EXHIBIT 99.1
Exhibit 99.l
EXECUTION COPY
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CWABS, INC.
Depositor
COUNTRYWIDE HOME LOANS, INC.
Sponsor and Master Servicer
CWABS MASTER TRUST
the Trust
BANK ONE, NATIONAL ASSOCIATION
Indenture Trustee
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SALE AND SERVICING AGREEMENT
Dated as of March 27, 2002
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REVOLVING HOME EQUITY LOAN ASSET BACKED NOTES
SERIES 2002-C
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Table of Contents
Page
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ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions..................................................1
Section 1.02. Other Terms..................................................1
Section 1.03. Rules of Construction........................................1
Section 1.04. Interest Calculations........................................2
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TAX TREATMENT
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation
to Fund Advances Under Credit Line Agreements................3
Section 2.02. Acceptance by Indenture Trustee..............................8
Section 2.03. Representations and Warranties Regarding the Master
Servicer....................................................10
Section 2.04. Representations and Warranties of the Sponsor Regarding
the Mortgage Loans; Retransfer of Certain Mortgage Loans....11
Section 2.05. Covenants of the Depositor..................................18
Section 2.06. Transfers of Mortgage Loans at Election of Transferor.......19
Section 2.07. Tax Treatment...............................................20
Section 2.08. Representations and Warranties of the Depositor.............20
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. The Master Servicer.........................................21
Section 3.02. Collection of Certain Mortgage Loan Payments;
Establishment of Accounts...................................23
Section 3.03. Withdrawals from the Collection Account and the
Additional Loan Account.....................................25
Section 3.04. Maintenance of Hazard Insurance; Property
Protection Expenses.........................................26
Section 3.05. Assumption and Modification Agreements......................26
Section 3.06. Realization Upon Defaulted Mortgage Loans;
Repurchase of Certain Mortgage Loans........................27
Section 3.07. Indenture Trustee to Cooperate..............................28
Section 3.08. Servicing Compensation; Payment of Certain Expenses
by Master Servicer.......... ...............................29
Section 3.09. Annual Statement as to Compliance...........................29
Section 3.10. Annual Servicing Report.....................................29
Section 3.11. Access to Certain Documentation and Information
Regarding the Mortgage Loans................................30
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Section 3.12. Maintenance of Certain Servicing Insurance Policies.........30
Section 3.13. Reports to the Securities and Exchange Commission...........30
Section 3.14. Tax Treatment...............................................30
Section 3.15. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments
of Mortgaged Property.................. ....................31
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01. Servicing Certificate.......................................31
Section 4.02. Acknowledgement and Cooperation.............................34
Section 4.03. Optional Advances of the Master Servicer....................34
Section 4.04. Statements to Noteholders...................................34
ARTICLE V
THE MASTER SERVICER, THE SPONSOR, AND THE DEPOSITOR
Section 5.01. Liability of the Sponsor, the Master Servicer, and
the Depositor................ ..............................36
Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Master Servicer or the Depositor........36
Section 5.03. Limitation on Liability of the Master Servicer and Others...36
Section 5.04. Master Servicer Not to Resign...............................37
Section 5.05. Delegation of Duties........................................38
Section 5.06. Indemnification by the Master Servicer......................38
ARTICLE VI
SERVICING TERMINATION
Section 6.01. Events of Servicing Termination.............................38
Section 6.02. Indenture Trustee to Act; Appointment of Successor..........40
Section 6.03. Notification to Noteholders and the Transferor..............41
ARTICLE VII
TERMINATION
Section 7.01. Termination.................................................42
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Amendment...................................................43
Section 8.02. Governing Law...............................................43
Section 8.03. Notices.....................................................43
Section 8.04. Severability of Provisions..................................45
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Section 8.05. Assignment..................................................45
Section 8.06. Third-Party Beneficiaries...................................45
Section 8.07. Counterparts................................................46
Section 8.08. Effect of Headings and Table of Contents....................46
Section 8.09. Series Trust................................................46
EXHIBIT A - MORTGAGE LOAN SCHEDULE..........................................A-1
EXHIBIT B - FORM OF CREDIT LINE AGREEMENT...................................B-1
EXHIBIT C - LETTER OF REPRESENTATIONS.......................................C-1
EXHIBIT D - FORM OF REQUEST FOR RELEASE.....................................D-1
EXHIBIT E - FORM OF TRANSFER DOCUMENT.......................................E-1
ANNEX 1 DEFINITIONS.......................................XXX-1-1
ANNEX 2 ADOPTION ANNEX....................................XXX-2-1
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This SALE AND SERVICING AGREEMENT, dated as of March 27, 2002, among CWABS,
INC., as depositor, COUNTRYWIDE HOME LOANS, INC., as sponsor and master
servicer, CWABS MASTER TRUST, and BANK ONE, NATIONAL ASSOCIATION, as Indenture
Trustee,
WITNESSETH THAT:
The parties agree as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
Unless the context requires a different meaning, capitalized terms are used
in this Agreement as defined in Annex 1.
Section 1.02. Other Terms.
Capitalized terms used in this Agreement that are not otherwise defined
have the meanings given to them in the Indenture. Defined terms that are used
only in one section or only in another definition may be omitted from the list
of defined terms in Annex 1. Defined terms used in this Agreement are sometimes
defined after their first use without a reference such as "(as hereinafter
defined)." Defined terms include, as appropriate, all genders and the plural as
well as the singular.
Section 1.03. Rules of Construction.
Except as otherwise expressly provided in this Agreement or unless the
context otherwise clearly requires:
(a) References to designated articles, sections, subsections, exhibits, and
other subdivisions of this Agreement, such as "Section 3.01(B)," refer to the
designated article, section, subsection, exhibit, or other subdivision of this
Agreement as a whole and to all subdivisions of the designated article, section,
subsection, exhibit, or other subdivision. The words "herein," "hereof,"
"hereto," "hereunder," and other words of similar import refer to this Agreement
as a whole and not to any particular article, section, exhibit, or other
subdivision of this Agreement.
(b) Any term that relates to a document or a statute, rule, or regulation
includes any amendments, modifications, supplements, or any other changes that
may have occurred since the document, statute, rule, or regulation came into
being, including changes that occur after the date of this Agreement.
(c) Any party may execute any of the requirements under this Agreement
either directly or through others, and the right to cause something to be done
rather than doing it directly shall be implicit in every requirement under this
Agreement. Unless a provision is restricted as to time or limited as to
frequency, all provisions under this Agreement are implicitly available and
things may happen from time to time.
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(d) The term "including" and all its variations mean "including but not
limited to." Except when used in conjunction with the word "either," the word
"or" is always used inclusively (for example, the phrase "A or B" means "A or B
or both," not "either A or B but not both").
(e) A reference to "a thing" or "any of a thing" does not imply the
existence or occurrence of the thing referred to even though not followed by "if
any," and "any of a thing" is any and all of it. A reference to the plural of
anything as to which there could be either one or more than one does not imply
the existence of more than one (for instance, the phrase "the obligors on a
note" means "the obligor or obligors on a note"). "Until something occurs" does
not imply that it must occur, and will not be modified by the word "unless." The
word "due" and the word "payable" are each used in the sense that the stated
time for payment has past. The word indemnify is used to include its dictionary
sense of hold harmless. The word "accrued" is used in its accounting sense,
i.e., an amount paid is no longer accrued. In the calculation of amounts of
things, differences and sums may generally result in negative numbers, but when
the calculation of the excess of one thing over another results in zero or a
negative number, the calculation is disregarded and an "excess" does not exist.
Portions of things may be expressed as fractions or percentages interchangeably.
(f) All accounting terms used in an accounting context and not otherwise
defined, and accounting terms partly defined in this Agreement, to the extent
not completely defined, shall be construed in accordance with generally accepted
accounting principles in the United States. To the extent that the definitions
of accounting terms in this Agreement are inconsistent with their meanings under
generally accepted accounting principles, the definitions contained in this
Agreement shall control. Capitalized terms used in this Agreement without
definition that are defined in the UCC are used in this Agreement as defined in
the UCC.
(g) In the computation of a period of time from a specified date to a later
specified date or an open-ended period, the word "from" or "beginning" means
"from and including," the word "after" means "from but excluding," the words
"to" or "until" mean "to but excluding," and the word "through" means "to and
including." Likewise, in setting deadlines or other periods, "by" means "on or
before." The words "preceding," "following," and words of similar import, mean
immediately preceding or following. References to a month or a year refer to
calendar months and calendar years.
(h) Any reference to the enforceability of any agreement against a party
means that it is enforceable, subject as to enforcement against the party, to
applicable bankruptcy, insolvency, reorganization, and other similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
Section 1.04. Interest Calculations.
All calculations of interest on the Asset Balance of a Mortgage Loan under
this Agreement are on a daily basis using a 365-day year. All calculations of
interest on the Notes are on the basis of the actual number of days in an
Interest Period and a year of 360 days. The calculation of the Servicing Fee is
on the basis of a 360-day year consisting of twelve 30-day
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months. All dollar amounts calculated under this Agreement are rounded to the
nearest cent with one-half of one cent being rounded down.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TAX TREATMENT
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to Fund
Advances Under Credit Line Agreements.
(a) Initial Transfer. Concurrently with the execution and delivery of this
Agreement, the Depositor hereby transfers to the Trust for the Series 2002-C
Subtrust without recourse (subject to Sections 2.02 and 2.04) all of its right,
title, and interest in
(i) each Initial Mortgage Loan, including its Asset Balance (including all
Additional Balances) and all collections received on it after the
Cut-off Date (excluding payments due by the Cut-off Date);
(ii) property that secured an Initial Mortgage Loan that is acquired by
foreclosure or deed in lieu of foreclosure;
(iii) the Depositor's rights under the Purchase Agreement;
(iv) the Depositor's rights under the hazard insurance policies;
(v) all other assets included or to be included in the Trust for the
Series 2002-C Subtrust for the benefit of the Noteholders and the
Credit Enhancer; and
(vi) all proceeds of the foregoing.
In addition, by the Closing Date, the Depositor shall cause the Credit Enhancer
to deliver the Policy to the Indenture Trustee for the benefit of the
Noteholders.
(b) Additional Transfers. The Depositor may sell to the Trust Additional
Home Equity Loans on any Subsequent Closing Date designated by the Depositor by
the Latest Subsequent Closing Date. The Depositor shall notify the Owner
Trustee, the Indenture Trustee, the Credit Enhancer, and each Rating Agency of
its designation of a Subsequent Closing Date at least one Business Day in
advance. On each Subsequent Closing Date the Depositor shall deliver a Transfer
Document to the Owner Trustee and the Officer's Certificate referred to in
Section 2.01(c)(ix) to the Owner Trustee, the Indenture Trustee, and the Credit
Enhancer, and the Indenture Trustee shall pay, on behalf of the Trust for the
Series 2002-C Subtrust, to the order of the Depositor, from the Additional Loan
Account, and set aside in an account under its control for the benefit of the
Depositor for later delivery to the Depositor, the purchase price in an amount
equal to the Cut-off Date Asset Balance specified in the Transfer Document, up
to the amount of funds remaining in the Additional Loan Account. Upon delivery
of the Transfer Document and payment of the purchase price, the Depositor hereby
transfers to the Trust for the Series 2002-C Subtrust without recourse (subject
to Sections 2.02 and 2.04) all of its right, title, and interest in each
Additional Home Equity Loan identified in the Transfer Document, including its
Asset Balance (including all Additional Balances) and all collections received
on it after the relevant Subsequent Cut-off Date (excluding payments due by the
Subsequent Cut-off
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Date) and all proceeds of the foregoing. This transfer to the Trust is to the
Owner Trustee, on behalf of the Trust, and each reference in this Agreement to
this transfer shall be construed accordingly.
The Depositor shall also deliver to the Owner Trustee, the Indenture
Trustee, and the Credit Enhancer by the Opinion Delivery Date an opinion of
counsel relating to each Subsequent Closing Date to the effect that a court in a
bankruptcy context addressing the transfer of the Additional Home Equity Loans
would characterize the transfer as a sale rather than as a secured lending. On
the day the revised Mortgage Loan Schedule and that opinion of counsel are
delivered, the Indenture Trustee shall deliver, on behalf of the Trust, to the
order of the Depositor the funds for the purchase price for the Additional Home
Equity Loans set aside on the relevant Subsequent Closing Date, and any earnings
on those funds since the relevant Subsequent Closing Date.
