Exhibit 4.10
XXXXX & XXXXX
XXXXX & XXXXX LLP
AMENDED AND RESTATED SERVICING
AGREEMENT
HALIFAX plc
as Servicer
and
PERMANENT MORTGAGES TRUSTEE LIMITED
as Mortgages Trustee
and
HALIFAX plc
as Seller
and
PERMANENT FUNDING (NO. 1) LIMITED
as Funding 1
and
PERMANENT FUNDING (NO. 2) LIMITED
as Funding 2
and
THE BANK OF NEW YORK
as Funding 1 Security Trustee
THE BANK OF NEW YORK
as Funding 2 Security Trustee
DATED [*] 2006
CONTENTS
CLAUSE PAGE
1. Definitions and Interpretation..........................................2
2. Appointment of Servicer.................................................2
3. The Administration Services.............................................3
4. Mortgages Trustee Variable Base Rate/Mortgages Trustee Tracker Rate.....6
5. Administration of Mortgages.............................................9
6. No Liability...........................................................14
7. New Loans..............................................................14
8. Product Switching and Further Advances.................................14
9. Redemption of Mortgages................................................15
10. Powers of Attorney.....................................................15
11. Costs and Expenses.....................................................16
12. Information............................................................16
13. Remuneration...........................................................18
14. Insurances.............................................................18
15. Halifax Insurance Policies.............................................19
16. Buildings Policies.....................................................19
17. Title Deeds and Customer Files.........................................19
18. Data Protection........................................................21
19. Covenants of Servicer..................................................22
20. Services Non-Exclusive.................................................23
21. Termination............................................................23
22. Further Assurance......................................................25
23. Miscellaneous..........................................................26
24. Confidentiality........................................................27
25. Notices................................................................28
26. Variation and Waiver...................................................28
27. No Partnership.........................................................29
28. Assignment.............................................................29
29. Change of Funding 1 Security Trustee and/or Funding 2 Security Trustee.29
30. Amendments.............................................................30
31. Exclusion of Third Party Rights........................................30
32. Counterparts and Severability..........................................30
33. Governing Law and Jurisdiction.........................................30
34. Process Agent..........................................................30
SCHEDULE
1. The Services...........................................................31
2. Form of Investor Monthly Report........................................32
3. Minimum Servicing Standards............................................36
4. Form of Annual Certification...........................................38
5. Form of Servicing Criteria to be Addressed in Assessment of
Compliance Statement...................................................39
Signatories..................................................................44
THIS AMENDED AND RESTATED SERVICING AGREEMENT (this AGREEMENT) is made as a
deed on [*] 2006
BETWEEN:
(1) HALIFAX PLC (registered number 02367076), a public limited company
incorporated under the laws of England and Wales whose registered office
is at Xxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxxxxxxx XX0 0XX (in its capacity as
the SERVICER of the Loans and their Related Security);
(2) PERMANENT MORTGAGES TRUSTEE LIMITED (registered number 83116), a private
limited company incorporated under the laws of Jersey, Channel Islands
whose registered office is at 00 Xxxxxxxxx, Xx. Xxxxxx, Xxxxxx XX0 0XX,
Xxxxxxx Xxxxxxx (xx its capacity as the MORTGAGES TRUSTEE);
(3) HALIFAX PLC (registered number 02367076), a public limited company
incorporated under the laws of England and Wales whose registered office
is at Xxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxxxxxxx XX0 0XX (in its capacity as
the SELLER and as one of the Beneficiaries);
(4) PERMANENT FUNDING (NO. 1) LIMITED (registered number 4267660), a private
limited company incorporated under the laws of England and Wales whose
registered office is at 00 Xxxxx Xx. Xxxxx'x, Xxxxxx XX0X 0XX (xx its
capacity as FUNDING 1 and one of the Beneficiaries);
(5) PERMANENT FUNDING (NO. 2) LIMITED (registered number 04441772), a private
limited company incorporated under the laws of England and Wales whose
registered office is at 00 Xxxxx Xx. Xxxxx'x, Xxxxxx XX0X 0XX (xx its
capacity as FUNDING 2 and one of the Beneficiaries); and
(6) THE BANK OF NEW YORK, a New York banking corporation acting through its
office at 00xx Xxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxx X00 0XX (in its capacity
as the FUNDING 1 SECURITY TRUSTEE and the FUNDING 2 SECURITY TRUSTEE,
which expression shall include such companies and all other persons or
companies for the time being acting as security trustee (or co-trustee)
pursuant to the terms of the Funding 1 Deed of Charge or the Funding 2
Deed of Charge, as the case may be).
WHEREAS:
(A) The Servicer carries on the business of, inter alia, administering
mortgage loans secured on residential properties within the United
Kingdom.
(B) By the Mortgage Sale Agreement, the Seller agreed to sell certain
mortgage loans it had originated to individual borrowers together with
their Related Security to the Mortgages Trustee. The Mortgages Trustee
holds those mortgage loans as bare trustee for Funding 1, Funding 2 and
the Seller pursuant to the terms of the Mortgages Trust Deed.
(C) The Servicer has agreed to provide administration and management services
to the Mortgages Trustee, the Seller, Funding 1 and, following the
Programme Date, Funding 2 on the terms and subject to the conditions
contained in the Servicing Agreement dated 14 June 2002, as amended and
restated on 6 March 2003, 25 November 2003, 12 March 2004, 22 July 2004,
18 November 2004, 23 March 2005, 22 June 2005, 22 March 2006 and as
further amended and restated by this Agreement and from time to time (the
SERVICING AGREEMENT) in relation to, inter alia, the Loans and their
Related Security sold to the Mortgages Trustee by the Seller.
(D) The parties to the Servicing Agreement have agreed to amend and restate
the terms of the Servicing Agreement as set out herein.
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IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 The amended and restated master definitions and construction schedule
signed by, amongst others, the parties to this Agreement and dated [*]
2006 (as the same may be amended, varied or supplemented from time to
time with the consent of the parties to this Agreement) (the MASTER
DEFINITIONS AND CONSTRUCTION SCHEDULE) is expressly and specifically
incorporated into this Agreement and, accordingly, the expressions
defined in the Master Definitions and Construction Schedule (as so
amended, varied or supplemented from time to time) shall, except where
the context otherwise requires and save where otherwise defined herein,
have the same meanings in this Agreement, including the Recitals hereto,
and this Agreement shall be construed in accordance with the
interpretation provisions set out in CLAUSE 2 of the Master Definitions
and Construction Schedule.
For the purposes of this Agreement:
COMMISSION means the United States Securities and Exchange Commission;
REGULATION AB means Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. [SECTION][SECTION]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;
XXXXXXXX-XXXXX CERTIFICATION has the meaning specified in CLAUSE
5.7(A)(IV);
SERVICING CRITERIA means the "servicing criteria" set forth in Item
1122(d) of Regulation AB; and
SUBCONTRACTOR means 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 1122(d) of Regulation AB with respect to the Mortgage Loans under
the direction or authority of the Servicer.
1.2 Any reference in this Agreement to any discretion, power or right on the
part of the Mortgages Trustee shall be exercised by the Mortgages Trustee
only as directed by the Beneficiaries but subject in each case to the
provisions of the Mortgages Trust Deed and the Controlling Beneficiary
Deed.
1.3 Save as expressly provided herein, any warranties or undertakings
provided under this Agreement are made to each other party to this
Agreement.
1.4 This Agreement amends and restates the Servicing Agreement made on 14
June 2002 as amended and restated on 6 March 2003, 25 November 2003, 12
March 2004, 22 July 2004, 18 November 2004, 23 March 2005, 22 June 2005
and 22 March 2006 (the PRINCIPAL AGREEMENT). As of the date of this
Agreement, any future rights or obligations (excluding such obligations
accrued to the date of this Agreement) of a party under the Principal
Agreement shall be extinguished and shall instead be governed by this
Agreement. The parties agree that this amended and restated Agreement
shall have effect and be operational as from 14 June 2002.
2. APPOINTMENT OF SERVICER
2.1 Subject to CLAUSES 2.4 and 4.3(E), and until termination pursuant to
CLAUSE 21, the Mortgages Trustee, the Seller and Funding 1 (according to
their respective estates and interests) each hereby
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appoints the Servicer as its lawful agent on their respective behalf to
administer the Loans and their Related Security, to provide certain other
administration and management services and to exercise their respective
rights, powers and discretions, and to perform their respective duties,
under and in relation to the Loans and their Related Security. The
Servicer in each case hereby accepts such appointment on the terms and
subject to the conditions of this Agreement. The Funding 1 Security
Trustee consents to the appointment of the Servicer on the terms of and
subject to the conditions of this Agreement.
2.2 Subject to CLAUSE 4.3(E) and CLAUSE 2.5, and until termination pursuant
to CLAUSE 21, Funding 2 (according to its estates and interests) hereby
appoints the Servicer as its lawful agent on its behalf to administer the
Loans and their Related Security, to provide certain other administration
and management services and to exercise its rights, powers and
discretions, and to perform its duties, under and in relation to the
Loans and their Related Security. The Servicer hereby accepts such
appointment on the terms and subject to the conditions of this Agreement.
The Funding 2 Security Trustee consents to the appointment of the
Servicer on the terms of and subject to the conditions of this Agreement.
2.3 For the avoidance of doubt and in connection with the rights, powers and
discretions conferred under CLAUSE 2.1 and CLAUSE 2.2, during the
continuance of its appointment hereunder, the Servicer shall, subject to
the terms and conditions of this Agreement, the Mortgage Conditions, the
Mortgage Sale Agreement and the Mortgages Trust Deed, have the full
power, authority and right to do or cause to be done any and all things
which it reasonably considers necessary, convenient or incidental to the
administration of the Loans and their Related Security or the exercise of
such rights, powers and discretions, provided however that neither the
Mortgages Trustee, Funding 1 nor Funding 2 nor their respective directors
shall be required or obliged at any time to enter into any transaction or
to comply with any directions which the Servicer may give with respect to
the operating and financial policies of the Mortgages Trustee, Funding 1
or Funding 2 and the Servicer hereby acknowledges that all powers to
determine such policies (including the determination of whether or not
any particular policy is for the benefit of the Mortgages Trustee,
Funding 1 or Funding 2) are, and shall at all times remain, vested, as
the case may be, in the Mortgages Trustee and/or Funding 1 and/or Funding
2 (and their respective directors) and none of the provisions of this
Agreement shall be construed in a manner inconsistent with this proviso.
2.4 The appointment pursuant to CLAUSE 2.1 is conditional upon the issue of
the First Issuer Notes having taken place and shall take effect upon and
from the Initial Closing Date automatically without any further action on
the part of any person PROVIDED THAT if the issue of the First Issuer
Notes has not occurred by 14 June 2002, or such later date as the First
Issuer and the Joint Lead Managers may agree, the appointment of the
Servicer as agent of Funding 1 under CLAUSE 2.1 shall not take effect.
2.5 The appointment pursuant to CLAUSE 2.2 is conditional upon the
acquisition by Funding 2 from the Seller of a portion of the Seller's
beneficial interest in the Mortgages Trust pursuant to the Seller
Mortgages Trust Assignment Agreement and shall take effect upon and from
the Programme Date automatically without any further action on the part
of any person PROVIDED THAT if Funding 2 has not acquired from the Seller
a portion of the Seller's beneficial interest in the Mortgages Trust by
[*] 2006, or such later date as the Seller and Funding 2 may agree, the
appointment of the Servicer as agent of Funding 2 under CLAUSE 2.2 shall
not take effect.
3. THE ADMINISTRATION SERVICES
3.1 GENERAL
(a) The duty of the Servicer shall be to provide the services set out in this
Agreement including SCHEDULE 1 hereto (the SERVICES).
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(b) If and when the Servicer is requested to confirm or state the capacity in
which it is administering and servicing the Loans, their Related Security
and related matters pursuant to this Agreement by any Borrower or any
third party not being a party to this Agreement and to whom the Servicer
is obliged by law to disclose such information, the Servicer shall
confirm or state that it is acting in its capacity as servicer of the
Loans, their Related Security and related matters as agent for and on
behalf of the Mortgages Trustee and the Beneficiaries and not on its own
behalf.
3.2 SUB-CONTRACTS
(a) The Servicer may sub-contract or delegate the performance of all or any
of its powers and obligations under this Agreement, provided that such
sub-contracting or delegation would not prevent the Servicer, the
Mortgages Trustee, Funding 1 or Funding 2 from complying in all material
respects with any law, statute, judgment, decree, order, licence,
authorisation, rule, order and provided further that (subject to CLAUSE
3.2(B)):
(i) the prior written consent of Funding 1, Funding 2, the Funding 1
Security Trustee and the Funding 2 Security Trustee to the
proposed arrangement (including, if Funding 1 and the Funding 1
Security Trustee or Funding 2 and the Funding 2 Security Trustee
consider it necessary, approving any contract which sets out the
terms on which such arrangements are to be made) has been obtained
and written notification has been given to each of the Rating
Agencies;
(ii) where the arrangements involve the custody or control of any
Customer Files and/or Title Deeds relating to the Portfolio for
the purpose of performing any delegated Services the
sub-contractor or delegate has executed an acknowledgement in form
and substance acceptable to Funding 1, Funding 2, the Funding 1
Security Trustee and the Funding 2 Security Trustee to the effect
that any such Customer Files and/or Title Deeds are and will be
held to the order of the Mortgages Trustee (as trustee for the
Beneficiaries);
(iii) where the arrangements involve or may involve the receipt by the
sub-contractor or delegate of monies belonging to the
Beneficiaries which, in accordance with this Agreement, are to be
paid into the Mortgages Trustee GIC Account and/or the Funding 1
GIC Account and/or the Funding 2 GIC Account, the sub-contractor
or delegate has executed a declaration in form and substance
acceptable to the Beneficiaries that any such monies held by it or
to its order are held on trust for the Beneficiaries and will be
paid forthwith into, as applicable, the Mortgages Trustee GIC
Account and/or the Funding 1 GIC Account and/or the Funding 2 GIC
Account in accordance with the terms of the Mortgages Trust Deed;
(iv) any such sub-contractor or delegate has executed a written waiver
of any Security Interest arising in connection with such delegated
Services (to the extent that such Security Interest relates to the
Portfolio or any amount referred to in (III) above);
(v) neither the Funding 1 Security Trustee, the Funding 2 Security
Trustee, the Mortgages Trustee, Funding 1 nor Funding 2 shall have
any liability for any costs, charges or expenses payable to or
incurred by such sub?contractor or delegate or arising from the
entering into, the continuance or the termination of any such
arrangement; and
(vi) any such sub-contractor or delegate shall have confirmed to the
Servicer, Funding 1, Funding 2, the Funding 1 Security Trustee and
the Funding 2 Security Trustee that it has, and shall maintain,
all requisite consents, authorisations, approvals, licences, and
orders, including without limitation all authorisations under the
FSMA, to enable it to fulfil its obligations under or in
connection with any such arrangement.
