its capacity as such except as
hereinafter set forth in this Section 3.02.
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The Company further is authorized and empowered by the Owners, with
the Owners' knowledge and consent, in its own name or in the name of the
Subservicer, when the Company believes it appropriate in its best judgment to
register any Mortgage Loan on the MERS(R) System, or cause the removal from the
registration of any Mortgage Loan on the MERS(R) System, to execute and deliver,
on behalf of the Owners any and all instruments of assignment and other
comparable instruments with respect to such assignment or re-recording of a
Mortgage in the name of MERS, solely as nominee for the Owners and its
successors and assigns. The cost of any such registration, removal, assignment
or re-recording shall be paid by the Owners.
The Company shall be entitled to terminate any Subservicing Agreement
that may exist and the rights and obligations of any Subservicer pursuant to any
Subservicing Agreement in accordance with the terms and conditions of such
Subservicing Agreement and without any limitation by virtue of this Agreement;
provided, however, that in the event of termination of any Subservicing
Agreement by the Company or the Subservicer, all servicing obligations of such
Subservicer shall be assumed simultaneously by the Company, and the Company
shall either act as servicer of the related Mortgage Loan or enter into a
Subservicing Agreement with a successor Subservicer which will be bound by the
terms of the related Subservicing Agreement.
The Company shall remain obligated and primarily liable to the Owners
for the servicing and administering of the Mortgage Loans in accordance with the
provisions of Section 3.01 without diminution of such obligation or liability by
virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Company alone were servicing and administering
the Mortgage Loans.
In the event the Company shall for any reason no longer be the master
servicer of the Mortgage Loans hereunder, the Successor Servicer appointed
pursuant to Section 8.01, if any, or the Owners, as the case may be, shall
thereupon assume all of the rights and obligations of the Company under each
Subservicing Agreement that may have been entered into, unless the Subservicer
or Owner is then permitted and elects to terminate any Subservicing Agreement in
accordance with its terms.
SECTION 3.03. COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS AND
LIQUIDATION OF MORTGAGE LOANS. The Company shall cause all payments called for
under the terms and provisions of the Mortgage Loans to be collected. Consistent
with the foregoing, the Company may in its discretion (i) waive any late payment
charge or penalty interest in connection with the prepayment of a Mortgage Loan
and (ii) only upon determining that the coverage of such Mortgage Loan by the
related mortgage insurance policy if any, will not be affected, extend the Due
Dates for the Monthly Payments due on a Mortgage Note in accordance with the
Program Guide. The Company may (or shall, in the case of clauses (ii) or (iii)
below) waive (or permit a Subservicer to waive) a Prepayment Penalty only under
the following circumstances: (i) such waiver relates to a default or a
reasonably foreseeable default and would, in the reasonable judgment of the
Company, maximize recovery of total proceeds taking into account the value of
such Prepayment Penalty and the related Mortgage Loan, (ii) such waiver is
required under state or federal law or (iii) the mortgage debt has been
accelerated as a result of the Mortgagor's default in making its Monthly
Payments. The Company shall not waive (and
31
shall not permit any Subservicer to waive) any Prepayment Penalty unless it is
waived in accordance with the immediately preceding sentence.
SECTION 3.04. PRINCIPAL AND INTEREST ACCOUNTS. In those cases where a
Subservicer is servicing a Mortgage Loan pursuant to a Subservicing Agreement,
the Subservicer will be required to establish and maintain one or more principal
and interest accounts in accordance with the Program Guide. The Subservicer will
generally be required to deposit into such accounts all proceeds of Mortgage
Loans received by the Subservicer, less its servicing compensation, and remit
such amounts to the Company as described in the Subservicing Agreement.
SECTION 3.05. ESCROW ACCOUNTS. In addition to the principal and
interest account described in Section 3.04, the Company shall cause each
Subservicer pursuant to the related Subservicing Agreement to establish and
maintain one or more escrow accounts for the benefit of the Company and deposit
and retain therein all collections from the Mortgagors for the payment of taxes,
assessments, hazard insurance premiums, mortgage insurance policy premiums, if
applicable, and comparable items for the account of the Mortgagors.
SECTION 3.06. CUSTODIAL ACCOUNT. The Company shall establish and
maintain one or more Custodial Accounts, which may be interest bearing accounts.
A Custodial Account may contain funds which do not belong to the Owners. Except
as otherwise set forth below, the following payments and collections shall be
deposited therein (other than in respect of principal and interest on the
Mortgage Loans due on or before the applicable Cut-off Date): (i) all payments
on account of principal on the Mortgage Loans; (ii) all payments on account of
interest on the Mortgage Loans, net of the Subservicing Fee or any portion of
the Servicing Fee payable to the Subservicer, including Compensating Interest;
(iii) all Insurance Proceeds and Liquidation Proceeds; (iv) any Monthly
Advances; (v) all proceeds of any Mortgage Loan repurchased pursuant to Sections
2.02 and 2.04 and clause (iii) of Section 7.01, (vi) any amounts required to be
deposited pursuant to Section 2.07, 2.08, the first paragraph of Section 3.08
and Section 3.19 and (vii) any Prepayment Penalties.
With respect to Liquidation Proceeds, Insurance Proceeds and the
proceeds of the purchase of any Mortgage Loan pursuant to Sections 2.02 and 2.04
received in any calendar month, the Company may elect to treat such amounts as
included in the Principal Remittance Amount for the Remittance Date in the month
of receipt, but is not obligated to do so. If the Company so elects, such
amounts will be deemed to have been received on the last day of the month prior
to the receipt thereof.
SECTION 3.07. PERMITTED WITHDRAWALS FROM THE CUSTODIAL ACCOUNT. The
Company may, from time to time as provided herein, make withdrawals from the
Custodial Account for the following purposes:
(i) to make payments to the Owners in the amounts and in the
manner provided for in Section 4.01;
(ii) to reimburse itself for Monthly Advances, the Company's
right to reimburse itself pursuant to this subclause (ii) being limited to
amounts received on the
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related Mortgage Loan which represent late payments of principal and/or
interest respecting which any such advance was made;
(iii) to reimburse itself as to any Liquidated Mortgage Loan from
related Liquidation Proceeds for related Monthly Advances, Insured Expenses
and Liquidation Expenses, and to reimburse itself for any unpaid servicing
compensation on such Liquidated Mortgage Loan;
(iv) to reimburse itself as to any Mortgage Loan which became an
REO Property, from related Liquidation Proceeds for related Insured
Expenses and Liquidation Expenses;
(v) (a) to pay to itself as servicing compensation any interest
earned on or investment income with respect to funds in the Custodial
Account to the extent interest earnings are in excess of the amount of
Compensating Interest owed and (b) to pay to itself as to each Mortgage
Loan the Servicing Fee, and to the related Subservicer the Subservicing
Fee;
(vi) to pay to itself with respect to each Mortgage Loan that has
been repurchased pursuant to Sections 2.02, 2.04 and 3.19 all amounts
received thereon and not required to be distributed to the Owners;
(vii) to reimburse itself for any Nonrecoverable Monthly Advance
or to reimburse itself for any Liquidation Expenses not previously
recovered pursuant to subclauses (iii) and (iv) above;
(viii) to reimburse itself for expenses incurred by and
reimbursable to it pursuant to Section 5.01;
(ix) to reimburse itself for any other expenses incurred and
reimbursable to it pursuant to Section 3.12 or otherwise; and
(x) to clear the Custodial Account of all amounts on deposit
therein attributable to the Mortgage Loans upon the termination of this
Agreement.
SECTION 3.08. PERMITTED INSTRUMENTS. The depository institution at
which the Custodial Account has been established may at the direction of the
Company, invest the funds in the Custodial Account in Permitted Instruments,
which shall mature not later than the Remittance Date next following the date of
such investment. All income and gain realized from any such investment shall be
for the benefit of the Company and shall be subject to its withdrawal or order
from time to time. The amount of any losses incurred in respect of any such
investments shall be deposited in the Custodial Account by the Company out of
its own funds immediately as such losses are realized. As used herein, Permitted
Instruments shall include the following:
(i) obligations of, or obligations fully guaranteed as to
principal and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by the full
faith and credit of the United States;
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(ii) repurchase obligations with respect to any security
described in clause (i) above maturing not more than one month from the
date of acquisition thereof provided that the unsecured obligations of the
party agreeing to repurchase such obligations are at the time rated by any
nationally recognized rating agency as investment grade;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each have an original
maturity of not more than 90 days and, in the case of bankers' acceptances,
shall in no event have an original maturity of more than 365 days or a
remaining maturity of more than 30 days) denominated in United States
dollars of any U.S. depository institution or trust company incorporated
under the laws of the United States or any state thereof or of any domestic
branch of a foreign depository institution or trust company incorporated
under the laws of the United States or any state, provided that the debt
obligations of such depository institution or trust company (or, in the
case of the principal depository institution in a depository institution
holding company system, debt obligations of the depository institution
holding company) at the date of acquisition thereof have been rated by any
nationally recognized rating agency as investment grade; and provided
further that, if the depository or trust company is a principal subsidiary
of a depository institution holding company and the debt obligations of
such subsidiary are not separately rated, the applicable rating shall be
that of the depository institution holding company; and, provided further
that, if the original maturity of such short-term obligations of a domestic
branch of a foreign depository institution or trust company shall exceed 30
days, the short-term rating of such institution shall be rated by any
nationally recognized rating agency as investment grade;
(iv) commercial paper and demand notes (having original
maturities of not more than 365 days) of any corporation incorporated under
the laws of the United States or any state thereof which on the date of
acquisition has a remaining maturity of not more than 30 days and has been
rated by any nationally recognized rating agency as investment grade;
(v) a money market fund or a qualified investment fund rated by
any nationally recognized rating agency as investment grade; and
(vi) other obligations or securities that are acceptable to any
nationally recognized rating agency as a Permitted Instrument for a
security rated as investment grade.
SECTION 3.09. PRIMARY INSURANCE POLICIES. The Company shall not take
any action which would result in non-coverage under any applicable mortgage
insurance policy or any loss which, but for the actions of the Company, would
have been covered thereunder. To the extent coverage is in full force and effect
on the Mortgage Loans as of the applicable Cut-off Date, the Company shall use
reasonable efforts to keep or cause to be kept in full force and effect each
such mortgage insurance policy until the principal balance of the related
Mortgage Loan is reduced to 80% or less of the Appraised Value in the case of
such a Mortgage Loan having a
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Loan-to-Value Ratio at origination in excess of 80%. The Company shall pay or
use reasonable efforts to cause the premium for each mortgage insurance policy
to be paid on a timely basis.
SECTION 3.10. MAINTENANCE OF HAZARD INSURANCE AND ERRORS AND OMISSIONS
AND FIDELITY COVERAGE.
(a) The Company shall use reasonable efforts to cause to be maintained
for each Mortgage Loan and on property acquired upon foreclosure, or deed in
lieu of foreclosure, of any Mortgage Loan, fire insurance with extended coverage
and flood insurance in accordance with the Program Guide. Any amounts applied to
the Company under any such policies (other than amounts applied to the
restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the Company's
normal servicing procedures) shall be deposited in the Custodial Account,
subject to withdrawal pursuant to Section 3.07. In the event that the Company
shall obtain and maintain a blanket policy insuring against hazard losses on all
of the Mortgage Loans, it shall conclusively be deemed to have satisfied its
obligations as set forth in the first sentence of this Section 3.10(a), it being
understood and agreed that such policy may contain a deductible clause, in which
case the Company shall, in the event that there shall not have been maintained
on the related Mortgaged Property a policy complying with the first sentence of
this Section 3.10(a) and there shall have been a loss which would have been
covered by such policy, deposit in the Custodial Account the amount not
otherwise payable under the blanket policy because of such deductible clause. In
connection with its activities as administrator and servicer of the Mortgage
Loans, the Company agrees to present, on behalf of itself and the Owners, claims
under any such blanket policy in a timely fashion in accordance with the terms
of such policy.
(b) The Company shall obtain and maintain at its own expense and keep
in full force and effect throughout the term of this Agreement a blanket
fidelity bond and an errors and omissions insurance policy covering the
Company's officers and employees and other persons acting on behalf of the
Company in connection with its activities under this Agreement. The amount of
coverage shall be at least equal to the coverage that would be required by
Xxxxxx Xxx or Xxxxxxx Mac with respect to the Company if the Company were
servicing and administrating the Mortgage Loans for Xxxxxx Mae or Xxxxxxx Mac in
addition to other mortgage loans being serviced and administered by the Company.
SECTION 3.11. ENFORCEMENT OF DUE-ON-SALE CLAUSES.
(a) When any Mortgaged Property is conveyed, the Company shall declare
such Mortgage Loan due and payable and shall enforce any due-on-sale clause
contained in any Mortgage Note or Mortgage in accordance with the Program Guide,
to the extent permitted under applicable law and governmental regulations, but
only to the extent that such enforcement will not adversely affect or jeopardize
coverage under any insurance policy. Notwithstanding the foregoing:
(i) the Company shall not be deemed to be in default under this
Section 3.11(a) by reason of any transfer or assumption which the Company
is restricted by law from preventing; and
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(ii) if the Company determines that it is reasonably likely that
any Mortgagor will bring, or if any Mortgagor does bring, legal action to
declare invalid or otherwise avoid enforcement of a due-on-sale clause
contained in any Mortgage Note or Mortgage, the Company shall not be
required to enforce the due-on-sale clause or to contest such action.
(b) Subject to the Company's duty to enforce any due-on-sale clause to
the extent set forth in Section 3.11(a), in any case in which a Mortgaged
Property is to be conveyed to a Person by a Mortgagor, and such Person is to
enter into an assumption or modification agreement or supplement to the Mortgage
Note or Mortgage which requires the signature of the Owners, or if an instrument
of release signed by the Owners is required releasing the Mortgagor from
liability on the Mortgage Loan, the Company is authorized, subject to the
requirements of the sentence next following, to execute and deliver, on behalf
of the Owners, the assumption agreement with the Person to whom the Mortgaged
Property is to be conveyed and such modification agreement or supplement to the
Mortgage Note or Mortgage or other instruments as are reasonable or necessary to
carry out the terms of the Mortgage Note or Mortgage or otherwise to comply with
any applicable laws regarding assumptions or the transfer of the Mortgaged
Property to such Person. The Company shall execute and deliver such documents
only if it reasonably determines that (i) its execution and delivery thereof
will not conflict with or violate any terms of this Agreement or cause the
unpaid balance and interest on the Mortgage Loan to be uncollectible in whole or
in part, (ii) any required consents of insurers under any related insurance
policies have been obtained and (iii) subsequent to the closing of the
transaction involving the assumption or transfer (A) the Mortgage Loan will
continue to be secured by a first mortgage lien pursuant to the terms of the
Mortgage, (B) such transaction will not adversely affect the coverage under any
related Insurance Policies, (C) the Mortgage Loan will fully amortize over the
remaining term thereof, (D) no material term of the Mortgage Loan (including the
interest rate on the Mortgage Loan) will be altered nor will the term of the
Mortgage Loan be changed and (E) if the seller/transferor of the Mortgaged
Property is to be released from liability on the Mortgage Loan, such release
will not (based on the Company's or the Subservicer's good faith determination)
adversely affect the collectability of the Mortgage Loan. Upon receipt of
appropriate instructions from the Company in accordance with the foregoing, the
Custodian shall execute any necessary instruments for such assumption or
substitution of liability as directed by the Company. Upon the closing of the
transactions contemplated by such documents, the Company shall cause the
originals or true and correct copies of the assumption agreement, the release
(if any), or the modification or supplement to the Mortgage Note or Mortgage to
be delivered to the Custodian and deposited with the Mortgage File for such
Mortgage Loan. Any fees collected by the Company or the related Subservicer for
entering into an assumption or substitution of liability agreement will be
retained by the Company or such Subservicer as additional servicing
compensation. The Company shall notify the Owner, in writing, of any such
assumption, modification, supplement or substitution of liability with respect
to any Mortgage Loan and the date thereof.
(c) The Company or the related Subservicer, as the case may be, shall
be entitled to approve a request from a Mortgagor for a partial release of the
related Mortgaged Property, the granting of an easement thereon in favor of
another Person, any alteration or demolition of the related Mortgaged Property
or other similar matters if it has determined, exercising its good faith
business judgment in the same manner as it would if it were the owner
36
of the related Mortgage Loan, that the security for, and the timely and full
collectability of, such Mortgage Loan would not be adversely affected thereby.
Any fee collected by the Company or the related Subservicer for processing such
a request will be retained by the Company or such Subservicer as additional
servicing compensation.
(d) Subject to any other applicable terms and conditions of this
Agreement, the Custodian and Company shall be entitled to approve an assignment
in lieu of satisfaction with respect to any Mortgage Loan, provided the obligee
with respect to such Mortgage Loan following such proposed assignment provides
the Custodian and Company with a "Certification" in the form attached hereto as
Exhibit E, in form and substance satisfactory to the Custodian and Company,
providing the following: (i) that the Mortgage Loan is secured by Mortgaged
Property located in a jurisdiction in which an assignment in lieu of
satisfaction is required to preserve lien priority, minimize or avoid mortgage
recording taxes or otherwise comply with, or facilitate a refinancing under, the
laws of such jurisdiction; (ii) that the substance of the assignment is, and is
intended to be, a refinancing of such Mortgage Loan and that the form of the
transaction is solely to comply with, or facilitate the transaction under, such
local laws; (iii) that the Mortgage Loan following the proposed assignment will
have a rate of interest at least 0.25 percent below or above the rate of
interest on such Mortgage Loan prior to such proposed assignment and (iv) that
such assignment is at the request of the borrower under the related Mortgage
Loan, upon approval of such assignment in lieu of satisfaction with respect to
any Mortgage Loan, the Company shall receive cash in an amount equal to the
unpaid principal balance of and accrued interest on such Mortgage Loan and the
Company shall treat such amount as a Full Prepayment with respect to such
Mortgage Loan for all purposes hereof.