(c) Conditions Precedent to Subsequent Additions. The obligation of the
Indenture Trustee on behalf of the Trust to pay the purchase price from the
relevant Additional Loan Account for the benefit of the Depositor and the
acceptance by the Owner Trustee of the transfer of the Additional Home Equity
Loans and the other property and rights relating to them on the related
Subsequent Closing Date are subject to the satisfaction of each of the following
conditions by the Subsequent Closing Date:
(i) the Depositor shall have delivered to the Owner Trustee a properly
completed and executed Transfer Document;
(ii) as of the related Subsequent Closing Date, neither the Sponsor
nor the Depositor is insolvent nor shall either of them be made insolvent
by the transfer of the Additional Home Equity Loans nor is either of them
aware of any pending insolvency;
(iii) the addition shall not result in a material adverse federal tax
consequence to the Trust, the Transferor, or the Noteholders;
(iv) the Subsequent Closing Date is not after the Latest Subsequent
Closing Date;
(v) neither the Depositor nor the Trust shall have been advised in
writing by any Rating Agency that the transfer of the Additional Home
Equity Loans would result in a reduction or withdrawal of the Rating
Agency's then current rating of the Notes (without regard to the Policy);
(vi) the Sponsor represents and warrants that on the Subsequent
Closing Date each of the representations and warranties in Section 2.04(a)
(excluding clauses (xvii), (xxix), (xxxi), (xxxii), and (xxxiii)) are true
with respect to the Additional Home Equity Loans;
(vii) the Sponsor represents and warrants that the addition of the
Additional Home Equity Loans will not result in a significant variance as
of the Subsequent Closing Date from the Mortgage Loan pool characteristics
covered by the
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representations and warranties in Section 2.04(a)(xvii), (xxix), (xxxi),
(xxxii), and (xxxiii) after taking into account the addition of the
Additional Home Equity Loans;
(viii) as of the relevant Subsequent Closing Date, the Sponsor is not
aware of any mechanics' or similar liens or claims that have been filed for
work, labor, or material affecting the related Mortgaged Property that are,
or may be, liens prior or equal to the lien of the related mortgage, except
liens that are fully insured against by the title insurance policy referred
to in Section 2.04(xv); and
(ix) the Depositor shall have delivered or caused the Sponsor to
deliver to the Owner Trustee, the Indenture Trustee, and the Credit
Enhancer an Officer's Certificate confirming the satisfaction of each of
these conditions precedent.
Neither the Owner Trustee nor the Indenture Trustee need investigate or
otherwise verify compliance with these conditions, except for its receipt of the
documents specified above, and they may rely on the required Officer's
Certificate.
(d) Additional Balances; Future Fundings. Additional Balances shall be part
of the Asset Balance and are hereby transferred to the Trust on the Closing Date
for the Initial Mortgage Loans and on the relevant Subsequent Closing Date for
the Additional Home Equity Loans pursuant to this Section 2.01, and therefore
are part of the Trust property. Neither the Owner Trustee nor the Trust nor the
Indenture Trustee assumes the obligation under any Credit Line Agreement that
provides for the funding of future advances to the mortgagor under it, and
neither the Trust nor the Owner Trustee nor the Indenture Trustee may fund these
future advances.
(e) Delayed Delivery. In connection with the transfer under Section 2.01(a)
by the Depositor, the Depositor shall effect delivery of the Mortgage Loan
Schedule to the Trust and the Indenture Trustee by the Closing Date and delivery
of the Initial Mortgage Files to the Trust, and the Trust shall deliver them to
the Indenture Trustee,
(i) no later than the Closing Date, with respect to no less than 50%
of the Initial Mortgage Loans,
(ii) no later than the twentieth day after the Closing Date, with
respect to no less than 40% of the Initial Mortgage Loans in addition to
those delivered on the Closing Date, and
(iii) within thirty days following the Closing Date, with respect to
the remaining Initial Mortgage Loans.
In connection with the transfers by the Depositor under Section 2.01(b), the
Depositor shall effect delivery of a revised Mortgage Loan Schedule reflecting
the addition of the Additional Home Equity Loans to the Indenture Trustee within
15 days following the relevant Subsequent Closing Date and of the relevant
Initial Mortgage Files,
(A) no later than the twentieth day after the relevant Subsequent
Closing Date, with respect to no less than 80% of the relevant Additional
Home Equity Loans, and
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(B) within thirty days following the relevant Subsequent Closing Date,
with respect to the remaining relevant Additional Home Equity Loans.
(f) Substitution and Repurchase. If the Indenture Trustee does not receive
the Mortgage File for any Mortgage Loan as required by Section 2.01(e), that
Mortgage Loan shall automatically be retransferred to the Sponsor, subject to
the conditions in Section 2.02(b) (as if that Mortgage Loan were otherwise
subject to these provisions). If a Transfer Deficiency results, the Sponsor
shall substitute an Eligible Substitute Mortgage Loan for the related Mortgage
Loan within five Business Days of notification of the Transfer Deficiency by the
Indenture Trustee or, if unable to effect this substitution, deposit into the
Collection Account the Transfer Deposit Amount in immediately available funds
equal to the Transfer Deficiency (or effect a combination of substitution and
deposit). This substitution or deposit shall be accomplished in the manner
specified in, and have the effect specified in, Section 2.02(b) (as if the
related Mortgage Loan were otherwise subject to these provisions).
(g) Xxxx Records. The Sponsor hereby confirms to the Owner Trustee and the
Indenture Trustee that it has caused the portions of the Electronic Ledgers
relating to the Initial Mortgage Loans to be clearly and unambiguously marked,
and has made the appropriate entries in its general accounting records, to
indicate that the Initial Mortgage Loans have been transferred to the Trust at
the direction of the Depositor. The Master Servicer hereby confirms to the Owner
Trustee and the Indenture Trustee that it has clearly and unambiguously made
appropriate entries in its general accounting records indicating that those
Initial Mortgage Loans constitute part of the Series 2002-C Subtrust of the
Trust and are serviced by it on behalf of the Trust in accordance with this
Agreement.
By the relevant Subsequent Closing Date, the Sponsor shall cause the
portions of the Electronic Ledgers relating to the Additional Home Equity Loans
to be clearly and unambiguously marked, and shall make appropriate entries in
its general accounting records, to indicate that those Additional Home Equity
Loans have been transferred to the Trust at the direction of the Depositor. By
the relevant Subsequent Closing Date, the Master Servicer shall clearly and
unambiguously make appropriate entries in its general accounting records
indicating that those Additional Home Equity Loans constitute part of the Trust
and are serviced by it on behalf of the Series 2002-C Subtrust of the Trust in
accordance with this Agreement.
(h) UCC Filings. The Depositor and the Trust agree (subject to paragraph
(i) below) to effect any actions and execute any documents necessary to perfect
and protect the Trust's, the Indenture Trustee's, the Noteholders', and the
Credit Enhancer's interests in each Cut-off Date Asset Balance and Additional
Balances and their proceeds, including filing all necessary Continuation
Statements for the UCC-1 Financing Statements filed in the State of Delaware
(which shall have been filed by the Closing Date) describing the Cut-off Date
Asset Balances and Additional Balances and naming the Depositor as debtor and
the Trust as secured party or naming the Trust as debtor and the Indenture
Trustee as secured party and any amendments to UCC-1 Financing Statements
required to reflect a change in the UCC or in the name or organizational
structure of the Depositor or the Trust or the filing of any additional UCC-1
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Financing Statements due to the change in the state of organization of the
Depositor or the Trust (within 30 days of any event necessitating the filing).
(i) Sponsor Rating Downgrade. If (i) the long term senior unsecured
corporate debt rating of Countrywide Home Loans, Inc. is withdrawn, suspended,
or reduced below "BBB" by Standard & Poor's or "Baa2" by Xxxxx'x, (ii) an Event
of Servicing Termination has occurred and not been waived, or (iii) the Credit
Enhancer has delivered to the Master Servicer a written request that the Master
Servicer, at its expense, record the Assignment of Mortgages because the Credit
Enhancer has determined, in its reasonable judgment, that recordation is
necessary to protect the Credit Enhancer's interest with respect to those
Mortgage Loans because (a) the Credit Enhancer has been advised by counsel as a
result of a change that occurred after the Closing Date in applicable law or the
interpretation thereof or (b) with respect to a particular Mortgage Loan, of the
insolvency of the related mortgagor, as promptly as practicable but in any case
within 90 days of the event, the Master Servicer shall, at its expense, either
(x) request that the Indenture Trustee deliver to it the original
Assignment of Mortgage previously delivered to the Indenture Trustee
pursuant to Section 2.01(e) and then record the Assignment of Mortgage in
favor of the Indenture Trustee (which may be a blanket assignment if
permitted by applicable law) in the appropriate real property or other
records.
(y) deliver to the Indenture Trustee an Independent Opinion of Counsel
addressed to the Indenture Trustee and the Credit Enhancer to the effect
that recording is not required to protect the Indenture Trustee's interest
in the related Mortgage Loan or, in case a court should recharacterize the
sale of the Mortgage Loans as a financing, to perfect a first priority
Security Interest in favor of the Indenture Trustee in the related Mortgage
Loan, which Independent Opinion of Counsel also shall be reasonably
acceptable to each of the Rating Agencies (as evidenced in writing) and the
Credit Enhancer, or
(z) cause the MERS(R) System to indicate (and provide evidence to the
Indenture Trustee that it has done so) that the Mortgage Loans have been
assigned by the Trust to the Indenture Trustee in accordance with this
Agreement for the benefit of the Noteholders and the Credit Enhancer by
including (or deleting, in the case of Mortgage Loans that are repurchased
in accordance with this Agreement) in the MERS computer files (a) the
appropriate code that identifies the Indenture Trustee in the field for
identifying the assignee and (b) the appropriate code that has been
assigned to identify the Notes to the MERS(R) System in the field "Pool
Field" identifying the Notes issued in connection with the Mortgage Loans.
(j) Sale Treatment. Notwithstanding the characterization of the Notes as
debt of the Transferor for federal, state, and local income and franchise tax
purposes, the transfer of the Mortgage Loans is a sale by the Sponsor to the
Depositor and by the Depositor to the Trust of all the Sponsor's and then all
the Depositor's interest in the Mortgage Loans and other property described
above. From the time the Notes are issued until such time as all or a portion of
the
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Notes are sold to one or more unaffiliated parties, the Sponsor will report
the transfer of the Mortgage Loans and the related Additional Balances to the
Depositor as a transfer of assets in exchange for beneficial interests in the
form of asset-backed securities and servicing rights. However, if the transfer
were to be characterized as a transfer for security and not as a sale, then the
Depositor hereby grants to the Trust a Security Interest in all of the
Depositor's right, title, and interest in the Mortgage Loans whether existing
now or in the future, all monies due or to become due on the Mortgage Loans, and
all their proceeds; and this Agreement shall constitute a Security Agreement
under applicable law.
Section 2.02. Acceptance by Indenture Trustee.
(a) On the Closing Date, the Custodian shall execute and deliver to the
Depositor, the Master Servicer, and the Sponsor (with a copy to the Credit
Enhancer) the Initial Certification pursuant to the Custodial Agreement. If
either (i) Initial Mortgage Loans have been delivered after the Closing Date or
(ii) Additional Home Equity Loans have been delivered after the Subsequent
Closing Date pursuant to Section 2.01(e), the Custodian shall execute and
deliver to the Depositor, the Master Servicer, and the Sponsor (with a copy to
the Credit Enhancer) a Delay Delivery Certification pursuant to the Custodial
Agreement within the period specified in the Custodial Agreement. Within 180
days after the Closing Date, Custodian shall deliver to the Depositor, the
Master Servicer, and the Sponsor (with a copy to the Credit Enhancer) a Final
Certification pursuant to the Custodial Agreement. The Sponsor shall correct any
defect noted in the Final Certification within 90 days of its receipt.
(b) All interest of the Trust in the Mortgage Loan shall be retransferred
without recourse, representation, or warranty to the Sponsor and the Asset
Balance of the Mortgage Loan shall be deducted from the Loan Balance on the next
Business Day after the Transfer Deposit Amount is deposited to the Collection
Account and any other applicable requirements are satisfied if
(i) the time to correct any defect in any Mortgage Loan noted on the Final
Certification has expired,
(ii) the Trust ever incurs any loss on any Mortgage Loan because any
document in its Mortgage File is defective, or
(iii) an Assignment of Mortgage to the Indenture Trustee has not been
recorded in accordance with Section 2.01(i) and the Mortgage Loan is
not registered on the MERS(R) System.
Interest accrued on the Asset Balance of the Mortgage Loan to the end of the
related Collection Period shall be the property of the Trust.