(b) The provisos to CLAUSE 3.2(A)(I), (II) and (III) shall not apply:
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(i) to the engagement by the Servicer of:
(A) any receiver, solicitor, insurance broker, valuer, surveyor,
accountant, estate agent, insolvency practitioner,
auctioneer, bailiff, sheriff officer, debt counsellor,
tracing agent, property management agent, licensed
conveyancer, qualified conveyancer or other professional
adviser acting as such; or
(B) any locksmith, builder or other contractor acting as such in
relation to a Property,
in any such case being a person or persons whom the Servicer would
be willing to appoint in respect of its own mortgages in
connection with the performance by the Servicer of any of its
obligations or functions or in connection with the exercise of its
powers under this Agreement; or
(ii) to any delegation to any wholly-owned subsidiary of the Seller or
HBOS plc from time to time.
(c) The Mortgages Trustee and/or Funding 1 and/or Funding 2 and the Funding 1
Security Trustee and the Funding 2 Security Trustee may by notice in
writing require the Servicer to assign to the Mortgages Trustee any
rights which the Servicer may have against any sub-contractor or delegate
arising from the performance of services by such person relating to any
matter contemplated by this Agreement and the Servicer acknowledges that
such rights assigned to the Mortgages Trustee will be exercised by the
Mortgages Trustee as trustee for the Beneficiaries subject to the terms
of the Mortgages Trust Deed.
(d) Notwithstanding any sub-contracting or delegation of the performance of
its obligations under this Agreement, the Servicer shall not thereby be
released or discharged from any liability hereunder and shall remain
responsible for the performance of all of the obligations of the Servicer
under this Agreement, and the performance or non-performance or the
manner of performance of any sub-contractor or delegate of any of the
Services shall not affect the Servicer's obligations under this Agreement
and any breach in the performance of the Services by such sub-contractor
or delegate shall, subject to the Servicer being entitled for a period of
20 London Business Days from receipt of any notice of the breach to
remedy such breach by any sub-contractor or delegate, be treated as a
breach of this Agreement by the Servicer.
3.3 NOTICES ETC.
(a) Within 20 London Business Days of the Initial Closing Date, the Servicer
will give notice (or procure that notice is given) by courier or by
special delivery to HBOS Insurance (PCC) Guernsey Limited of the
assignment to the Mortgages Trustee by the Seller of its interests in the
Halifax Mortgage Re Limited MIG Policies pursuant to the Assignment of
Halifax Mortgage Re Limited MIG Policies, which shall be held by the
Mortgages Trustee absolutely as bare trustee for the Beneficiaries
pursuant to the Mortgages Trust Deed, and the Servicer shall take all
reasonable steps to ensure the return by the relevant recipient of the
duplicate notices of assignment by way of acknowledgement thereof.
(b) Promptly upon request by Funding 1, Funding 2, the Funding 1 Security
Trustee and the Funding 2 Security Trustee, the Servicer shall procure
that any notices permitted to be given by the Mortgages Trustee under
CLAUSE 6.4 of the Mortgage Sale Agreement are so given by the Servicer on
the Mortgages Trustee's behalf.
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3.4 LIABILITY OF SERVICER
(a) The Servicer shall indemnify each of the Mortgages Trustee and the
Beneficiaries on demand on an after-tax basis for any loss, liability,
claim, expense or damage suffered or incurred by any of them in respect
of the negligence or wilful default of the Servicer in carrying out its
functions as Servicer under this Agreement or the other Transaction
Documents or as a result of a breach by the Servicer of the terms and
provisions of this Agreement or the other Transaction Documents in
relation to such functions.
(b) For the avoidance of doubt, the Servicer shall not be liable in respect
of any loss, liability, claim, expense or damage suffered or incurred by
the Mortgages Trustee and/or the Beneficiaries and/or any other person as
a result of the proper performance of the Services by the Servicer save
where such loss, liability, claim, expense or damage is suffered or
incurred as a result of any negligence or wilful default of the Servicer
or as a result of a breach by the Servicer of the terms and provisions of
this Agreement or the other Transaction Documents in relation to such
functions.
(c) Any indemnification under this CLAUSE 3.4 in respect of loss suffered by
the Beneficiaries while Halifax plc is Servicer shall be paid for by
reducing the Seller Share of the Trust Property by an amount equal to the
relevant loss incurred by the Beneficiaries in accordance with CLAUSE 8.4
of the Mortgages Trust Deed and SCHEDULE 2 to the Cash Management
Agreement.
4. MORTGAGES TRUSTEE VARIABLE BASE RATE/MORTGAGES TRUSTEE TRACKER RATE
4.1 The Mortgages Trustee and each of the Beneficiaries each hereby grants
the Servicer full right, liberty and authority from time to time, in
accordance with the relevant Mortgage Terms, to determine and set the
Mortgages Trustee Variable Base Rate and any variable margin incorporated
within the Mortgages Trustee Tracker Rate above the Bank of England repo
rate applicable in relation to Tracker Rate Loans chargeable to Borrowers
from time to time. In exercising such right, liberty and authority the
Servicer undertakes to each of the other parties to this Agreement that
it shall not at any time, without the prior consent of the Mortgages
Trustee, Funding 1 and Funding 2, set or maintain the Mortgages Trustee
Variable Base Rate at a rate which is higher than (although it may be
lower than or equal to) the then prevailing Seller's Variable Base Rate,
nor will it set or maintain a margin incorporated within the Mortgages
Trustee Tracker Rate above the Bank of England repo rate in respect of
any Tracker Rate Loan, which is higher than the margin above the Bank of
England repo rate then applying to those Tracker Rate Loans beneficially
owned by the Seller outside the Portfolio except in the limited
circumstances described in this paragraph when the Mortgages Trustee will
be entitled to do so. The Servicer will not at any time, without the
prior consent of the Mortgages Trustee, Funding 1 and Funding 2, set or
maintain:
(a) the Mortgages Trustee Variable Base Rate at a rate which is higher
than (although it may be lower than or equal to) the then
prevailing Seller's Variable Base Rate which applies to loans
beneficially owned by the Seller outside the Portfolio;
(b) the margin incorporated within the Mortgages Trustee Tracker Rate
in respect of any Tracker Rate Loan in the Portfolio which, where
the offer conditions for that Tracker Rate Loan provide that the
margin above the Bank of England repo rate shall be the same as
the margin above the Bank of England repo rate applicable to all
other loans having the same offer conditions in relation to
interest rate setting as that Tracker Rate Loan, is higher or
lower than the margin above the Bank of England repo rate then
applying to those Tracker Rate Loans beneficially owned by the
Seller outside the Portfolio; and
(c) the margin incorporated within the Mortgages Trustee Tracker Rate
above the Bank of England repo rate in respect of any other
Tracker Rate Loan which is higher than the margin
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above the Bank of England repo rate which would then be set in
accordance with the Seller's Policy from time to time in relation
to that Tracker Rate Loan,
unless the Servicer is required to do so pursuant to CLAUSE 4.3, and,
subject to that requirement, that it shall not change the Mortgages
Trustee Variable Base Rate nor the Mortgages Trustee Tracker Rate save
for the same reasons as the Seller was entitled, under the Mortgage
Conditions, to change the Seller's Variable Base Rate and the Seller's
Tracker Rate prior to the sale to the Mortgages Trustee of the Loans
comprised in the Portfolio and their Related Security. Each of the
Mortgages Trustee and the Beneficiaries shall be bound by the Mortgages
Trustee Variable Base Rate and the Mortgages Trustee Tracker Rate set in
accordance with this Agreement.
4.2 The Servicer shall take the steps rendered necessary by the relevant
Mortgage Terms and applicable law (including, without limitation, the
Guidance Note on Interest Variation Terms issued by the Office of Fair
Trading in February 2000 and any successor guideline or applicable
additional guidelines) to bring each change in such rate or rates of
interest to the attention of the relevant Borrowers, whether due to a
change in the Mortgages Trustee Variable Base Rate or the Mortgages
Trustee Tracker Rate or as a consequence of any provisions of the
Mortgage Terms. Any change in the Mortgages Trustee Variable Base Rate or
the Mortgages Trustee Tracker Rate shall be notified in writing to each
of the Mortgages Trustee, the Funding 1 Security Trustee, the Funding 2
Security Trustee and the Beneficiaries as soon as reasonably practicable
and shall, upon receipt of a request from any of such parties, notify
such requesting party of any changes in the Monthly Payments in relation
to the Loans. All costs arising in relation to such a notification of a
change in such rate or rates of interest shall be borne by the Servicer.
4.3 (a) On each Funding 1 Interest Payment Date and Funding 2 Interest
Payment Date the Servicer shall determine, having regard to the
aggregate of:
(i) the revenue which each of Funding 1 and Funding 2 would
respectively expect to receive during the next succeeding
related Interest Period;
(ii) the Mortgages Trustee Variable Base Rate, any variable
margins applicable in relation to any Tracker Rate Loans and
the Variable Mortgage Rates in respect of the Loans which
the Servicer proposes to set under this CLAUSE 4; and
(iii) the other resources available to:
(A) Funding 1 including the Funding 1 Swap Agreement, the
Funding 1 Liquidity Facility, the General Reserve Fund
and the Liquidity Reserve Fund; and
(B) Funding 2 including the Funding 2 Swap Agreement and
the Funding 2 General Reserve Fund,
whether:
I. Funding 1 would receive an amount of revenue
during that related Interest Period which when
aggregated with the funds otherwise available to
it is less than the amount which is the aggregate
of (a) the amount of interest which will be
payable in respect of the Term AAA Advances of
the Funding 1 Issuer's and all amounts ranking
higher in priority to such amounts on the Funding
1 Interest Payment Date falling at the end of
such Interest Period and (b) the other senior
expenses of Funding 1 which rank in priority
thereto
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(the amount (if any) by which it is less being
the FUNDING 1 INTEREST RATE SHORTFALL); and
II. Funding 2 would receive an amount of revenue
during that related Interest Period which when
aggregated with the funds otherwise available to
it is less than the amount which is the aggregate
of (a) the amount of interest which will be
payable in respect of the AAA Loan Tranches under
the Master Intercompany Loan Agreement and all
amounts ranking higher in priority to such
amounts falling at the end of such Interest
Period and (b) the other senior expenses of
Funding 2 which rank in priority thereto (the
amount (if any) by which it is less being the
FUNDING 2 INTEREST RATE SHORTFALL).
(b) If the Servicer determines that there will be either a Funding 1
Interest Rate Shortfall or a Funding 2 Interest Rate Shortfall, it
will within one London Business Day of such determination give
written notice thereof to the Mortgages Trustee, Funding 1,
Funding 2, the Funding 1 Security Trustee and the Funding 2
Security Trustee of such Funding 1 Interest Rate Shortfall or
Funding 2 Interest Rate Shortfall, as the case may be, and of the
Mortgages Trustee Variable Base Rate and/or the Mortgages Trustee
Tracker Rate which would (taking into account the applicable
Mortgage Conditions), in the Servicer's reasonable opinion, need
to be set in order for no Funding 1 Interest Rate Shortfall or
Funding 2 Interest Rate Shortfall, as the case may be, to arise,
having regard to the date(s) (which shall be specified in the
notice) on which such change to the Mortgages Trustee Variable
Base Rate and the Mortgages Trustee Tracker Rate would take effect
and at all times acting in accordance with the standards of a
Reasonable, Prudent Mortgage Lender as regards the competing
interests of Borrowers with Mortgage Trustee Variable Base Rate
Loans and Borrowers with Mortgages Trustee Tracker Rate Loans.
(c) If the Mortgages Trustee, Funding 1 and the Funding 1 Security
Trustee notify the Servicer that, having regard to the obligations
of Funding 1, the Mortgages Trustee Variable Base Rate and/or the
Mortgages Trustee Tracker Rate should be increased but no
notification is received by the Servicer under CLAUSE 4.3(D), the
Servicer, as agent for and on behalf of, inter alios, the
Mortgages Trustee and the Beneficiaries, shall take all steps
which are necessary, including publishing any notice which is
required in accordance with the Mortgage Terms, to effect such
change in the Mortgages Trustee Variable Base Rate and/or the
Mortgages Trustee Tracker Rate on the date(s) specified in the
notice referred to in CLAUSE 4.3(B).
(d) If the Mortgages Trustee, Funding 2 and the Funding 2 Security
Trustee notify the Servicer that, having regard to the obligations
of Funding 2, the Mortgages Trustee Variable Base Rate and/or the
Mortgages Trustee Tracker Rate should be increased but no
notification is received by the Servicer under CLAUSE 4.3(C), the
Servicer, as agent for and on behalf of, inter alios, the
Mortgages Trustee and the Beneficiaries, shall take all steps
which are necessary, including publishing any notice which is
required in accordance with the Mortgage Terms, to effect such
change in the Mortgages Trustee Variable Base Rate and/or the
Mortgages Trustee Tracker Rate on the date(s) specified in the
notice referred to in CLAUSE 4.3(B).