SECTION 3.12. REALIZATION UPON DEFAULTED MORTGAGE LOANS.
(a) Subject to Section 3.18(f), the Company shall foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.03; provided, however, that the Company shall notify the
Owners of the Company's intent to foreclose on any such properties at least 5
Business Days prior to the commencement of foreclosure on such properties. In
connection with such foreclosure or other conversion, the Company shall,
consistent with this Agreement, follow such practices and procedures as it shall
deem necessary or advisable and as shall be normal and usual in its general
mortgage servicing activities; provided that the Company shall not be liable in
any respect hereunder if the Company is acting in a manner that is consistent
with the provisions of this Agreement and the applicable Custodial Agreement.
The foregoing is subject to the proviso that the Company shall not be required
to expend its own funds in connection with any foreclosure or towards the
restoration of any property unless it shall determine (i) that such restoration
and/or foreclosure will increase the proceeds of liquidation of the Mortgage
Loan to the Owners after reimbursement to itself for such expenses and (ii) that
such expenses will be recoverable to it through Liquidation Proceeds from the
related Mortgaged Property, as contemplated in Section 3.07. In the event of a
determination by the Company pursuant to this Section 3.12(a), the Company shall
be entitled to reimbursement of its funds so expended pursuant to Section 3.07.
The Company shall be responsible for all other costs and expenses incurred by it
in any such proceeding; provided, however, that it shall be entitled to
reimbursement thereof from the related Mortgaged Property, as contemplated in
Section 3.07.
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(b) Any proceeds collected by the Subservicer and received by the
Company with respect to any Mortgage Loan, including without limitation,
Insurance Proceeds, Liquidation Proceeds or any other proceeds realized with
respect to the sale of the Mortgage Loan (other than any such amounts relating
to REO Property) shall be applied as follows: first, to reimburse the
Subservicer and the Company for all unreimbursed Monthly Advances with respect
to such Mortgage Loan and servicing advances and expenses incurred by the
Subservicer and the Company with respect to such Mortgage Loan in accordance
with the Program Guide and this Agreement, including without limitation, taxes,
assessments and hazard insurance premiums; second, to pay to the Company any
unpaid Servicing Fees and Subservicing Fees owed with respect to the related
Mortgage Loan; third, to pay to the Owners an amount equal to accrued and unpaid
interest on the Principal Balance of such Mortgage Loan at the Mortgage Loan
Remittance Rate to the Due Date prior to the Remittance Date on which such
amounts are to be distributed; fourth, to pay to the Owners an amount equal to
the Principal Balance of such Mortgage Loan; and fifth, to pay to the Owners any
amounts remaining.
SECTION 3.13. OWNER TO COOPERATE: RELEASE OF MORTGAGE FILES.
(a) Upon becoming aware of the payment in full of any Mortgage Loan or
upon the receipt by the Company of a notification that payment in full will be
escrowed in a manner customary for such purposes, the Company will immediately
notify the relevant Initial Owner and the Custodian by delivering to such
Initial Owner and the Custodian a Request for Release. Upon receipt of such
Request for Release, such Initial Owner shall, within five Business Days,
release or cause the Custodian to release the related Mortgage File to the
Company. No expenses incurred in connection with any instrument of satisfaction
or deed of reconveyance shall be chargeable to funds attributable to the
Mortgage Loans on deposit in the Custodial Account.
(b) From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan, the Company will deliver to the Owners and the
Custodian a Request for Release. Upon receipt of such Request for Release, the
Owners shall promptly cause the Custodian to deliver the related Mortgage File,
as requested, to the Company. The Company shall cause each Mortgage File so
released to be returned to the Custodian when the need therefor by the Company
no longer exists, unless (i) the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Custodial Account or (ii) the Mortgage File or such document has been delivered
directly or through a Subservicer to an attorney, or to a public trustee or
other public official as required by law, for purposes of initiating or pursuing
legal action or other proceedings for the foreclosure of the Mortgaged Property
either judicially or non-judicially.
SECTION 3.14. REPORTS TO THE OWNERS.
(a) The Company will deliver to the Owners on or before March 15 of
each year, beginning with the first March 15 that occurs at least three (3)
months after the initial Cut-off Date, a certificate of an officer of the
Company stating, as to each signer thereof, that (i) a review of the activities
of the Company during the preceding calendar year and of performance under
agreements similar to this Agreement has been made under such officer's
supervision, (ii) to the best of such officer's knowledge, based on such review,
the Company has fulfilled its
38
obligations in all material respects throughout such year, or, if there has been
a default in the fulfillment in all material respects of any such obligation
relating to this Agreement, specifying each such default known to such officer
and the nature and status thereof and (iii) to the best of such officer's
knowledge, each Subservicer has fulfilled its material obligations under its
Subservicing Agreement in all material respects, or if there has been a material
default in the fulfillment of such obligations as it relates to the Mortgage
Loans, specifying such default known to such officer and the nature and status
thereof.
(b) On or before March 15 of each year, beginning with the first March
15 that occurs at least three (3) months after the initial Cut-off Date, the
Company shall cause a firm of independent public accountants which is a member
of the American Institute of Certified Public Accountants to furnish a statement
to the Owners to the effect that such firm has examined certain documents and
records relating to the servicing of the mortgage loans under various agreements
(including this Agreement) similar one to another and that, on the basis of such
examination conducted substantially in compliance with the Uniform Single Audit
Program for Mortgage Bankers or the Audit Program for Mortgages serviced for
Xxxxxxx Mac, such servicing has been conducted in compliance with such
agreements except for such significant exceptions or errors in records that, in
the opinion of such firm, the Uniform Single Audit Program for Mortgage Bankers
or the Audit Program for Mortgages serviced for Xxxxxxx Mac requires it to
report. The Company shall use its best efforts to eliminate any such reported
exceptions or errors as promptly as practicable.
SECTION 3.15. REO PROPERTY. In the event that title to a Mortgaged
Property is acquired in foreclosure or by deed in lieu of foreclosure, the deed
or certificate of sale to the REO Property shall be taken in the name of the
relevant Owner of the related Mortgage Loan on the date (the "Acquisition Date")
on which such Mortgaged Property becomes an REO Property, or in the name of such
other Person or Persons as requested by the Owners, provided, however, that
title to the REO Property shall not be taken in the name of the Company unless
the Company has obtained an Opinion of Counsel satisfactory to it from an
attorney duly licensed to practice law in the State where the REO Property is
located to the effect that the Company shall not suffer any adverse tax,
financial, regulatory or licensing consequences as a result of obtaining record
title to the REO property. The Person or Persons other than the Owners holding
record title to an REO Property shall acknowledge in writing that such title is
being held as nominee for such Owners.
The Company by itself or through an affiliate shall manage or cause
the Subservicer to manage the REO Property in accordance with the terms and
provisions of the Program Guide and in a manner that is consistent with the
manner in which it would manage its own property, and in a manner that is in the
best interests of the Owners. Any proceeds collected by the Subservicer after
the Acquisition Date with respect to the REO Property, including without
limitation, insurance, liquidation or any proceeds realized with respect to the
sale or rental of the REO Property (collectively, the "Cash Receipts") shall be
promptly applied as follows: First, to pay the commission of the broker, if any,
who introduced the purchaser of the REO Property to the Subservicer; and Second,
to reimburse the Subservicer and the Company for all unreimbursed Monthly
Advances and pre and post Acquisition Date cash outlays made by the Subservicer
and the Company (or such affiliate) with respect to such REO Property in
accordance with the Program Guide, including without limitation, taxes,
assessments and hazard
39
insurance premiums. All Cash Receipts remaining thereafter shall be distributed
to the Owners on the first Remittance Date which occurs one calendar month after
the sale of the REO Property.
The Company and the Owners hereby agree that the Subservicer shall be
relieved of its obligation, as set forth in the Program Guide, to advance to the
Company on the 18th day of the month following the Acquisition Date uncollected
principal and net interest with respect to the Mortgage Loan relating to the REO
Property.
SECTION 3.16. COMPENSATING INTEREST. Notwithstanding any other
provisions contained herein, the amount of servicing compensation that the
Company shall be entitled to receive for its activities hereunder for the period
ending on each Remittance Date shall be reduced (but not below zero) by an
amount equal to Compensating Interest (if any) for such Remittance Date. Such
reduction shall be applied during such period as follows: first, to any
Servicing Fee or Subservicing Fee to which the Company is entitled pursuant to
Section 3.07, and second, to any income or gain realized from any investment of
funds held in the Custodial Account to which the Company is entitled pursuant to
Section 3.08. In making such reduction, the Company (i) will not withdraw from
the Custodial Account any such amount representing all or a portion of the
Servicing Fee to which it is entitled pursuant to Section 3.07, and (ii) will
not withdraw from the Custodial Account any such amount to which it is entitled
pursuant to Section 3.08.
SECTION 3.17. FILING REQUIREMENTS. In the event that the Mortgage
Loans in a Mortgage Pool are transferred by the Owner directly or indirectly to
a securitization trust (a "Securitization Trust"), other than pursuant to
Section 3.18(a), then, upon request of the Owner or any other person as
specified in the related pooling and servicing agreement or similar agreement
(and except as otherwise specified therein), the Company shall cause the
servicing officer in charge of servicing of the Company to execute and deliver a
certification (the "Backup Certification") in the form set forth as Exhibit A to
the Regulation AB Compliance Addendum attached hereto as Exhibit H in connection
with such Securitization Trust, not later than March 15 of each calendar year
following the first fiscal year of the Securitization Trust; provided that such
Backup Certification shall no longer be required if periodic reports under the
Securities Exchange Act of 1934 are no longer required with respect to the
Securitization Trust.
SECTION 3.18. RECONSTITUTION.
(a) Upon 20 days' prior written notice of intent to the Company, the
Owner and the Company agree that the Owner may consummate a Whole-Loan Transfer
or Securitization Transaction and assign its rights under this Agreement with
respect to the Mortgage Loans subject to such Whole-Loan Transfer or
Securitization Transaction subject to the terms of this Agreement; provided,
however, that the transferee will not be deemed to be the Owner hereunder unless
such transferee shall agree in writing to be bound by the terms of this
Agreement and an original counterpart of the document evidencing such agreement
shall have been executed by the Owner and the transferee and delivered to the
Company. Notwithstanding the foregoing, no transfer shall be effective if such
transfer would result in there being more than three (3) transferees outstanding
hereunder with respect to any Mortgage Loan Package.
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(b) The Owner and the Company agree that in connection with the
completion of a Securitization Transaction, the Company shall:
(i) provide the Owner with an Officer's Certificate on behalf of
the Company that restates as of the date of the Reconstitution all
representations and warranties made by the Company pursuant to Section
2.04(c) of this Agreement and to restate the representations and warranties
made by the Company in Section 2.04(a) as of the Closing Date on which such
Mortgage Loans were purchased by the Initial Owner pursuant to this
Agreement, together with any additional reasonable representations and
warranties which may be required by the rating agencies in connection with
the Securitization Transaction, which shall be mutually agreed upon by the
Company and the Owner and shall be standard representations and warranties
for Securitization Transactions involving mortgage loans similar to the
Mortgage Loans and shall not impose any additional material obligations or
liabilities on the Company than are set forth in this Agreement;
(ii) cooperate with the Owner with respect to reasonable requests
which have been made by the Owner by prior notice and if the Company is
required to be a party to any of the Reconstitution Agreements, execute any
Reconstitution Agreement, subject to the provisions of this Section 3.18,
and subject to the mutual agreement between the Owner and the Company as to
the terms thereof within a reasonable period of time, but in no event shall
any prior notice and request to execute a Reconstitution Agreement be made
to the Company less than ten (10) days prior to the date such
Reconstitution Agreement is to be executed;
(iii) provide to any master servicer or trustee, as applicable,
and/or the Owner, as of a recent date prior to the Securitization
Transaction, any and all publicly available information and appropriate
verification of information which may be reasonably available to the
Company, whether through letters of its auditors and counsel or otherwise,
as the Owner. trustee or a master servicer shall reasonably request as to
the related Mortgage Loans and that is customary information for a
Securitization Transaction;
(iv) agree to service the Mortgage Loans in accordance with the
requirements of the Securitization Transaction, including, without
limitation, servicing the Mortgage Loans in accordance with the
requirements of the applicable Agency if the Securitization Transaction is
an Agency securitization, or servicing the Mortgage Loans in accordance
with the requirements of the private label securitization if the
Securitization Transaction is a private label securitization; provided that
no such servicing requirements shall impose any additional obligations or
liabilities on the Company than are set forth in this Agreement unless
mutually agreed upon by the Company and the Owner;
(v) deliver to the Owner an Opinion of Counsel with respect to
the enforceability of the Reconstitution Agreement against the Company, it
being understood that the cost of any Opinion of Counsel from outside
counsel shall be the responsibility of the Owner, subject to Section
3.18(b); and
41
(vi) provide all other assistance reasonably requested by the
Owner in connection with effectuation and completion of the Securitization
Transaction.
With respect to any Securitization Transaction, the Owner shall be
entitled to include in any disclosure document information provided by the
Company as required by the rating agencies (the "Company Information"), and the
Company acknowledges and agrees that the related investors will be permitted to
rely on such information. The Company shall indemnify the Owner for any untrue
statement or alleged untrue statement of any material fact contained in such
Company Information, or the omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading. In addition, the
Owner shall indemnify the Company and its affiliates for any untrue statement of
any material fact contained in information other than the Company Information
contained in any disclosure document, or the omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading.
(c) The Owner shall reimburse the Company for all reasonable
out-of-pocket costs and expenses (including auditor and legal fees) incurred in
connection with any Securitization Transaction; provided, however, that all
amounts required to be paid by the Owner pursuant to this clause (c) shall be
subject to the prior notice and approval of the Owner, such approval not to be
unreasonably withheld; and provided, further, that, unless otherwise agreed by
the Owner and the Company in a term sheet related to a Securitization
Transaction, such legal fees for the first such Securitization Transaction shall
not exceed $20,000 and shall not exceed $10,000 for any additional
Securitization Transaction.
(d) All Mortgage Loans not sold or transferred pursuant to Section
2.03 or a Securitization Transaction shall be subject to this Agreement and
shall continue to be serviced in accordance with the terms of this Agreement and
with respect thereto this Agreement shall remain in full force and effect.
(e) If a REMIC election has been made with respect to the arrangement
under which the Mortgage Loans and REO Property are held, the Company shall not
take any action, cause the REMIC to take any action or fail to take (or fail to
cause to be taken) any action that, under the REMIC Provisions, if taken or not
taken, as the case may be, could (i) endanger the status of the REMIC as a REMIC
or (ii) result in the imposition of a tax upon the REMIC (including but not
limited to the tax on "prohibited transactions" as defined Section 860(a)(2) of
the Code and the tax on "contributions" to a REMIC set forth in Section 860(d)
of the Code) unless the Company has received an Opinion of Counsel (at the
expense of the party seeking to take such an action) to the effect that the
contemplated action will not endanger such REMIC status or result in the
imposition of any such tax.
(f) (i) The Company hereby agrees to the inclusion in any
Reconstitution Agreement, where applicable, a section relating to special
foreclosure rights in the form of Exhibit I attached hereto which provisions
shall be applicable to the Company or any Subservicer with respect to the
applicable Mortgage Loans. Notwithstanding the foregoing, prior to any
Reconstitution in respect of any Mortgage Loan, the provisions of Exhibit I
attached hereto shall be applicable to the Company, any Subservicer, Luminent
Mortgage Capital, Inc.
42
("Luminent"), the Initial Owners and the Owners; provided that, for purposes of
such Exhibit I, during any such pre-Reconstitution period in respect of a
Mortgage Loan, any reference in Exhibit I to (A) "Master Servicer" (other than
in clause (c) thereof) shall be deemed to be a reference to the relevant Initial
Owner in respect of such Mortgage Loan, (B) "Master Servicer" in clause (c)
thereof shall be deemed to be a reference to the Company, (C) to the "holder of
the most junior of the Subordinate Certificates" shall be deemed to be a
reference to the relevant Owner in respect of such Mortgage Loan, and (D) to the
"Servicer" shall be deemed a reference to the Company or any Subservicer, as
applicable.
(ii) In connection with any notice required to be delivered
pursuant to clause (a) of Exhibit I (whether prior to or after a
Reconstitution with respect to a Mortgage Loan), so long as Luminent or an
affiliate thereof is the Owner of such Mortgage Loan or the holder of the
most junior of the Subordinate Certificates in respect of a Securitization
Transaction in respect of such Mortgage Loan, as applicable, Luminent shall
provide evidence to the Company as to the Person that is the 100% holder of
the most junior of the Subordinate Certificates (as defined in the relevant
Reconstitution Agreement) or the Owner of the Mortgage Loan, as applicable,
in the form of an officer's certificate of Luminent setting forth the 100%
holder of the most junior of the Subordinate Certificates or Owner of the
Mortgage Loan, as applicable, together with (A) if the Subordinate
Certificate is registered in the name of the Depository Trust Company, an
account statement through the applicable broker-dealer or such other
evidence as the Company shall reasonably request or (B) if the Subordinate
Certificate is held in physical form, the trade confirmation with respect
to such Subordinate Certificate or such other evidence as the Company shall
reasonably request.