The Indenture Trustee shall determine if reducing the relevant Loan Balance
by the Asset Balance of the retransferred Mortgage Loan would cause a Transfer
Deficiency. If so, the Indenture Trustee shall notify the Sponsor of the
deficiency, and within five Business Days after the retransfer the Sponsor shall
either
(x) substitute an Eligible Substitute Mortgage Loan,
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(y) deposit into the Collection Account an amount (the "Transfer Deposit
Amount") in immediately available funds equal to the Transfer
Deficiency, or
(z) do a combination of both (x) and (y) above.
The reduction or substitution and the actual payment of any Transfer Deposit
Amount shall be payment in full for the Mortgage Loan.
The Owner Trustee shall execute any documents of transfer presented by the
Sponsor, without recourse, representation, or warranty, and take any other
actions reasonably requested by the Sponsor to effect the transfer by the Trust
of the Defective Mortgage Loan pursuant to this Section on receipt of any
Eligible Substitute Mortgage Loan or notice from a Servicing Officer to the
effect that the Transfer Deposit Amount for a Defective Mortgage Loan has been
deposited into the Collection Account or, if the Transferor Principal Balance is
not reduced below the greater of the Minimum Transferor Interest and the
Required Transferor Subordinated Amount as a result of the retransfer of a
Defective Mortgage Loan, as promptly as practicable following the transfer. The
sole remedy of the Noteholders, the Transferor, the Owner Trustee, the Indenture
Trustee, and the Credit Enhancer against the Sponsor for the transfer of a
Defective Mortgage Loan to the Trust is the Sponsor's obligation to accept a
transfer of a Defective Mortgage Loan and to either convey an Eligible
Substitute Mortgage Loan or to make a deposit of any Transfer Deposit Amount
into the Collection Account. The foregoing shall not preclude the Credit
Enhancer from pursuing any independent remedies or rights it has against the
Sponsor under Section 3.04(b) of the Insurance Agreement, Section 5.12(b) of the
Indenture, and Section 5.02 of the Trust Supplement.
Promptly following the transfer of any Defective Mortgage Loan or Eligible
Substitute Mortgage Loan from or to the Trust pursuant to this Section, the
Master Servicer shall amend the Mortgage Loan Schedule, deliver the amended
Mortgage Loan Schedule to the Indenture Trustee, and make appropriate entries in
its general account records to reflect the transfer. Following the retransfer,
the Master Servicer shall appropriately xxxx its records to indicate that it is
no longer servicing the Mortgage Loan on behalf of the Trust. The Sponsor shall
appropriately xxxx its Electronic Ledger and make appropriate entries in its
general account records to reflect the transfer promptly following the transfer.
Notwithstanding any other provision of this Section, a retransfer of a
Defective Mortgage Loan to the Sponsor pursuant to this Section that would cause
the Transferor Principal Balance to be less than the greater of the Minimum
Transferor Interest and the Required Transferor Subordinated Amount shall not
occur if either the Sponsor fails to convey an Eligible Substitute Mortgage Loan
or to deposit into the Collection Account any Transfer Deposit Amount required
by this Section with respect to the transfer of the Defective Mortgage Loan.
(c) The Sponsor shall deliver to the Indenture Trustee any documents
required to be held by the Indenture Trustee in accordance with Section 2.01
with respect to any Eligible Substitute Mortgage Loans. The Master Servicer
shall determine the Transfer Deposit Amount in any Collection Period during
which the Sponsor substitutes Eligible Substitute Mortgage Loans and the Sponsor
shall deposit that amount in the Collection Account at the time of
9
substitution. All amounts received on the Eligible Substitute Mortgage Loans
during the Collection Period in which the circumstances giving rise to the
substitution occur shall not be a part of the Trust and shall not be deposited
by the Master Servicer in the Collection Account. All amounts received on a
removed Defective Mortgage Loan during the Collection Period in which the
circumstances giving rise to the substitution occur shall be a part of the Trust
for the Series 2002-C Subtrust and shall be deposited by the Master Servicer in
the Collection Account. An Eligible Substitute Mortgage Loan will be subject to
the terms of this Agreement in all respects when transferred to the Trust, and
the Sponsor hereby makes the representations, warranties, and covenants in
Section 2.04 with respect to the Eligible Substitute Mortgage Loan as of the
date of substitution. The procedures applied by the Sponsor in selecting each
Eligible Substitute Mortgage Loan shall not be materially adverse to the
interests of the Indenture Trustee, the Transferor, the Noteholders, or the
Credit Enhancer.
(d) The Custodian shall retain possession of each Mortgage File on behalf
of the Indenture Trustee in accordance with the Custodial Agreement. The Master
Servicer shall promptly deliver to the Indenture Trustee the originals of any
other documents constituting the Mortgage File coming into its possession on
their execution or receipt. Any documents to be delivered to the Indenture
Trustee under this Agreement may be delivered to the Custodian acting on behalf
of the Indenture Trustee.
Section 2.03. Representations and Warranties Regarding the Master Servicer.
The Master Servicer represents and warrants to the Indenture Trustee and
the Credit Enhancer that as of the Closing Date:
(i) The Master Servicer is a New York corporation, validly existing
and in good standing under the laws of the State of New York, and has the
corporate power to own its assets and to transact the business in which it
is currently engaged. The Master Servicer is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in
which the character of its business or any properties owned or leased by it
requires such qualification and in which the failure so to qualify would
have a material adverse effect on the business, properties, assets, or
condition (financial or other) of the Master Servicer.
(ii) The Master Servicer has the power and authority to make, execute,
deliver, and perform this Agreement and all of the transactions
contemplated under this Agreement, and has taken all necessary corporate
action to authorize the execution, delivery, and performance of this
Agreement. When executed and delivered, this Agreement will constitute a
valid and legally binding obligation of the Master Servicer enforceable in
accordance with its terms.
(iii) The Master Servicer is not required to obtain the consent of any
other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau, or
agency in connection with the execution, delivery, performance, validity,
or enforceability of this Agreement, except for consents, licenses,
approvals or authorizations, or registrations or declarations that have
been obtained or filed, as the case may be, before the Closing Date.
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(iv) The execution, delivery, and performance of this Agreement by the
Master Servicer will not violate any existing law or regulation or any
order or decree of any court applicable to the Master Servicer or the
certificate of incorporation or bylaws of the Master Servicer, or
constitute a material breach of any mortgage, indenture, contract, or other
agreement to which the Master Servicer is a party or by which the Master
Servicer may be bound.
(v) No litigation or administrative proceeding of or before any court,
tribunal, or governmental body is currently pending, or to the knowledge of
the Master Servicer threatened, against the Master Servicer or any of its
properties or with respect to this Agreement, the Indenture, or the Notes
that in the opinion of the Master Servicer has a reasonable likelihood of
resulting in a material adverse effect on the transactions contemplated by
the Transaction Documents.
(vi) If any Mortgage Loan has been registered on the MERS(R) System,
the Master Servicer is a membeR of MERS in good standing.
The representations and warranties in this Section shall survive the transfer of
the Mortgage Loans to the Trust. Upon discovery of a breach of any
representations and warranties that materially and adversely affects the
interests of the Transferor, the Noteholders, or the Credit Enhancer, the person
discovering the breach shall give prompt notice to the other parties and to the
Credit Enhancer. The Master Servicer shall cure in all material respects any
breach of any representation or warranty within 90 days of becoming aware of it
or, with the consent of a Responsible Officer of the Indenture Trustee and the
Credit Enhancer, any longer period specified in the consent.
Section 2.04. Representations and Warranties of the Sponsor Regarding the
Mortgage Loans; Retransfer of Certain Mortgage Loans.
(a) The Sponsor represents and warrants to the Indenture Trustee, the
Trust, and the Credit Enhancer that as of the Cut-off Date, unless specifically
stated otherwise:
(i) As of the Closing Date with respect to the Initial Mortgage Loans,
the relevant Subsequent Closing Date, with respect to any Additional Home
Equity Loans, and the applicable date of substitution with respect to any
Eligible Substitute Mortgage Loan, this Agreement constitutes a valid and
legally binding obligation of the Sponsor, enforceable against the Sponsor
in accordance with its terms.
(ii) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date, with respect to any Additional
Home Equity Loans, and the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, either
(A) the Purchase Agreement constitutes a valid transfer to the
Depositor of all right, title, and interest of the Sponsor in the
applicable Mortgage Loans, all monies due or to become due on them
(excluding payments of accrued interest due by the Cut-off Date), all
proceeds of the applicable Mortgage Loans, and any funds from time to
time deposited in the
11
Collection Account (excluding investment earnings on the funds) and
all other property specified in Section 2.01(a) or (b), as applicable,
and this Agreement constitutes a valid transfer to the Trust of the
foregoing property such that, on execution of this Agreement, it is
owned by the Trust free of all liens and other encumbrances, and is
part of the corpus of the Trust conveyed to the Trust by the Sponsor,
and upon payment for the Additional Balances, the Purchase Agreement
and this Agreement will constitute a valid transfer to the Trust of
all right, title, and interest of the Sponsor in the Additional
Balances, all monies due or to become due on them, all proceeds of the
Additional Balances, and all other property specified in Section
2.01(a) relating to the Additional Balances free of all liens and
other encumbrances, or
(B) the Purchase Agreement or this Agreement, as appropriate,
constitutes a Grant of a Security Interest to the Owner Trustee on
behalf of the Trust in the property described in clause (A) above and
the Indenture constitutes a Grant of a Security Interest to the
Indenture Trustee in the Collateral. The Indenture Trustee has a first
priority perfected Security Interest in the Collateral, subject to the
effect of Section 9-315 of the UCC with respect to collections on the
Mortgage Loans that are deposited in the Collection Account in
accordance with the next to last paragraph of Section 3.02(b), and if
this Agreement constitutes the Grant of a Security Interest in the
property described in clause (A) above to the Trust, the Trust has a
first priority perfected Security Interest in the property, subject to
the same limitations. This Security Interest is enforceable as such
against creditors of and purchasers from the Trust, the Depositor, and
the Sponsor.
(iii) The Sponsor has not authorized the filing of and is not aware of
any financing statements against the Sponsor that include a description of
collateral covering the Collateral other than any financing statement (A)
relating to the Security Interests granted to the Depositor, the Trust, or
the Indenture Trustee under this Indenture, (B) that has been terminated,
or (C) that names the Depositor, the Trust, or the Indenture Trustee as
secured party.
(iv) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date, with respect to any Additional
Home Equity Loans, and the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, and as of the date any Additional
Balance is created, the information in the Mortgage Loan Schedule for the
Mortgage Loans is correct in all material respects.
(v) The applicable Mortgage Loan has not been assigned or pledged, and
the Sponsor is its sole owner and holder free of any liens, claims,
encumbrances, participation interests, equities, pledges, charges, or
Security Interests of any nature, and immediately before the sale of the
applicable Mortgage Loans to the Depositor, has good and marketable title,
and has full authority, under all governmental and regulatory
12
bodies having jurisdiction over the ownership of the applicable Mortgage
Loan, to transfer it pursuant to the Purchase Agreement.
(vi) With respect to the Initial Mortgage Loans, the relevant
Subsequent Closing Date, with respect to any Additional Home Equity Loans,
and the applicable date of substitution with respect to any Eligible
Substitute Mortgage Loan, the related Mortgage Note and the mortgage for
each Mortgage Loan have not been assigned or pledged, and immediately
before the sale of the Mortgage Loans to the Depositor, the Sponsor was the
sole owner and holder of the Mortgage Loan free of any liens, claims,
encumbrances, participation interests, equities, pledges, charges, or
Security Interests of any nature, and has full authority, under all
governmental and regulatory bodies having jurisdiction over the ownership
of the applicable Mortgage Loans, to transfer it pursuant to the Purchase
Agreement.
(vii) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date, with respect to any Additional
Home Equity Loans, and the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, the related mortgage is a valid and
subsisting first or second lien on the property described in it, as shown
on the Mortgage Loan Schedule with respect to each related Mortgage Loan,
and as of the Cut-off Date or date of substitution, as applicable, the
related Mortgaged Property is free of all encumbrances and liens having
priority over the first or second lien, as applicable, of the mortgage
except for liens for
(A) real estate taxes and special assessments not yet delinquent;
(B) any first mortgage loan secured by the Mortgaged Property and
specified on the Mortgage Loan Schedule;
(C) covenants, conditions and restrictions, rights of way,
easements, and other matters of public record as of the date of
recording that are acceptable to mortgage lending institutions
generally; and
(D) other matters to which like properties are commonly subject
that do not materially interfere with the benefits of the security
intended to be provided by the mortgage.