(e) If the Servicer receives notification from:
(i) the Mortgages Trustee, Funding 1 and the Funding 1 Security
Trustee in accordance with CLAUSE 4.3(C); and
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(ii) the Mortgages Trustee, Funding 2 and the Funding 2 Security
Trustee in accordance with CLAUSE 4.3(D),
then the Servicer, as agent for and on behalf of the Mortgages
Trustee and the Beneficiaries, shall take all steps which are
necessary, including publishing any notice which is required in
accordance with the Mortgage Terms, to effect such change in the
Mortgages Trustee Variable Base Rate and/or the Mortgages Trustee
Tracker Rate on the date(s) specified in the notice referred to in
CLAUSE 4.3(B).
(f) The Mortgages Trustee and/or Funding 1 and/or Funding 2 and/or the
Funding 1 Security Trustee and/or the Funding 2 Security Trustee
may terminate the authority of the Servicer under CLAUSE 4.1 and
CLAUSE 4.3 to determine the Mortgages Trustee Variable Base Rate
and the Mortgages Trustee Tracker Rate on or after the occurrence
of a Servicer Termination Event, in which case the Mortgages
Trustee shall set the Mortgages Trustee Variable Base Rate and the
Mortgages Trustee Tracker Rate in accordance with this CLAUSE 4.
5. ADMINISTRATION OF MORTGAGES
5.1 DIRECT DEBITING SCHEME
(a) For the purposes of collecting amounts due from Borrowers under the Loans
and their Related Security comprised in the Portfolio in accordance with
this Agreement the Servicer will unless otherwise agreed in writing with
the Beneficiaries:
(i) act, or procure that another person approved in writing by the
Beneficiaries (such approval not to be unreasonably withheld) (the
Third Party Collection Agent) acts, as collection agent for the
Mortgages Trustee and the Beneficiaries under the Direct Debiting
Scheme and remains a member of the Direct Debiting Scheme or any
scheme which replaces the Direct Debiting Scheme;
(ii) subject to Clauses 5.1(b) and 5.1(c), deliver to the Bankers
Automated Clearing System (BACS) or to the Account Bank such
instructions as may be necessary from time to time for the debit
of the account of each Borrower in respect of which there is a
direct debit mandate (the date of such delivery being the D.D.
Date) with the Monthly Payment due from such Borrower, and for the
amount of such Monthly Payment to be credited to the Mortgages
Trustee GIC Account on the day after the D.D. Date or, if such day
is not a London Business Day, the following London Business Day
unless the short-term ratings of the Account Bank fall below A-1+
by S&P, P-1 by Xxxxx'x or F1+ by Fitch, in which case all further
instructions by the Servicer to debit the accounts of Borrowers
that are subject to direct debit bank mandates shall be made to
another bank which has a rating of at least A-1+ by S&P, P-1 by
Xxxxx'x or F1+ by Fitch, or directly to the Mortgages Trustee GIC
Account;
(iii) subject to Clauses 5.1(b) and 5.1(c), deliver to the Account Bank
or BACS (as appropriate) instructions for the debit of the account
of each Borrower in respect of which there is a direct debit
mandate and the Monthly Payment due and owing from such Borrower
on the D.D. Date immediately preceding the next succeeding Monthly
Payment Date remains outstanding to the extent that, on the date
of presentation of such instructions, such Monthly Payment has not
been received in full by the Servicer on behalf of the Mortgages
Trustee and where the instructions for the debit of the account of
the relevant Borrower for the Monthly Payment due and owing from
such Borrower was returned to the Servicer marked "insufficient
funds" within 10 London Business Days of receipt by the Servicer
of any such returned instructions;
9
(iv) subject to Clauses 5.1(b) and 5.1(c), deliver to the Account Bank
or BACS (as appropriate) such other instructions for the debit of
the account of each Borrower in respect of which there is a direct
debit mandate in accordance with the Direct Debiting Scheme as may
be appropriate for the recovery of sums due by such Borrower; and
(v) comply in all material respects with the requirements from time to
time of the Direct Debiting Scheme including "The Originator's
Guide and Rules to the Direct Debiting Scheme" as amended from
time to time,
and take all such other steps as are reasonably appropriate, including in
particular the preparation and administration of appropriate computer
tapes in connection with BACS, to ensure that all monies received from
Borrowers during banking hours on any particular day are credited on the
next day to the Mortgages Trustee GIC Account.
(b) The Servicer may agree with a Borrower that the Direct Debiting Scheme
shall not apply to Monthly Payments to be made by such Borrower,
provided, subject to CLAUSE 5.1(D), that (i) alternative payment
arrangements are made which are intended to ensure timely payment of
Monthly Payments due from the Borrower to the Mortgages Trustee on behalf
of the Beneficiaries, and (ii) the change in arrangements was made at the
instigation of the Borrower or by the Servicer in accordance with the
procedures which would be adopted by a Reasonable, Prudent Mortgage
Lender.
(c) The Servicer may, notwithstanding the proviso to CLAUSE 5.1(B), agree
such procedures for the payment by a Borrower of (i) overdue amounts and
(ii) amounts payable on redemption of a Mortgage in whole or in part
other than through the Direct Debiting Scheme as would be agreed by a
Reasonable, Prudent Mortgage Lender.
(d) The Servicer shall, notwithstanding the proviso to CLAUSE 5.1(B), use its
reasonable endeavours to credit Monthly Payments made by a Borrower under
a payment arrangement other than the Direct Debiting Scheme to the
Mortgages Trustee GIC Account as follows:
(i) where the Borrower pays by standing order, by close of business on
the second London Business Day following the day on which such
amount is received or credited by the Servicer;
(ii) where the Borrower pays by payment of cash, by transfer payment
from another account of the Seller or by cheque where reference to
the relevant Borrower is provided or payments are made by way of
paying-in book, by close of business on the London Business Day
which immediately follows the day on which such amount is received
or credited by the Servicer; and
(iii) where the Borrower pays by cheque where a reference to the
relevant Borrower is not provided, by close of business on the
next London Business Day after notification from the banks
operating the Seller Bank Accounts of the identity of the
Borrower.
(e) Where a Borrower permits a direct debit to be made to his bank account,
the Servicer will endeavour to procure that such Borrower maintains a
valid and effective mandate relating to such direct debit in relation to
each Monthly Payment due from that Borrower, provided that in any case
where a Borrower will not permit a direct debit to be made to his bank
account the Servicer will endeavour to make alternative arrangements
acceptable to a Reasonable, Prudent Mortgage Lender so that such Borrower
nevertheless pays each Monthly Payment within the month in which it falls
due.
(f) In the event that the BACS system ceases to operate for any reason the
Servicer will use reasonable endeavours to make alternative arrangements
for the use of the back up systems available to each Account Bank.
10
(g) If at any time the Servicer shall receive notice whether under the Direct
Debiting Scheme or otherwise that any amount (or part thereof), which was
paid in or credited pursuant to CLAUSE 5.1 and which has been transferred
to the Mortgages Trustee GIC Account has not been received as cleared
funds or has otherwise been recalled, the Servicer shall notify the Cash
Manager and instruct the Cash Manager forthwith to debit the Mortgages
Trustee GIC Account and credit the relevant collection account for the
whole or any part of such amount (such amount hereinafter referred to as
the SHORTFALL) and, an amount equal to any costs which are irrecoverable
by the Servicer from the relevant Borrower incurred by the Servicer as a
result of such shortfall; PROVIDED THAT no debit from the Mortgages
Trustee GIC Account for the credit of the collection accounts in respect
of any shortfall may be made on or after a Calculation Date in respect of
the relevant period between that Calculation Date and the next
Distribution Date unless sufficient funds are available after providing
or making provision for all payments to be made on the next succeeding
Distribution Date. After that following Distribution Date the Mortgages
Trustee shall transfer, or procure on its behalf the transfer, from the
Mortgages Trustee GIC Account to the relevant collection account of an
amount equal to such shortfall subject to it having sufficient funds
available to it or the Servicer shall deduct an amount equal to such
shortfall from payments otherwise due on a daily basis from the Seller to
the Mortgages Trustee in respect of Principal Receipts and Interest
Receipts received under the Loans.
5.2 ADMINISTRATION AND ENFORCEMENT OF MORTGAGES
(a) The Mortgages Trustee and the Beneficiaries hereby direct the Servicer to
administer the Loans comprised in the Portfolio and carry out its
specific obligations under this Agreement in accordance with the Seller's
Policy.
(b) The Servicer will, in relation to any default by a Borrower under or in
connection with a Loan or a Mortgage comprised in the Portfolio, comply
with the Enforcement Procedures or, to the extent that the Enforcement
Procedures are not applicable having regard to the nature of the default
in question, take such action as is not materially prejudicial to the
interests of the Mortgages Trustee (as trustee for the Beneficiaries) and
the Beneficiaries under the relevant MIG Policy, provided that:
(i) the Servicer shall only become obliged to comply with the
Enforcement Procedures (to the extent applicable) or to take
action as aforesaid after it has become aware of the default;
(ii) it is acknowledged by the Beneficiaries that mortgage lenders
generally exercise discretion in pursuing their respective
enforcement procedures and that the Servicer may exercise such
discretion as would a Reasonable, Prudent Mortgage Lender in
applying the Enforcement Procedures to any particular defaulting
Borrower or taking action as aforesaid, provided that in
exercising such discretion the interest of Funding 1 and/or
Funding 2 in the Portfolio is not materially prejudiced; and
(iii) in any case where any of the Insurance Policies requires exact
compliance with certain enforcement procedures the Servicer shall
procure the prior written consent of the relevant insurance
company for any deviation by it from such enforcement procedures.
5.3 RECORDS
The Servicer shall keep and maintain records in relation to the
Portfolio, on a Loan by Loan basis, for the purposes of identifying
amounts paid by each Borrower, any amount due from a Borrower and the
principal balance (and, if different, the total balance) from time to
time outstanding on a Borrower's account and such other records as would
be kept by a Reasonable, Prudent Mortgage Lender. The Servicer will
provide such information to the Mortgages Trustee and/or Funding 1 and/or
Funding 2 and/or the Funding 1 Security Trustee and/or the Funding 2
Security Trustee or to their order at any time upon reasonable notice
subject to the Servicer being reasonably capable of
11
providing such information without significant additional cost and
subject to the provisions of the Data Protection Xxx 0000 and other
applicable legislation from time to time and provided that no duty of
confidence and no industry code of practice will or may be breached
thereby.
5.4 TRUST
(a) If the Servicer in carrying out its functions as Servicer under this
Agreement receives (including in its capacity as agent for the Mortgages
Trustee and the Beneficiaries) any money whatsoever arising from the
Loans and their Related Security, which money belongs to the Mortgages
Trustee (as trustee for the Beneficiaries) and is to be paid to the
Mortgages Trustee GIC Account pursuant to this Agreement or any of the
other Transaction Documents or otherwise, it will hold such monies on
trust for the Mortgages Trustee and shall keep such money separate from
all other monies held by the Servicer and shall, as soon as reasonably
practicable and in any event within the time limits referred to in CLAUSE
5.1, pay the monies into the Mortgages Trustee GIC Account.
(b) All other sums received by the Servicer in respect of the Loans and their
Related Security shall be held by the Servicer for itself.
5.5 ANNUAL SERVICER COMPLIANCE STATEMENT
For so long as the Mortgages Trustee, Funding 1, Funding 2, any Funding 1
Issuer or the Master Issuer is subject to the reporting requirements of
Section 13(a) or 15(d) of the Exchange Act, the Servicer shall deliver to
the Mortgages Trustee, Funding 1 and Funding 2 (as applicable) not later
than 31 March in each calendar year commencing in 2007, a statement of
compliance with respect to such calendar year, which statement will be in
the form of an officer's certificate with respect to each such Funding 1
Issuer and/or the Master Issuer, as the case may be, stating that (i) a
review of the activities of the Servicer during the immediately preceding
calendar year (or such shorter period as shall have elapsed since the
relevant Closing Date) and of its performance under this Agreement during
such period has been made under such officer's supervision and (ii) to
the best of such officer's knowledge, based on such review, the Servicer
has throughout such period fulfilled all of its obligations under this
Agreement and the minimum servicing standards set out in SCHEDULE 3 (the
MINIMUM SERVICING STANDARDS) in all material respects, or, if there has
been a failure to fulfil any such obligations or the minimum servicing
standards in any material respect, specifying each such failure known to
such officer and the nature and status thereof.
5.6 INDEPENDENT AUDITORS' ANNUAL SERVICER COMPLIANCE CERTIFICATE
For so long as the Mortgages Trustee, Funding 1, Funding 2, any Funding 1
Issuer or the Master Issuer is subject to the reporting requirements of
Section 13(a) or 15(d) of the Exchange Act, the Servicer shall cause a
registered public accounting firm to furnish to the Servicer and the
Mortgages Trustee on behalf of the Beneficiaries and the Funding 1
Issuers and the Master Issuer, as applicable, not later than 31 March in
each calendar year commencing in 2007, an attestation report (addressed
to the Board of Directors of the Servicer) on assessment of compliance
with the Servicing Criteria with respect to the Servicer or any affiliate
thereof during the immediately preceding calendar year delivered by such
accountants pursuant to Rule 13(a)-18 or Rule 15(d)-18 of the Exchange
Act and Item 1122 of Regulation AB; provided, however, that solely with
respect to the fiscal year ending December 31, 2006, the Servicer, in its
sole and absolute discretion, rather than cause the report described
above to be furnished, may cause a registered public accounting firm to
furnish to the Servicer and the Mortgages Trustee:
(a) an attestation report on assessment of compliance with the
Servicing Criteria with respect to the Servicer during the
three-month period ending December 31, 2006 delivered by such
accountants pursuant to Rule 13(a)-18 or Rule 15(d)-18 of the
Exchange Act and Item 1122 of Regulation AB; and
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(b) a report substantially to the effect that (i) such accounting firm
has examined certain documents and records of the Servicer
relating to the servicing of Loans under this Agreement during the
period from 1 January 2006 to and including 30 September 2006,
(ii) such examination included such tests and auditing procedures
as such firm considered necessary in the circumstances and was
conducted in accordance with attestation standards established by
the American Institute of Certified Public Accountants, (iii)
management of the Servicer has asserted to such firm that the
Servicer has complied with the minimum servicing standards set out
in SCHEDULE 3 as of and for the period from 1 January 2006 to and
including 30 September 2006 and (iv) in the opinion of such firm,
such assertion of the Servicer's management is fairly stated in
all material respects (or if such assertion is not fairly stated,
stating why such assertion is not fairly stated).