(iii) In the event that the provisions of Exhibit I are no longer
applicable to the servicer with respect to any Mortgage Loan pursuant to
the terms of the first paragraph of Exhibit I, then, if the Company is the
servicer with respect to such Mortgage Loan, the Company shall be entitled
to elect to whether to continue the applicability of this Section 3.18(f)
with respect to such Mortgage Loan in its sole discretion.
(iv) So long as Luminent or any affiliate thereof is the holder
of the most junior of the Subordinate Certificates (under, and as defined
in the relevant Reconstitution Agreement) or the Owner of a Mortgage Loan,
as applicable, Luminent shall deliver to the Company written notice of any
transfer of such Subordinate Certificate or Mortgage Loan, as applicable,
promptly upon any transfer thereof, which notice shall set forth the name
and address of the transferee and the date upon which such transfer was
effected.
(v) It is expressly understood and agreed by the parties hereto
that the servicing procedures set forth in this Section 3.18 and Exhibit I
hereto differ from the standard servicing practices of the Company and that
the Company's compliance with such procedures may (i) increase the time to
resolution of any foreclosure or in respect of any REO Property, and the
Company shall not be responsible for any losses resulting from such delays
and (ii) result in additional expenses that will be borne by the Owner or
holder of the most junior of the Subordinate Certificates, as applicable.
43
(g) With respect to any Securitization Transaction, at the option of
the Company, in the event that any payment due under any Mortgage Loan and not
postponed is not paid when the same becomes due and payable, or in the event the
related Mortgagor fails to perform any other covenant or obligation under such
Mortgage Loan and such failure continues beyond any applicable grace period, the
Company shall take such action, which action (notwithstanding anything contained
herein or incorporated by reference to the contrary) may include but is not
limited to effecting the sale of such Mortgage Loan on an as-is basis, as (1)
the Company would undertake under similar circumstances with respect to a
similar mortgage loan held for its own account for investment, (2) shall be
consistent with accepted servicing practices, and (3) the Company shall
determine prudently to be in the best interest of the Company. The Company, on
behalf of the Owner, may also, in its sole and exclusive discretion, as an
alternative to foreclosure, sell defaulted Mortgage Loans at fair market value
to third-parties, if the Company believes, in its sole and exclusive discretion,
that such sale would maximize proceeds to the Owner (on a present value basis)
with respect to each such Mortgage Loan. Notwithstanding any other provision in
this Agreement or otherwise, the Company shall have no liability to the Owner or
any other party for the Company's determination hereunder.
SECTION 3.19. RESERVED.
SECTION 3.20. COMPLIANCE WITH REGULATION AB. In order to facilitate
compliance with Regulation AB, the Company and each Owner agree to comply with
the provisions of the Regulation AB Compliance Addendum attached hereto as
Exhibit H.
ARTICLE IV
PAYMENTS TO THE OWNERS
SECTION 4.01. DISTRIBUTIONS. On each Remittance Date the Company shall
distribute to the Owners of record on the next preceding Record Date in
immediately available funds (by wire transfer or otherwise) to the account of
such Owner in accordance with the wire instructions set forth in, or provided to
the Company in accordance with, Section 8.04 the Remittance Amount payable to
such Owner.
SECTION 4.02. STATEMENTS TO THE OWNERS. Concurrently with each
distribution charged to the Custodial Account, the Company shall furnish to the
Owners in an electronic format agreed upon by the Company and the Owners a
statement setting forth certain information in respect of the Mortgage Loans
including:
(i) the amount, if any, of such distribution allocable to
principal and/or interest;
(ii) the amount of related servicing compensation received by the
Company and the Subservicer and such other customary information as the
Company deems necessary or desirable to enable each Owner to prepare its
tax returns;
(iii) the number and aggregate Principal Balance of the Mortgage
Loans at the close of business on such Remittance Date after giving effect
to all distributions allocable to principal made on such Remittance Date,
including, for this
44
purpose, the Principal Balances of all Mortgage Loans purchased pursuant to
Section 2.02 or 2.04 the proceeds of which are being distributed on such
Remittance Date;
(iv) on the basis of the most recent reports furnished to it by
the Subservicer, the number and aggregate principal balances of Mortgage
Loans in each Mortgage Pool delinquent (a) one month, (b) two or more
months, and (c) the number and aggregate balance of Mortgage Loans that are
in foreclosure;
(v) the number and aggregate balance of REO Properties;
(vi) the Pass-Through Rate for such Remittance Date;
(vii) loan-level data, including but not limited to "paid to
date" information, Partial Prepayments and Mortgage Interest Rate
Adjustments; and
(viii) such other information as shall be reasonably requested by
the Owner.
Within a reasonable period of time after the end of each calendar
year, the Company shall furnish to the Owners a statement containing the
information set forth in clauses (i) and (iii) above aggregated for such
calendar year. Such obligation of the Company shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Company pursuant to any requirements of the Code as from time to
time in force.
SECTION 4.03. DISTRIBUTION REPORTS; MONTHLY ADVANCES BY THE COMPANY.
Prior to the close of business on the Business Day next succeeding each
Determination Date, the Company shall furnish a statement to the Owners setting
forth the amount to be distributed on the next succeeding Remittance Date on
account of principal of and interest on the Mortgage Loans. Prior to such time
as title to a Mortgaged Property is acquired in foreclosure or by deed in lieu
of foreclosure, on or before each Remittance Date, the Company shall either (i)
deposit in the Custodial Account an amount equal to the Monthly Advance, if any,
or (ii) cause to be made an appropriate entry in the records of the Custodial
Account that funds in such account that are being held for future distribution
or withdrawal or which do not belong to the Owners have been used by the Company
in discharge of any such Monthly Advance or (iii) make advances in the form of
any combination of (i) and (ii) aggregating the amount of such Monthly Advance.
Any funds being held for future distribution to the Owners and so used shall be
replaced by the Company by deposit in the Custodial Account on any future
Remittance Date to the extent that funds in the Custodial Account relating to
the Mortgage Loans on such Remittance Date shall be less than payments to the
Owners required to be made on such date.
SECTION 4.04. REPORTS AND RETURNS TO BE FILED BY THE COMPANY. The
Company shall file information reports with respect to the receipt of mortgage
interest received in a trade or business, reports of foreclosures and
abandonments of any Mortgaged Property and information returns relating to
cancellation of indebtedness income with respect to any Mortgaged Property as
required by Sections 6050H, 6050J and 6050P of the Code. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.
45
SECTION 4.05. FORMAT OF REPORTS AND STATEMENTS. The reports and
statements delivered by the Company to the Owners pursuant to this Article IV
shall be substantially in the form attached hereto as Exhibit G.
SECTION 4.06. RECORDS; AUDIT. The Company shall maintain complete and
accurate records in accordance with standard accounting practices during the
term of this Agreement and for a period of at least six (6) years following the
termination of this Agreement (the "Retention Period"); provided, however, that
in the event of any dispute arising under or with respect to this Agreement, the
Retention Period shall last until the resolution of such dispute becomes final
and non-appealable and all obligations of the parties hereto have been satisfied
in full. The Company shall as and when so requested by any Initial Owner or by a
regulatory authority acting pursuant to law at all reasonable times and from
time to time during the Retention Period (i) make such records available for
inspection by such person or persons as such Initial Owner designates as its
authorized representatives or such regulatory authority, who shall have the
right to take copies of or extracts from any records kept pursuant to this
Agreement, (ii) permit such Initial Owner's authorized representatives or such
regulatory authority to examine and make copies of that portion of any of the
Company's external audit opinions (including, but not limited to, the external
auditor's management letter and reports prepared in accordance with Statement of
Auditing Standards No. 70 Type II or other reports) which relates to the Company
provision of services under this Agreement, (iii) give such Initial Owner's
authorized representatives or such regulatory authority complete access, during
regular business hours to the Company's officers, employees and other
representatives, including attorneys, accountants and others, in connection with
such audit, and (iv) provide such computer access, office space and furniture
and telephone, photocopying and electric service as may be necessary or
advisable for such Initial Owner's authorized representatives or such regulatory
authority to conduct such audit.
ARTICLE V
THE COMPANY
SECTION 5.01. INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless the Owner and any
director, officer, employee or agent of the Owner against any and all claims,
losses, damages, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Owner may sustain
arising out of, resulting from, or caused by (i) any material breach of any of
Company's representations, warranties or covenants set forth in this Agreement;
provided, however, that if the Company breaches a representation or warranty set
forth in clauses (xxi), (xli) or (xlii) of Section 2.04(a), then the Company
shall pay to the relevant Owner, concurrently with and in addition to the
repurchase or substitution obligations set forth in Section 2.04 an amount equal
to any liability, penalty or expense that was actually incurred and paid out of
or on behalf of such Owner (including any reasonable attorney's fees), and that
directly resulted from such breach, or if incurred and paid by an Owner
thereafter, concurrently with such payment, or (ii) the failure by the Company
to perform its duties hereunder. The Owner shall notify the Company promptly if
a claim is made by a third party with respect to this Agreement or the Mortgage
Loans, and the Company may assume the defense of any such claim and pay all
46
expenses in connection therewith, including counsel fees, and promptly pay,
discharge and satisfy any judgment or decree that may be entered against it or
the Owner in respect of such claim. The Owner promptly shall reimburse the
Company for all amounts advanced by it pursuant to the preceding sentence unless
the Company's indemnification obligation described in this paragraph is
applicable.
(b) The Owner shall indemnify and hold harmless the Company and any
director, officer, employee or agent of the Company against any and all claims,
losses, damages, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses incurred in connection with
any audit, controversy or judicial proceeding relating to a governmental taxing
authority or legal action relating to this Agreement, other than any such
amounts incurred by reason of a material breach by the Company of any
representation or warranty made by it herein or the failure by the Company to
perform its duties hereunder.
(c) The Company shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties under
this Agreement and which in its opinion may involve it in any expense or
liability; provided, however, that the Company may in its discretion undertake
any such legal action relating to the servicing of the Mortgage Loans under this
Agreement that it may deem necessary or desirable in respect to this Agreement
and the rights and duties of the parties hereto. In such event, the legal
expenses and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities payable or reimbursable out of the Custodial
Account as provided by Section 3.07 unless the Company's indemnification
obligation described in Section 5.01(a) above is applicable and, notwithstanding
any other provision hereof, distributions pursuant to Section 4.01 shall be
reduced accordingly.
(d) For purposes of this Section 5.01, "Owner" shall mean the Person
then acting as the Owner under this Agreement and any and all Persons who
previously were "Owners" under this Agreement.
SECTION 5.02. LIABILITY OF THE COMPANY AND OTHERS.
(a) The Company shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by the
Company herein.
(b) Neither the Company, nor any of the directors, officers, employees
or agents of the Company shall be under any liability to any Owner for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Company or any such person against any
breach of warranties or representations made herein, failure to perform its
duties hereunder or any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
or by reason of reckless disregard of obligations and duties hereunder. The
Company and any director, officer, employee or agent of the Company may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder.
SECTION 5.03. MERGER OR CONSOLIDATION OF THE COMPANY. The Company will
keep in full effect its existence, rights and franchises as a corporation under
the laws of the State
47
of Delaware, and will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of this Agreement or any
of the Mortgage Loans and to perform its duties under this Agreement.
Any Person into which the Company may be merged or consolidated, or
any corporation resulting from any merger or consolidation to which the Company
shall be a party, or any Person succeeding to the business of the Company, shall
be the successor of the Company hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided, however, such successor shall
be a Xxxxxx Xxx and Xxxxxxx Mac approved seller/servicer.
SECTION 5.04. LIMITATION ON RESIGNATION AND ASSIGNMENT BY COMPANY. The
Company shall not assign this Agreement or the servicing hereunder or delegate
its rights or duties hereunder or any portion hereof without the prior written
consent of the Owner; provided, however, that no such prior written consent
shall be required if such assignee is a Xxxxxx Mae and Xxxxxxx Mac approved
Seller/Servicer with a net worth of at least $25 million.
The Company shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Company and the Owner or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Company. Any such
determination permitting the resignation of the Company shall be evidenced by an
Opinion of Counsel to such effect delivered to the Owner which Opinion of
Counsel shall be in form and substance acceptable to the Owner. No such
resignation shall become effective until a successor acceptable to the Owner
shall have assumed the Company's responsibilities and obligations hereunder.
SECTION 5.05. RIGHT TO EXAMINE COMPANY RECORDS. The Owner, or its
designee, shall have the right to examine and audit any of the related books,
records or other information of the Company, whether held by the Company or by
another on its behalf, with respect to or concerning this Agreement or the
Mortgage Loans, during business hours or at such other times as may be
reasonable under applicable circumstances, upon reasonable advance notice. The
Owner shall pay its own travel expenses and any other costs and expenses
incurred by the Owner and the Company associated with such examination.
The Company shall provide to the Owner and any supervisory agents or
examiners which may relate to the Owner access to any documentation regarding
the Mortgage Loans which may be required by any applicable regulations,
including but not limited to any disaster recovery/business continuity plan
and/or any measures taken by the Company to protect Consumer Information,
provided, however, that the Company shall only be obligated to provide such
documentation to the extent such documentation is maintained by the Company in
the ordinary course of business. Such access shall be afforded without charge,
upon reasonable request, upon ten Business Days prior written notice, during
normal business hours and at the offices of the Company, all in accordance with
applicable federal government regulations.
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ARTICLE VI
DEFAULT
SECTION 6.01. EVENTS OF DEFAULT OF THE COMPANY. Event of Default,
wherever used herein, means any one of the following events:
(i) the Company shall fail to remit to any Owner any payment
required to be made under the terms of this Agreement and such failure
shall continue unremedied for a period of 2 Business Days after the date
upon which written notice or oral notice (promptly confirmed in writing) of
such failure, requiring such failure to be remedied, shall have been given
to the Company by such Owner; or
(ii) the Company shall fail to observe or perform in any material
respect any other of the covenants or agreements on the part of the Company
contained in this Agreement and such failure shall continue unremedied for
a period of 30 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Company by
an Owner; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in an involuntary case under any present or
future federal or state bankruptcy, insolvency or similar law or appointing
a conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Company and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days; or
(iv) the Company shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of, or
relating to, the Company or of, or relating to, all or substantially all of
the property of the Company; or
(v) the Company shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of,
or commence a voluntary case under, any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations; or
(vi) any failure of the Company to be in compliance with
applicable qualification or licensing laws of any jurisdiction where
Mortgaged Property is located, provided that such failure has a material
adverse effect on the ability of the Company to perform its obligations
under this Agreement; or
(vii) any representation or warranty made by the Company
hereunder (other than the representations and warranties set forth in
Section 2.04(a)) shall prove to be untrue or incomplete in any material
respect and continues unremedied for a period of thirty (30) days after the
discovery of same; or
49
(viii) the Company ceases to meet the qualifications of either
FNMA or FHLMC; or
(ix) the Company's servicer rating (if any) by any rating agency
for a classification of loans sold under this Agreement falls below an
"average" rating at any time after the effectiveness of this Agreement.
If an Event of Default described in this Section shall occur, then,
and in each and every such case, so long as such Event of Default shall not have
been remedied, the Owners by notice in writing to the Company, may terminate all
of the rights and obligations of the Company under this Agreement other than its
right to receive servicing compensation for servicing the Mortgage Loans
hereunder during any period prior to the date of such termination and may
exercise any and all other remedies available at law or equity; provided,
however, that any liability of the Company under this Agreement arising prior to
such termination shall survive. On or after the receipt by the Company of such
written notice, all authority and power of the Company under this Agreement
shall, in accordance with Section 8.01, pass to and be vested in the Owners or
the Successor Servicer appointed pursuant to Section 8.01. Upon written request
from the Owner, the Company shall prepare, execute and deliver to a successor
any and all documents and other instruments, place in such successor's
possession all Mortgage Files and do or cause to be done all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, including, but not limited to, the transfer and endorsement or
assignment of the Mortgage Loans and related documents to the successor at the
Company's sole expense. The Company agrees to cooperate with the Owner and such
successor in effecting the termination of the Company's responsibilities and
rights hereunder, including, without limitation, the transfer to such successor
for administration by it of all amounts which shall at the time be credited by
the Company to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans. If the Company obtains knowledge of an Event
of Default, the Company shall promptly notify the Owner thereof.
SECTION 6.02. WAIVER OF DEFAULTS. The Owner may waive such default by
the Company in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Event of Default, as defined in Section 6.01, arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
ARTICLE VII
TERMINATION
SECTION 7.01. TERMINATION. The obligations and responsibilities of the
Company hereunder shall terminate upon the earlier of: (i) the later of the
final payment or other liquidation (or any advance with respect thereto) of the
last Mortgage Loan in the Mortgage Pool and the remittance of all funds due
hereunder, or (ii) by mutual consent of the Company and each Initial Owner in
writing, or (iii) the purchase by the Company of all Mortgage Loans in the
Mortgage Pool and all property acquired in respect of any such Mortgage Loan
remaining subject to this Agreement at a price equal to the aggregate Principal
Balance of such Mortgage
50
Loans (including, with respect to any such Mortgage Loan as to which title to
the underlying Mortgaged Property has been acquired, the Principal Balance
thereof as of the date of such acquisition), together with interest on such
aggregate Principal Balance at the then applicable Pass-Through Rate to the
first day of the month in which such repurchase price is distributed to the
Owners.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.01. SUCCESSOR TO THE COMPANY. Any successor servicer
appointed as provided herein (the "Successor Servicer") shall have a net worth
of not less than $25,000,000 and shall execute, acknowledge and deliver to the
Company and the Owners an instrument accepting such appointment, whereupon such
Successor Servicer shall succeed to the rights and obligations of the Company
under the Subservicing Agreements and shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Company with like effect as if originally named as a party to this Agreement.