(viii) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date, with respect to any Additional
Home Equity Loans, and the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, no obligor has a valid offset,
defense, or counterclaim under any Credit Line Agreement or mortgage.
(ix) To the best knowledge of the Sponsor, as of the Closing Date with
respect to the Initial Mortgage Loans, the relevant Subsequent Closing
Date, with respect to any Additional Home Equity Loans, and the applicable
date of substitution with respect to any Eligible Substitute Mortgage Loan,
no related Mortgaged Property has any delinquent recording or other tax or
fee or assessment lien against it.
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(x) As of the Closing Date with respect to the Initial Mortgage Loans,
the relevant Subsequent Closing Date, with respect to any Additional Home
Equity Loans, and the applicable date of substitution with respect to any
Eligible Substitute Mortgage Loan, no proceeding is pending or, to the best
knowledge of the Sponsor, threatened for the total or partial condemnation
of the related Mortgaged Property, and the property is free of material
damage.
(xi) To the best knowledge of the Sponsor, as of the Closing Date with
respect to the Initial Mortgage Loans, the relevant Subsequent Closing
Date, with respect to any Additional Home Equity Loans, and the applicable
date of substitution with respect to any Eligible Substitute Mortgage Loan,
no mechanics' or similar liens or claims have been filed for work, labor,
or material affecting the related Mortgaged Property that are, or may be,
liens prior or equal to the lien of the related mortgage, except liens that
are fully insured against by the title insurance policy referred to in
clause (xiv).
(xii) No Minimum Monthly Payment on a Mortgage Loan is more than 59
days delinquent (measured on a contractual basis) and no Minimum Monthly
Payment on any other Mortgage Loan being transferred on the relevant date
is more than 30 days delinquent (measured on a contractual basis) and no
more than the percentage specified in the Adoption Annex of the Initial
Mortgage Loans being transferred on the Closing Date (by Cut-off Date Loan
Balance) were 30-59 days delinquent (measured on a contractual basis).
(xiii) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date, with respect to any Additional
Home Equity Loans, and the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, the related Mortgage File contains
each of the documents specified to be included in them.
(xiv) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date, with respect to any Additional
Home Equity Loans, and the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, the related Mortgage Note and the
related mortgage at origination complied in all material respects with
applicable state and federal laws, including usury, truth-in-lending, real
estate settlement procedures, consumer credit protection, equal credit
opportunity, or disclosure laws applicable to the related Mortgage Loan,
and the servicing practices used by the Master Servicer with respect to
each Mortgage Loan have been consistent with the practices and the degree
of skill and care the Master Servicer exercises in servicing for itself
loans that it owns that are comparable to the Mortgage Loans.
(xv) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date, with respect to any Additional
Home Equity Loans, and the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, either a lender's title insurance
policy or binder was issued on the date of
14
origination of the Mortgage Loan being transferred on the relevant date and
each policy is valid and remains in full force, or a title search or
guaranty of title customary in the relevant jurisdiction was obtained with
respect to the applicable Mortgage Loan as to which no title insurance
policy or binder was issued.
(xvi) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date, with respect to any Additional
Home Equity Loans, and the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, none of the Mortgaged Properties is
a mobile home or a manufactured housing unit that is not considered or
classified as part of the real estate under the laws of the jurisdiction in
which it is located.
(xvii) As of the Cut-off Date for the Initial Mortgage Loans, no more
than the percentage specified in the Adoption Annex of the Initial Mortgage
Loans, by aggregate principal balance, are secured by Mortgaged Properties
located in one United States postal zip code.
(xviii) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date, with respect to any Additional
Home Equity Loans, and the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, the Combined Loan-to-Value Ratio for
each Mortgage Loan was not in excess of the percentage specified in the
Adoption Annex.
(xix) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date, with respect to any Additional
Home Equity Loans, and the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, no selection procedure reasonably
believed by the Sponsor to be adverse to the interests of the Transferor,
the Noteholders, or the Credit Enhancer was used in selecting the Mortgage
Loans.
(xx) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date, with respect to any Additional
Home Equity Loans, and the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, the Sponsor has not transferred the
Mortgage Loans to the Trust with any intent to hinder, delay, or defraud
any of its creditors.
(xxi) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date, with respect to any Additional
Home Equity Loans, and the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, the Minimum Monthly Payment with
respect to any Mortgage Loan is not less than the interest accrued at the
applicable Loan Rate on the average daily Asset Balance during the interest
period relating to the date on which the Minimum Monthly Payment is due.
(xxii) The Mortgage Notes constitute either "instruments" or "general
intangibles" as defined in the UCC.
15
(xxiii) By the Closing Date with respect to the Initial Mortgage
Loans, within 10 days following the relevant Subsequent Closing Date,with
respect to any Additional Home Equity Loans, and within 10 days following
the applicable date of substitution with respect to any Eligible Substitute
Mortgage Loan, the Sponsor will file UCC-1 financing statements in the
proper filing office in the appropriate jurisdiction to perfect the
Security Interest in the Collateral Granted under this Indenture.
(xxiv) The Mortgage Notes that constitute or evidence the Collateral
do not have any marks or notations indicating that they have been pledged,
assigned, or otherwise transferred to any person other than the Depositor,
the Trust, or the Indenture Trustee. All financing statements filed or to
be filed against the Sponsor in favor of the Depositor, the Trust, or the
Indenture Trustee in connection with this Agreement, the Purchase
Agreement, or the Indenture describing the Collateral contain a statement
to the following effect: "A purchase of the Mortgage Loans included in the
collateral covered by this financing statement will violate the rights of
the Depositor, the Trust, or the Indenture Trustee."
(xxv) As of the Closing Date, the Sponsor will have received a written
acknowledgement from the Custodian that is acting solely as agent of the
Indenture Trustee.
(xxvi) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date, with respect to any Additional
Home Equity Loans, and the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, each Credit Line Agreement and each
Mortgage Loan is an enforceable obligation of the related mortgagor.
(xxvii) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date, with respect to any Additional
Home Equity Loans, and the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, the Sponsor has not received a
notice of default of any senior mortgage loan related to a Mortgaged
Property that has not been cured.
(xxviii) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date, with respect to any Additional
Home Equity Loans, and the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, the definition of "prime rate" in
each Credit Line Agreement relating to a Mortgage Loan does not differ
materially from the definition in the form of Credit Line Agreement in
Exhibit B.
(xxix) The weighted average remaining term to maturity of the Initial
Mortgage Loans on a contractual basis as of the Cut-off Date for the
Initial Mortgage Loans is approximately the number of months specified in
the Adoption Annex. On each date that the Loan Rates have been adjusted,
interest rate adjustments on the Initial Mortgage Loans were made in
compliance with the related mortgage and Mortgage Note and applicable law.
Over the term of each Initial Mortgage Loan, the Loan Rate
17
may not exceed the related Loan Rate Cap. The Loan Rate Cap for the Initial
Mortgage Loans ranges between the percentages specified in the Adoption
Annex and the weighted average Loan Rate Cap is approximately the
percentage specified in the Adoption Annex. The Gross Margins for the
Initial Mortgage Loans range between the percentages specified in the
Adoption Annex and the weighted average Gross Margin is approximately the
percentage specified in the Adoption Annex as of the Cut-off Date. The Loan
Rates on the Initial Mortgage Loans range between the percentages specified
in the Adoption Annex and the weighted average Loan Rate on the Initial
Mortgage Loans is approximately the percentage specified in the Adoption
Annex. The percentage of the Initial Mortgage Loans (by credit limit) that
were underwritten in conformity with Xxxxxx Xxx guidelines is approximately
the percentage specified in the Adoption Annex.
(xxx) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date, with respect to any Additional
Home Equity Loans, and the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, each Mortgaged Property consists of
a single parcel of real property with a one-to-four unit single family
residence erected on it, or an individual condominium unit, planned unit
development unit, or townhouse.
(xxxi) No more than the percentage specified in the Adoption Annex (by
Cut-off Date Loan Balance) of the Initial Mortgage Loans are secured by
real property improved by individual condominium units, units in planned
unit developments, townhouses or two-to-four family residences erected on
them, and at least the percentage specified in the Adoption Annex (by
Cut-off Date Loan Balance) of the Initial Mortgage Loans are secured by
real property with a detached one-family residence erected on them.
(xxxii) The Credit Limits on the Initial Mortgage Loans range between
approximately the dollar amounts specified in the Adoption Annex with an
average of approximately the dollar amount specified in the Adoption Annex.
As of the Cut-off Date for the Initial Mortgage Loans, no Initial Mortgage
Loan had a principal balance in excess of approximately the dollar amount
specified in the Adoption Annex and the average principal balance of the
Initial Mortgage Loans is equal to approximately the dollar amounts
specified in the Adoption Annex.
(xxxiii) Approximately the percentages specified in the Adoption Annex
of the Initial Mortgage Loans, by aggregate principal balance as of the
Cut-off Date for the Initial Mortgage Loans, are first and second liens.
(xxxiv) As of the Closing Date for the Initial Mortgage Loans, no more
than the percentage specified in the Adoption Annex of the Initial Mortgage
Loans, by aggregate principal balance, were appraised electronically.
If the substance of any representation and warranty in this Section made to
the best of the Sponsor's knowledge or as to which the Sponsor has no knowledge
is inaccurate and the
17
inaccuracy materially and adversely affects the interest of the Trust and the
Noteholders in the related Mortgage Loan then, notwithstanding that the Sponsor
did not know the substance of the representation and warranty was inaccurate at
the time the representation or warranty was made, the inaccuracy shall be a
breach of the applicable representation or warranty.
(b) The representations and warranties in this Section and in Section
2.01(c)(vi) and (vii) shall survive delivery of the respective Mortgage Files to
the Custodian pursuant to the Custodial Agreement and the termination of the
rights and obligations of the Master Servicer pursuant to Section 5.04 or 6.02.
If the Sponsor, the Depositor, the Master Servicer, the Credit Enhancer, or a
Responsible Officer of the Indenture Trustee discovers a breach of any of the
foregoing representations and warranties or the representations and warranties
in Section 2.01(c)(vi) and (vii) (other than the representation and warranty in
Section 2.04(a)(iv)), without regard to any limitation concerning the knowledge
of the Sponsor, that materially and adversely affects the interests of the
Trust, the Indenture Trustee under the Indenture, the Noteholders, or the Credit
Enhancer in a Mortgage Loan, the party discovering the breach shall give prompt
notice to the other parties and the Credit Enhancer. The Sponsor shall use all
reasonable efforts to cure in all material respects any breach within 90 days of
becoming aware of it or shall, not later than the Business Day before the
Payment Date in the month following the Collection Period in which the cure
period expired (or any later date that the Indenture Trustee and the Credit
Enhancer consent to), either (1) accept a transfer of the applicable Mortgage
Loan from the Trust or (2) substitute an Eligible Substitute Mortgage Loan in
accordance with Section 2.02. The cure for any breach of a representation and
warranty relating to the characteristics of the Initial Mortgage Loans in the
aggregate shall be a repurchase of or substitution for only the Initial Mortgage
Loans necessary to cause the characteristics to comply with the related
representation and warranty. Upon accepting the transfer and making any required
deposit into the Collection Account or substitution of an Eligible Substitute
Mortgage Loan, as the case may be, the Owner Trustee shall execute any documents
of transfer presented by the Sponsor, without recourse, representation, or
warranty, and take any other actions reasonably requested by the Sponsor to
effect the transfer by the Trust of the Initial Mortgage Loans.
The sole remedy of the Noteholders, the Indenture Trustee on behalf of
Noteholders, the Owner Trustee, and the Credit Enhancer against the Sponsor for
the breach of a representation or warranty other than Section 2.04(a)(iv) is the
Sponsor's obligation to accept a transfer of a Mortgage Loan as to which a
breach has occurred and is continuing and to make any required deposit in the
Collection Account or to substitute an Eligible Substitute Mortgage Loan. If the
representation and warranty in Section 2.04(a)(iv) is breached, the transfer of
the affected Mortgage Loans to the Trust shall be void and the Sponsor shall pay
to the Trust the sum of (i) the amount of the related Asset Balances, plus
accrued interest on each Asset Balance at the applicable Loan Rate to the date
of payment and (ii) the amount of any loss suffered by the Transferor, the
Noteholders, or the Credit Enhancer with respect to the affected Mortgage Loans.
The Indenture Trustee may enforce the Sponsor's obligations under this Section
in its own right or as the owner of the Trust's right to seek enforcement as the
assignee of the Trust's rights under this Agreement pursuant to the Indenture.