5.7 REPORT ON ASSESSMENT OF COMPLIANCE AND ATTESTATION
(a) On or before March 31 of each calendar year, commencing in 2007, the
Servicer shall:
(i) deliver to the Mortgages Trustee, Funding 1 and Funding 2 (as
applicable) a report regarding the Servicer'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 addressed to the Mortgages Trustee and signed by an
authorized officer of the Servicer, and shall address each of
Servicing Criteria specified on a certification substantially in
the form of Schedule 5 delivered to the Mortgages Trustee
concurrently with the execution of this Agreement. To the extent
any of the Servicing Criteria are not applicable to the Servicer,
with respect to asset-backed securities transactions taken as a
whole involving the Servicer and that are backed by the same asset
type backing the Notes, such report shall include a statement to
that effect;
(ii) deliver to the Mortgages Trustee, Funding 1 and Funding 2 (as
applicable) a report of a registered public accounting firm
reasonably acceptable to the Mortgages Trustee that attests to,
and reports on, the assessment of compliance made by the Servicer
and delivered pursuant to paragraph (i) above. 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,
including, without limitation that in the event that an overall
opinion cannot be expressed, such registered public accounting
firm shall state in such report why it was unable to express such
an opinion. Such report must be available for general use and not
contain restricted use language. To the extent any of the
Servicing Criteria are not applicable to the Servicer, with
respect to asset-backed securities transactions taken as a whole
involving the Servicer and that are backed by the same asset type
backing the Notes, such report shall include a statement to that
effect;
(iii) cause each Subcontractor determined by the Servicer pursuant to
Clause 5.7(b) to be "participating in the servicing function"
within the meaning of Item 1122 of Regulation AB, to deliver to
the Mortgages Trustee an assessment of compliance and accountants'
attestation as and when provided in paragraphs (a) and (b) of this
Clause 5.7; and
(iv) deliver or cause to be delivered to any 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 and the rules and regulations of the Commission promulgated
thereunder (including any interpretations thereof by the
Commission's staff) a certification in the form attached hereto as
Schedule 4.
The Servicer acknowledges that any person identified in clause (a)(iv)
above may rely on the certification provided by the Servicer pursuant to
such clause in signing a Sarbanes Certification and filing such with the
Commission.
13
(b) Each assessment of compliance provided by a Subcontractor pursuant to
Clause 5.7(a)(iv) shall address each of the Servicing Criteria specified
on a certification substantially in the form of Schedule 6 hereto
delivered to the Mortgages Trustee concurrently with the execution of
this Agreement. An assessment of compliance provided by a Subcontractor
pursuant to Clause 5.7(a)(iv) need not address any elements of the
Servicing Criteria other than those specified by the Servicer pursuant to
Clause 5.7(a)(i).
5.8 USE OF SUBCONTRACTORS
The Servicer shall promptly upon request provide the Mortgages Trustee,
Funding 1 and Funding 2 (as applicable) a written description (in form
and substance satisfactory to the Mortgages Truste,e Funding 1 and
Funding 2 (as applicable)) of the role and function of each Subcontractor
utilized by the Servicer, 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 Servicer shall cause any such Subcontractor used by the Servicer for
the benefit of the Mortgages Trustee to comply with the provisions of
Clause 5.7 of this Agreement to the same extent as if such Subcontractor
were the Servicer. The Servicer shall be responsible for obtaining from
each Subcontractor and delivering to the Mortgages Trustee any assessment
of compliance and attestation required to be delivered by such
Subcontractor under Clause 5.7, in each case as and when required to be
delivered.
6. NO LIABILITY
6.1 The Servicer shall have no liability for any obligation of a Borrower
under any Loan comprised in the Portfolio or any Related Security and
nothing herein shall constitute a guarantee, or similar obligation, by
the Servicer of any Loan, Mortgage or any Borrower.
6.2 Save as otherwise provided in this Agreement, the Servicer shall have no
liability for the obligations of the Mortgages Trustee or the
Beneficiaries under any of the Transaction Documents or otherwise and
nothing herein shall constitute a guarantee, or similar obligation, by
the Servicer of the Mortgages Trustee or the Beneficiaries in respect of
any of them.
7. NEW LOANS
7.1 The Portfolio may be augmented from time to time by the sale to the
Mortgages Trustee on any Sale Date of a New Portfolio by the Seller.
7.2 The sale of each New Portfolio to the Mortgages Trustee will in all cases
be subject to the terms set out in the Mortgage Sale Agreement including,
without limitation, the conditions set out in CLAUSE 4 of the Mortgage
Sale Agreement and the representations and warranties set out in CLAUSE 8
of the Mortgage Sale Agreement.
8. PRODUCT SWITCHING AND FURTHER ADVANCES
8.1 (a) The Servicer shall not send an offer of a Further Advance or a
Home Cash Reserve Advance without first having received
confirmation in writing from the Seller save where the Seller and
the Servicer are both Halifax that the Seller would, if so offered
by the Mortgages Trustee, purchase the relevant Loan and its
Related Security from the Mortgages Trustee.
(b) The Servicer shall not send an offer of a Product Switch without
first having received confirmation in writing from the Seller save
where the Seller and the Servicer are both
14
Halifax that the Seller would, if so offered by the Mortgages
Trustee, purchase the relevant Loan and its Related Security from
the Mortgages Trustee if on the immediately preceding Distribution
Date, the Seller is in breach of the conditions referred to in
CLAUSES 4.2(A) TO (Q) inclusive of the Mortgage Sale Agreement as
if references therein to "NEW LOANS" and "NEW PORTFOLIO" were
references to the Loan which would result from the implementation
of such Product Switch and as if references to "SALE DATE" were
references to the date when the Seller and relevant Borrower
complete such Product Switch.
(c) For the avoidance of doubt, neither the Servicer nor the Seller
shall make an offer to a Borrower for a Further Advance, a Home
Cash Reserve Advance or a Product Switch if it would result in the
Issuer, Funding 1, Funding 2 or the Mortgages Trustee arranging or
advising in respect of, administering (servicing) or entering into
a regulated mortgage contract or agreeing to carry on any of these
activities, if the Issuer, Funding 1, Funding 2 or the Mortgages
Trustee would be required to do so.
8.2 Subject to complying with the terms of CLAUSE 8.1, where the Servicer
sends an offer of a Product Switch, a Further Advance or a Home Cash
Reserve Advance, the Servicer shall then notify the Seller save where the
Seller and the Servicer are both Halifax and the Mortgages Trustee in
writing.
8.3 Notwithstanding CLAUSE 8.2, subject to complying with the terms of CLAUSE
8.1, the Servicer, on behalf of and as agent for the Seller may send an
offer to Borrowers for Product Switches, Further Advances and Home Cash
Reserve Advances provided that the Servicer acts in accordance with the
then applicable procedure which would be acceptable to a Reasonable,
Prudent Mortgage Lender.
8.4 For the avoidance of doubt, where the Servicer sends any offer
contemplated by this CLAUSE 8, it shall do so pursuant to its appointment
under this Agreement.
9. REDEMPTION OF MORTGAGES
9.1 Upon repayment in full of all sums secured by a Mortgage and/or other
Related Security comprised in the Portfolio, the Servicer shall, and is
hereby authorised by the Mortgages Trustee and the Beneficiaries to
execute a receipt or discharge or relevant Land Registry Form DS1 of the
Mortgage and any such other or further instrument or deed of satisfaction
regarding such Mortgage and/or the Related Security as it considers to be
necessary or advisable, to implement an Electronic Notification of
Discharge to the Land Registry and to release the relevant Title Deeds to
the person or persons entitled thereto.
9.2 The Servicer undertakes that prior to any actual release by it of the
relevant Title Deeds it will take reasonable and appropriate steps to
satisfy itself that the relevant Title Deeds are being released to the
person or persons entitled thereto.
9.3 The Servicer shall procure that if, upon completion of the Enforcement
Procedures, an amount in excess of all sums due by the relevant Borrower
is recovered or received, the balance, after discharge of all sums due by
the Borrower, is paid to the person or persons next entitled thereto.
10. POWERS OF ATTORNEY
10.1 For good and valuable consideration and as security for the interests of
the Mortgages Trustee and the Beneficiaries hereunder, each of the
Seller, the Mortgages Trustee and the Beneficiaries hereby appoints the
Servicer as its attorney on its behalf, and in its own or the attorney's
name, for the following purposes:
15
(a) executing all documents necessary for the purpose of discharging a
Mortgage comprised in the Portfolio which has been repaid in full
and any Related Security or for the sale of a Property as
Mortgagee;
(b) executing all documents and implementing all Electronic
Notifications of Discharge to the Land Registry necessary for the
purpose of releasing a Borrower in accordance with CLAUSE 9;
(c) executing all documents and doing all such acts and things which
in the reasonable opinion of the Servicer are necessary or
desirable for the efficient provision of the Services hereunder;
and
(d) exercising its rights, powers and discretion under the Mortgages
including the right to fix the Mortgages Trustee Variable Base
Rate and the Mortgages Trustee Tracker Rate or any related rights,
provided that, for the avoidance of doubt, these Powers of Attorney shall
not authorise the Servicer to sell any of the Loans and/or their Related
Security comprised in the Portfolio except as specifically authorised in
the Transaction Documents. For the avoidance of doubt, neither the Seller
(where the Servicer is not Halifax), the Mortgages Trustee, Funding 1 nor
Funding 2 shall be liable or responsible for the acts of the Servicer or
any failure by the Servicer to act under or in respect of these Powers of
Attorney.
10.2 The appointments contained in CLAUSE 10.1 shall be irrevocable unless and
until following a Servicer Termination Event the Mortgages Trustee and/or
Funding 1 and/or Funding 2 and/or the Funding 1 Security Trustee and/or
the Funding 2 Security Trustee serves notice pursuant to CLAUSE 21 to
terminate the Servicer's appointment under this Agreement upon which the
appointments contained in CLAUSE 10.1 shall be automatically revoked.
11. COSTS AND EXPENSES
11.1 The Mortgages Trustee (on behalf of the Beneficiaries) will on each
Distribution Date reimburse, in accordance with CLAUSE 10.2 of the
Mortgages Trust Deed, the Servicer for all out-of-pocket costs, expenses
and charges (together with any amounts in respect of Irrecoverable VAT
due thereon) properly incurred by the Servicer in the performance of the
Services including any such costs, expenses or charges not reimbursed to
the Servicer on any previous Distribution Date and the Servicer shall
supply the Mortgages Trustee with a copy of an appropriate VAT invoice
issued by the person making the supply.
11.2 The Servicer will use reasonable endeavours to recover from the relevant
Borrowers all costs and expenses incurred by the Servicer which are
properly recoverable from those Borrowers under the relevant Mortgage
Conditions.
12. INFORMATION
12.1 MAINTENANCE OF RECORDS
(a) Subject to CLAUSE 18, the Servicer shall keep the Customer Files relating
to the Portfolio in safe custody and shall take appropriate technical and
organisational measures against the unauthorised or unlawful processing
of personal data and against accidental loss or destruction of, or damage
to, personal data. The Servicer shall maintain in an adequate form such
records as are necessary to enforce each Mortgage comprised in the
Portfolio and, where relevant, any other Related Security.
16
(b) A duplicate of any computer records held by the Servicer which contains
information relating to the Loans and the Related Security shall be
lodged by the Servicer on a daily basis at the offices of the Seller at
the Pudsey Data Centre or at such other locations selected by the
Servicer, so long as such location is a location separate from that in
which the original computer records are stored and in an environment
conducive to the safe storage of electronic media, such records to be
held to the order of the Mortgages Trustee and to be replaced by a
revised duplicate as and when the original records are revised. The
Servicer shall keep the Mortgages Trustee informed of the location of the
Customer Files and duplicate computer records.
12.2 USE OF I.T. SYSTEMS
(a) The Servicer covenants that at the date hereof in respect of the software
which is used by the Servicer in providing the Services, it shall for the
duration of this Agreement:
(i) ensure that it has in place all necessary licences and/or consents
from the respective licensor or licensors (if any) of such
software; and
(ii) except in so far as it would breach any other of its legal
obligations, grant to any person to whom it may sub-contract or
delegate the performance of all or any of its powers and
obligations under this Agreement and/or to such person as the
Mortgages Trustee and the Beneficiaries elect as a substitute
servicer in accordance with the terms of this Agreement a licence
to use any proprietary software together with any updates which
may be made thereto from time to time.
(b) The Servicer shall use reasonable endeavours to maintain in working order
the information technology systems used by the Servicer in providing the
Services.
(c) The Servicer shall pass to any person to whom it may sub-contract or
delegate the performance of all or any of its powers and obligations
under this Agreement and/or to such person as the Mortgages Trustee and
the Beneficiaries elect as a substitute servicer in accordance with the
terms of this Agreement the benefit of any warranties in relation to the
software insofar as the same are capable of assignment.