The Successor Servicer shall promptly deliver a copy of any such instrument to
the Custodian. The resignation or removal of the Servicer hereunder shall not
become effective until a successor shall be appointed pursuant to this Section
8.01. In connection with the termination or resignation of the Company as
servicer hereunder, either (i) the Successor Servicer shall represent and
warrant that it is a member of MERS in good standing and shall agree to comply
in all material respects with the rules and procedures of MERS in connection
with the servicing of the Mortgage Loans that are registered with MERS, or (ii)
the Company shall cooperate with the Successor Servicer in causing MERS to
execute and deliver an Assignment of Mortgage in recordable form to transfer the
Mortgage from MERS to the Owners and to execute and deliver such other notices,
documents and other instruments as may be necessary or desirable to effect a
transfer of such Mortgage Loan or servicing of such Mortgage Loan on the MERS(R)
System to the Successor Servicer. The Company shall file or cause to be filed
any such assignment in the appropriate recording office. The Successor Servicer
shall cause such assignment to be delivered to the Custodian promptly upon
receipt of the original with evidence of recording thereon or a copy certified
by the public recording office in which such assignment was recorded.
SECTION 8.02. ENTIRE AGREEMENT: AMENDMENT. This Agreement may be
amended from time to time by the Company and each Initial Owner by written
agreement signed by the Company and each Initial Owner. This Agreement together
with each Reference Agreement shall constitute the entire agreement between the
parties.
SECTION 8.03. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
EACH OF THE COMPANY AND THE OWNER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY AN ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT, OR ANY OTHER
51
DOCUMENTS AND INSTRUMENTS EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF
THE COMPANY OR THE OWNER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE OWNER
TO ENTER INTO THIS AGREEMENT.
SECTION 8.04. NOTICES. All demands and notices hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by registered mail, postage prepaid, or sent by overnight courier to
(a) in the case of the Company: (i) in the case of any notice delivered pursuant
to Exhibit I, Residential Funding Corporation, 0000 X. Xxxxxxx Xxxxxx, Xxxxx
000, Xxxxxxx, Xxxxxxxxxx 00000, Attention: Servicing Manager and/or such other
address as may hereafter be furnished to the Initial Owner in writing by the
Company and (ii) in the case of any other notice, Residential Funding
Corporation, 0000 Xxxxxxxxxx Xxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx
00000, Attention: Office of the President, and Residential Funding Corporation,
0000 X. Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx 00000, Attention:
Servicing Manager and/or such other address as may hereafter be furnished to the
Initial Owner in writing by the Company; (b) in the case of the Initial Owners:
Luminent Mortgage Capital, Inc., One Commerce Square, 0000 Xxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxxx Xxxxx, COO, Telephone:
(000) 000-0000, Fax: (000) 000-0000, with a copy to Luminent Mortgage Capital,
Inc., One Market Street, Spear Tower, 30th Floor, Xxx Xxxxxxxxx, Xxxxxxxxxx
00000, Attention: Xxxxxxxxxxx Xxxx, CFO, Telephone: (000) 000-0000, Fax: (415)
000-0000, or such other address or addresses as may hereafter be furnished to
the Company in writing by an Initial Owner; (c) in the case of any Owner other
than the Initial Owner, to such address as may be furnished to the Company in
writing by such Owner; and (d) in the case of the Custodian, Xxxxx Fargo Bank,
N.A., 0000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention:
Mortgage Document Custody, or such other address or addresses as may hereafter
be furnished to the Company in writing by the Custodian.
Distributions that may be made by wire transfer pursuant to Section
4.01 shall be made in accordance with wire instructions provided in the
applicable Reference Agreement or in accordance with such other instructions as
may hereafter be furnished to the Company in writing by an Owner, provided that
such instructions have been received by the Company prior to the Record Date.
SECTION 8.05. SEVERABILITY OF PROVISIONS. If any provision of this
Agreement or a Reference Agreement shall be for any reason whatsoever held
invalid, then such provision shall be deemed severable from the remaining
provisions of this Agreement and such Reference Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Agreement
or such Reference Agreements.
SECTION 8.06. NO PARTNERSHIP. Nothing herein contained shall be deemed
or construed to create a co-partnership or joint venture between the parties
hereto and the services of the Company shall be rendered as an independent
contractor and not as agent for the Owners.
SECTION 8.07. EXHIBITS. The exhibits to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
52
SECTION 8.08. COUNTERPARTS; SUCCESSORS AND ASSIGNS. This Agreement may
be executed in one or more counterparts and by the different parties hereto on
separate counterparts, each of which, when so executed, shall be deemed to be an
original; such counterparts, together, shall constitute one and the same
agreement. Subject to Section 5.04, this Agreement shall inure to the benefit of
and be binding upon the Company and the Owners and their respective successors
and assigns.
[Signature Page Follows]
53
IN WITNESS WHEREOF, the Company and each Initial Owner have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
RESIDENTIAL FUNDING CORPORATION
By:
------------------------------------
Name:
Title:
LUMINENT MORTGAGE CAPITAL, INC.,
By:
------------------------------------
Name:
Title:
MERCURY MORTGAGE FINANCE STATUTORY TRUST
By:
------------------------------------
Name:
Title:
MAIA MORTGAGE FINANCE STATUTORY TRUST
By:
------------------------------------
Name:
Title:
EXHIBIT A
FORM OF REFERENCE AGREEMENT
----------
RESIDENTIAL FUNDING CORPORATION,
THE COMPANY,
AND
_______________________
THE INITIAL OWNER
REFERENCE AGREEMENT
DATED AS OF [__________ __, 20__]
ADJUSTABLE RATE MORTGAGE LOANS
SERIES 20__-WH__
A-1
REFERENCE AGREEMENT
THIS REFERENCE AGREEMENT, dated as of [______ __, 20__] (this
"Reference Agreement"), is hereby executed by and between RESIDENTIAL FUNDING
CORPORATION, as seller and master servicer (the "Company") and
____________________________, as initial owner (the "Initial Owner") under this
Reference Agreement and the Standard Terms and Provisions of Sale and Servicing
Agreement, dated as of [______ __, 20__] (as further amended or restated from
time to time, the "Standard Terms"), all the provisions of which are
incorporated herein and shall be a part of this Reference Agreement as if set
forth herein in full (this Reference Agreement together with the Standard Terms
so incorporated, the "Agreement").
PRELIMINARY STATEMENT
The Initial Owner has agreed to purchase from the Company and the
Company has agreed to sell to the Initial Owner, on a servicing retained basis
and without recourse, a 100% undivided Ownership Interest in the Mortgage Loans,
which an aggregate outstanding principal balance as of the Cut-off Date of
$[_______________] as described in the Mortgage Loan Schedule attached hereto as
Exhibit A.
The Mortgage Loans are adjustable rate, [fully-amortizing] mortgage
loans with terms to maturity from the date of origination or modification of not
more than [15] [30] [40] years. The interest rate on each Mortgage Loan will
adjust annually to equal the sum of (i) the Index plus (ii) the Gross Margin for
such Mortgage Loan, rounded to the nearest multiple of 0.125%, subject to the
Periodic Cap, Minimum Mortgage Rate and Maximum Mortgage Rate applicable to such
Mortgage Loan. [With respect to [____]% of the Mortgage Loans, the related
Mortgage Notes require that interest only be paid for not more than ten years.]
[The interest rate on each Mortgage Loan will adjust annually after a fixed
initial period of [_____] years, to equal the sum of (i) the Index, as most
recently available as of the applicable Adjustment Date specified in the related
Mortgage Note, plus (ii) the Gross Margin for such Mortgage Loan, rounded to the
nearest multiple of 0.125%, subject to the Periodic Cap, Minimum Mortgage Rate
and Maximum Mortgage Rate applicable to such Mortgage Loan.]
In consideration of the premises and the mutual agreements hereinafter
set forth, and intending to be legally bound, the Initial Owner and the Company
agree hereby as follows:
Standard Terms; Designation.
The Company and the Initial Owner acknowledge that the Standard Terms
prescribe certain obligations of the Company and the Initial Owner with respect
to the Mortgage Loans. The Company and the Initial Owner each agree to observe
and perform such prescribed duties, responsibilities and obligations, and
acknowledge that the Standard Terms are and shall be a part of this Agreement to
the same extent as if set forth herein in full.
The Mortgage Loans are designated generally as the Adjustable Rate
Mortgage Loans, Series [20__-WH__].
A-2
Defined Terms.
In addition to the definitions set forth in Section 1.01 of the
Standard Terms, the following words and phrases, unless the context otherwise
requires, shall have the meanings specified in this Article.
Closing Date: [______ __, 20__].
Cut-off Date: [______ __, 20__].
First Remittance Date: [______ __, 20__].
Index: With respect to any Mortgage Loan and as to any Adjustment Date
therefor, a rate per annum equal to either (a) the average of interbank offered
rates for one-year U.S. dollar-denominated deposits in the London market based
on quotations of major banks as published in The Wall Street Journal, (b) the
average of interbank offered rates for six-month U.S. dollar-denominated
deposits in the London market based on quotations of major banks as published in
The Wall Street Journal, (c) the weekly average yield on U.S. Treasury
securities adjusted to a constant maturity of one year, as reported by the
Federal Reserve Board in Statistical Release No. H.15(519), as most recently
available as of the applicable Adjustment Date specified in the related Mortgage
Note, or (d) in the event that the related index is no longer available, an
index selected by the Company that is based on comparable information.
Servicing Fee Rate: As to each Mortgage Loan, an amount equal to 0.05%
per annum plus, if such Mortgage Loan is not serviced by a Subservicer at the
time of determination, an amount equal to the Subservicing Fee Rate for such
Mortgage Loan.
Subservicing Fee Rate: As to each Mortgage Loan, the rate per annum
set forth in the Mortgage Loan Schedule as the "SUBSERV FEE." The weighted
average subservice fee is [______].
Conveyance of Mortgage Loans; Possession of Mortgage Files.
The Company, simultaneously with the execution and delivery of this
Reference Agreement, does hereby sell, transfer and assign, without recourse, to
the Initial Owner the Ownership Interest comprising all of the right, title and
interest of the Company in and to the Mortgage Loans, including all documents
maintained as part of the related Mortgage Files all Mortgaged Properties which
secure an Mortgage Loan but are acquired by foreclosure, deed in lieu of
foreclosure after the Cut-Off Date or otherwise, all interest at the applicable
Mortgage Loan Remittance Rate and principal received on or with respect to the
Mortgage Loans after the Cut-off Date (other than payments of principal and
interest due on the Mortgage Loans on or before the Cut-off Date) on a servicing
retained basis, all other unscheduled collections collected in respect of the
Mortgage Loans after the Cut-Off Date, and all proceeds of the foregoing (other
than the servicing rights with respect thereto, and any late fees in respect
thereof). Additionally, in connection with the Company's assignment to the
Initial Owner, and subject to Section 2.01 of the Standard Terms, the Company
has delivered to, and deposited with, the Custodian, as the duly appointed agent
of the Owners for such purpose, the documents or instruments or copies thereof
set forth in Section 2.01(b) of the Standard Terms.
A-3
Additional Representations and Warranties of the Company.
The Company hereby restates each of the representations and warranties
in the standard terms as of the date hereof and further represents and warrants
to the Initial Owner that as of the Closing Date or such other date specifically
provided for herein:
(i) [With respect to the Mortgage Loans described in the Mortgage
Loan Schedule attached hereto as Exhibit A, the Company has complied with
its obligations under Section 2.01 of the Standard Terms;]
(ii) The Mortgage Loans are adjustable rate, [fully-amortizing]
mortgage loans having terms to maturity of not more than [15] [30] [40]
years from the date of origination or modification with monthly payments
due on the first day of each month, with interest payable in arrears;
(iii) [Each Mortgage Loan with a Loan-to-Value Ratio at
origination in excess of 80% is the subject of a primary insurance policy
that insures at least 30% of the principal balance of the Mortgage Loan at
origination if the Loan-to-Value Ratio is between 95.00% and 90.01%, at
least 25% of the principal balance of the Mortgage Loan at origination if
the Loan-to-Value Ratio is between 90.00% and 85.01%, and at least 12% of
the principal balance of the Mortgage Loan at origination if the
Loan-to-Value Ratio is between 85.00% and 80.01%;]
(iv) [None of the Mortgage Loans are buydown mortgage loans;]
(v) [None of the Mortgage Loans are balloon mortgage loans;]
(vi) [All condominiums or units in a planned unit development
(other than a de minimis planned unit development) on any Mortgaged
Property meet the eligibility requirements set forth in the Program Guide;]
(vii) [The Mortgage Loan is not a graduated payment loan nor does
it have a shared appreciation feature, or other contingent interest
feature];
(viii) [The Mortgage Loans are secured by one- to four family
dwelling units;]
(ix) [None of the Mortgage Loans are secured by a leasehold
estate or is a cooperative loan;] and
(x) [INSERT OTHER APPLICABLE REPRESENTATIONS AND WARRANTIES TO
COVER THE MORTGAGE LOANS PURCHASED WITH THE REFERENCE AGREEMENT].
Wire Instructions
Distributions that may be made by wire transfer pursuant to Section
4.01 of the Standard Terms shall be made in accordance with the following wire
instructions:
A-4
Bank: [__________]
ABA Number: [__________]
Account Name: [__________]
Account Number: [__________]
Reference: PORT [__]
or in accordance with such other instructions as may hereafter be furnished to
the Company in writing by an Owner, provided that such instructions have been
received by the Company prior to the Record Date.
Counterparts.
This Reference Agreement may be executed simultaneously in any number
of counterparts, each of which counterparts shall be deemed to be an original,
and such counterparts shall constitute but one and the same instrument.
Governing Law.
This Reference Agreement shall be governed by and construed in
accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
Amendment.
This Reference Agreement may be amended from time to time by the
Company and the Initial Owner by written agreement signed by the Company and the
Initial Owner.
[Signature Page Follows]
A-5
IN WITNESS WHEREOF, the Company and the Initial Owner have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
RESIDENTIAL FUNDING CORPORATION
By:
------------------------------------
Name:
Title:
----------------------------------------
By:
------------------------------------
Name:
Title:
EXHIBIT [A] [A-1] [A-2]
TO THE REFERENCE AGREEMENT
MORTGAGE LOAN SCHEDULE
EXHIBIT B
RESERVED
B-1
EXHIBIT C
FORM OF SUBSERVICING AGREEMENT
SUBSERVICING AGREEMENT
This Seller/Servicer Contract (as may be amended, supplemented or
otherwise modified from time to time, this "Contract") is made this ____ day of
__________, 20__, by and between Residential Funding Corporation, its successors
and assigns ("Residential Funding") and _____________ (the "Seller/Servicer,"
and, together with Residential Funding, the "parties" and each, individually, a
"party").
WHEREAS, the Seller/Servicer desires to sell Loans to, and/or service
Loans for, Residential Funding, and Residential Funding desires to purchase
Loans from the Seller/Servicer and/or have the Seller/Servicer service various
of its Loans, pursuant to the terms of this Contract and the Residential Funding
Seller and Servicer Guides incorporated herein by reference, as amended,
supplemented or otherwise modified, from time to time (together, the "Guides").
NOW, THEREFORE, in consideration of the premises, and the terms,
conditions and agreements set forth below, the parties agree as follows:
ARTICLE I
Incorporation of Guides by Reference.
The Seller/Servicer acknowledges that it has received and read the
Guides. All provisions of the Guides are incorporated by reference into and made
a part of this Contract, and shall be binding upon the parties; provided,
however, that the Seller/Servicer shall be entitled to sell Loans to and/or
service Loans for Residential Funding only if and for so long as it shall have
been authorized to do so by Residential Funding in writing. Specific reference
in this Contract to particular provisions of the Guides and not to other
provisions does not mean that those provisions of the Guides not specifically
cited in this Contract are not applicable. All terms used herein shall have the
same meanings as such terms have in the Guides, unless the context clearly
requires otherwise.
ARTICLE II
Amendments.
This Contract may not be amended or modified orally, and no provision
of this Contract may be waived or amended except in writing signed by the party
against whom enforcement is sought. Such a written waiver or amendment must
expressly reference this Contract. However, by their terms, the Guides may be
amended or supplemented by Residential Funding from time to time. Any such
amendment(s) to the Guides shall be binding upon the parties hereto.
C-1
ARTICLE III
Representations and Warranties.
A. Reciprocal Representations and Warranties.
The Seller/Servicer and Residential Funding each represents and
warrants to the other that as of the date of this Contract:
Each party is duly organized, validly existing, and in good standing
under the laws of its jurisdiction of organization, is qualified, if necessary,
to do business and in good standing in each jurisdiction in which it is required
to be so qualified, and has the requisite power and authority to enter into this
Contract and all other agreements which are contemplated by this Contract and to
carry out its obligations hereunder and under the Guides and under such other
agreements.
This Contract has been duly authorized, executed and delivered by each
party and constitutes a valid and legally binding agreement of each party
enforceable in accordance with its terms.
There is no action, proceeding or investigation pending or threatened,
and no basis therefor is known to either party, that could affect the validity
or prospective validity of this Contract.