18
The Sponsor shall defend and indemnify the Indenture Trustee, the Owner
Trustee, the Credit Enhancer, and the Noteholders against all reasonable costs
and expenses, and all losses, damages, claims, and liabilities, including
reasonable fees and expenses of counsel and the amount of any settlement entered
into with the consent of the Sponsor (this consent not to be unreasonably
withheld), that may be asserted against or incurred by any of them as a result
of any third-party action arising out of any breach of a representation and
warranty.
Section 2.05. Covenants of the Depositor.
The Depositor covenants that:
(a) Security Interests. Except for the transfer under this Agreement, the
Depositor will not transfer any Mortgage Loan to any other person, or create or
suffer to exist any Lien on any Mortgage Loan or any interest in one, whether
existing now or in the future; the Depositor will notify the Indenture Trustee
of the existence of any Lien on any Mortgage Loan immediately on its discovery;
and the Depositor will defend the right, title, and interest of the Trust in the
Mortgage Loans, whether existing now or in the future, against all claims of
third parties claiming through the Depositor. Nothing in this Section shall
prohibit the Depositor from suffering to exist on any Mortgage Loan any Liens
for municipal or other local taxes and other governmental charges if the taxes
or governmental charges are not due at the time or if the Depositor is
contesting their validity in good faith by appropriate proceedings and has set
aside on its books adequate reserves with respect to them.
(b) Negative Pledge. The Depositor shall not transfer or grant a Security
Interest in the Transferor Certificates except in accordance with Section 4.05
of the Trust Supplement to the Trust Agreement establishing Series 2002-C.
(c) Additional Indebtedness. So long as the Notes are outstanding the
Depositor will not incur any debt other than debt that (i) is non-recourse to
the assets of the Depositor other than the mortgage loans specifically pledged
as security for the debt, (ii) is subordinated in right of payment to the rights
of the Noteholders, or (iii) is assigned a rating by each of the Rating Agencies
that is the same as the then current rating of the Notes.
(d) Downgrading. The Depositor will not engage in any activity that would
result in a downgrading of the Notes without regard to the Policy.
(e) Amendment to Certificate of Incorporation. The Depositor will not amend
its Certificate of Incorporation or state of incorporation without prior notice
to the Rating Agencies, the Indenture Trustee, and the Credit Enhancer.
Section 2.06. Transfers of Mortgage Loans at Election of Transferor.
Subject to the conditions below, the Transferor may require the transfer of
Mortgage Loans from the Trust to the Transferor as of the close of business on a
Payment Date (the "Transfer Date"). In connection with any transfer, the
Transferor Interest shall be reduced by the aggregate Asset Balances as of their
Transfer Date of the Mortgage Loans transferred. On the fifth Business Day (the
"Transfer Notice Date") before the Transfer Date designated in the notice, the
Transferor shall give the Owner Trustee, the Indenture Trustee, the Master
Servicer, and the Credit Enhancer a notice of the proposed transfer that
contains a list of the Mortgage
19
Loans to be transferred. These transfers of Mortgage Loans shall be permitted if
the following conditions are satisfied:
(i) No Rapid Amortization Event has occurred.
(ii) On the Transfer Date the Transferor Principal Balance (after
giving effect to the removal of the Mortgage Loans proposed to be
transferred) exceeds the greater of the Minimum Transferor Interest and the
Required Transferor Subordinated Amount.
(iii) The transfer of any Mortgage Loans on any Transfer Date during
the Managed Amortization Period shall not, in the reasonable belief of the
Transferor, cause a Rapid Amortization Event to occur or an event that with
notice or lapse of time or both would constitute a Rapid Amortization
Event.
(iv) By the Transfer Date, the Transferor shall have delivered to the
Indenture Trustee a revised Mortgage Loan Schedule, reflecting the proposed
transfer and the Transfer Date, and the Master Servicer shall have marked
the Electronic Ledger to show that the Mortgage Loans transferred to the
Transferor are no longer owned by the Trust.
(v) The Transferor shall represent and warrant that the selection
procedures that the Transferor used in selecting the Mortgage Loans to be
removed from the Trust were random and not materially adverse to the
interests of the Noteholders or the Credit Enhancer.
(vi) In connection with each transfer of Mortgage Loans pursuant to
this Section, each Rating Agency and the Credit Enhancer shall have
received by the related Transfer Notice Date notice of the proposed
transfer of Mortgage Loans and, before the Transfer Date, each Rating
Agency shall have notified the Transferor, the Indenture Trustee, and the
Credit Enhancer that the transfer of Mortgage Loans would not result in a
reduction or withdrawal of its then current rating of the Notes without
regard to the Policy.
(vii) The Transferor shall have delivered to the Owner Trustee, the
Indenture Trustee, and the Credit Enhancer an Officer's Certificate
certifying that the items in subparagraphs (i) through (vi), inclusive,
have been performed or are true, as the case may be. The Owner Trustee and
the Indenture Trustee may conclusively rely on the Officer's Certificate,
shall have no duty to make inquiries with regard to the matters in it, and
shall incur no liability in so relying.
Upon receiving the requisite information from the Transferor, the Master
Servicer shall perform in a timely manner those acts required of it, as
specified above. Upon satisfaction of the above conditions, on the Transfer Date
the Indenture Trustee shall effect delivery to the Transferor the Mortgage File
for each Mortgage Loan being so transferred, and the Indenture Trustee shall
execute and deliver to the Transferor any other documents prepared by the
Transferor reasonably necessary to transfer the Mortgage Loans to the
Transferor. This transfer
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of the Trust's interest in Mortgage Loans shall be without recourse,
representation, or warranty by the Indenture Trustee or the Trust to the
Transferor.
Section 2.07. Tax Treatment.
The Depositor and the Transferor intend that the Notes will be indebtedness
of the Transferor for federal, state, and local income and franchise tax
purposes and for purposes of any other tax imposed on or measured by income. The
Transferor and the Depositor agree to treat the Notes for purposes of federal,
state, and local income or franchise taxes and any other tax imposed on or
measured by income, as indebtedness of the Transferor secured by the assets of
the Trust and to report the transactions contemplated by this Agreement on all
applicable tax returns in a manner consistent with this treatment. The Indenture
Trustee will prepare and file all tax reports required under this Agreement on
behalf of the Trust.
Section 2.08. Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Indenture Trustee on behalf of
the Noteholders and the Credit Enhancer as follows:
(i) This Agreement constitutes a valid and legally binding obligation
of the Depositor, enforceable against the Depositor in accordance with its
terms.
(ii) Immediately before the sale and assignment by the Depositor to
the Trust of each Mortgage Loan, the Depositor was the sole beneficial
owner of each Mortgage Loan (insofar as the title was conveyed to it by the
Sponsor) subject to no prior lien, claim, participation interest, mortgage,
Security Interest, pledge, charge, or other encumbrance or other interest
of any nature.
(iii) As of the Closing Date, the Depositor has transferred all right,
title, and interest in the Initial Mortgage Loans to the Trust, as of each
Subsequent Closing Date, the Depositor has transferred all right, title,
and interest in the Additional Home Equity Loans transferred on that
Subsequent Closing Date, and, as of each applicable date of substitution,
the Depositor has transferred all right, title, and interest in the
Eligible Substitute Mortgage Loan to the Trust.
(iv) The Depositor has not transferred the Mortgage Loans to the Trust
with any intent to hinder, delay, or defraud any of its creditors.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. The Master Servicer.
The Master Servicer shall service and administer the Mortgage Loans in a
manner consistent with the terms of this Agreement and with general industry
practice and shall have full power and authority, acting alone or through a
subservicer, (i) to execute and deliver, on behalf of the Noteholders, the
Trust, and the Indenture Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and
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assumptions of the Mortgage Notes and related Mortgages (but only in the manner
provided in this Agreement), (iii) to collect any Insurance Proceeds and other
Liquidation Proceeds, and (iv) to effectuate foreclosure or other conversion of
the ownership of the Mortgaged Property securing any Mortgage Loan. The Master
Servicer shall remain responsible to the parties to this Agreement and the
Credit Enhancer for its obligations under this Agreement. Any amounts received
by any subservicer on a Mortgage Loan shall be considered to have been received
by the Master Servicer whether or not actually received by it. Without limiting
the generality of the foregoing, the Master Servicer may execute and deliver, on
behalf of itself, the Noteholders, and the Indenture Trustee, or any of them,
any instruments of satisfaction or cancellation, or of partial or full release
or discharge, and all other comparable instruments, with respect to the Mortgage
Loans and with respect to the Mortgaged Properties, in each case to the extent
not inconsistent with this Agreement.
At the request of a Servicing Officer, the Indenture Trustee shall furnish
the Master Servicer with any powers of attorney and other documents appropriate
to enable the Master Servicer to carry out its servicing and administrative
duties under this Agreement. The Master Servicer in this capacity may also
consent to the placing of a lien senior to that of any mortgage on the related
Mortgaged Property, if
(i) the new senior lien secures a mortgage loan that refinances an
existing first mortgage loan and
(ii) the Loan-to-Value Ratio of the new mortgage loan (without taking
into account any closing costs that may be financed by the new mortgage
loan) is equal to or less than the Loan-to-Value Ratio of the first
mortgage loan to be replaced measured either (A) as of the Cut-off Date or
(B) as of the date of the refinancing referenced in clause (i).
The aggregate Asset Balance of the Mortgage Loans with respect to which the
senior lien may be modified in accordance with clause (ii)(A) may not exceed 10%
of the Original Note Principal Balance and clause (ii)(B) may not exceed 40% of
the Original Note Principal Balance. The aggregate Asset Balance of all the
Mortgage Loans with respect to which the senior lien may be so modified may not
exceed 50% of the Original Note Principal Balance (this 50% referred to as the
"Increased Senior Lien Limitation").
The Master Servicer may also, without approval from the Rating Agencies or
the Credit Enhancer, increase the Credit Limits on Mortgage Loans if
(i) new appraisals are obtained and the weighted average Combined
Loan-to-Value Ratios of the Mortgage Loans after giving effect to the
increase are less than or equal to the weighted average Combined
Loan-to-Value Ratios of the Mortgage Loans as of the Cut-off Date and
(ii) the increases are consistent with the Master Servicer's
underwriting policies. In addition, the Master Servicer may increase the
Credit Limits on the Mortgage Loans having aggregate Asset Balances of up
to an additional 5.0% of the Original Note Principal Balance, if
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(x) the increase in the Credit Limit of a Mortgage Loan does not
cause the Combined Loan-to-Value Ratio of the Mortgage Loan to exceed
100%,
(y) the increase in the Credit Limit of a Mortgage Loan does not
cause the Combined Loan-to-Value Ratio of the Mortgage Loan to
increase by more than 25% (for example, a Combined Loan-to-Value Ratio
of 50% can be increased to 75%, a Combined Loan-to-Value Ratio of 60%
can be increased to 85%, and so forth), and
(z) the increase is consistent with the Master Servicer's
underwriting policies.
Furthermore, the Master Servicer, without prior approval from the Rating
Agencies or the Credit Enhancer, may solicit mortgagors for a reduction in Loan
Rates. The Master Servicer may only reduce the Loan Rates on up to 10% of the
Mortgage Loans by Original Note Principal Balance. Any solicitations shall not
result in a reduction in the weighted average Gross Margin of the Mortgage Loans
by more than 25 basis points taking into account any prior reductions.
In addition, the Master Servicer may agree to changes in the terms of a
Mortgage Loan at the request of the mortgagor if the changes (i) do not
materially and adversely affect the interests of Noteholders, the Transferor, or
the Credit Enhancer, (ii) are consistent with prudent and customary business
practice as evidenced by a certificate signed by a Servicing Officer delivered
to the Indenture Trustee and the Credit Enhancer, and (iii) do not extend the
maturity date of the Mortgage Loan beyond the final maturity date of the Notes.
In addition, the Master Servicer may solicit mortgagors to change any other
terms of the related Mortgage Loans if the changes (i) do not materially and
adversely affect the interests of the Noteholders, the Transferor, or the Credit
Enhancer and (ii) are consistent with prudent and customary business practice as
evidenced by a certificate signed by a Servicing Officer delivered to the
Indenture Trustee and the Credit Enhancer. Nothing in this Agreement shall limit
the right of the Master Servicer to solicit mortgagors with respect to new loans
(including mortgage loans) that are not Mortgage Loans.