12.3 ACCESS TO BOOKS AND RECORDS
Subject to all applicable laws, the Servicer shall permit the Mortgages
Trustee, Funding 1 and Funding 2 (and their auditors), Funding 1 Security
Trustee and the Funding 2 Security Trustee and any other person nominated
by the Beneficiaries (to whom the Servicer has no reasonable objection)
upon reasonable notice during normal office hours to have access, or
procure that such person or persons are granted access, to all books of
record and account (including, for the avoidance of doubt, the Title
Deeds and Customer Files) relating to the administration of the Loans and
their Related Security comprised in the Portfolio and related matters in
accordance with this Agreement.
12.4 INFORMATION COVENANTS
(a) The Servicer shall, within ten (10) Business Days following each
Distribution Date, provide the Mortgages Trustee, the Beneficiaries, each
Manager and/or Dealer (if requested by such Manager or Dealer to do so)
and the Rating Agencies (on the terms agreed with each of the Rating
Agencies) monthly with a report in, or substantially in, the form set out
in SCHEDULE 2 and shall assist the Cash Manager in the production of
monthly reports substantially in the forms set out in SCHEDULE 3 of the
Cash Management Agreement.
(b) The Servicer shall notify the Rating Agencies in writing of the details
of (i) any material amendment to the Transaction Documents, (ii) any
proposed material change in the valuation procedures or
17
policies applied or to be applied in relation to Properties by it in
connection with its mortgage business (details of which change may be
included in a report provided under PARAGRAPH (A)) and (iii) any other
information relating to its mortgage business and financial condition as
the Rating Agencies may reasonably request in connection with the ratings
of the Notes and other matters contemplated by the Transaction Documents,
provided that such request does not adversely interfere with the
Servicer's day to day provision of the Services under the other terms of
this Agreement.
(c) The Servicer shall, at the request of Funding 1 and/or Funding 2 and/or
the Funding 1 Security Trustee and/or the Funding 2 Security Trustee
(where the Servicer is the Seller) and at the request of the
Beneficiaries (where the Servicer is no longer the Seller), furnish
Funding 1, Funding 2, the Funding 1 Security Trustee, the Funding 2
Security Trustee and/or the Beneficiaries (as appropriate) and the Rating
Agencies with such other information relating to its business and
financial condition as it may be reasonable for Funding 1, Funding 2, the
Funding 1 Security Trustee, the Funding 2 Security Trustee and/or the
Beneficiaries (as appropriate) to request in connection with the ratings
of the Notes and other matters contemplated by the Transaction Documents,
provided that Funding 1, Funding 2, the Funding 1 Security Trustee, the
Funding 2 Security Trustee or the Beneficiaries (as appropriate) shall
not make such a request more than once every three months unless, in the
belief of Funding 1, Funding 2, the Funding 1 Security Trustee, the
Funding 2 Security Trustee or the Beneficiaries (as appropriate), an
Intercompany Loan Event of Default, a Master Intercompany Loan Event of
Default or a Servicer Termination Event shall have occurred and is
continuing or may reasonably be expected to occur.
(d) The Servicer shall make available to beneficial owners of the Notes, who
have provided beneficial ownership certification as described herein, on
a monthly basis a report containing information about the Loans in the
Mortgages Trust.
13. REMUNERATION
The Mortgages Trustee (on behalf of the Beneficiaries) shall pay to the
Servicer for its Services hereunder an administration fee (the
ADMINISTRATION FEE) (inclusive of VAT) which:
(a) shall be calculated in relation to each Calculation Period on the
basis of the number of days elapsed and a 365 day year at the rate
of 0.05 per cent. per annum, inclusive of VAT, on the aggregate
amount of the Trust Property as at open of business on the
preceding Calculation Date, provided that where the appointment of
the Servicer is terminated pursuant to CLAUSE 21 and a substitute
servicer is to be appointed, the Administration Fee may be
calculated on different terms agreed with such substitute
servicer; and
(b) shall be paid to the Servicer in arrear on each Distribution Date
in the manner contemplated by and in accordance with the
provisions of CLAUSE 10.2 of the Mortgages Trust Deed.
14. INSURANCES
14.1 The Servicer will administer the arrangements for insurance to which the
Mortgages Trustee is a party or in which either the Seller or the
Mortgages Trustee (on behalf of the Beneficiaries) has an interest and
which relate to the Loans and the Mortgages comprised in the Portfolio or
the business of the Mortgages Trustee. In particular, but without
limitation, the Servicer shall promptly notify the Mortgages Trustee, the
Beneficiaries, the Funding 1 Security Trustee and the Funding 2 Security
Trustee of the existence of any insurance policies to which the Seller is
a party or in which it has an interest in addition to those specifically
referred to in the definition of "HALIFAX INSURANCE POLICIES" in the
Master Definitions and Construction Schedule.
14.2 The Servicer shall use its reasonable endeavours to credit to the
Mortgages Trustee GIC Account all proceeds received from any claim made
under any Insurance Policy in relation to any Loan or its
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Related Security by close of business on the London Business Day which
immediately follows the day on which such amounts are received or
credited by the Servicer and which is to be applied either in whole or in
part in repayment of a Loan.
15. HALIFAX INSURANCE POLICIES
15.1 The Servicer shall not knowingly take or omit to take any action which
would:
(a) result in the avoidance or termination of any of the Halifax
Insurance Policies in relation to any Loans and Mortgages to which
any Halifax Insurance Policy applies; or
(b) reduce the amount payable on any claim made on behalf of the
Mortgages Trustee (as trustee for the Beneficiaries) under any
Halifax Insurance Policy; or
(c) invalidate any Halifax Insurance Policy.
15.2 The Servicer shall prepare and submit any claim under the Halifax
Insurance Policies in accordance with the requirements of the relevant
Halifax Insurance Policy and otherwise with the usual procedures
undertaken by a Reasonable, Prudent Mortgage Lender on behalf of the
Mortgages Trustee and the Beneficiaries and shall comply with the other
requirements of the insurer under the relevant Halifax Insurance Policy.
15.3 If the Seller's Policy requires the Servicer to make a claim under the
relevant MIG Policy and the Servicer has failed to make such a claim,
then the Beneficiaries may direct the Mortgages Trustee on their behalf
to direct the Servicer to make a claim or, in default thereof by the
Servicer, the Beneficiaries may direct the Mortgages Trustee to itself
make a claim under such policy and the Servicer shall, within 10 London
Business Days of receiving a written request from the Mortgages Trustee
(as trustee for the Beneficiaries), provide the Mortgages Trustee with
such information as the Mortgages Trustee may require to enable it to
make a claim under the relevant MIG Policy.
16. BUILDINGS POLICIES
16.1 The Servicer shall not knowingly take any action or omit to take any
action which would result in the avoidance or termination of any
applicable Buildings Policy or would reduce the amount payable on any
claim thereunder.
16.2 Upon receipt of notice that any Borrower whose Loan is secured by a
mortgage of or a standard security over a leasehold Property including a
Property in Scotland held under a long lease has failed to make a payment
when due of any sums due under the relevant lease in respect of the
insurance of the property the Servicer may debit that Borrower's account
with the relevant amount which shall then be paid to the landlord or to
the relevant insurance company together with notice to the landlord.
16.3 If the Servicer becomes aware that a Borrower has failed to pay premiums
due under any Buildings Policy, the Servicer shall take such action as
would a Reasonable, Prudent Mortgage Lender with a view to ensuring that
the relevant Property continues to be insured in accordance with the
applicable Mortgage Terms or the Alternative Insurance Recommendations.
17. TITLE DEEDS AND CUSTOMER FILES
17.1 The Servicer shall keep the Title Deeds, Customer Files and (where
applicable) Insurance Policies and the receipt of notes of assignment
relating to the Portfolio in safe custody and shall not without the prior
written consent of the Mortgages Trustee and the Beneficiaries part with
possession, custody or control of them otherwise than to a sub-contractor
or delegate appointed pursuant to
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CLAUSE 3.2 or to a solicitor, licensed conveyancer, qualified conveyancer
or authorised practitioner, subject to the usual undertaking to hold them
to the order of the Servicer (who in turn will hold them to the order of
the Mortgages Trustee (as trustee for the Beneficiaries) or in the case
of Scottish Loans, to the order of the Seller, in its capacity as trustee
for the Mortgages Trustee (as trustee for the Beneficiaries) or to the
Land Registry or Registers of Scotland or, upon redemption of the
relevant Loan, to the order of the Borrower).
17.2 The Title Deeds and Customer Files relating to the Portfolio shall be
kept in such manner so that a computer record is maintained of their
location and they are identifiable and retrievable by reference to an
account number and pool identifier and identifiable and distinguishable
from the title deeds relating to other properties and mortgages and
standard securities in respect of which the Servicer is mortgagee or
heritable creditor or servicer. In the event of receipt by the Servicer
of notice that the short-term, unsecured, unsubordinated and unguaranteed
debt of the Servicer is rated less than A-1 by S&P and P-1 by Xxxxx'x and
F1 by Fitch, the Servicer shall use reasonable endeavours to ensure that
the Title Deeds are identified as distinct from the title deeds of other
properties and mortgages and standard securities which do not form part
of the Portfolio.
17.3 The Servicer shall provide access or procure that access is provided to
the Title Deeds, Customer Files and other records relating to the
administration of the Loans and Mortgages in the Portfolio to the
Mortgages Trustee, the Beneficiaries, the Funding 1 Security Trustee, the
Funding 2 Security Trustee and their respective agents at all reasonable
times and upon reasonable written notice. The Servicer acknowledges that
the Title Deeds and Customer Files relating to the Portfolio in its
possession, custody or control will be held to the order of the Mortgages
Trustee (as trustee for the Beneficiaries) or in the case of Scottish
Loans, to the order of the Seller, in its capacity as trustee for the
Mortgages Trustee (as trustee for the Beneficiaries), and that it has, in
its capacity as Servicer, no beneficial interest therein and the Servicer
(in its capacity as such but not in its capacity as a Beneficiary)
irrevocably waives any rights or any Security Interest which it might
have therein or to which it might at any time be entitled.
17.4 The Servicer shall, forthwith on the termination of the appointment of
the Servicer pursuant to CLAUSE 21, deliver the Title Deeds and Customer
Files in its possession, custody or control or that of its
sub-contractors or agents to or to the order of the Mortgages Trustee or
to such person as the Mortgages Trustee elects as a substitute servicer
in accordance with the terms of this Agreement upon written request by
the Mortgages Trustee made at any time on or after notice of, or on or
after, termination of the appointment of the Servicer pursuant to CLAUSE
21.
17.5 The Servicer undertakes that it will use all reasonable efforts to obtain
as soon as reasonably practicable:
(a) the title number to each Property in respect of which a Mortgage
is registered at the Land Registry to the extent that such title
number does not appear in the Exhibit to the Mortgage Sale
Agreement (or, as the case may be, the Schedule to the relevant
New Portfolio Notice); and
(b) the title number to each Property in respect of which a Mortgage
is registered in the Land Register of Scotland to the extent that
such title number does not appear in the Schedule to the relevant
New Portfolio Notice.
The Servicer shall include in the monthly report to be delivered in
accordance with CLAUSE 12.4 of this Agreement (i) details of such title
numbers relating to the Initial Portfolio as are then known to the
Servicer at the time of such report and (ii) details of such title
numbers relating to any New Loans purchased from the Seller as are then
known to the Seller at the time of such report, together with such other
information relating thereto as the Mortgages Trustee may reasonably
request.
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18. DATA PROTECTION
18.1 The Servicer and the Mortgages Trustee each represents that as at the
date hereof it has and hereafter it will maintain all appropriate
registrations, licences, consents and authorities (if any) required under
the Data Protection Xxx 0000 together, with its ancillary legislation
(the DATA PROTECTION ACT) to enable it to perform its respective
obligations under this Agreement. In addition to the foregoing and
notwithstanding any of the other provisions of this Agreement, each of
the Servicer and the Mortgages Trustee hereby agree and covenant as
follows:
(a) that only data that is not "personal data" (as defined in the Data
Protection Act) may be transferred by the Servicer to the
Mortgages Trustee or any other entity located in Jersey (unless:
(i) Jersey is determined, on the basis of Article 25(b) of
Directive 95/46/EC, a third country which ensures an adequate
level of protection of "personal data" by the European Commission
or (ii) the Servicer and the Mortgages Trustee have entered into a
data transfer agreement in a form approved by the EC Commission as
meeting the requirements of Article 26(2) of Directive 95/46/EC
for the transfer of personal data to third countries which do not
ensure an adequate level of protection (the STANDARD CONTRACTUAL
CLAUSES) in which case, subject to CLAUSE 18.1 (E), the Servicer
may transfer such personal data to the Mortgages Trustee in
Jersey);
(b) that if, at the date at which circumstances enable the Mortgages
Trustee to exercise its right to demand that the Servicer transfer
inter alia personal data to the Mortgages Trustee, (i) Jersey has
been determined, on the basis of Article 25(b) of Directive
95/46/EC a third country which ensures an adequate level of
protection of personal data by the European Commission or (ii) the
Servicer and the Mortgages Trustee have entered into the Standard
Contractual Clauses then, subject to the CLAUSE 18.1(E), the
Servicer shall transfer the relevant personal data to the
Mortgages Trustee or to its order;
(c) that the Servicer will, if the Mortgages Trustee requires the
Servicer to do so, take all reasonable steps to notify each
Borrower that the Mortgages Trustee is a "data controller" (as
defined in the Data Protection Act) and provide each such Borrower
with such details as the Mortgage Trustee shall reasonably request
including but not limited to the Mortgages Trustee's contact
details for the purposes of the Data Protection Act;
(d) that the Servicer and the Mortgages Trustee will only use any data
in relation to the Loans and the related Borrowers for the
purposes of administering and/or managing the Portfolio, and will
not sell such data to any third party or allow any third party to
use such data other than in compliance with the Data Protection
Act, the conditions stated in this CLAUSE 18 and for the sole
purpose of administering and/or managing the Portfolio;
(e) that the Mortgages Trustee will comply with the provisions of the
Data Protection (Jersey) Law 1987 (as amended) or any law which
supersedes or replaces the Data Protection (Jersey) Law 1987 and
(so long as the provisions of the Data Protection Act do not
conflict with the provisions of the Data Protection (Jersey) Law
1987 (as amended) or any law which supersedes or replaces the Data
Protection (Jersey) Law 1987) with the provisions of the Data
Protection Act; and
(f) that the Mortgages Trustee shall maintain a written record of its
reasons for applying the Data Protection Order 2000/185 (as set
forth under the Conditions under paragraph 3 of Part II of
Schedule I of the Data Protection Act).