Insofar as its capacity to carry out any obligation under this
Contract is concerned, neither party is in violation of any charter, articles of
incorporation, bylaws, mortgage, indenture, indebtedness, agreement, instrument,
judgment, decree, order, statute, rule or regulation and none of the foregoing
adversely affects its capacity to fulfill any of its obligations under this
Contract. Its execution of, and performance pursuant to, this Contract will not
result in a violation of any of the foregoing.
B. Seller/Servicer's Representations, Warranties and Covenants.
In addition to the representations, warranties and covenants made by
the Seller/Servicer pursuant to subparagraph (a) of this paragraph 3, the
Seller/Servicer makes the representations, warranties and covenants set forth in
the Guides and, upon request, agrees to deliver to Residential Funding the
certified Resolution of Board of Directors which authorizes the execution and
delivery of this Contract.
ARTICLE IV
Remedies of Residential Funding.
If an Event of Seller Default or an Event of Servicer Default shall
occur, Residential Funding may, at its option, exercise one or more of those
remedies set forth in the Guides.
C-2
ARTICLE V
Seller/Servicer's Status as Independent Contractor.
At no time shall the Seller/Servicer represent that it is acting as an
agent of Residential Funding. The Seller/Servicer shall, at all times, act as an
independent contractor.
ARTICLE VI
Prior Agreements Superseded.
This Contract restates, amends and supersedes any and all prior Seller
Contracts or Servicer Contracts between the parties except that any subservicing
agreement executed by the Seller/Servicer in connection with any loan-security
exchange transaction shall not be affected.
ARTICLE VII
Assignment.
This Contract may not be assigned or transferred, in whole or in part,
by the Seller/Servicer without the prior written consent of Residential Funding.
Residential Funding may sell, assign, convey, hypothecate, pledge or in any
other way transfer, in whole or in part, without restriction, its rights under
this Contract and the Guides with respect to any Commitment or Loan.
Article VIII
Notices.
All notices, requests, demands or other communications that are to be
given under this Contract shall be in writing, addressed to the appropriate
parties and sent by facsimile or by overnight courier or by United States mail,
postage prepaid, to the addresses and facsimile numbers specified below.
However, another name, address and/or facsimile number may be substituted by the
Seller/Servicer pursuant to the requirements of this paragraph 8, or Residential
Funding pursuant to an amendment to the Guides.
If to Residential Funding, notices must be sent to the appropriate
address or facsimile number specified in the Guides.
If to the Seller/Servicer, notice must be sent to:
Attention:
Facsimile Number: (___) ___-___
ARTICLE IX
Jurisdiction and Venue.
Each of the parties irrevocably submits to the jurisdiction of any
state or federal court located in Hennepin County, Minnesota, over any action,
suit or proceeding to enforce or defend any right under this Contract or
otherwise arising from any loan sale or servicing
C-3
relationship existing in connection with this Contract, and each of the parties
irrevocably agrees that all claims in respect of any such action or proceeding
may be heard or determined in such state or federal court. Each of the parties
irrevocably waives the defense of an inconvenient forum to the maintenance of
any such action or proceeding and any other substantive or procedural rights or
remedies it may have with respect to the maintenance of any such action or
proceeding in any such forum. Each of the parties agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in any
other jurisdiction by suit on the judgment or in any other manner provided by
law. Each of the parties further agrees not to institute any legal actions or
proceedings against the other party or any director, officer, employee,
attorney, agent or property of the other party, arising out of or relating to
this Contract in any court other than as hereinabove specified in this paragraph
9.
ARTICLE X
Miscellaneous.
This Contract, including all documents incorporated by reference
herein, constitutes the entire understanding between the parties hereto and
supersedes all other agreements, covenants, representations, warranties,
understandings and communications between the parties, whether written or oral,
with respect to the transactions contemplated by this Contract. All paragraph
headings contained herein are for convenience only and shall not be construed as
part of this Contract. Any provision of this Contract that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction, and, to this end, the provisions hereof are
severable. This Contract shall be governed by, and construed and enforced in
accordance with, applicable federal laws and the laws of the State of Minnesota.
[Signature Page Follows]
C-4
IN WITNESS WHEREOF, the duly authorized officers of the
Seller/Servicer and Residential Funding have executed this Seller/Servicer
Contract as of the date first above written.
ATTEST: SELLER/SERVICER
[Corporate Seal]
(If none, so state.)
--------------------------------
(Name of Seller/Servicer)
By:
---------------------------------
(Signature)
By:
---------------------------------------- ---------------------------------
(Typed Name) (Typed Name)
Title: Title:
---------------------------------- ------------------------------
ATTEST: RESIDENTIAL FUNDING CORPORATION
By:
---------------------------------
(Signature)
By:
---------------------------------------- ---------------------------------
(Typed Name) (Typed Name)
Title: Title:
---------------------------------- ------------------------------
EXHIBIT D
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is dated [__________ __,
20__], between ____________ ("Assignor"), and ____________ ("Assignee").
For and in consideration of the sum of TEN DOLLARS ($10.00) and other
valuable consideration the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
The Assignor hereby grants, transfers and assigns to Assignee all of
the right, title and interest of the Assignor, as Owner in, to and under that
certain Reference Agreement, Adjustable Rate Mortgage Loans, Series 20__-WH__
(the "Servicing Agreement"), dated as of [__________ __, 20__], by and between
Residential Funding Corporation (the "Company") and ___________________________
the Mortgage Loans delivered thereunder by the Company to the Assignor; [AND
THAT CERTAIN CUSTODIAL AGREEMENT, SERIES 20__-WH__ (THE "CUSTODIAL AGREEMENT"),
DATED [__________ __, 20__], BY AND AMONG ____________________________ AND XXXXX
FARGO BANK, N.A., AS CUSTODIAN].
The Assignor warrants and represents to, and covenants with, the
Assignee that:
(a) The Assignor is the lawful owner of the Mortgage Loans with the
full right to transfer such Mortgage Loans, which transfer is made subject to
the terms and provisions of the Servicing Agreement but free from any other
claims and encumbrances;
(b) The Assignor has not received notice of, and has no knowledge of,
any offsets, counterclaims or other defenses available to the Company with
respect to the Servicing Agreement or the Mortgage Loans;
(c) Unless noted below, the Assignor has not waived or agreed to any
waiver under, or agreed to any amendment or other modification of, the Servicing
Agreement, the Custodial Agreement or the Mortgage Loans, including without
limitation the transfer of the servicing obligations under the Servicing
Agreement. The Assignor has no knowledge of, and has not received notice of, any
waivers under or amendments or other modifications of, or assignments of rights
or obligations under, the Servicing Agreement, the Custodial Agreement or the
Mortgage Loans; and
(d) Neither the Assignor nor anyone acting on its behalf has offered,
transferred, pledged sold or otherwise disposed of the Mortgage Loans or any
interest in the Mortgage Loans to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Mortgage Loans or any interest in
the Mortgage Loans from, or otherwise approached or negotiated with respect to
the Mortgage Loans, any interest in the Mortgage Loans with, any Person in any
manner, or made any general solicitation by means of general advertising or in
any other manner, or taken any other action which would constitute a
distribution of the Mortgage
D-1
Loans under the Securities Act of 1933 (the "Securities Act") or which would
render the disposition of the Mortgage Loans a violation of Section 5 of the
Securities Act or require registration pursuant thereto.
The Assignee represents and warrants to, and covenants with, the
Assignor and the Company pursuant to Section 2.03 of the Servicing Agreement
that:
(a) The Assignee agrees to be bound, as Owner by all of the terms,
covenants and conditions of the Servicing Agreement, the Mortgage Loans and the
Custodial Agreement and from and after the date hereof, the Assignee assumes for
the benefit of each of the Company and the Assignor all of the Assignor's
obligations as Owner thereunder;
(b) Assignee understands that the Mortgage Loans have not been
registered under the Securities Act or the securities laws of any state.
Assignee is acquiring the Mortgage Loans for investment for its own account only
and not with a view to or for sale or other transfer in connection with any
distribution of the Mortgage Loans in any manner that would violate the
Securities Act or any applicable state securities law. Assignee considers itself
a substantial, sophisticated institutional investor having such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of investment in the Mortgage Loans. Assignee has been
furnished with all information regarding the Mortgage Loans that it has
requested from Assignor or the Company. Neither the Assignee nor anyone acting
on its behalf has offered, transferred, pledged, sold or otherwise disposed of
the Mortgage Loans, any interest in the Mortgage Loans to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the Mortgage
Loans, any interest in the Mortgage Loans from, or otherwise approached or
negotiated with respect to the Mortgage Loans, any interest in the Mortgage
Loans with, any Person in any manner, or made any general solicitation by means
of general advertising or in any other manner or taken any other action, which
would constitute a distribution of the Mortgage Loans under the Securities Act
or which would render the disposition of the Mortgage Loans a violation of
Section 5 of the Securities Act or require registration pursuant thereto, nor
will it act, nor has it authorized or will it authorize any person to act, in
such manner with respect to the Mortgage Loans;
(c) The Assignee is either (i) not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or Section 4975 of the Internal Revenue Code of 1986 (the "Code")(a
"Plan") and not a Person acting, directly or indirectly, on behalf of or
investing with "plan assets" of any such Plan or (ii) an employee benefit plan
that is subject to ERISA and the assignment contemplated herein does not
constitute and will not result in a non-exempt prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code; and
(d) The Assignee shall indemnify the Company and hold it harmless
against any loss, liability or expense incurred in connection with any claim,
demand, defense or assertion based on or grounded upon or resulting from, a
breach of the Assignee's representations, warranties and covenants set forth in
this Assignment and Assumption Agreement.
(h) The Assignee's address for purposes of all notices and
correspondence related to the Mortgage Loans and the Servicing Agreement is:
D-2
[Assignee's address]
Attention:
Telephone:
Fax:
Email:
The Assignee's wire transfer instructions for purposes of all
remittances and payments related to the Mortgage Loans and the Servicing
Agreement is:
For the account of
ABA#:
A/C#:
A/C Name:
Taxpayer ID#:
From and after the date hereof, the Company shall note the transfer of
the Mortgage Loans to the Assignee in its books and records and the Company
shall recognize the Assignee as the owner of the Mortgage Loans. The Company
hereby agrees that it shall continue to provide information pursuant to Section
4.02(vii) of the Standard Terms (as defined in the Servicing Agreement) to the
Assignor following the date hereof. The Company acknowledges that the Mortgage
Loans may become part of a REMIC and the Company shall service the Mortgage
Loans in accordance with the Servicing Agreement, the terms of which are
incorporated herein by reference, but in no event in a manner that would (i)
cause any REMIC to fail to qualify as a REMIC or (ii) result in the imposition
of a tax upon any REMIC (including but not limited to the tax on prohibited
transactions as defined in Section 860F(a)(2) of the Code and the tax on
contributions to a REMIC set forth in Section 860G(d) of the Code). It is the
intention of the Assignor, the Company and the Assignee that the Servicing
Agreement shall be binding upon and inure to the benefit of the Company and the
Assignee and their respective successors and assigns.
[Signature Page Follows]
D-3
Capitalized words and phrases used but not otherwise defined in this
Assignment and Assumption Agreement shall have the respective meanings assigned
to them in the Servicing Agreement.
IN WITNESS WHEREOF, the parties have caused this Assignment and
Assumption Agreement to be executed by their duly authorized officers as of the
date first above written.
-------------------------------------- --------------------------------------
Assignor Assignee
By: By:
---------------------------------- ----------------------------------
Name: Name:
-------------------------------- --------------------------------
Title: Title:
------------------------------- -------------------------------
Taxpayer
Identification No.____________________
EXHIBIT E
FORM OF CERTIFICATION
____________ ___, ____
Residential Funding Corporation
0000 Xxxxxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Re: Adjustable Rate Mortgage Loans,
Series [20__-WH__] - Assignment of Mortgage Loan
Ladies and Gentlemen:
This letter is delivered to you in connection with the assignment by
(the "Owner") to ____________ (the "Lender") of ____________ (the "Mortgage
Loan") pursuant to Section 3.11(d) of the Sale and Servicing Agreement (the
"Sale and Servicing Agreement"), dated as of [__________ __, 20__], among
Residential Funding Corporation, as company (the "Company") and
____________________________, as Initial Owner. All terms used herein and not
otherwise defined shall have the meanings set forth in the Sale and Servicing
Agreement. The Lender hereby certifies, represents and warrants to, and
covenants with, the Company and the Custodian that:
(i) the Mortgage Loan is secured by Mortgaged Property located in a
jurisdiction in which an assignment in lieu of satisfaction is required to
preserve lien priority, minimize or avoid mortgage recording taxes or otherwise
comply with, or facilitate a refinancing under, the laws of such jurisdiction;
(ii) the substance of the assignment is, and is intended to be, a
refinancing of such Mortgage Loan and the form of the transaction is solely to
comply with, or facilitate the transaction under, such local laws;
(iii) the Mortgage Loan following the proposed assignment will be
modified to have a rate of interest at least 0.25 percent below or above the
rate of interest on such Mortgage Loan prior to such proposed assignment; and
(iv) such assignment is at the request of the borrower under the
related Mortgage Loan.
Very truly yours,
LENDER
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
E-1
EXHIBIT F
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with the administration of the pool of Mortgage Loans held by you
for the referenced pool, we request the release of the Mortgage File described
below.
Sale and Servicing Agreement Dated:
Series#:
Account#:
Pool#:
Loan#:
Min#:
Borrower Name(s):
Reason for Document Request: (circle one) Mortgage Loan Prepaid in Full
Mortgage Loan Repurchased
Mortgage Loan in Foreclosure
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Sale and Servicing Agreement."
--------------------------------------
Residential Funding Corporation
Authorized Signature
TO CUSTODIAN: Please acknowledge this request, and check off documents being
enclosed with a copy of this form. You should retain this form for your files in
accordance with the terms of the Sale and Servicing Agreement.
Enclosed Documents: [_] Promissory Note
[_] Primary Insurance Policy
[_] Mortgage or Deed of Trust
[_] Assignment(s) of Mortgage or Deed of Trust
[_] Title Insurance Policy
[_] Other:________________
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Date:
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F-1
EXHIBIT G
FORMAT FOR REPORTS AND STATEMENTS
[See Attachment]
X-0
XXXXXXX X
XXXXXXXXXX XX COMPLIANCE ADDENDUM
SEE ATTACHED
H-1
EXHIBIT I
FORM OF SPECIAL FORECLOSURE RIGHTS SECTION
Notwithstanding anything in this Agreement to the contrary, for so
long as the Master Servicer has not notified the Servicer that a real estate
investment trust or one of its subsidiaries and is no longer the holder of the
entire interest in the most junior of the Subordinate Certificates is no longer
entitled to the rights described in this Section [__]:
(a) The Servicer shall not commence foreclosure proceedings with respect to
a Mortgage Loan unless (i) no later than five Business Days prior to its
commencement of such foreclosure proceedings, it notifies the Master Servicer of
its intention to do so, and (ii) the holder of the entire interest in the most
junior of the Subordinate Certificates, either directly or through the Master
Servicer, does not, within such five-Business-Day period, affirmatively object
to such action.
(b) In the event that the Servicer determines not to proceed with
foreclosure proceedings with respect to a Mortgage Loan that becomes 60 days' or
more delinquent and the Servicer has determined that it is unable to collect
payments due under such Mortgage Loan in accordance with Accepted Servicing
Practices, the Servicer shall, prior to taking any action with respect to such
Mortgage Loan, promptly provide the Master Servicer with notice of such
determination and a description of such other action as it intends to take with
respect to such Mortgage Loan; provided, that the Servicer shall not be
permitted to proceed with any such action unless the holder of the entire
interest in the most junior of the Subordinate Certificates, either directly or
through the Master Servicer, does not, within five Business Days following such
notice, affirmatively object to the Servicer taking such action.
(c) If the holder of the entire interest in the most junior of the
Subordinate Certificates timely and affirmatively objects to an action or
contemplated action of the Servicer pursuant to either (a) or (b) above, then
such holder shall instruct the Master Servicer to hire, at such holder's sole
cost and expense, three appraisal firms, selected by the Master Servicer in its
reasonable discretion, to compute the fair value of the Mortgaged Property
relating to the related Mortgage Loan utilizing the Xxxxxx Mae Form 2055
Exterior-Only Inspection Residential Appraisal Report (each such appraisal-firm
computation, a "Fair Value Price"), in each case (other than as set forth in (d)
below) no later than 30 days from the date of such holder's objection. If the
Master Servicer shall have received three Fair Value Prices by the end of such
30-day period, then the holder of the entire interest in the most junior of the
Subordinate Certificates shall, no later than 5 days after the expiration of
such 30-day period, purchase such Mortgage Loan and the related Mortgaged
Property at an amount equal to the sum of (i) accrued and unpaid interest on
such Mortgage Loan as of such purchase date ("Accrued Interest") and (ii) the
highest of such three Fair Value Prices respectively determined by such
appraisal firms, and shall promptly delivery such amount to the Servicer for
deposit into the Custodial Account. All costs relating to the computation of the
related Fair Value Prices shall be (x) set forth in an invoice delivered by the
Master Servicer, (y) for the account of the holder of the entire interest in the
most junior of the Subordinate Certificates and (z) paid to the Master Servicer
in immediately available funds by the holder of the entire interest in the most
junior of the Subordinate
I-1
Certificates at the time of such Mortgage Loan and the related Mortgaged
Property are purchased by such holder.