The Master Servicer may register any Mortgage Loan on the MERS(R) System,
or cause the removal from registration of any Mortgage Loan on the MERS(R)
System, and execute and deliver, on behalf of the Owner Trustee, any instruments
of assignment and other comparable instruments with respect to the assignment or
re-recording of a mortgage in the name of MERS, solely as nominee for the Owner
Trustee and its successors and assigns.
For so long as any Mortgage Loan is registered on the MERS(R) System, the
Master Servicer shall maintain in good standing its membership in MERS and shall
comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Mortgage Loans that are registered with
MERS. If any Mortgage Loans are registered on the MERS(R) System, the Master
Servicer may cause MERS to execute and deliver an assignment of mortgage in
recordable form to transfer any of the Mortgage Loans registered on the MERS(R)
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System from MERS to the Owner Trustee. The Master Servicer shall promptly notify
MERS of any transfer of beneficial ownership or release of any Security Interest
in any MOM Loan.
The relationship of the Master Servicer to the Trust and the Indenture
Trustee under this Agreement is intended by the parties to be that of an
independent contractor and not that of a joint venturer, partner, or agent of
the Trust or the Indenture Trustee.
(b) If the rights and obligations of the Master Servicer are terminated
under this Agreement, any successor to the Master Servicer in its sole
discretion may terminate the existing subservicer arrangements with any
subservicer or assume the terminated Master Servicer's rights under those
subservicing arrangements to the extent permitted by applicable law and the
subservicing agreements.
Section 3.02. Collection of Certain Mortgage Loan Payments; Establishment
of Accounts.
(a) The Master Servicer shall make reasonable efforts to collect all
payments called for under the Mortgage Loans, and shall follow the collection
procedures it follows for servicing mortgage loans in its servicing portfolio of
mortgage loans it owns comparable to the mortgage loans it owns, to the extent
consistent with this Agreement. Consistent with the foregoing, and without
limiting the generality of the foregoing, the Master Servicer may in its
discretion (i) waive any late payment charge or any assumption fees or other
fees that may be collected in the ordinary course of servicing the Mortgage
Loans and (ii) arrange with a mortgagor a schedule for the payment of interest
due and unpaid if the arrangement is consistent with the Master Servicer's
policies with respect to the mortgage loans it owns. Notwithstanding any
arrangement, the Mortgage Loans will be included in the information regarding
delinquent Mortgage Loans in the Servicing Certificate and monthly statement to
Noteholders pursuant to Section 7.04 of the Indenture.
(b) The Master Servicer shall establish and maintain a trust account (the
"Collection Account") with the title specified in the Adoption Annex. The
Collection Account shall be an Eligible Account. The Master Servicer shall (i)
on the Business Day before each of the first three Payment Dates, deposit in the
Collection Account any shortfall in the amount required to pay the Note Interest
on those Payment Dates resulting solely from the failure of certain Mortgage
Loans to be fully indexed and (ii) on the Business Day before the first Payment
Date, deposit in the Collection Account (A) the amount of any Sponsor Shortfall
Interest Requirement and (B) any amounts representing payments on, and any
collections in respect of, the Mortgage Loans received after the Cut-off Date
and before the Closing Date (exclusive of payments of accrued interest due by
the Cut-off Date), and then the Master Servicer, or the Sponsor, as the case may
be, shall deposit within two Business Days following its receipt the following
payments and collections received or made by it (without duplication):
(1) all collections on the Mortgage Loans;
(2) the amounts deposited to the Collection Account pursuant to
Section 4.03;
(3) Net Liquidation Proceeds net of any related Foreclosure
Profit;
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(4) Insurance Proceeds; and
(5) any amounts required to be deposited pursuant to Section
7.01.
The Master Servicer may retain from payments of interest on the Mortgage
Loans in each Collection Period, the Servicing Fee for the Collection Period and
any unreimbursed optional advance made by the Master Servicer pursuant to
Section 4.03. Notwithstanding the foregoing, so long as Countrywide is the
Master Servicer and (x) the rating on the Master Servicer's long-term senior
unsecured debt obligations has not been withdrawn, suspended, or reduced below
"Baa2" by Xxxxx'x or "BBB" by Standard & Poor's and (y) the Credit Enhancer's
claims-paying ability is rated "Aaa" by Xxxxx'x and "AAA" by Standard & Poor's,
the Master Servicer need not make daily deposits in the Collection Account for
any Collection Period, but instead may make a single deposit in the Collection
Account of amounts to be remitted by it for the Collection Period in immediately
available funds on the Business Day before the related Payment Date. No other
amounts are to be deposited to the Collection Account, including amounts
representing Foreclosure Profits, fees (including annual fees) or late charge
penalties payable by mortgagors, or amounts received by the Master Servicer for
the accounts of mortgagors for application towards the payment of taxes,
insurance premiums, assessments, excess pay off amounts, and similar items. The
Master Servicer shall remit all Foreclosure Profits to the Sponsor.
The Indenture Trustee shall hold amounts deposited in the Collection
Account as trustee for the Noteholders, the Transferor, and the Credit Enhancer.
In addition, the Master Servicer shall notify the Indenture Trustee and the
Credit Enhancer on each Determination Date of the amount of collections in the
Collection Account allocable to Interest Collections and Principal Collections
for the Mortgage Loans for the related Payment Date. Following this
notification, the Master Servicer may withdraw from the Collection Account and
retain any amounts that constitute income realized from the investment of the
collections.
Amounts on deposit in the Collection Account will be invested in Eligible
Investments maturing no later than the day before the next Payment Date at the
direction of the Master Servicer. All income realized from any investment in
Eligible Investments of funds in the Collection Account is the Master Servicer's
and may be withdrawn from time to time. Any losses incurred on these investments
that reduce principal shall be deposited in the Collection Account by the Master
Servicer out of its own funds immediately as realized.
Section 3.03. Withdrawals from the Collection Account.
(a) If the Master Servicer makes monthly deposits in the Collection Account
pursuant to Section 3.02(b), the Master Servicer may make a net deposit in the
Collection Account of the amounts required by Section 3.02(b).
(b) Upon satisfaction of the conditions precedent to subsequent additions
in Section 2.01(c) on a Subsequent Closing Date designated by the Depositor, the
Indenture Trustee shall withdraw from the Additional Loan Account and set aside
for the benefit of the Depositor for later delivery pursuant to Section 3.03(c)
an amount equal to the Cut-off Date Asset Balance in the Transfer Document to
purchase the Additional Home Equity Loans covered by the Transfer Document.
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The Additional Home Equity Loans transferred by a Transfer Document on any
Subsequent Closing Date shall be determined as follows. The Sponsor shall list
all funded Mortgage Loans then owned by it for securitization by the date on
which they were funded, and for each date, the mortgagors shall be listed
alphabetically. Beginning with the earliest date, sequentially by date and
within a date alphabetically, the listed loans shall become Additional Home
Equity Loans until either their aggregate Cut-off Date Asset Balance is as close
as possible to equal to the Cut-off Date Asset Balance indicated on the Transfer
Document without exceeding it or all of the loans through the Subsequent Cut-off
Date have been transferred.
Once the potential Additional Home Equity Loans are identified in this
manner, the total potential loan pool shall be tested for compliance with the
pool characteristics covered by the representations and warranties in Section
2.04(a)(xii), (xvii), (xxix), (xxxi), (xxxii), and (xxxiii) after taking into
account the addition of the potential Additional Home Equity Loans. If any pool
characteristic is outside any permitted parameter by more than 10% of the
parameter, then beginning with the last Mortgage Loan initially added as a
potential Additional Home Equity Loan and progressing in reverse order, any
potential Additional Home Equity Loan having a characteristic that is outside of
the permitted parameters of a parameter violated by the total potential loan
pool shall be removed. Then additional Mortgage Loans shall be added as provided
in the preceding paragraph except that no Mortgage Loan shall be added if it has
a characteristic that is outside of the permitted parameters of a parameter
violated by the total potential loan pool. This procedure shall be repeated
until the pool characteristics covered by the representations and warranties in
Section 2.04(a)(xii), (xvii), (xxix), (xxxi), (xxxii), and (xxxiii) are
satisfied within 10% of each parameter specified in those representations and
warranties after taking into account the addition of the potential Additional
Home Equity Loans.
(c) On the date on which the revised Mortgage Loan Schedule reflecting the
addition of the Additional Home Equity Loans covered by a Transfer Document are
delivered to the Indenture Trustee and the Credit Enhancer along with an opinion
of counsel to the effect that a court in a bankruptcy context addressing the
transfer of the Additional Home Equity Loans would characterize the transfer as
a sale rather than as a secured lending, the Indenture Trustee shall deliver to
the order of the Depositor an amount in cash equal to the actual Cut-off Date
Asset Balance of the relevant Additional Home Equity Loans, and to the Master
Servicer any earnings on those funds since the relevant Subsequent Closing Date.
If after that payment any funds remain from the original set aside with respect
to the Transfer Document pursuant to Section 2.01(b), then they shall be
returned to the Additional Loan Account. If on the Latest Subsequent Closing
Date any funds remain in the Indenture Trustee's possession from any set aside
under Section 3.01(b), then they shall be returned to the Additional Loan
Account.
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses.
The Master Servicer shall cause to be maintained for each Mortgage Loan
hazard insurance naming the Master Servicer or the related subservicer as loss
payee under it providing extended coverage in an amount that is at least equal
to the lesser of (i) the maximum insurable value of the improvements securing
the Mortgage Loan from time to time or (ii) the combined principal balance owing
on the Mortgage Loan and any mortgage loan senior to the Mortgage Loan from time
to time. The Master Servicer shall also maintain on property acquired through
26
foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value from time to time of the improvements that are a part of the
property or (ii) the combined principal balance owing on the Mortgage Loan and
any mortgage loan senior to the Mortgage Loan at the time of the foreclosure or
deed in lieu of foreclosure plus accrued interest and the good-faith estimate of
the Master Servicer of related Liquidation Expenses to be incurred.
Amounts collected by the Master Servicer under these policies shall be
deposited in the Collection Account to the extent called for by Section 3.02.
The hazard insurance to be maintained for the related Mortgage Loan shall
include flood insurance when the Mortgaged Property is located in a federally
designated flood area. The flood insurance shall be in the amount required under
applicable guidelines of the Federal Flood Emergency Act. No other insurance
need be carried on any Mortgaged Properties pursuant to this Agreement.
Section 3.05. Assumption and Modification Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
mortgagor, the Master Servicer shall exercise its right to accelerate the
maturity of the Mortgage Loan consistent with the then current practice of the
Master Servicer and without regard to the inclusion of the Mortgage Loan in the
Trust. If it elects not to enforce its right to accelerate or if it is prevented
from doing so by applicable law, the Master Servicer (so long as its action
conforms with the underwriting standards generally acceptable in the industry at
the time for new origination) may enter into an assumption and modification
agreement with the person to whom the Mortgaged Property has been or is about to
be conveyed, pursuant to which that person becomes liable under the Credit Line
Agreement and, to the extent permitted by applicable law, the mortgagor remains
liable on it. The Master Servicer shall notify the Indenture Trustee that any
assumption and modification agreement has been completed by delivering to the
Indenture Trustee an Officer's Certificate certifying that the agreement is in
compliance with this Section and by forwarding the original copy of the
assumption and modification agreement to the Indenture Trustee. Any assumption
and modification agreement shall be a part of the related Mortgage File. No
change in the terms of the related Credit Line Agreement may be made by the
Master Servicer in connection with the assumption to the extent that the change
would not be permitted to be made in the original Credit Line Agreement pursuant
to Section 3.01(a). Any fee collected by the Master Servicer for entering into
the assumption and modification agreement will be retained by the Master
Servicer as additional servicing compensation.
Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans.
The Master Servicer shall foreclose or otherwise comparably convert to
ownership Mortgaged Properties securing defaulted Mortgage Loans when, in the
opinion of the Master Servicer based on normal and usual practices and
procedures, no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.02. If the Master Servicer has actual
knowledge or reasonably believes that any Mortgaged Property is affected by
hazardous or toxic wastes or substances and that the acquisition of the
Mortgaged Property would not be commercially reasonable, then the Master
Servicer will not cause the Trust to
27
acquire title to the Mortgaged Property in a foreclosure or similar proceeding.
In connection with foreclosure or other conversion, the Master Servicer shall
follow the practices and procedures it deems appropriate and that are normal and
usual in its general mortgage servicing activities, including advancing funds to
correct a default on a related senior mortgage loan. However, the Master
Servicer shall not be required to expend its own funds in connection with any
foreclosure or towards the correction of any default on a related senior
mortgage loan or restoration of any property unless it determines that the
expenditure will increase Net Liquidation Proceeds.