18.2 The Servicer will use all reasonable endeavours to ensure that, in the
event of the appointment of a sub-contractor in accordance with CLAUSE
3.2 such sub-contractor shall obtain and maintain all appropriate
registrations, licences, consents and authorities required (including,
without limitation,
21
those required under the Data Protection Act), and comply with
obligations equivalent to those imposed on the Servicer in this CLAUSE
18, to enable it to perform its obligations.
19. COVENANTS OF SERVICER
19.1 The Servicer hereby covenants with and undertakes to each of the
Mortgages Trustee, the Beneficiaries, the Funding 1 Security Trustee and
the Funding 2 Security Trustee that without prejudice to any of its
specific obligations hereunder it will:
(a) administer the Loans and their Related Security as if the same had
not been sold to the Mortgages Trustee but had remained on the
books of the Seller;
(b) provide the Services in such manner and with the same level of
skill, care and diligence as would a Reasonable, Prudent Mortgage
Lender;
(c) comply with any proper directions, orders and instructions which
the Mortgages Trustee or the Beneficiaries may from time to time
give to it in accordance with the provisions of this Agreement
and, in the event of any conflict, those of the Mortgages Trustee
shall prevail;
(d) keep in force all licences, approvals, authorisations, permissions
and consents which may be necessary in connection with the
performance of the Services and prepare and submit on a timely
basis all necessary applications and requests for any further
approval, authorisation, consent, registration or licence required
in connection with the performance of the Services and in
particular any necessary registrations under the Data Protection
Act;
(e) save as otherwise agreed with the Mortgages Trustee and each of
the Beneficiaries, provide free of charge to the Mortgages Trustee
and the Beneficiaries, office space, facilities, equipment and
staff sufficient to fulfil the obligations of the Mortgages
Trustee and the Beneficiaries under this Agreement;
(f) not knowingly fail to comply with any legal requirements in the
performance of the Services, including without limitation any
rules of the FSA in MCOB, ICOB or otherwise;
(g) make all payments required to be made by it pursuant to this
Agreement on the due date for payment thereof in sterling (or as
otherwise required under the Transaction Documents) in immediately
available funds for value on such day without set-off (including,
without limitation, in respect of any fees owed to it) or
counterclaim but subject to any deductions required by law;
(h) not without the prior written consent of the Funding 1 Security
Trustee and the Funding 2 Security Trustee amend or terminate any
of the Transaction Documents save in accordance with their terms;
and
(i) forthwith upon becoming aware of any event which may reasonably
give rise to an obligation of the Seller to repurchase any Loan
pursuant to the Mortgage Sale Agreement, notify the Mortgages
Trustee and the Beneficiaries in writing of such event.
19.2 The covenants of the Servicer in CLAUSE 19.1 shall remain in force until
this Agreement is terminated but without prejudice to any right or remedy
of the Mortgages Trustee and/or the Seller and/or Funding 1 and/or
Funding 2 arising from breach of any such covenant prior to the date of
termination of this Agreement.
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20. SERVICES NON-EXCLUSIVE
Nothing in this Agreement shall prevent the Servicer from rendering or
performing services similar to those provided for in this Agreement to or
for itself or other persons, firms or companies or from carrying on
business similar to or in competition with the business of the Mortgages
Trustee and the Beneficiaries.
21. TERMINATION
21.1 If any of the following events (SERVICER TERMINATION EVENTS) shall occur:
(a) default is made by the Servicer in the payment on the due date of
any payment due and payable by it under this Agreement and such
default continues unremedied for a period of five London Business
Days after the earlier of the Servicer becoming aware of such
default and receipt by the Servicer of written notice from Funding
1, Funding 2, the Funding 1 Security Trustee the Funding 2
Security Trustee and/or the Mortgages Trustee requiring the same
to be remedied; or
(b) default is made by the Servicer in the performance or observance
of any of its other covenants and obligations under this
Agreement, which in the reasonable opinion of:
(i) the Funding 1 Security Trustee is materially prejudicial to
the interests of Funding 1 and/or the Funding 1 Issuers
under the Intercompany Loans and/or the interests of the
holders of the Notes issued by a Funding 1 Issuer from time
to time; and/or
(ii) the Funding 2 Security Trustee is materially prejudicial to
the interests of Funding 2 and/or the Master Issuer under
the Master Intercompany Loan or any New Funding 2 Issuer
and/or the interests of the holders of the Notes issued by
the Master Issuer or any New Funding 2 Issuer,
(iii) and such default continues unremedied for a period of 20
London Business Days after becoming aware of such default
provided however that where the relevant default occurs as a
result of a default by any person to whom the Servicer has
sub-contracted or delegated part of its obligations
hereunder, such default shall not constitute a Servicer
Termination Event if, within such period of 10 London
Business Days of receipt of such notice from Funding 1,
Funding 2, the Funding 1 Security Trustee and/or the Funding
2 Security Trustee, the Servicer terminates the relevant
sub-contracting or delegation arrangements and takes such
steps as Funding 1, Funding 2, the Funding 1 Security
Trustee and the Funding 2 Security Trustee may in their
absolute discretion specify to remedy such default or to
indemnify the Mortgages Trustee and the Beneficiaries
against the consequences of such default; or
(c) the occurrence of an Insolvency Event in relation to the Servicer;
or
(d) the Board of Funding 1 and/or the Board of Funding 2 resolves,
after due consideration and acting reasonably, that the
appointment of the Servicer should be terminated,
then the Mortgages Trustee and/or Funding 1 and/or Funding 2 and/or the
Funding 1 Security Trustee and/or the Funding 2 Security Trustee may at
once or at any time thereafter while such default continues by notice in
writing to the Servicer terminate its appointment as Servicer under this
Agreement with effect from a date (not earlier than the date of the
notice) specified in the notice. Upon termination of the Servicer as
servicer under this Agreement, the Funding 1 Security Trustee
23
and the Funding 2 Security Trustee shall use its reasonable endeavours to
appoint a substitute servicer that satisfies the conditions set forth in
CLAUSES 21.2(C), (D) and (E).
21.2 The appointment of the Servicer under this Agreement may be terminated
upon the expiry of not less than 12 months' notice of termination given
by the Servicer to the Mortgages Trustee, the Beneficiaries, the Funding
1 Security Trustee and the Funding 2 Security Trustee provided that:
(a) the Mortgages Trustee and the Beneficiaries consent in writing to
such termination;
(b) a substitute servicer shall be appointed, such appointment to be
effective not later than the date of such termination and the
Servicer shall notify the Rating Agencies in writing of the
identity of such substitute servicer;
(c) such substitute servicer has experience of administering mortgages
of and standard securities over residential property in the United
Kingdom and is approved by the Mortgages Trustee and the
Beneficiaries;
(d) such substitute servicer enters into an agreement substantially on
the same terms as the relevant provisions of this Agreement and
the Servicer shall not be released from its obligations under the
relevant provisions of this Agreement until such substitute
servicer has entered into such new agreement; and
(e) the then current ratings (if any) of the Notes are not adversely
affected as a result thereof, unless otherwise agreed by an
Extraordinary Resolution of the holders of the relevant series and
class of Notes.
21.3 On and after termination of the appointment of the Servicer under this
Agreement pursuant to this CLAUSE 21, all authority and power of the
Servicer under this Agreement shall be terminated and be of no further
effect and the Servicer shall not thereafter hold itself out in any way
as the agent of the Mortgages Trustee and/or the Beneficiaries pursuant
to this Agreement.
21.4 Upon termination of the appointment of the Servicer under this Agreement
pursuant to this CLAUSE 21 (but subject to CLAUSE 18.1 (E)), the Servicer
shall:
(a) forthwith deliver (and in the meantime hold on trust for, and to
the order of, the Mortgages Trustee) to the Mortgages Trustee or
as it shall direct the Customer Files, the Title Deeds, all books
of account, papers, records, registers, correspondence and
documents in its possession or under its control relating to the
affairs of or belonging to the Mortgages Trustee (as trustee for
the Beneficiaries) and the Mortgages in the Portfolio and any
other Related Security, (if practicable, on the date of receipt)
any monies then held by the Servicer on behalf of the Mortgages
Trustee and any other assets of the Mortgages Trustee and the
Beneficiaries;
(b) take such further action as the Mortgages Trustee, Funding 1,
Funding 2, the Funding 1 Security Trustee and the Funding 2
Security Trustee may reasonably direct at the expense of the
Beneficiaries (including in relation to the appointment of a
substitute servicer) provided that the Mortgages Trustee shall not
be required to take or direct to be taken such further action
unless it has been indemnified to its satisfaction;
(c) provide all relevant information contained on computer records in
the form of magnetic tape, together with details of the layout of
the files encoded on such magnetic tapes;
(d) co-operate and consult with and assist the Mortgages Trustee,
Funding 1, Funding 2, the Funding 1 Security Trustee the Funding 2
Security Trustee and their nominees (which shall,
24
for the avoidance of doubt, include any new servicer appointed by
any of them) for the purposes of explaining the file layouts and
the format of the magnetic tapes generally containing such
computer records on the computer system of the Mortgages Trustee
or such nominee; and
(e) permit the Mortgages Trustee, Funding 1, Funding 2, the Funding 1
Security Trustee and the Funding 2 Security Trustee to have access
at reasonable times to the Halifax Insurance Policies.
21.5 The Servicer shall deliver to the Mortgages Trustee and the Beneficiaries
as soon as reasonably practicable but in any event within five days of
becoming aware thereof a notice of any Servicer Termination Event or any
event which with the giving of notice or lapse of time or certification
would constitute the same. Such notification shall specify which event in
Clause 21 has occurred and was the cause of such Servicer Termination
Event (or any event which the giving of notice or lapse of time or
certification would constitute a Servicer Termination Event), a
description of the details of such Servicer Termination Event, and, if
relevant, a reference to the provision in this Agreement or the other
Transaction Documents which the Servicer has breached.
21.6 Termination of this Agreement or the appointment of the Servicer under
this Agreement shall be without prejudice to the liabilities of the
Mortgages Trustee and the Beneficiaries to the Servicer or vice versa
incurred before the date of such termination. The Servicer shall have no
right of set-off or any lien in respect of such amounts against amounts
held by it on behalf of the Mortgages Trustee.
21.7 This Agreement shall terminate at such time as Funding 1 and Funding 2
have no further interest in any of the Loans or the Mortgages which have
been comprised in the Portfolio.
21.8 On termination of the appointment of the Servicer under the provisions of
this CLAUSE 21, the Servicer shall be entitled to receive all fees and
other monies accrued up to the date of termination but shall not be
entitled to any other or further compensation. Such monies so receivable
by the Servicer shall be paid by the Mortgages Trustee on the dates on
which they would otherwise have fallen due hereunder. For the avoidance
of doubt, such termination shall not affect the Servicer's rights to
receive payment of all amounts (if any) due to it from the Mortgages
Trustee other than under this Agreement.
21.9 Prior to termination of this Agreement, the Servicer, the Seller, the
Funding 1 Security Trustee, the Funding 2 Security Trustee, the Mortgages
Trustee, Funding 1 and Funding 2 shall co-operate to obtain the agreement
of the Borrowers to a new bank mandate permitting the Mortgages Trustee
to operate the Direct Debiting Scheme.
21.10 Any provision of this Agreement which is stated to continue after
termination of the Agreement shall remain in full force and effect
notwithstanding termination.
22. FURTHER ASSURANCE
22.1 The parties hereto agree that they will co-operate fully to do all such
further acts and things and execute any further documents as may be
necessary or desirable to give full effect to the arrangements
contemplated by this Agreement.
22.2 Without prejudice to the generality of CLAUSE 22.1, the Mortgages Trustee
and the Beneficiaries shall upon request by the Servicer forthwith give
to the Servicer such further powers of attorney or other written
authorisations, mandates or instruments as are necessary to enable the
Servicer to perform the Services.
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22.3 In the event that there is any change in the identity of the Mortgages
Trustee or an additional Mortgages Trustee is appointed, the remaining
Mortgages Trustee and/or the retiring Mortgages Trustee, as the case may
be, shall execute such documents with any other parties to this Agreement
and take such actions as such new Mortgages Trustee may reasonably
require for the purposes of vesting in such new Mortgages Trustee the
rights of the Mortgages Trustee under this Agreement and releasing the
retiring Mortgages Trustee from further obligations thereunder and while
any Note remains outstanding shall give notice thereof to the Rating
Agencies.
22.4 Nothing herein contained shall impose any obligation or liability on the
Mortgages Trustee to assume or perform any of the obligations of the
Servicer hereunder or render it liable for any breach thereof.
23. MISCELLANEOUS
23.1 Subject to CLAUSE 23.2, in the event that the funds available to the
Mortgages Trustee on any Distribution Date are not sufficient to satisfy
in full the aggregate amount payable to the Servicer by the Mortgages
Trustee on such Distribution Date then the amount payable to the Servicer
on such Distribution Date shall be reduced by the amount of the shortfall
and such shortfall shall (subject always to the provisions of this CLAUSE
23) be payable on the immediately succeeding Distribution Date.