(d) If the Master Servicer shall not have received three Fair Value Prices
at the end of the 30-day period set forth in (c) above, then:
(i) The Master Servicer shall obtain such three Fair Value Prices no later
than 15 days after the end of such 30-day period.
(ii) If the Master Servicer shall have only received two Fair Value Prices
at the end of such 15-day extension period, then the Master Servicer will
determine, in its sole and absolute discretion, the fair value of the
Mortgaged Property relating to such Mortgage Loan, related Insurance
Proceeds and the current delinquency status of such Mortgage Loan (such
fair value, the "Master Servicer Fair Value Price"), and the holder of the
entire interest in the most junior of the Subordinate Certificates shall,
no later than 5 days after the expiration of such 15-day extension period,
purchase (and deliver to the Servicer the purchase price for) such Mortgage
Loan and the related Mortgaged Property at an amount equal to the sum of
(A) Accrued Interest thereon and (B) the higher of (1) the highest of such
two Fair Value Prices determined by such appraisal firms and (2) the Master
Servicer Fair Value Price.
(iii) If the Master Servicer shall have received only one Fair Value Price
at the end of such 15-day extension period, then the Master Servicer will
determine, in its sole and absolute discretion, the Master Servicer Fair
Value Price of the Mortgaged Property related to such Mortgage Loan, and:
(A) if such Master Servicer Fair Value Price is equal to or greater than
the unpaid principal balance of the related Mortgage Loan as of such
date (the "Unpaid Principal Balance"), then the holder of the entire
interest in the most junior of the Subordinate Certificates shall, no
later than 5 days after the expiration of such 15-day extension
period, purchase (and deliver to the Servicer the purchase price for)
such Mortgage Loan and the related Mortgaged Property at an amount
equal to the sum of (1) Accrued Interest thereon and (2) such Master
Servicer Fair Value Price; and
(B) if such Master Servicer Fair Value Price is less than the related
Unpaid Principal Balance, then the holder of the entire interest in
the most junior of the Subordinate Certificates shall, no later than 5
days after the expiration of such 15-day extension period, purchase
(and deliver to the Servicer the purchase price for) such Mortgage
Loan and the related Mortgaged Property at an amount equal to the sum
of (1) Accrued Interest thereon and (2) the related Unpaid Principal
Balance (such sum, the "Preliminary Purchase Price"); provided, that
the provisions of clause (d)(iv) shall thereafter apply.
(iv) Following the payment by the holder of the entire interest in the most
junior of the Subordinate Certificates of the Preliminary Purchase Price,
the Master Servicer shall continue to hire appraisal firms at the holder of
the entire interest in the most junior of the
Subordinate Certificates' sole cost and expense (which shall be payable by
the holder of the entire interest in the most junior of the Subordinate
Certificates to the Master Servicer in immediately available funds promptly
upon the delivery to it by the Master Servicer of an invoice with respect
thereto) to compute the Fair Value Price of the Mortgaged Property related
to such Mortgage Loan, and at such time as two such Fair Value Prices shall
have been obtained:
(A) if such Master Servicer Fair Value Price is equal to or greater than
the unpaid principal balance of the related Mortgage Loan as of such
date (the "Unpaid Principal Balance"), then the holder of the entire
interest in the most junior of the Subordinate Certificates shall, no
later than 5 days after the expiration of such 15-day extension
period, purchase (and deliver to the Servicer the purchase price for)
such Mortgage Loan and the related Mortgaged Property at an amount
equal to the sum of (1) Accrued Interest thereon and (2) such Master
Servicer Fair Value Price; and
(B) if the sum of (1) Accrued Interest on the related Mortgage Loan and
(2) the higher of (x) the highest of such two Fair Value Prices
determined by such appraisal firms and (y) the Master Servicer's Fair
Value Price of the Mortgaged Property related to such Mortgage Loan
(such sum, the "Revised Fair Value Price") is greater than such
Preliminary Purchase Price, then the Master Servicer shall promptly
notify the holder of the entire interest in the most junior of the
Subordinate Certificates and the Servicer of such calculation, and
such holder shall, no later than 5 days after such notice, remit to
the Servicer, for deposit into the Custodial Account, the difference
between such Revised Fair Value Price and such Preliminary Purchase
Price; and
(C) if such Preliminary Purchase Price is greater than such Revised Fair
Value Price, then the Master Servicer shall promptly notify the holder
of the entire interest in the most junior of the Subordinate
Certificates and the Servicer of such calculation, and the Servicer
shall, no later than 5 days after such notice, remit to such holder,
from funds then on deposit in the Custodial Account, the difference
between such Preliminary Purchase Price and such Revised Fair Value
Price.
(e) Notwithstanding anything herein to the contrary, the holder of the
entire interest in the most junior of the Subordinate Certificates shall not be
entitled to any of its rights set forth herein with respect to a Mortgage Loan
following its failure to purchase such Mortgage Loan and the related Mortgaged
Property, at the related purchase price set forth in this Section [__] within
the timeframe set forth in this Section [__] following such holder's objection
to an action of the Servicer, and the Servicer shall provide the Master Servicer
written notice of such failure. Moreover, the holder of the entire interest in
the most junior of the Subordinate Certificates shall not be entitled to the
foregoing rights if any of the Subordinate Certificates are held by entities
that are unaffiliated with such holder.
(f) Any notice, confirmation, instruction or objection pursuant to
paragraphs (a), (b), (c) and (d) above may be delivered via facsimile or other
written or electronic communication as
the parties hereto and the holder of the entire interest in the most junior of
the Subordinate Certificates may agree to from time to time.
(g) For the avoidance of doubt, the holder of the entire interest in the
most junior of the Subordinate Certificates' rights set forth in this Section
[__] are intended to provide such holder, for so long as it has not forfeited
its right under this Section [__] as set forth in clause (e) above, with the
unilateral right to control foreclosure decisions in respect of delinquent and
defaulted Mortgage Loans, and certain exclusive purchase rights so as to
maximize the recovery value on delinquent and defaulted Mortgage Loans.
(h) The holder of the entire interest in the most junior of the Subordinate
Certificates as of the Closing Date is [_________]. Any notice delivered by such
holder (or any other holder of the entire interest in the most junior of the
Subordinate Certificates), either directly or through the Master Servicer, shall
be accompanied by an officer's certificate of such holder certifying to the
Servicer that it is the holder of the entire interest in the most junior of the
Subordinate Certificates and shall attach thereto (A) if the Subordinate
Certificate is registered in the name of a nominee of the Depository Trust
Company, an account statement through the applicable broker-dealer or such other
evidence as the Servicer shall reasonably request or (B) if the Subordinate
Certificate is held in physical form, the trade confirmation with respect to
such Subordinate Certificate or such other evidence as the Servicer shall
reasonably request. For purposes of this Section [__], the Servicer shall be
entitled to rely on any notice delivered by [_______________] until a notice
(together with an officer's certificate and the supporting evidence of ownership
set forth in the immediately preceding sentence) is delivered to the Servicer by
any subsequent holder of the entire interest in the most junior of the
Subordinate Certificates.
(i) To the extent that the holder of the entire interest in the most junior
of the Subordinate Certificates purchases any Mortgage Loan pursuant to this
Section [__], the Servicer will continue to service such Mortgage Loan in
accordance with this Agreement. The parties acknowledge that, in such event, the
Master Servicer will have no duty or responsibility to master service any such
Mortgage Loan.
EXHIBIT H
ARTICLE I
DEFINED TERMS
Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Agreement. The following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
Commission: The United States Securities and Exchange Commission.
Company Information: As defined in Section 2.07(a).
Depositor: The depositor, as such term is defined in Regulation AB,
with respect to any Securitization Transaction.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Master Servicer: With respect to any Securitization Transaction, the
"master servicer," if any, identified in the related transaction documents.
Qualified Correspondent: Any Person from which the Company purchased
Mortgage Loans, provided that the following conditions are satisfied: (i) such
Mortgage Loans were originated pursuant to an agreement between the Company and
such Person that contemplated that such Person would underwrite mortgage loans
from time to time, for sale to the Company, in accordance with underwriting
guidelines designated by the Company ("Designated Guidelines") or guidelines
that do not vary materially from such Designated Guidelines; (ii) such Mortgage
Loans were in fact underwritten as described in clause (i) above and were
acquired by the Company within 180 days after origination; (iii) either (x) the
Designated Guidelines were, at the time such Mortgage Loans were originated,
used by the Company in origination of mortgage loans of the same type as the
Mortgage Loans for the Company's own account or (y) the Designated Guidelines
were, at the time such Mortgage Loans were underwritten, designated by the
Company on a consistent basis for use by lenders in originating mortgage loans
to be purchased by the Company; and (iv) the Company employed, at the time such
Mortgage Loans were acquired by the Company, pre-purchase or post-purchase
quality assurance procedures (which may involve, among other things, review of a
sample of mortgage loans purchased during a particular time period or through
particular channels) designed to ensure that Persons from which it purchased
mortgage loans properly applied the underwriting criteria designated by the
Company.
Reconstitution: Any Securitization Transaction or Whole Loan Transfer.
Reconstitution Agreement: An agreement entered into by the Company and
the Purchaser and/or certain third parties in connection with a Reconstitution
with respect to any or all of the Mortgage Loans serviced under this Agreement.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation
AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from time to
time, and subject to such clarification and interpretation as have been provided
by the Commission in the adopting release (Asset-Backed Securities, Securities
Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the
staff of the Commission, or as may be provided by the Commission or its staff
from time to time.
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction: Any transaction involving either (1) a sale
or other transfer of some or all of the Mortgage Loans directly or indirectly to
an issuing entity in connection with an issuance of publicly offered or
privately placed, rated or unrated mortgage-backed securities or (2) an issuance
of publicly offered or privately placed, rated or unrated securities, the
payments on which are determined primarily by reference to one or more
portfolios of residential mortgage loans consisting, in whole or in part, of
some or all of the Mortgage Loans.
Servicer: As defined in Section 2.03(c).
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d)
of Regulation AB, as such may be amended from time to time.
Static Pool Information: Static pool information as described in Item
1l05(a)(l)-(3) and 1105(c) of Regulation AB.
Subcontractor: Any vendor, subcontractor or other Person that is not
responsible for the overall servicing (as "servicing" is commonly understood by
participants in the mortgage-backed securities market) of Mortgage Loans but
performs one or more discrete functions identified in Item l122( d) of
Regulation AB with respect to Mortgage Loans under the direction or authority of
the Company or a Subservicer.
Subservicer: Any Person that services Mortgage Loans on behalf of the
Company or any Subservicer and is responsible for the performance (whether
directly or through Subservicers or Subcontractors) of a substantial portion of
the material servicing functions required to be performed by the Company under
this Agreement or any Reconstitution Agreement that are identified in Item
1122(d) of Regulation AB.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans, other than a Securitization Transaction.
ARTICLE II
COMPLIANCE WITH REGULATION AB
Section 2.01. Intent of the Parties; Reasonableness.
The Purchaser and the Company acknowledge and agree that the purpose of
Article II of this Reg AB Addendum is to facilitate compliance by the Purchaser
and any Depositor with the provisions of Regulation AB and related rules and
regulations of the Commission and that the provisions of this Reg AB Addendum
shall be applicable to all Mortgage Loans included in a Securitization
Transaction closing on or after January 1, 2006, regardless whether the Mortgage
Loans were purchased by the Purchaser from the Company prior to the date hereof.
Although Regulation AB is applicable by its terms only to offerings of
asset-backed securities that are registered under the Securities Act, the
Company acknowledges that investors in privately offered securities may require
that the Purchaser or any Depositor provide comparable disclosure in
unregistered offerings. References in this Agreement to compliance with
Regulation AB include provision of comparable disclosure in private offerings.
Neither the Purchaser nor any Depositor shall exercise its right to
request delivery of information or other performance under these provisions
other than in good faith, or for purposes other than compliance with the
Securities Act, the Exchange Act and the rules and regulations of the Commission
thereunder (or the provision in a private offering of disclosure comparable to
that required under the Securities Act). The Company acknowledges that
interpretations of the requirements of Regulation AB may change over time,
whether due to interpretive guidance provided by the Commission or its staff,
consensus among participants in the asset-backed securities markets, advice of
counsel, or otherwise, and agrees to comply with requests made by the Purchaser,
any Master Servicer or any Depositor in good faith for delivery of information
under these provisions on the basis of evolving interpretations of Regulation
AB. In connection with any Securitization Transaction, the Company shall
cooperate fully with the Purchaser and any Master Servicer to deliver to the
Purchaser (including any of its assignees or designees), any Master Servicer and
any Depositor, any and all statements, reports, certifications, records and any
other information necessary in the good faith determination of the Purchaser,
the Master Servicer or any Depositor to permit the Purchaser, such Master
Servicer or such Depositor to comply with the provisions of Regulation AB,
together with such disclosures relating to the Company, any Subservicer and the
Mortgage Loans, or the servicing of the Mortgage Loans, reasonably believed by
the Purchaser or any Depositor to be necessary in order to effect such
compliance.
The Purchaser (including any of its assignees or designees) shall
cooperate with the Company by providing timely notice of requests for
information under these provisions and by reasonably limiting such requests to
information required to comply with Regulation AB.
Section 2.02. Additional Representations and Warranties of the Company.
(a) The Company hereby represents to the Purchaser, to any Master
Servicer and to any Depositor, as of the date on which information is first
provided to the Purchaser or any Depositor under Section 2.03 that, except as
disclosed in writing to the Purchaser or such Depositor prior to such date: (i)
the Company is not aware and has not received notice that any default, early
amortization or other performance triggering event has occurred as to any other
Securitization Transaction due to any default by the Company as a Servicer; (ii)
the Company has not been terminated as servicer in a residential mortgage loan
securitization due to a servicing default; (iii) no material noncompliance with
the applicable Servicing Criteria with respect to other securitizations of
residential mortgage loans involving the Company as servicer has been disclosed
or reported by the Company; (iv) no material changes to the Company's policies
or procedures with respect to the servicing function it will perform under this
Agreement and any Reconstitution Agreement for mortgage loans of a type similar
to the Mortgage Loans have occurred during the three-year period immediately
preceding the related Securitization Transaction; (v) there are no changes to
the Company's financial condition that could have a material adverse effect on
the performance by the Company of its servicing obligations under this
Agreement; (vi) there are no legal or governmental proceedings pending (or
governmental proceedings known to be contemplated) against the Company or any
Subservicer that are material to investors in the related Securitization
Transaction; (vii) there are no affiliations, relationships or transactions
relating to the Company or any Subservicer with respect to any Securitization
Transaction and any party thereto identified by the related Depositor of a type
described in Item 1119 of Regulation AB; and (viii) each Mortgage Loan was
originated by a Qualified Correspondent.
(b) If so requested by the Purchaser, any Master Servicer or any
Depositor on any date following the date on which information is first provided
to the Purchaser, any Master Servicer or any Depositor under Section 2.03, the
Company shall, within five Business Days following such request, confirm in
writing the accuracy of the representations and warranties set forth in
paragraph (a) of this Section or, if any such representation and warranty is not
accurate as of the date of such request, provide reasonably adequate disclosure
of the pertinent facts, in writing, to the requesting party.
Section 2.03. Information to Be Provided by the Company.
In connection with any Securitization Transaction, the Company shall
(i) within five Business Days following a request by the Purchaser or any
Depositor, provide to the Purchaser and such Depositor (or, as applicable, cause
each Subservicer to provide), in writing and in form and substance reasonably
satisfactory to the Purchaser and such Depositor, the information and materials
specified in paragraphs (a), (b), (c), (f) and (g) of this Section, provided,
that the Company shall not be required to provide such information and materials
with respect to a Subservicer if Regulation AB does not require disclosure of
such information and materials and (ii) as promptly as practicable following
notice to or discovery by the Company, provide to the Purchaser and any
Depositor (in writing and in form and substance reasonably satisfactory to the
Purchaser and such Depositor) the information specified in paragraph (d) of this
Section.
(a) If so requested by the Purchaser or any Depositor, the Company
shall provide such information regarding (i) the Company, as originator of the
Mortgage Loans (including as an acquirer of Mortgage Loans from a Qualified
Correspondent) and (ii) as applicable, each Subservicer, as is requested for the
purpose of compliance with Items 1103(a)(l), 1105, 1110, 1117 and 1119 of
Regulation AB. Such information shall include, at a minimum:
(A) the originator's form of organization;
(B) a description of the originator's origination program and how
long the originator has been engaged in originating residential
mortgage loans, which description shall include a discussion of the
originator's experience in originating mortgage loans of a similar type
as the Mortgage Loans; information regarding the size and composition
of the originator's origination portfolio; and information that may be
material to an analysis of the performance of the Mortgage Loans,
including the originators' credit-granting or underwriting criteria for
mortgage loans of similar type(s) as the Mortgage Loans and such other
information as the Purchaser or any Depositor may reasonably request
for the purpose of compliance with Item 1110(b)(2) of Regulation AB;
(C) a description of any legal or governmental proceedings pending
(or governmental proceedings known to be contemplated) against the
Company and each Subservicer that would be material to investors in the
related Securitization Transaction; and
(D) a description of any affiliation or relationship, as described
in Item 1119 of Regulation AB, between the Company, each Subservicer
and any of the following parties to a Securitization Transaction, as
such parties are identified to the Company by the Purchaser or any
Depositor in writing in advance of such Securitization Transaction:
(1) the sponsor;
(2) the depositor;
(3) the issuing entity;
(4) any servicer;
(5) any trustee;
(6) any originator;
(7) any significant obligor;
(8) any enhancement or support provider; and
(9) any other material transaction party.