If title to any Mortgaged Property is acquired in foreclosure or by deed in
lieu of foreclosure, the deed or certificate of sale shall be issued to the
Indenture Trustee, or to its nominee on behalf of Noteholders. The Master
Servicer shall dispose of the Mortgaged Property as soon as practicable in a
manner that maximizes its Liquidation Proceeds.
The Master Servicer, in its sole discretion, may purchase for its own
account from the Trust any Mortgage Loan that is 151 days or more delinquent.
The price for any Mortgage Loan purchased shall be 100% of its Asset Balance
plus accrued interest on it at the applicable Loan Rate from the date through
which interest was last paid by the related mortgagor to the first day of the
month in which the purchase price is to be distributed to the Noteholders. The
purchase price shall be deposited in the Collection Account. The Master Servicer
may only exercise this right on or before the penultimate day of the calendar
month in which the Mortgage Loan became 151 days delinquent. Any delinquent
Mortgage Loan that becomes current but thereafter again becomes 151 days or more
delinquent may be purchased by the Master Servicer pursuant to this Section.
Upon receipt of a certificate from the Master Servicer in the form of Exhibit D,
the Indenture Trustee shall release to the Master Servicer the related Mortgage
File and shall execute and deliver any instruments of transfer prepared by the
Master Servicer, without recourse, necessary to vest in the purchaser of the
Mortgage Loan any Mortgage Loan released to it and the Master Servicer shall
succeed to all the Trust's interest in the Mortgage Loan and all related
security and documents. This assignment shall be an assignment outright and not
for security. The Master Servicer shall then own the Mortgage Loan, and all
security and documents, free of any further obligation to the Trust, the Owner
Trustee, the Indenture Trustee, the Credit Enhancer, the Transferor, or the
Noteholders with respect to it.
Section 3.07. Indenture Trustee to Cooperate.
By each Payment Date, the Master Servicer will notify the Indenture Trustee
whenever the Asset Balance of any Mortgage Loan has been paid in full during the
preceding Collection Period. A Servicing Officer shall certify that the Mortgage
Loan has been paid in full and that all amounts received in connection with the
payment that are required to be deposited in the Collection Account pursuant to
Section 3.02 have been so deposited or credited. Upon payment in full pursuant
to Section 3.01, the Master Servicer is authorized to execute an instrument of
satisfaction regarding the related mortgage, which instrument of satisfaction
shall be recorded by the Master Servicer if required by applicable law and be
delivered to the person entitled to it.
If the mortgage has been registered on the MERS(R) System, the Master
Servicer shall cause the removal of the mortgage from registration on the
MERS(R) System and execute and
29
deliver, on behalf of the Indenture Trustee and the Noteholders, any instruments
of satisfaction or cancellation or of partial or full release. No expenses
incurred in connection with the instrument of satisfaction or transfer shall be
reimbursed from amounts deposited in the Collection Account.
As appropriate for the servicing or foreclosure of any Mortgage Loan, or in
connection with the payment in full of the Asset Balance of any Mortgage Loan,
upon request of the Master Servicer and delivery to the Indenture Trustee of a
Request for Release substantially in the form of Exhibit D signed by a Servicing
Officer, the Indenture Trustee shall release the related Mortgage File to the
Master Servicer and the Indenture Trustee shall execute any documents provided
by the Master Servicer necessary to the prosecution of any proceedings or the
taking of other servicing actions. The Master Servicer shall return the Mortgage
File to the Indenture Trustee when the need for it by the Master Servicer no
longer exists, unless the Mortgage Loan is liquidated, in which case, upon
receipt of a certificate of a Servicing Officer similar to that specified above,
the Request for Release shall be released by the Indenture Trustee to the Master
Servicer.
To facilitate the foreclosure of the mortgage securing any Mortgage Loan
that is in default following recordation of the assignments of mortgage in
accordance with this Agreement, if so requested by the Master Servicer, the
Indenture Trustee shall execute an appropriate assignment in the form provided
to the Indenture Trustee by the Master Servicer to assign the Mortgage Loan for
the purpose of collection to the Master Servicer or a subservicer. The
assignment shall unambiguously indicate that the assignment is for the purpose
of collection only. The Master Servicer will then bring all required actions in
its own name and otherwise enforce the terms of the Mortgage Loan and deposit
the Net Liquidation Proceeds, exclusive of Foreclosure Profits, in the
Collection Account. If all delinquent payments due under the Mortgage Loan are
paid by the mortgagor and any other defaults are cured, then the Master Servicer
shall promptly reassign the Mortgage Loan to the Indenture Trustee and return
the related Mortgage File to the place where it was being maintained.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by Master
Servicer.
The Master Servicer may retain the Servicing Fee pursuant to Section 3.02
and 3.03 as compensation for its services in servicing the Mortgage Loans.
Moreover, additional servicing compensation in the form of late payment charges
or other receipts not required to be deposited in the Collection Account (other
than Foreclosure Profits) shall be retained by the Master Servicer. The Master
Servicer must pay all expenses incurred by it in connection with its activities
under this Agreement (including payment of all other fees and expenses not
expressly stated under this Agreement to be for the account of another person)
and shall not be entitled to reimbursement under this Agreement except as
specifically provided in this Agreement. Liquidation Expenses are reimbursable
to the Master Servicer
FIRST, from related Liquidation Proceeds and
SECOND, from the Collection Account pursuant to Section
8.03(a)(viii) of the Indenture.
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Section 3.09. Annual Statement as to Compliance.
(a) The Master Servicer will deliver to the Indenture Trustee, the Credit
Enhancer, and the Rating Agencies, by the date in each year specified in the
Adoption Annex, beginning on the date specified in the Adoption Annex, an
Officer's Certificate stating that (i) a review of the activities of the Master
Servicer during the preceding fiscal year (or the applicable shorter period for
the first report) and of its performance under this Agreement has been made
under the officer's supervision and (ii) to the best of the officer's knowledge,
based on the review, the Master Servicer has fulfilled all of its material
obligations under this Agreement throughout the fiscal year, or, if there has
been a default in the fulfillment of those obligations, specifying each default
known to the officer and its nature and status.
(b) Within five Business Days after obtaining knowledge of it, the Master
Servicer shall notify the Indenture Trustee, the Credit Enhancer, and each of
the Rating Agencies of any event that with the giving of notice or the lapse of
time would become an Event of Servicing Termination by delivering an Officer's
Certificate describing the event.
Section 3.10. Annual Servicing Report.
By the date in each year specified in the Adoption Annex, beginning on the
date specified in the Adoption Annex, the Master Servicer, at its expense, shall
cause a firm of nationally recognized independent public accountants (who may
also render other services to the Master Servicer) to furnish a report to the
Indenture Trustee, the Credit Enhancer, and each Rating Agency to the effect
that the firm has examined certain documents and records relating to the
servicing of mortgage loans during the most recent fiscal year then ended under
sale and servicing agreements or pooling and servicing agreements (substantially
similar to this Agreement, including this Agreement), that the examination was
conducted substantially in compliance with the audit guide for audits of
non-supervised mortgagees approved by the Department of Housing and Urban
Development for use by independent public accountants (to the extent that the
procedures in the audit guide are applicable to the servicing obligations in
those agreements), and that the examination has disclosed no items of
noncompliance with this Agreement that, in the opinion of the firm, are
material, except for the items of noncompliance described in the report.
Section 3.11. Access to Certain Documentation and Information Regarding the
Mortgage Loans.
(a) The Master Servicer shall provide to the Indenture Trustee, the Credit
Enhancer, any Noteholders that are federally insured savings and loan
associations, the Office of Thrift Supervision, successor to the Federal Home
Loan Bank Board, the FDIC, and the supervisory agents and examiners of the
Office of Thrift Supervision access to the documentation regarding the Mortgage
Loans required by applicable regulations of the Office of Thrift Supervision and
the FDIC (acting as operator of the Savings Association Insurance Fund or the
Bank Insurance Fund). The Master Servicer will provide access without charge but
only after reasonable notice and during normal business hours at the offices of
the Master Servicer. Nothing in this Section shall derogate from the obligation
of the Master Servicer to observe any applicable law prohibiting disclosure of
information regarding the mortgagors and the failure of the Master
30
Servicer to provide access as provided in this Section as a result of this
obligation shall not constitute a breach of this Section.
(b) The Master Servicer shall supply the information needed to make
required distributions and to furnish required reports to Noteholders and to
make any claim under the Policy, in the form the Indenture Trustee reasonably
requests, to the Indenture Trustee and any Paying Agent by the start of the
Determination Date preceding the related Payment Date.
Section 3.12. Maintenance of Certain Servicing Insurance Policies.
The Master Servicer shall during the term of its service as master servicer
maintain in force (i) policies of insurance covering errors and omissions in the
performance of its obligations as master servicer under this Agreement and (ii)
a fidelity bond covering its officers, employees, or agents. Each policy and
bond together shall comply with the requirements from time to time of Xxxxxx Xxx
for persons performing servicing for mortgage loans purchased by Xxxxxx Mae.
Section 3.13. Reports to the Securities and Exchange Commission.
The Administrator shall, on behalf of the Trust, effect filing with the
Securities and Exchange Commission of any periodic reports required to be filed
under the Securities Exchange Act of 1934 and the rules and regulations of the
Securities and Exchange Commission under it. At the request of the
Administrator, each of the Sponsor, the Master Servicer, the Depositor, the
Indenture Trustee, and the Transferor shall cooperate with the Administrator in
the preparation of these reports and shall provide to the Indenture Trustee in a
timely manner all information or documentation the Indenture Trustee reasonably
requests in connection with the performance of its obligations under this
Section.
Section 3.14. Tax Treatment.
The Transferor shall treat the Mortgage Loans as its property for all
federal, state, or local tax purposes and shall report all income earned thereon
(including amounts payable as fees to the Master Servicer) as its income for
income tax purposes. The Master Servicer shall prepare all tax information
required by law to be distributed to Noteholders. The Master Servicer shall not
be liable for any liabilities, costs, or expenses of the Trust, the Noteholders,
the Transferor, or the Note Owners arising under any tax law, including federal,
state, or local income and franchise or excise taxes or any other tax imposed on
or measured by income (or any interest or penalty with respect to any tax or
arising from a failure to comply with any tax requirement).
Section 3.15. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments of Mortgaged Property.
The Master Servicer shall prepare and deliver all federal and state
information reports when and as required by all applicable state and federal
income tax laws. In particular, with respect to the requirement under Section
6050J of the Code for reports of foreclosures and abandonments of any mortgaged
property, the Master Servicer shall file reports relating to each instance
occurring during the previous calendar year in which the Master Servicer (i) on
behalf of the Indenture Trustee acquires an interest in any Mortgaged Property
through foreclosure or other comparable conversion in full or partial
satisfaction of a Mortgage Loan, or (ii) knows or has reason to know that any
Mortgaged Property has been abandoned. The reports from the
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Master Servicer shall be in form, substance, and timing sufficient to meet the
reporting requirements imposed by Section 6050J of the Code.
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01. Servicing Certificate.