23.2 In the event that:
(a) after redemption in full of the Intercompany Loans and the Master
Intercompany Loan; or
(b) after service of an Intercompany Loan Acceleration Notice and/or
Master Intercompany Loan Acceleration Notice and payment of all
other prior claims,
the remaining sums available to the Mortgages Trustee or remaining
proceeds of enforcement are insufficient to satisfy in full the
outstanding fees or other claims of the Servicer, such fees shall be
reduced by the amount of the deficiency.
23.3 Each of the Seller and the Servicer agrees that it will not:
(a) set off or purport to set off any amount which the Mortgages
Trustee, Funding 1, Funding 2, any Funding 1 Issuer or the Master
Issuer is or will become obliged to pay to it under any of the
Transaction Documents against any amount from time to time
standing to the credit of or to be credited to the Mortgages
Trustee GIC Account, the Funding 1 GIC Account, the Funding 1
Transaction Account, the Funding 2 GIC Account, the Funding 2
Transaction Account, any Issuer Account or any Master Issuer
Account or in any other account prior to transfer to the Mortgages
Trustee GIC Account, the Funding 1 GIC Account, the Funding 1
Transaction Account, the Funding 2 GIC Account, the Funding 2
Transaction Account, any Issuer Account or any Master Issuer
Account, as appropriate; or
(b) make or exercise any claims or demands, any rights of counterclaim
or any other equities against or withhold payment of any and all
sums of money which may at any time and from time to time be
standing to the credit of the Mortgages Trustee GIC Account, the
Funding 1 GIC Account, the Funding 1 Transaction Account, the
Funding 2 GIC Account, the Funding 2 Transaction Account, any
Issuer Account or any Master Issuer Account.
23.4 The Servicer agrees that for so long as any Notes are outstanding it will
not petition nor commence proceedings for the administration or winding
up of the Mortgages Trustee, Funding 1, Funding 2, any Funding 1 Issuer
or the Master Issuer nor participate in any ex parte proceedings with
regard thereto.
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23.5 In relation to all sums due and payable by the Mortgages Trustee to the
Servicer, the Servicer agrees that it shall have recourse only to sums
paid to or received by (or on behalf of) the Mortgages Trustee pursuant
to the provisions of the Mortgage Sale Agreement, the other Transaction
Documents and in relation to the Mortgages.
23.6 For the avoidance of doubt, neither Beneficiary shall be liable to pay
any amounts due under CLAUSES 11 and 13 without prejudice to the
obligations of the Mortgages Trustee in respect of such amounts.
23.7 Notwithstanding any other provisions of this Agreement, all obligations
to, and rights of (i) Funding 1 under or in connection with this
Agreement (other than its obligations under CLAUSE 24) shall
automatically terminate upon the discharge in full of all amounts owing
by it under any Intercompany Loan Agreement and (ii) Funding 2 under or
in connection with this Agreement (other than its obligations under
CLAUSE 24) shall automatically terminate upon the discharge in full of
all amounts owing by it under the Master Intercompany Loan Agreement and,
provided that this shall be without prejudice to any claims in respect of
such obligations and rights arising on or prior to such date.
24. CONFIDENTIALITY
During the continuance of this Agreement or after its termination, each
of the Mortgages Trustee and the Beneficiaries shall use its best
endeavours not to disclose to any person, firm or company whatsoever any
information relating to the business, finances or other matters of a
confidential nature of any other party hereto of which it may exclusively
by virtue of being party to the Transaction Documents have become
possessed and shall use all reasonable endeavours to prevent any such
disclosure as aforesaid, provided however that the provisions of this
CLAUSE 24 shall not apply:
(a) to any information already known to the Mortgages Trustee or the
Beneficiaries otherwise than as a result of entering into any of
the Transaction Documents;
(b) to any information subsequently received by the Mortgages Trustee
or the Beneficiaries which it would otherwise be free to disclose;
(c) to any information which is or becomes public knowledge otherwise
than as a result of the conduct of the Mortgages Trustee or the
Beneficiaries;
(d) to any extent that the Mortgages Trustee or the Beneficiaries is
required to disclose the same pursuant to any law or order of any
court or pursuant to any direction, request or requirement
(whether or not having the force of law) of any central bank or
any governmental or other authority (including, without
limitation, any official bank examiners or regulators);
(e) to the extent that the Mortgages Trustee or the Beneficiaries
needs to disclose the same for determining the existence of, or
declaring, an Intercompany Loan Event of Default, a Master
Intercompany Loan Event of Default or a Servicer Termination
Event, the protection or enforcement of any of its rights under
any of the Transaction Documents or in connection herewith or
therewith or for the purpose of discharging, in such manner as it
thinks fit, its duties under or in connection with such agreements
in each case to such persons as require to be informed of such
information for such purposes; or
(f) in relation to any information disclosed to the professional
advisers of the Mortgages Trustee or the Beneficiaries or (in
connection with the review of current ratings of the Notes or with
a prospective rating of any debt to be issued by a Funding 1
Issuer or the Master Issuer) to any credit rating agency or any
prospective new Servicer or Mortgages Trustee.
27
25. NOTICES
Any notices to be given pursuant to this Agreement to any of the parties
hereto shall be sufficiently served if sent by prepaid first class post,
by hand or facsimile transmission and shall be deemed to be given (in the
case of facsimile transmission) when despatched, (where delivered by
hand) on the day of delivery if delivered before 5.00 p.m. on a London
Business Day or on the next London Business Day if delivered thereafter
or (in the case of first class post) when it would be received in the
ordinary course of the post and shall be sent:
(a) in the case of the Servicer: to Halifax plc (LP/3/3/SEC), Xxxxxxx
Xxxx, Xxxxxxx, Xxxx Xxxxxxxxx XX0 0XX (facsimile number +44 (0)
113 235 7511) for the attention of Mortgage Securitisation Manager
with a copy to HBOS Treasury Services plc, 00 Xxx Xxxxx Xxxxxx,
Xxxxxx XX0X 0XX (facsimile number x00 (0)00 0000 0000) for the
attention of Head of Mortgage Securitisation and Covered Bonds;
(b) in the case of the Mortgages Trustee: to Permanent Mortgages
Trustee Limited, 00 Xxxxxxxxx, Xx. Xxxxxx, Xxxxxx XX0 0XX
(facsimile number x00 (0) 0000 000000) for the attention of the
Secretary with a copy to HBOS Treasury Services plc, 00 Xxx Xxxxx
Xxxxxx, Xxxxxx XX0X 0XX (facsimile number x00 (0)00 0000 0000) for
the attention of Head of Mortgage Securitisation and Covered
Bonds;
(c) in the case of the Seller: to Halifax plc (LP/3/3/SEC), Xxxxxxx
Xxxx, Xxxxxxx, Xxxx Xxxxxxxxx XX0 0XX (facsimile number +44 (0)
113 235 7511) for the attention Mortgage Securitisation Manager
with a copy to HBOS Treasury Services PLC, 00 Xxx Xxxxx Xxxxxx,
Xxxxxx XX0X 0XX (facsimile number x00 (0)00 0000 0000) for the
attention of Head of Mortgage Securitisation and Covered Bonds;
(d) in the case of Funding 1: to Permanent Funding (No. 1) Limited, 00
Xxxxx Xx. Xxxxx'x, Xxxxxx XX0X 0XX (facsimile number +44 (0)20
7398 6325) for the attention of the Secretary with a copy to HBOS
Treasury Services plc, 00 Xxx Xxxxx Xxxxxx, Xxxxxx XX0X 0XX
(facsimile number x00 (0)00 0000 0000) for the attention of Head
of Mortgage Securitisation and Covered Bonds;
(e) in the case of Funding 2: to Permanent Funding (No. 2) Limited, 00
Xxxxx Xx. Xxxxx'x, Xxxxxx XX0X 0XX (facsimile number +44 (0)20
7398 6325) for the attention of the Secretary with a copy to HBOS
Treasury Services plc, 00 Xxx Xxxxx Xxxxxx, Xxxxxx XX0X 0XX
(facsimile number x00 (0)00 0000 0000) for the attention of Head
of Mortgage Securitisation and Covered Bonds; and
(f) in the case of the Funding 1 Security Trustee and the Funding 2
Security Trustee: to the Bank of New York, 00xx Xxxxx, Xxx Xxxxxx
Xxxxxx, Xxxxxx X00 0XX (facsimile number + 00 (0)00 0000 0000 or +
00 (0)00 0000 0000, for the attention of Global Structured Finance
- Corporate Trust,)
or to such other address or facsimile number or for the attention of such
other person or entity as may from time to time be notified by any party
to the others by written notice in accordance with the provisions of this
CLAUSE 25. All notices served under this Agreement shall be
simultaneously copied to the Funding 1 Security Trustee and the Funding 2
Security Trustee by the person serving the same.
26. VARIATION AND WAIVER
No variation or waiver of this Agreement shall be effective unless it is
in writing and signed by (or by some person duly authorised by) each of
the parties. No single or partial exercise of, or failure or
28
delay in exercising, any right under this Agreement shall constitute a
waiver or preclude any other or further exercise of that or any other
right. No variation or waiver of this Agreement shall be made if the same
would adversely affect the then current ratings of any of the Notes.
27. NO PARTNERSHIP
It is hereby acknowledged and agreed by the parties that nothing in this
Agreement shall be construed as giving rise to any partnership between
any of the parties.
28. ASSIGNMENT
28.1 The Mortgages Trustee may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of
each of the Beneficiaries.
28.2 The Servicer may not assign or transfer any of its rights and obligations
under this Agreement without the prior written consent of the Mortgages
Trustee (as trustee for the Beneficiaries) and each of the Beneficiaries.
28.3 The Servicer acknowledges that Funding 1 has assigned its rights under
this Agreement to the Funding 1 Security Trustee pursuant to the Funding
1 Deed of Charge and acknowledges that pursuant to the terms of the
Funding 1 Deed of Charge, Funding 1 has, inter alia, authorised the
Funding 1 Security Trustee, prior to the Funding 1 Security becoming
enforceable, to exercise, or refrain from exercising, all rights, powers,
authorities, discretions and remedies under or in respect of the
Transaction Documents, including this Agreement, in such manner as in its
absolute discretion it shall think fit.
28.4 The Servicer acknowledges that Funding 2 has assigned its rights under
this Agreement to the Funding 2 Security Trustee pursuant to the Funding
2 Deed of Charge and acknowledges that pursuant to the terms of the
Funding 2 Deed of Charge, Funding 2 has, inter alia, authorised the
Funding 2 Security Trustee, prior to the Funding 2 Security becoming
enforceable, to exercise, or refrain from exercising, all rights, powers,
authorities, discretions and remedies under or in respect of the
Transaction Documents, including this Agreement, in such manner as in its
absolute discretion it shall think fit.
29. CHANGE OF FUNDING 1 SECURITY TRUSTEE AND/OR FUNDING 2 SECURITY TRUSTEE
29.1 If there is any change in the identity of the Funding 1 Security Trustee
and/or the Funding 2 Security Trustee in accordance with the Funding 1
Deed of Charge and/or the Funding 2 Deed of Charge, the Servicer, the
Seller, Funding 1, Funding 2 and the Mortgages Trustee shall execute such
documents and take such action as the successor Funding 1 Security
Trustee and/or the successor Funding 2 Security Trustee and the outgoing
Funding 1 Security Trustee and/or the outgoing Funding 2 Security Trustee
may reasonably require for the purpose of vesting in the successor
Funding 1 Security Trustee and/or the successor Funding 2 Security
Trustee the rights and obligations of the outgoing Funding 1 Security
Trustee and/or the outgoing Funding 2 Security Trustee under this
Agreement and releasing the outgoing Security Trustee from its future
obligations under this Agreement.
29.2 It is hereby acknowledged and agreed that by its execution of this
Agreement neither the funding 1 Security Trustee nor the Funding 2
Security Trustee shall assume or have any of the obligations or
liabilities of the Servicer, the Seller, Funding 1, Funding 2, the
Mortgages Trustee or each other under this Agreement.
29
30. AMENDMENTS
Subject to CLAUSE 25 of the Funding 1 Deed of Charge (Supplemental
Provisions Regarding the Security Trustee) and CLAUSE 24 of the Funding 2
Deed of Charge (Supplemental Provisions Regarding the Security Trustee),
any amendments to this Agreement will be made only with the prior written
consent of each party to this Agreement.
31. EXCLUSION OF THIRD PARTY RIGHTS
The parties to this Agreement do not intend that any term of this
Agreement should be enforced, by virtue of the Contracts (Rights of Third
Parties) Xxx 0000, by any person who is not a party to this Agreement.
32. COUNTERPARTS AND SEVERABILITY
32.1 This Agreement may be executed in any number of counterparts (manually or
by facsimile) and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all
of which when taken together shall constitute one and the same
instrument.
32.2 Where any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations
under this Agreement, or of such provision or obligation in any other
jurisdiction, shall not be affected or impaired thereby.
33. GOVERNING LAW AND JURISDICTION
33.1 This Agreement is governed by the laws of England (provided that any
terms of this Agreement which are particular to Scots law shall be
construed in accordance with the laws of Scotland).
33.2 Each party to this Agreement hereby irrevocably submits to the
non-exclusive jurisdiction of the English courts in any action or
proceeding arising out of or relating to this Agreement, and hereby
irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined by such courts. Each party to this
Agreement hereby irrevocably waives, to the fullest extent it may
possibly do so, any defence or claim that the English courts are an
inconvenient forum for the maintenance or hearing of such action or
proceeding.
34. PROCESS AGENT
The Mortgages Trustee irrevocably and unconditionally appoints Structured
Finance Management Limited of 00 Xxxxx Xx. Xxxxx'x, Xxxxxx XX0X 0XX for
the time being as its agent for service of process in England in respect
of any proceedings in respect of this Agreement and undertakes that in
the event of Structured Finance Management Limited ceasing so to act it
will appoint another person with a registered office in London as its
agent for service of process.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed as a
deed the day and year first before written.