(b) If so requested by the Purchaser or any Depositor, the Company
shall provide Static Pool Information with respect to the mortgage loans (of a
similar type as the Mortgage Loans) originated by the Company, if the Company is
an originator of Mortgage Loans (including as an acquirer of Mortgage Loans from
a Qualified Correspondent). Such Static Pool Information shall be prepared by
the Company on the basis of its reasonable, good faith interpretation of the
requirements of Item 1105(a)(1)-(3) of Regulation AB. The content of such Static
Pool Information may be in the form customarily provided by the Company, and
need not be customized for the Purchaser or any Depositor. Such Static Pool
Information for each vintage origination year or prior securitized pool, as
applicable, shall be presented in increments no less frequently than quarterly
over the life of the mortgage loans included in the vintage origination year or
prior securitized pool. The most recent periodic increment must be as of a date
no later than 135 days prior to the date of the prospectus or other offering
document in which the Static Pool Information is to be included or incorporated
by reference. The Static Pool Information shall be provided in an electronic
format that provides a permanent record of the information provided, such as a
portable document format (pdf) file, or other such electronic format reasonably
required by the Purchaser or the Depositor, as applicable.
Promptly following notice or discovery of a material error in Static
Pool Information provided pursuant to the immediately preceding paragraph
(including an omission to include therein information required to be provided
pursuant to such paragraph), the Company shall provide corrected Static Pool
Information to the Purchaser or any Depositor, as applicable, in the same format
in which Static Pool Information was previously provided to such party by the
Company.
If so requested by the Purchaser or any Depositor, the Company shall
provide at the expense of the requesting party (to the extent of any additional
incremental expense associated with delivery pursuant to this Agreement), such
statements and agreed-upon procedures letters of certified public accountants
reasonably acceptable to the Purchaser or Depositor, as applicable, pertaining
to Static Pool Information relating to prior securitized pools for
securitizations closed on or after January 1, 2006 or, in the case of Static
Pool Information with respect to the Company's originations or purchases, to
calendar months commencing January 1, 2006, as the Purchaser or such Depositor
shall reasonably request. Such statements and letters shall be addressed to and
be for the benefit of such parties as the Purchaser or such Depositor shall
designate, which may include, by way of example, any Sponsor, any Depositor and
any broker dealer acting as underwriter, placement agent or initial purchaser
with respect to a Securitization Transaction. Any such statement or letter may
take the form of a standard, generally applicable document accompanied by a
reliance letter authorizing reliance by the addressees designated by the
Purchaser or such Depositor.
(c) If so requested by the Purchaser or any Depositor, the Company
shall provide such information regarding the Company, as servicer of the
Mortgage Loans, and each Subservicer (each of the Company and each Subservicer,
for purposes of this paragraph, a "Servicer"), as is requested for the purpose
of compliance with Items 1108, 1117 and 1119 of Regulation AB. Such information
shall include, at a minimum:
(A) the Servicer's form of organization;
(B) a description of how long the Servicer has been servicing
residential mortgage loans; a general discussion of the Servicer's
experience in servicing assets of any type as well as a more detailed
discussion of the Servicer's experience in, and procedures for, the
servicing function it will perform under the Agreement and any
Reconstitution Agreements; information regarding the size, composition
and growth of the Servicer's portfolio of residential mortgage loans of
a type similar to the Mortgage Loans and information on factors related
to the Servicer that may be material to any analysis of the servicing
of the Mortgage Loans or the related asset-backed securities, as
applicable, including, without limitation:
(1) whether any prior securitizations of mortgage loans of a
type similar to the Mortgage Loans involving the Servicer have
defaulted because of servicing during the three-year period
immediately preceding the related Securitization Transaction;
(2) the extent of outsourcing the Servicer utilizes;
(3) whether there has been previous disclosure of material
noncompliance with the applicable servicing criteria with respect
to other securitizations of residential mortgage loans involving
the Servicer as a servicer during the three-year period immediately
preceding the related Securitization Transaction;
(4) whether the Servicer has been terminated as servicer in a
residential mortgage loan securitization due to a servicing
default; and
(5) such other information as the Purchaser or any Depositor
may reasonably request for the purpose of compliance with Item
1108(b)(2) of Regulation AB;
(C) a description of any material changes during the three-year
period immediately preceding the related Securitization Transaction to
the Servicer's policies or procedures with respect to the servicing
function it will perform under the Agreement and any Reconstitution
Agreements for mortgage loans of a type similar to the Mortgage Loans;
(D) information regarding the Servicer's financial condition, to
the extent that there is a material risk that an adverse financial
event or circumstance involving the Servicer could have a material
adverse effect on the performance by the Company of its servicing
obligations under the Agreement or any Reconstitution Agreement;
(E) a statement by an authorized officer of the Servicer to the
effect that the Servicer has made all advances required to be made on
residential mortgage loans serviced by it during the three-year period
immediately preceding the related Securitization Transaction, or, if
such statement would not be accurate, information regarding the
percentage and type of advances not made as required, and the reasons
for such failure to advance;
(F) a description of the Servicer's processes and procedures
designed to address any special or unique factors involved in servicing
loans of a similar type as the Mortgage Loans;
(G) a description of the Servicer's processes for handling
delinquencies, losses, bankruptcies and recoveries, such as through
liquidation of mortgaged properties, sale of defaulted mortgage loans
or workouts; and
(H) information as to how the Servicer defines or determines
delinquencies and charge-offs, including the effect of any grace
period, re-aging, restructuring, partial payments considered current or
other practices with respect to delinquency and loss experience.
(d) For the purpose of satisfying the reporting obligation under the
Exchange Act with respect to any class of asset-backed securities, for so long
as the Depositor is required to file reports under the Exchange Act with respect
to a Securitization Transaction, the Company shall (or shall cause each
Subservicer to) (i) provide prompt notice to the Purchaser, any Master Servicer
and any Depositor in writing of (A) any litigation or governmental proceedings
involving the Company or any Subservicer that would be material to investors in
the related Securitization Transaction, (B) any affiliations or relationships of
the type described in Item 1119 of Regulation AB that develop following the
closing date of a Securitization Transaction between the Company or any
Subservicer and any of the parties specified in clause (D) of paragraph (a) of
this Section (and any other parties identified in writing by the requesting
party) with respect to such Securitization Transaction, (C) any Event of Default
under the terms of this Agreement or any Reconstitution Agreement, (D) any
merger, consolidation or sale of substantially all of the assets of the Company,
and (E) the Company's entry into a material agreement after the applicable
closing date with a Subservicer to perform or assist in the performance of any
of the Company's obligations under this Agreement or any Reconstitution
Agreement and (ii) provide to the Purchaser and any Depositor a description of
such proceedings, affiliations or relationships.
(e) As a condition to the succession to the Company or any Subservicer
as a servicer or subservicer of at least 10% of the pool assets in a
Securitization Transaction or sub-pool thereof under the Agreement or any
Reconstitution Agreement by any Person (i) into which the Company or such
Subservicer may be merged or consolidated, or (ii) which may be appointed as a
successor to the Company or any Subservicer, the Company shall provide to the
Purchaser, any Master Servicer, and any Depositor, at least 15 calendar days
prior to the effective date of such succession or appointment, (x) written
notice to the Purchaser and any Depositor of such succession or appointment and
(y) in writing and in form and substance reasonably satisfactory to the
Purchaser and such Depositor, all information reasonably requested by the
Purchaser or any Depositor in order to comply with its reporting obligation
under Item 6.02 of Form 8-K with respect to any class of asset-backed
securities.
(f) In addition to such information as the Company, as servicer, is
obligated to provide pursuant to other provisions of the Agreement, not later
than ten days prior to the deadline for the filing of any distribution report on
Form 10-D in respect of any Securitization Transaction that includes any of the
Mortgage Loans serviced by the Company or any Subservicer, the Company or such
Subservicer, as applicable, shall, to the extent the Company or such Subservicer
has knowledge, provide to the party responsible for filing such report
(including, if applicable, the Master Servicer) notice of the occurrence of any
of the following events along with all information, data, and materials related
thereto as may be required to be included in the related distribution report on
Form 10-D (as specified in the provisions of Regulation AB referenced below):
(i) any material modifications, extensions or waivers of pool asset
terms, fees, penalties or payments during the distribution period or
that have cumulatively become material over time (Item 1121(a)(11) of
Regulation AB);
(ii) material breaches of pool asset representations or warranties
or transaction covenants (Item 1121(a)(12) of Regulation AB); and
(iii) information regarding any material pool asset changes (such
as additions, substitutions or repurchases) (Item 1121(a)(14) of
Regulation AB).
(g) The Company shall provide to the Purchaser, any Master Servicer and
any Depositor, upon request evidence of the authorization of the person signing
any certification or statement, copies or other evidence of Fidelity Bond
Insurance and Errors and Omissions Insurance policy, publicly available
financial information and reports, and such other information reasonably related
to the Company's or such Subservicer's performance hereunder.
(h) In the event that (i) the Company does not reasonably believe that
certain information requested under Section 2.03 is required to be disclosed
pursuant to Regulation AB and (ii) the Company has not provided such information
for any of its own securitizations, the Purchaser shall pay all reasonable
documented costs incurred by the Company in connection with the preparation and
delivery of such information, and the Company shall promptly deliver such
information after expiration of a reasonable period of time for establishing the
necessary systems and procedures to produce such information. Further,
notwithstanding anything to the contrary herein, when determining if information
is required under Regulation AB, all threshold and other requirements shall be
determined solely by looking at the Company's mortgage loans and those of its
third-party originators. The Company shall have no obligation with respect to
disclosure or reporting under Regulation AB in the event that the aggregation of
its third-party originated Mortgage Loans with those of the Purchaser's other
sellers require additional disclosure; provided, however, the Company shall
otherwise cooperate with the Purchaser to provide disclosure or reporting under
Regulation AB in the event that such disclosure or reporting is required under
Regulation AB and not otherwise available to the Purchaser.
Section 2.04. Servicer Compliance Statement.
On or before March 15 of each calendar year, commencing in 2007, the
Company shall deliver to the Purchaser, any Master Servicer and any Depositor a
statement of compliance addressed to the Purchaser, such Master Servicer and
such Depositor and signed by an authorized officer of the Company, to the effect
that (i) a review of the Company's activities during the immediately preceding
calendar year (or applicable portion thereof) and of its performance under the
Agreement and any applicable Reconstitution Agreement during such period has
been made under such officer's supervision, and (ii) to the best of such
officers' knowledge, based on such review, the Company has fulfilled all of its
obligations under the Agreement and any applicable Reconstitution Agreement in
all material respects throughout such calendar year (or applicable portion
thereof) or, if there has been a failure to fulfill any such obligation in any
material respect, specifically identifying each such failure known to such
officer and the nature and the status thereof.
Section 2.05. Report on Assessment of Compliance and Attestation.
(a) On or before March 15 of each calendar year when the Depositor is
required to file reports under the Exchange Act with respect to the related
Securitization Transaction commencing in 2007, the Company shall:
(i) deliver to the Purchaser, any Master Servicer and any Depositor
a report (in form and substance reasonably satisfactory to the
Purchaser, such Master Servicer and such Depositor) regarding the
Company's assessment of compliance with the Servicing Criteria during
the immediately preceding calendar year, as required under Rules 13a-18
and 15d-18 of the Exchange Act and Item 1122 of Regulation AB. Such
report shall be signed by an authorized officer of the Company, and
shall address each of the "Applicable Servicing Criteria" specified on
Exhibit B hereto;
(ii) deliver to the Purchaser, any Master Servicer and any
Depositor a report of a registered public accounting firm reasonably
acceptable to the Purchaser, such Master Servicer and such Depositor
that attests to, and reports on, the assessment of compliance made by
the Company and delivered pursuant to the preceding paragraph. Such
attestation shall be in accordance with Rules 1-02(a)(3) and 2-02(g) of
Regulation S-X under the Securities Act and the Exchange Act;
(iii) cause each Subservicer and each Subcontractor determined by
the Company pursuant to Section 2.06(b) to be "participating in the
servicing function" within the meaning of Item 1122 of Regulation AB to
deliver to the Purchaser, any Master Servicer and any Depositor an
assessment of compliance and accountants' attestation as and when
provided in paragraphs (a) and (b) of this Section; and
(iv) deliver, and cause each Subservicer and Subcontractor
described in clause (iii) to provide, to the Purchaser, any Depositor,
any Master Servicer and any other Person that will be responsible for
signing the certification (a "Sarbanes Certification") required by
Rules 13a-14(d) and 15d-14(d) under the Exchange Act (pursuant to
Section 302 of the Xxxxxxxx-Xxxxx Act of 2002) on behalf of an
asset-backed issuer with respect to a Securitization Transaction a
certification, signed by the appropriate officer of the Company, in the
form attached hereto as Exhibit A.
The Company acknowledges that the parties identified in clause (a)(iv) above may
rely on the certification provided by the Company pursuant to such clause in
signing a Sarbanes Certification and filing such with the Commission. Neither
the Purchaser nor any Depositor will request delivery of a certification under
clause (a)(iv) above unless a Depositor is required under the Exchange Act to
file an annual report on Form 10-K with respect to an issuing entity whose asset
pool includes Mortgage Loans.
(b) Each assessment of compliance provided by a Subservicer pursuant to
Section 2.05(a)(iii) shall address each of the Servicing Criteria specified on a
certification substantially in the form of Exhibit B hereto delivered to the
Purchaser concurrently with the execution of this Reg AB Addendum or, in the
case of a Subservicer subsequently appointed as such, on or prior to the date of
such appointment. An assessment of compliance provided by a Subcontractor
pursuant to Section 2.05(a)(iii) need not address any elements of the Servicing
Criteria other than those specified by the Company pursuant to Section 2.06.
Section 2.06. Use of Subservicers and Subcontractors.
The Company shall not hire or otherwise utilize the services of any
Subservicer "participating in the Servicing function" within the meaning of Item
1122 of Regulation AB, to fulfill any of the obligations of the Company as
servicer under the Agreement or any Reconstitution Agreement unless the Company
complies with the provisions of paragraph (a) of this Section. The Company shall
not hire or otherwise utilize the services of any Subcontractor "participating
in the Servicing function" within the meaning of Item 1122 of Regulation AB, and
shall not permit any Subservicer to hire or otherwise utilize the services of
any such Subcontractor to fulfill any of the obligations of the Company as
servicer under the Agreement or any Reconstitution Agreement unless the Company
complies with the provisions of paragraph (b) of this Section.
(a) It shall not be necessary for the Company to seek the consent of
the Purchaser, any Master Servicer or any Depositor to the utilization of any
Subservicer. The Company shall cause any Subservicer used by the Company (or by
any Subservicer) for the benefit of the Purchaser and any Depositor to comply
with the provisions of this Section and with Sections 2.02, 2.03( c), (e), (f)
and (g), 2.04, 2.05 and 2.07 of this Reg AB Addendum to the same extent as if
such Subservicer were the Company, to the extent required under Regulation AB,
and to provide the information required with respect to such Subservicer under
Section 2.03(d) of this Reg AB Addendum. The Company shall be responsible for
obtaining from each Subservicer and delivering to the Purchaser and any
Depositor any servicer compliance statement required to be delivered by such
Subservicer under Section 2.04 and Regulation AB, any assessment of compliance
and attestation required to be delivered by such Subservicer under Section 2.05
and Regulation AB and any certification required to be delivered to the Person
that will be responsible for signing the Sarbanes Certification under Section
2.05 as and when required to be delivered under Regulation AB.
(b) It shall not be necessary for the Company to seek the consent of
the Purchaser, any Master Servicer or any Depositor to the utilization of any
Subcontractor. If required under Regulation AB, the Company shall promptly upon
request provide to the Purchaser, any Master Servicer and any Depositor (or any
designee of the Depositor, such as an administrator) a written description (in
form and substance reasonably satisfactory to the Purchaser, such Depositor and
such Master Servicer) of the role and function of each Subcontractor utilized by
the Company or any Subservicer, specifying (i) the identity of each such
Subcontractor, (ii) which (if any) of such Subcontractors are "participating in
the servicing function" within the meaning of Item 1122 of Regulation AB, and
(iii) which elements of the Servicing Criteria will be addressed in assessments
of compliance provided by each Subcontractor identified pursuant to clause (ii)
of this paragraph.
As a condition to the utilization of any Subcontractor determined to be
"participating in the servicing function" within the meaning of Item 1122 of
Regulation AB, the Company shall cause any such Subcontractor used by the
Company (or by any Subservicer) for the benefit of the Purchaser and any
Depositor to comply with the applicable provisions of Sections 2.05 and 2.07 of
this Reg AB Addendum. The Company shall be responsible for obtaining from each
Subcontractor and delivering to the Purchaser and any Depositor any assessment
of compliance and attestation and the other certifications required to be
delivered by such Subservicer and such Subcontractor under Section 2.05, in each
case as and when required to be delivered under Regulation AB.
Section 2.07. Indemnification; Remedies.