30
SCHEDULE 1
THE SERVICES
In addition to the Services set out in the body of the Servicing Agreement, the
Servicer shall:
(a) keep records and books of account for the Mortgages Trustee in relation
to the Loans and their Related Security comprised in the Portfolio;
(b) keep records for all taxation purposes and Value Added Tax;
(c) notify relevant Borrowers of any change in their Monthly Payments;
(d) assist the auditors of the Mortgages Trustee and provide information to
them upon reasonable request;
(e) provide a redemption statement upon the request of a Borrower or the
Borrower's solicitor, licensed conveyancer or qualified conveyancer;
(f) notify relevant Borrowers of any other matter or thing which the
applicable Mortgage Conditions or Offer Conditions require them to be
notified of in the manner and at the time required by the relevant
Mortgage Terms;
(g) subject to the provisions of this Agreement (including without limitation
CLAUSE 5.2) take all reasonable steps to recover all sums due to the
Mortgages Trustee including without limitation by the institution of
proceedings and/or the enforcement of any Loan comprised in the Portfolio
or any Related Security;
(h) take all other action and do all other things which it would be
reasonable to expect a Reasonable, Prudent Mortgage Lender to do in
administering its loans and their related security; and
(i) act as collection agent for the Mortgages Trustee under the Direct
Debiting Scheme in accordance with the provisions of this Agreement.
31
SCHEDULE 2
FORM OF INVESTOR MONTHLY REPORT
Date of Report [ ]
MORTGAGES
Number of Loans in Pool [ ]
Current Balance [POUND][ ]
Opening Trust Property [POUND][ ]
Funding 1 Share [POUND][ ]
Funding 1 Share Percentage [ ]%
Funding 2 Share [POUND][ ]
Funding 2 Share Percentage [ ]%
Seller Share [POUND][ ]
Seller Share Percentage [ ]%
Minimum Seller Share (Amount) [POUND][ ]
Minimum Seller Share (% of Total) [ ]%
ARREARS ANALYSIS OF NON REPOSSESSED MORTGAGES
Number Principal Arrears
Less than [ ] month [ ] [ ] [ ]
[ ] - [ ] months [ ] [ ] [ ]
[ ] - [ ] months [ ] [ ] [ ]
[ ] - [ ] months [ ] [ ] [ ]
[ ] - [ ] months [ ] [ ] [ ]
[ ] months + [ ] [ ] [ ]
Total [ ] [ ] [ ]
Properties in Possession Number Principal Arrears
Total [ ] [ ] [ ]
32
Properties in Possession
Number Brought Forward [ ]
Repossessed [ ]
Sold [ ]
Number Carried Forward [ ]
Average Time from
Possession to Sale [ ]
Average Arrears at Sale [ ]
Repossessed [ ]
MIG Claims Submitted [ ]
MIG Claims Outstanding [ ]
Average Time from Claim
to Payment [ ]
Note: The arrears analysis and repossession information is as at close of
business for the report month
Substitution Number Principal
Substituted this period (this month) [ ] [ ]
Substituted to dated (since [ ]) [ ] [ ]
CPR Analysis Monthly Annualised
Current [ ] Month CPR Rate [ ]% [ ]%
Previous [ ] Month CPR Rate [ ]% [ ]%
Weighted Average Seasoning (by value) [ ]
Average Loan Size [ ]
Weighted Average LTV (by value) [ ]%
Product Breakdown
Fixed Rate [ ]%
Flexible -Together [ ]%
33
LTV LEVELS BREAKDOWN Number Value
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ] - [ ]% [ ] [ ]
[ ]% + [ ] [ ]
Totals [ ] [ ]
NR Current Existing Borrowers' SVR [ ]
Effective Date of Change [ ]
NOTES Outstanding Rating Reference Rate
Moodys/S&P/Fitch
Funding 1 Notes
[ ] [relevant [ ] / [ ] / [ ] [ ]% [ ]%
currency
amount]
Funding 2 Notes
34
[ ] [relevant [ ] / [ ] / [ ] [ ]% [ ]%
currency
amount]
Funding 2 Reserve Required Amount [POUND][ ]
Balance brought forward [POUND][ ]
Drawings this period
Funding 2 General Reserve Fund top-up this period* [POUND][ ]
Excess Spread [POUND][ ]
Current Balance [POUND][ ]
General 1 Reserve Balance [POUND][ ]
General 1 Reserve % [ ]%
Funding 1 Reserve Balance [POUND][ ]
Funding 1 Reserve % [ ]%
*Top-ups only occur at the end of each quarter.
35
SCHEDULE 3
MINIMUM SERVICING STANDARDS
1. GENERAL SERVICING CONSIDERATIONS
(a) Policies and procedures are instituted to monitor any performance or
other triggers and events of default in accordance with the transaction
agreements.
2. CASH COLLECTION AND ADMINISTRATION
(a) Payments on pool assets are deposited into the appropriate custodial bank
accounts - the Permanent Mortgage Trustee GIC control account - no more
than two business days of receipt.
(b) Advances of funds or guarantees regarding collections, cash flows or
distributions, and any interest or other fees charged for such advances,
are made, reviewed and approved as specified in the transaction
agreements.
(c) The related accounts for the transaction, such as cash 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.
(d) Reconciliations are prepared on a monthly basis for all asset-backed
securities related bank accounts, including custodial accounts and
related bank clearing accounts - namely, the Permanent Mortgages Trustee
GIC account, Permanent Funding (No.1) GIC account, Permanent Funding
(No.2) GIC account, each Funding 1 Issuer's capital account, the Master
Issuer's capital account, each Funding 1 Issuer's transaction account and
the Master Issuer's transaction account. These reconciliations:
(i) Are mathematically accurate;
(ii) Are prepared within 30 calendar days after the bank statement
cut-off date;
(iii) Are reviewed and approved by someone other than the person who
prepared the reconciliation; and
(iv) Contain explanations for reconciling items. These reconciling
items are resolved within 90 calendar days of their original
identification.
3. INVESTOR REMITTANCES
Amounts due to investors are allocated and remitted in accordance with
timeframes, distribution priority and other terms set forth in the
transaction agreements.
4. POOL ASSET ADMINISTRATION
(a) The servicer has made reasonable endeavours to maintain collateral or
security on pool assets.
(b) Any additions, removals or substitutions to the asset pool are made,
reviewed and approved in accordance with any conditions or requirements
in the transaction agreements.
(c) The servicer's records regarding the pool assets agree with the lender's
records with respect to the unpaid principal balance.
36
(d) Changes with respect to the terms or status of a pool asset (for example
loan modifications or re-ageings) are made, reviewed and approved by
authorized personnel in accordance with the transaction agreements and
related pool asset documents.
(e) Loss mitigation or recovery actions (e.g., foreclosures or repossessions)
are initiated, conducted and concluded in accordance with the timeframes
or other requirements established by the transaction agreements. Such
programs include a hierarchy of workout procedures (e.g., forbearance
plans, modifications and deeds in lieu of foreclosure, as applicable).
(f) Records documenting collection efforts are maintained during the period a
pool asset is delinquent in accordance with the transaction agreements.
Such records are maintained on at least a monthly basis 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).
(g) Adjustments to interest rates or rates of return for pool assets with
variable rates are computed based on the related pool asset documents.
(h) Delinquencies, charge-offs and uncollectible accounts are recognized and
recorded in accordance with the transaction agreements.
(i) Any external enhancement or other support is maintained as set forth in
the transaction agreements.
37
SCHEDULE 4
FORM OF ANNUAL CERTIFICATION
Re: Amended and Restated Servicing Agreement (as amended, supplemented or
otherwise modified from time to time, the SERVICING AGREEMENT) dated as of [*],
2006, among Halifax plc, as Seller and Servicer, the Mortgages Trustee, the
Beneficiaries and the Bank of New York
I, ________________________________, the _______________________ of [NAME OF
COMPANY], certify 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 Servicer's compliance with the servicing
criteria set forth in Item 1122(d) of Regulation AB (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 Servicer during 20[*] that were delivered by
the Servicer to the Mortgages Trustee pursuant to the Servicing Agreement
(collectively, the SERVICING INFORMATION);
2. Based on my knowledge, the Servicing Information, taken as a whole, does
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order 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 Servicing
Information;
3. Based on my knowledge, all of the Servicing Information required to be
provided by the Servicer under the Administration Agreement has been
provided to the Mortgages Trustee;
4. I am responsible for reviewing the activities performed by the Servicer
and based on my knowledge and the Compliance Statement required in this
report under Item 1123 of Regulation AB, and except as disclosed in the
Compliance Statement, the Servicing Assessment or the Attestation Report,
the Servicer has fulfilled its obligations under the Agreement in all
material respects; and
5. The Compliance Statement, the Servicing Assessment and Attestation Report
required to be provided by the Servicer pursuant to the Agreement, have
been provided to the Mortgages Trustee. Any material instance of
noncompliance with the Servicing Criteria has been disclosed in such
reports.
Date: _________________________
By:
Name: _________________________
Title: _________________________
38
SCHEDULE 5
FORM OF SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF
COMPLIANCE STATEMENT
The assessment of compliance to be delivered by the Servicer shall address, at
a minimum, the criteria identified as below as "Applicable Servicing Criteria":
--------------------------------------------------------------------------------------------------------
Servicing Criteria Applicable Servicing
Criteria
--------------------------------------------------------------------------------------------------------
Reference Criteria
General Servicing Considerations
1122(d)(1)(i) Policies and procedures are instituted to monitor any
performance 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 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 mortgage loans are maintained.
1122(d)(1)(iv) A fidelity bond and errors and omissions policy is in
effect on the 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 mortgage loans are deposited into the
appropriate 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 an investor are made only by authorized
personnel.
1122(d)(2)(iii) Advances of funds or guarantees regarding collections, cash
flows 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
39
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
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 access.
1122(d)(2)(vii) Reconciliations are prepared on a monthly basis for all
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.
Investor Remittances and Reporting
1122(d)(3)(i) Reports to investors, including those to be filed with the
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 mortgage loans
serviced by the Servicer.
1122(d)(3)(ii) Amounts due to investors are allocated and remitted in
accordance 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 days to the Servicer's investor records, or such
other number of days specified in the transaction
agreements.
40
1122(d)(3)(iv) Amounts remitted to investors per the investor reports
agree with cancelled checks, or other form of payment, or
custodial bank statements.
Pool Asset Administration
1122(d)(4)(i) Collateral or security on mortgage loans is maintained as
required by the transaction agreements or related mortgage
loan documents.
1122(d)(4)(ii) Mortgage loan and related documents are safeguarded as
required by the transaction agreements.
1122(d)(4)(iii) Any additions, removals or substitutions to the asset pool
are made, reviewed and approved in accordance with any
conditions or requirements in the transaction agreements.
1122(d)(4)(iv) Payments on mortgage loans, including any payoffs, made in
accordance with the related mortgage loan 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 mortgage loan
documents.
1122(d)(4)(v) The Servicer's records regarding the mortgage loans agree
with the 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
mortgage loans (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, 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 period a mortgage loan 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
mortgage loans including, for example, phone calls, letters
and payment rescheduling plans in cases where delinquency
is deemed temporary
41
(e.g., illness or unemployment).
1122(d)(4)(ix) Adjustments to interest rates or rates of return for
mortgage loans with variable rates are computed based on
the related mortgage loan documents.
1122(d)(4)(x) Regarding any funds held in trust for an obligor (such as
escrow accounts): (A) such funds are analyzed, in
accordance with the obligor's mortgage loan 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 mortgage loan documents and state laws; and (C)
such funds are returned to the obligor within 30 calendar
days of full repayment of the related mortgage loans, or
such other number of days specified in the transaction
agreements.
1122(d)(4)(xi) Payments made on behalf of an obligor (such as tax or
insurance 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.
1122(d)(4)(xii) Any late payment penalties in connection with any payment
to be 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.
1122(d)(4)(xiii) Disbursements made on behalf of an obligor are posted
within two business days to the obligor's records
maintained by the servicer, or such other number of days
specified in the transaction agreements.
1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible accounts are
recognized and recorded in accordance with the transaction
agreements.
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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[NAME OF SERVICER]
Date: _________________________
42
By: _________________________
Name:
Title:
43
SIGNATORIES
SERVICER
EXECUTED as a DEED by )
HALIFAX PLC )
acting by its attorney ) .............................
in the presence of: ) (as attorney for HALIFAX PLC)
Witness's signature:
Name:
Address:
MORTGAGES TRUSTEE
EXECUTED as a DEED on behalf of )
PERMANENT MORTGAGES )
TRUSTEE LIMITED, )
a company incorporated in Jersey, )
Channel Islands, by )
being a person who, )
in accordance with the laws of that )
territory is acting under the authority of )
the company in the presence of: )
Witness's signature:
Name:
Address:
SELLER
EXECUTED as a DEED by )
HALIFAX PLC )
acting by its attorney ) .............................
in the presence of ) (as attorney for HALIFAX PLC)
Witness's signature:
Name:
Address:
44
FUNDING 1
EXECUTED as a DEED by )
PERMANENT FUNDING (NO. 1) )
LIMITED acting by two directors )
in the presence of ) (as attorney for PERMANENT
FUNDING (NO. 1 ) LIMITED)
Witness's signature:...........................
Name: ...........................
Address: ...........................
FUNDING 2
EXECUTED as a DEED by )
PERMANENT FUNDING (NO. 2) )
LIMITED acting by two directors )
in the presence of ) (as attorney for PERMANENT
FUNDING (NO. 2) LIMITED)
Witness's signature:...........................
Name: ...........................
Address: ...........................
FUNDING 1 SECURITY TRUSTEE
EXECUTED as a DEED by an authorised )
signatory for and on behalf of )
THE BANK OF NEW YORK )
Authorised signatory
FUNDING 2 SECURITY TRUSTEE
EXECUTED as a DEED by an authorised )
signatory for and on behalf of )
THE BANK OF NEW YORK )
Authorised signatory
45