(a) The Company shall indemnify the Purchaser, each affiliate of the
Purchaser, and each of the following parties participating in a Securitization
Transaction: each sponsor and issuing entity; each Person (including, but not
limited to, any Master Servicer if applicable) responsible for the preparation,
execution or filing of any report required to be filed with the Commission with
respect to such Securitization Transaction, or for execution of a certification
pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect
to such Securitization Transaction; each broker dealer acting as underwriter,
placement agent or initial purchaser, each Person who controls any of such
parties or the Depositor (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act); and the respective present and former
directors, officers, employees, agents and affiliates of each of the foregoing
and of the Depositor (each, a "Purchaser Indemnified Party"), and shall hold
each of them harmless from and against any losses, damages, penalties, fines,
forfeitures, reasonable legal fees and expenses and related costs, judgments,
and any other costs, fees and expenses that any of them may sustain arising out
of or based upon:
(i) (A) any untrue statement of a material fact contained or
alleged to be contained in any information, report, certification, data
or other material provided under this Article II by or on behalf of the
Company, or provided under this Article II by or on behalf of any
Subservicer or Subcontractor (collectively, the "Company Information"),
or (B) the omission or alleged omission to state in the Company
Information a material fact required to be stated in the Company
Information or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, by way of clarification, that clause (B) of this
paragraph shall be construed solely by reference to the Company
Information and not to any other information communicated in connection
with a sale or purchase of securities, without regard to whether the
Company Information or any portion thereof is presented together with
or separately from such other information;
(ii) any breach by the Company of its obligations under this
Article II, including particularly any failure by the Company, any
Subservicer or any Subcontractor to deliver any information, report,
certification, accountants' letter or other material when and as
required under this Article II, including any failure by the Company to
identify pursuant to Section 2.06(b) any Subcontractor "participating
in the servicing function" within the meaning of Item 1122 of
Regulation AB;
(iii) any breach by the Company of a representation or warranty set
forth in Section 2.02(a) or in a writing furnished pursuant to Section
2.02(b) and made as of a date prior to the closing date of the related
Securitization Transaction, to the extent that such breach is not cured
by such closing date, or any breach by the Company of a representation
or warranty in a writing furnished pursuant to Section 2.02(b) to the
extent made as of a date subsequent to such closing date; or
(iv) the gross negligence, bad faith or willful misfeasance in the
performance of the Company's duties, or by reason of reckless disregard
of obligations and duties, under this Article II;
provided, however, that in no event, other than with respect to any
indemnification obligations of the Company relating to any Company Information
provided by the Company for inclusion in the any prospectus, prospectus
supplement, or any private placement memorandum, or in any amendment or
supplement thereto, in a Securitization Transaction, will the Company be liable
for any consequential or punitive damages pursuant to this Section 2.07, even if
advised of the possibility of such damages.
The Purchaser shall indemnify the Company, each Person who controls the
Company (within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act), and the respective present and former directors, officers,
employees, agents and affiliates of each of the foregoing (each, a "Company
Indemnified Party;" together with the Purchaser Indemnified Parties, the
"Indemnified Parties"), and shall hold each of them harmless from and against
any losses, damages, penalties, fines, forfeitures, reasonable legal fees and
expenses and related costs, judgments, and any other costs, fees and expenses
that any of them may sustain arising out of or based upon any untrue statement
contained or alleged to be contained in any filing with the Commission or the
omission or alleged omission to state in any filing with the Commission a
material fact required to be stated or necessary to be stated in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement, alleged untrue statement, omission, or alleged omission
arose out of or was based upon any information or statement, other than the
Company Information, in a filing with the Commission.
If the indemnification provided for herein is unavailable or
insufficient to hold harmless an Indemnified Party, then the Company agrees that
it shall contribute to the amount paid or payable by such Indemnified Party as a
result of any claims, losses, damages or liabilities incurred by such
Indemnified Party in such proportion as is appropriate to reflect the relative
fault of such Indemnified Party on the one hand and the Company on the other.
In the case of any failure of performance described in clause (a)(ii)
of this Section, the Company shall promptly reimburse the Purchaser, any
Depositor, as applicable, and each Person responsible for the preparation,
execution or filing of any report required to be filed with the Commission with
respect to such Securitization Transaction, or for execution of a certification
pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect
to such Securitization Transaction, for all costs reasonably incurred by each
such party in order to obtain the information, report, certification,
accountants' letter or other material not delivered as required under Regulation
AB by the Company, any Subservicer or any Subcontractor.
This indemnification shall survive the termination of this Agreement or
the termination of any party to this Agreement.
(b) (i) Any failure by the Company, any Subservicer or any
Subcontractor to deliver any information, report, certification,
accountants' letter or other material when and as required under this
Article II, or any breach by the Company of a representation or
warranty set forth in Section 2.02(a) or in a writing furnished
pursuant to Section 2.02(b) and made as of a date prior to the closing
date of the related Securitization Transaction, to the extent that such
breach is not cured by such closing date, or any breach by the Company
of a representation or warranty in a writing furnished pursuant to
Section 2.02(b) to the extent made as of a date subsequent to such
closing date, shall immediately and automatically, without notice or
grace period, constitute an Event of Default with respect to the
Company under the Agreement and any applicable Reconstitution
Agreement, and shall entitle the Purchaser or any Depositor, as
applicable, in its sole discretion to terminate the rights and
obligations of the Company as servicer under the Agreement and/or any
applicable Reconstitution Agreement without payment (notwithstanding
anything in this Agreement or any applicable Reconstitution Agreement
to the contrary) of any compensation to the Company (and if the Company
is servicing any of the Mortgage Loans in a Securitization Transaction,
appoint a successor servicer reasonably acceptable to any Master
Servicer for such Securitization Transaction); provided that to the
extent that any provision of the Agreement and/or any applicable
Reconstitution Agreement expressly provides for the survival of certain
rights or obligations following termination of the Company as servicer,
such provision shall be given effect. Neither the Purchaser, any Master
Servicer nor any Depositor shall be entitled to terminate the rights
and obligations of the Company pursuant to this subparagraph (b)(i) if
a failure of the Company to identify a Subcontractor "participating in
the servicing function" within the meaning of Item 1122 of Regulation
AB was attributable solely to the role or functions of such
Subcontractor with respect to mortgage loans other than the Mortgage
Loans.
(ii) The Company shall promptly reimburse the Purchaser (or any
designee of the Purchaser, such as a master servicer) and any
Depositor, as applicable, for all reasonable expenses incurred by the
Purchaser (or such designee) or such Depositor, as such are incurred,
in connection with the termination of the Company as servicer and the
transfer of servicing of the Mortgage Loans to a successor servicer.
The provisions of this paragraph shall not limit whatever rights the
Purchaser or any Depositor may have under other provisions of the
Agreement and/or any applicable Reconstitution Agreement or otherwise,
whether in equity or at law, such as an action for damages, specific
performance or injunctive relief.
Section 2.08. Third-Party Beneficiary.
For purposes of this Article II and any related provisions thereto,
each Master Servicer shall be considered a third-party beneficiary of this Reg
AB Addendum, entitled to all the rights and benefits hereof as if it were a
direct party to Article II of this Agreement.
EXHIBIT A
FORM OF ANNUAL CERTIFICATION
Re: The [ ] agreement dated as of [ ], 200[ ]
(the "Agreement"), among [IDENTIFY PARTIES]
I, ________________________________, the _____________________ of [NAME
OF COMPANY] (the "Company"), certify to [the Purchaser], [the Depositor], and
the [Master Servicer] [Securities Administrator] [Trustee], and their officers,
with the knowledge and intent that they will rely upon this certification, that:
(1) I have reviewed the servicer compliance statement of the
Company provided in accordance with Item 1123 of Regulation AB (the
"Compliance Statement"), the report on assessment of the Company's
compliance with the servicing criteria set forth in Item 1122(d) of
Regulation AB and identified as the responsibility of the Company on
Exhibit B to the Regulation AB Compliance Addendum to the Agreement
(the "Servicing Criteria"), provided in accordance with Rules 13a-18
and 15d-18 under Securities Exchange Act of 1934, as amended (the
"Exchange Act") and Item 1122 of Regulation AB (the "Servicing
Assessment"), the registered public accounting firm's attestation
report provided in accordance with Rules 13a-18 and 15d-18 under the
Exchange Act and Section 1122(b) of Regulation AB (the "Attestation
Report"), and all servicing reports, officer's certificates and other
information relating to the servicing of the Mortgage Loans by the
Company during 200[ ] that were delivered by the Company to the
[Depositor] [Master Servicer] [Securities Administrator] [Trustee]
pursuant to the Agreement (collectively, the "Company Servicing
Information");
(2) Based on my knowledge, the Company Servicing Information,
taken as a whole, does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
made, in the light of the circumstances under which such statements
were made, not misleading with respect to the period of time covered by
the Company Servicing Information;
(3) Based on my knowledge, all of the Company Servicing
Information required to be provided by the Company under the Agreement
has been provided to the [Depositor] [Master Servicer] [Securities
Administrator] [Trustee];
(4) I am responsible for reviewing the activities performed by
the Company as servicer under the Agreement, and based on my knowledge
and the compliance review conducted in preparing the Compliance
Statement and except as disclosed in the Compliance Statement, the
Servicing Assessment or the Attestation Report, the Company has
fulfilled its obligations under the Agreement in all material respects;
and
(5) The Compliance Statement required to be delivered by the
Company pursuant to this Agreement, and the Servicing Assessment and
Attestation Report required to be provided by the Company and by any
Subservicer and Subcontractor pursuant to the Agreement, have been
provided to the [Depositor] [Master Servicer]. Any material instances
of noncompliance described in such reports have been disclosed to the
[Depositor] [Master Servicer]. Any material instance of noncompliance
with the Servicing Criteria has been disclosed in such reports.
Date:
------------------------------------
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
2
EXHIBIT B
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by the Servicer shall
address, at a minimum, the criteria identified as below as "Applicable Servicing
Criteria":
-----------------------------------------------------------------------------------------------------------------
APPLICABLE SERVICING
SERVICING CRITERIA CRITERIA
-----------------------------------------------------------------------------------------------------------------
REFERENCE CRITERIA
-----------------------------------------------------------------------------------------------------------------
GENERAL SERVICING CONSIDERATIONS
-----------------------------------------------------------------------------------------------------------------
1122(d)(1)(i) Policies and procedures are instituted to monitor any performance |X|
or other triggers and events of default in accordance with the
transaction agreements.
-----------------------------------------------------------------------------------------------------------------
1122(d)(1)(ii) If any material servicing activities are outsourced to third |X|
parties, policies and procedures are instituted to monitor the
third party's performance and compliance with such servicing
activities.
-----------------------------------------------------------------------------------------------------------------
1122(d)(1)(iii) Any requirements in the transaction agreements to maintain
a back-up servicer for the pool assets are maintained.
-----------------------------------------------------------------------------------------------------------------
1122(d)(1)(iv) A fidelity bond and errors and omissions policy is in effect on the |X|
party participating in the servicing function throughout the
reporting period in the amount of coverage required by and
otherwise in accordance with the terms of the transaction
agreements.
-----------------------------------------------------------------------------------------------------------------
CASH COLLECTION AND ADMINISTRATION
-----------------------------------------------------------------------------------------------------------------
1122(d)(2)(i) Payments on pool assets are deposited into the appropriate |X|
custodial bank accounts and related bank clearing accounts no more
than two business days following receipt, or such other number of
days specified in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------
1122(d)(2)(ii) Disbursements made via wire transfer on behalf of an obligor or to |X|
an investor are made only by authorized personnel.
-----------------------------------------------------------------------------------------------------------------
1122(d)(2)(iii) Advances of funds or guarantees regarding collections, cash flows |X|
or distributions, and any interest or other fees charged for such
advances, are made, reviewed and approved as specified in the
transaction agreements.
-----------------------------------------------------------------------------------------------------------------
1122(d)(2)(iv) The related accounts for the transaction, such as cash |X|
reserve accounts or accounts established as a form of
overcollateralization, are separately maintained (e.g.,
with respect to commingling of cash) as set forth in
the transaction agreements.
-----------------------------------------------------------------------------------------------------------------
1122(d)(2)(v) Each custodial account is maintained at a federally insured |X|
depository institution as set forth in the transaction agreements.
For purposes of this criterion, "federally insured depository
institution" with respect to a foreign financial institution means
a foreign financial institution that meets the requirements of Rule
13k-1(b)(1) of the Securities Exchange Act.
-----------------------------------------------------------------------------------------------------------------
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent unauthorized |X|
access.
-----------------------------------------------------------------------------------------------------------------
1122(d)(2)(vii) Reconciliations are prepared on a monthly basis for all |X|
asset-backed securities related bank accounts, including custodial
accounts and related bank clearing accounts. These reconciliations
are (A) mathematically accurate; (B) prepared within 30 calendar
days after the bank statement cutoff date, or such other number of
days specified in the transaction agreements; (C) reviewed and
approved by someone other than the person who prepared the
reconciliation; and (D) contain explanations for reconciling items.
These reconciling items are resolved within 90 calendar days of
their original identification, or such other number of days
specified in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
APPLICABLE SERVICING
SERVICING CRITERIA CRITERIA
-----------------------------------------------------------------------------------------------------------------
REFERENCE CRITERIA
-----------------------------------------------------------------------------------------------------------------
INVESTOR REMITTANCES AND REPORTING
-----------------------------------------------------------------------------------------------------------------
1122(d)(3)(i) Reports to investors, including those to be filed with the |X|
Commission, are maintained in accordance with the transaction
agreements and applicable Commission requirements. Specifically,
such reports (A) are prepared in accordance with timeframes and
other terms set forth in the transaction agreements; (B) provide
information calculated in accordance with the terms specified in
the transaction agreements; (C) are filed with the Commission as
required by its rules and regulations; and (D) agree with
investors' or the trustee's records as to the total unpaid
principal balance and number of pool assets serviced by the
servicer.
-----------------------------------------------------------------------------------------------------------------
1122(d)(3)(ii) Amounts due to investors are allocated and remitted in accordance |X|
with timeframes, distribution priority and other terms set forth in
the transaction agreements.
-----------------------------------------------------------------------------------------------------------------
1122(d)(3)(iii) Disbursements made to an investor are posted within two business |X|
days to the servicer's investor records, or such other number of
days specified in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------
1122(d)(3)(iv) Amounts remitted to investors per the investor reports |X|
agree with cancelled checks, or other form of payment, or
custodial bank statements.
-----------------------------------------------------------------------------------------------------------------
POOL ASSET ADMINISTRATION
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(i) Collateral or security on pool assets is maintained as |X|
required by the transaction agreements or related asset
pool documents.
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(ii) Pool assets and related documents are safeguarded as required by |X|
the transaction agreements
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(iii) Any additions, removals or substitutions to the asset pool are |X|
made, reviewed and approved in accordance with any conditions or
requirements in the transaction agreements.
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(iv) Payments on pool assets, including any payoffs, made in accordance |X|
with the related pool asset documents are posted to the servicer's
obligor records maintained no more than two business days after
receipt, or such other number of days specified in the transaction
agreements, and allocated to principal, interest or other items
(e.g., escrow) in accordance with the related pool asset documents.
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(v) The servicer's records regarding the pool assets agree with the |X|
servicer's records with respect to an obligor's unpaid principal
balance.
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(vi) Changes with respect to the terms or status of an obligor's pool |X|
asset (e.g., loan modifications or re-agings) are made, reviewed
and approved by authorized personnel in accordance with the
transaction agreements and related pool asset documents.
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(vii) Loss mitigation or recovery actions (e.g., forbearance plans, |X|
modifications and deeds in lieu of foreclosure, foreclosures and
repossessions, as applicable) are initiated, conducted and
concluded in accordance with the timeframes or other requirements
established by the transaction agreements.
-----------------------------------------------------------------------------------------------------------------
1122(d)(4)(viii) Records documenting collection efforts are maintained during the |X|
period a pool asset is delinquent in accordance with the
transaction agreements. Such records are maintained on at least a
monthly basis, or such other period specified in the transaction
agreements, and describe the entity's activities in monitoring
delinquent pool assets including, for example, phone calls, letters
and payment rescheduling plans in cases where delinquency is deemed
temporary (e.g., illness or unemployment).
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1122(d)(4)(ix) Adjustments to interest rates or rates of return for pool assets |X|
with variable rates are computed based on the related pool asset
documents.
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APPLICABLE SERVICING
SERVICING CRITERIA CRITERIA
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REFERENCE CRITERIA
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1122(d)(4)(x) Regarding any funds held in trust for an obligor (such as escrow |X|
accounts): (A) such funds are analyzed, in accordance with the
obligor's pool asset documents, on at least an annual basis, or
such other period specified in the transaction agreements; (B)
interest on such funds is paid, or credited, to obligors in
accordance with applicable pool asset documents and state laws; and
(C) such funds are returned to the obligor within 30 calendar days
of full repayment of the related pool asset, or such other number
of days specified in the transaction agreements.
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1122(d)(4)(xi) Payments made on behalf of an obligor (such as tax or insurance |X|
payments) are made on or before the related penalty or expiration
dates, as indicated on the appropriate bills or notices for such
payments, provided that such support has been received by the
servicer at least 30 calendar days prior to these dates, or such
other number of days specified in the transaction agreements.
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1122(d)(4)(xii) Any late payment penalties in connection with any payment to be |X|
made on behalf of an obligor are paid from the servicer's funds and
not charged to the obligor, unless the late payment was due to the
obligor's error or omission.
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1122(d)(4)(xiii) Disbursements made on behalf of an obligor are posted |X|
within two business days to the obligor's records
maintained by the servicer, or such other number of days
specified in the transaction agreements.
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1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible accounts are |X|
recognized and recorded in accordance with the transaction
agreements.
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1122(d)(4)(xv) Any external enhancement or other support, identified in
Item 1114(a)(1) through (3) or Item 1115 of Regulation AB,
is maintained as set forth in the transaction agreements.
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