Not later than each Determination Date, the Master Servicer shall deliver
(a) to the Indenture Trustee, the data necessary to prepare the items below and
the statement for Noteholders required to be prepared pursuant to Section 4.04
and (b) to the Indenture Trustee, the Owner Trustee, the Sponsor, the Depositor,
the Paying Agent, the Credit Enhancer, and each Rating Agency a Servicing
Certificate (in written form or the form of computer readable media or such
other form as may be agreed to by the Indenture Trustee and the Master
Servicer), together with an Officer's Certificate to the effect that the
Servicing Certificate is correct in all material respects, stating the related
Collection Period, Payment Date, the series number of the Notes, the date of
this Agreement, and:
(i) the aggregate amount of collections received on the Mortgage Loans
by the Determination Date for the related Collection Period;
(ii) the aggregate amount of (a) Interest Collections and (b)
Principal Collections for the related Collection Period;
(iii) the Investor Floating Allocation Percentage and the Investor
Fixed Allocation Percentage for the related Collection Period;
(iv) the Investor Interest Collections and Investor Principal
Collections for the related Collection Period;
(v) the Interest Collections that are not Investor Interest
Collections and Transferor Principal Collections for the related Collection
Period;
(vi) the Note Interest and the applicable Note Rate for the Notes for
the related Interest Period;
(vii) the amount of the Note Interest that is not payable to the
Noteholders because of insufficient Investor Interest Collections;
(viii) the Unpaid Investor Interest Shortfall and the amount of
interest on the shortfall at the applicable Note Rate applicable from time
to time (separately stated) to be distributed on the related Payment Date;
(ix) the remaining Unpaid Investor Interest Shortfall after the
distribution on the related Payment Date;
(x) the amount of any Basis Risk Carryforward in the distribution;
(xi) the amount of the remaining Basis Risk Carryforward after giving
effect to the related distribution;
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(xii) the Accelerated Principal Payment Amount and the portion of it
that will be distributed pursuant to Section 8.03(a)(vi) of the Indenture;
(xiii) the Scheduled Principal Collections Payment Amount, separately
stating its components;
(xiv) the amount of any Transfer Deposit Amount paid by the Sponsor or
the Depositor pursuant to Section 2.02 or 2.04;
(xv) any accrued Servicing Fees for the Mortgage Loans for previous
Collection Periods and the Servicing Fee for the related Collection Period;
(xvi) the Investor Loss Amount for the related Collection Period;
(xvii) the aggregate amount of Investor Loss Reduction Amounts for
previous Payment Dates that have not been previously reimbursed to the
Holders of the Notes pursuant to Section 8.03(a)(iv) of the Indenture;
(xviii) the aggregate Asset Balance of the Mortgage Loans as of the
end of the preceding Collection Period and as of the end of the second
preceding Collection Period;
(xix) [Deleted];
(xx) the Note Principal Balance and loan factor after giving effect to
the distribution on the related Payment Date and to any reduction because
of the Investor Loss Amount;
(xxi) the Transferor Principal Balance and the Available Transferor
Subordinated Amount after giving effect to the distribution on the Payment
Date;
(xxii) the aggregate amount of Additional Balances created on the
Mortgage Loans during the previous Collection Period;
(xxiii) the number and aggregate Asset Balances of Mortgage Loans (x)
as to which the Minimum Monthly Payment is delinquent for 30-59 days, 60-89
days, and 90 or more days, respectively and (y) that have become REO, in
each case as of the end of the preceding Collection Period;
(xxiv) whether a Rapid Amortization Event has occurred since the prior
Determination Date, specifying the Rapid Amortization Event if one has
occurred;
(xxv) whether an Event of Servicing Termination has occurred since the
prior Determination Date, specifying the Event of Servicing Termination if
one has occurred;
(xxvi) the amount to be distributed to the Credit Enhancer pursuant to
Section 8.03(a)(v) and Section 8.03(a)(vii) of the Indenture, stated
separately;
(xxvii) the Guaranteed Principal Payment Amount for the Payment Date;
(xxviii) the Credit Enhancement Draw Amount for the related Payment
Date;
(xxix) the amount to be distributed to the Transferor pursuant to
Section 8.03(a)(x) of the Indenture;
(xxx) the amount to be paid to the Master Servicer pursuant to Section
8.03(a)(viii) of the Indenture;
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(xxxi) the Maximum Rate for the related Collection Period and the
Weighted Average Net Loan Rate for the Mortgage Loans;
(xxxii) the expected amount of any optional advances pursuant to
Section 4.03 by the Master Servicer included in the distribution on the
related Payment Date and the aggregate expected amount of optional advances
pursuant to Section 4.03 by the Master Servicer outstanding as of the close
of business on the related Payment Date;
(xxxiii) the related Available Subordinated Transferor Amount after
giving effect to the distribution to be made on the related Payment Date;
(xxxiv) the number and principal balances of any Mortgage Loans
transferred to the Transferor pursuant to Section 2.06;
(xxxv) the aggregate of all Liquidation Loss Amounts on the Mortgage
Loans since the Cut-off Date and whether a Cumulative Loss Test Violation
has occurred since the prior Determination Date;
(xxxvi) the Spread Rate and the Excess Spread Percentage for the
Payment Date;
(xxxvii) in the Servicing Certificates for the first and second
Payment Dates, the number and Cut-off Date Asset Balance of Mortgage Loans
for which the Mortgage Loan File was not delivered to the Indenture Trustee
within 30 days of the Closing Date or Subsequent Closing Date, as
applicable;
(xxxviii) in the Servicing Certificate for the first Payment Date, the
aggregate Cut-off Asset Balance of Additional Home Equity Loans acquired by
the Trust;
(xxxix) the number and aggregate Asset Balances of Mortgage Loans as
to which the Minimum Monthly Payment is delinquent for 180 or more days;
(xl) the number and aggregate Asset Balances of Mortgage Loans that
are in foreclosure; and
(xli) the sum of the Asset Balances for the three largest outstanding
Mortgage Loans.
The Indenture Trustee and the Owner Trustee shall conclusively rely upon
the information contained in a Servicing Certificate for purposes of making
distributions pursuant to Section 8.03 of the Indenture or distributions on the
Transferor Certificates, shall have no duty to inquire into this information and
shall have no liability in so relying. The format and content of the Servicing
Certificate may be modified by the mutual agreement of the Master Servicer, the
Indenture Trustee and the Credit Enhancer. The Master Servicer shall give notice
of any changes to the Rating Agencies.
Section 4.02. Acknowledgement and Cooperation.
The Depositor, the Master Servicer, and the Indenture Trustee acknowledge
that without the need for any further action on the part of the Credit Enhancer,
the Depositor, the Master Servicer, the Indenture Trustee, or the Note Registrar
(a) to the extent the Credit Enhancer makes payments, directly or indirectly, on
account of principal of or interest or other amounts on any Notes to the Holders
of the Notes or the Credit Enhancer, as applicable, will be
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fully subrogated to the rights of these Holders to receive the principal and
interest from the Trust and (b) the Credit Enhancer shall be paid the principal
and interest or other amounts but only from the sources and in the manner
provided in this Agreement for the payment of the principal and interest or
other amounts. The Indenture Trustee and the Master Servicer shall cooperate in
all respects with any reasonable request by the Credit Enhancer for action to
preserve or enforce the Credit Enhancer's rights or interests under this
Agreement and the Indenture without limiting the rights or affecting the
interests of the Holders as otherwise stated in this Agreement and the
Indenture.
Section 4.03. Optional Advances of the Master Servicer.
The Master Servicer, in its sole discretion, may advance the interest
component of any delinquent Minimum Monthly Payment (or any portion of it) by
depositing the amount into the Collection Account by the related Determination
Date.
Section 4.04. Statements to Noteholders.
Concurrently with each payment to Noteholders, the Master Servicer shall
deliver to the Indenture Trustee the data necessary to prepare a statement (the
"Monthly Statement") for each Payment Date with the following information:
(i) the Investor Floating Allocation Percentage for the preceding
Collection Period;
(ii) the aggregate amount to be paid to Noteholders;
(iii) the amount of Note Interest in the payment and the Note Rate;
(iv) the amount of any Unpaid Investor Interest Shortfall in the
payment;
(v) the amount of the remaining Unpaid Investor Interest Shortfall
after giving effect to the payment;
(vi) the amount of principal in the payment, separately stating its
components;
(vii) the amount of the reimbursement of previous Investor Loss
Amounts in the payment;
(viii) the amount of the aggregate of unreimbursed Investor Loss
Reduction Amounts after giving effect to the payment;
(ix) the amount of any Basis Risk Carryforward in the payment;
(x) the amount of the remaining Basis Risk Carryforward after giving
effect to the payment;
(xi) the Servicing Fee for the Payment Date;
(xii) the Note Principal Balance and the factor to seven decimal
places obtained by dividing the Note Principal Balance for the Payment Date
by the Original Note Principal Balance after giving effect to the payment;
(xiii) the Loan Balance as of the end of the preceding Collection
Period;
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(xiv) any Credit Enhancement Draw Amount;
(xv) the number and aggregate Asset Balances of Mortgage Loans as to
which the Minimum Monthly Payment is delinquent for 30-59 days, 60-89 days,
and 90 or more days, respectively, as of the end of the preceding
Collection Period;
(xvi) the book value (within the meaning of 12 X.X.X.xx. 571.13 or
comparable provision) of any real estate acquired through foreclosure or
grant of a deed in lieu of foreclosure;
(xvii) the amount of any optional advances pursuant to Section 4.03 by
the Master Servicer included in the payment on the Payment Date and the
aggregate amount of optional advances pursuant to Section 4.03 by the
Master Servicer outstanding as of the close of business on the Payment
Date;
(xviii) the Note Rate for the payment;
(xix) the number and principal balances of any Mortgage Loans
retransferred to the Transferor pursuant to each of Section 2.04 and
Section 2.06;
(xx) the amount of Subordinated Transferor Collections included in the
payment;
(xxi) the amount of Overcollateralization Step-Down Amount included in
the payment;
(xxii) the Available Transferor Subordinated Amount for the payment
Date; and
(xxiii) for the first Payment Date, the number and Cut-off- Date Asset
Balance of Mortgage Loans for which the Mortgage Loan File was not
delivered to the Indenture Trustee within 30 days of the Closing Date or
Subsequent Closing Date, as applicable.
The amounts furnished pursuant to clauses (ii), (iii) (for Note Interest),
(iv), (v), (vi), (vii), and (viii) above shall be expressed as a dollar amount
per $1,000 increment of Notes.
If the Monthly Statement is not accessible to any of the Noteholders, the
Master Servicer, the Credit Enhancer, or either Rating Agency on the Indenture
Trustee's internet website, the Indenture Trustee shall forward a hard copy of
it to each Noteholder, the Master Servicer, the Credit Enhancer, and each Rating
Agency immediately after the Indenture Trustee becomes aware that the Monthly
Statement is not accessible to any of them via the Indenture Trustee's internet
website. The address of the Indenture Trustee's internet website where the
Monthly Statement will be accessible is xxxxx://xxx.xxx.xxxxxxx.xxx. Assistance
in using the Indenture Trustee's internet website may be obtained by calling the
Indenture Trustee's customer service desk at (000) 000-0000. The Indenture
Trustee shall notify each Noteholder, the Master Servicer, the Credit Enhancer,
and each Rating Agency in writing of any change in the address or means of
access to the internet website where the Monthly Statement is accessible.
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Within 60 days after the end of each calendar year, the Master Servicer
shall prepare and forward to the Indenture Trustee the information in clauses
(iii) and (vi) above aggregated for the calendar year. This requirement of the
Master Servicer shall be satisfied if substantially comparable information is
provided by the Master Servicer or a Paying Agent pursuant to any requirements
of the Code.
The Indenture Trustee shall prepare (in a manner consistent with the
treatment of the Notes as indebtedness of the Transferor, or as may be otherwise
required by Section 3.14) Internal Revenue Service Form 1099 (or any successor
form) and any other tax forms required to be filed or furnished to Noteholders
for payments by the Indenture Trustee (or the Paying Agent) on the Notes and
shall file and distribute such forms as required by law.
ARTICLE V
THE MASTER SERVICER, THE SPONSOR, AND THE DEPOSITOR
Section 5.01. Liability of the Sponsor, the Master Servicer, and the
Depositor.
The Sponsor, the Depositor, and the Master Servicer shall be liable only
for their express agreements under this Agreement.
Section 5.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Master Servicer or the Depositor.
Any corporation into which the Master Servicer or the Depositor may be
merged or consolidated, or any corporation resulting from any merger,
conversion, or consolidation to which the Master Servicer or the Depositor is a
party, or any corporation succeeding to the business of the Master Servicer or
the Depositor, shall be the successor of the Master Servicer or the Depositor,
as the case may be, under this Agreement, without the execution or filing of any
paper or any further act on the part of any of the parties to this Agreement,
notwithstanding anything in this Agreement to the contrary.
Section 5.03. Limitation on Liability of the Master Servicer and Others.
Neither the Master Servicer nor any of its directors, officers, employees,
or agents is liable to the Trust, the Owner Trustee, the Transferor, or the
Noteholders for the Master Servicer's taking any action or refraining from
taking any action in good faith pursuant to this Agreement, or for errors in
judgment. This provision shall not protect the Master Servicer or any of its
directors, officers, employees, or agents against any liability that would
otherwise be imposed for misfeasance, bad faith, or gross negligence in the
performance of the duties of the Master Servicer or for reckless disregard of
the obligations of the Master Servicer. The Master Servicer and any of its
directors, officers, employees, or agents may rely in good faith on any document
of any kind prima facie properly executed and submitted by any person about
anything arising under this Agreement.
The Master Servicer and each of its directors, officers, employees, and
agents shall be indemnified by the Trust and held harmless against any loss,
liability, or expense incurred in connection with any legal action relating to
this Agreement, the Transferor Certificates, or the Notes, other than any loss,
liability, or expense related to any specific Mortgage Loan that is
37
otherwise not reimbursable pursuant to this Agreement and any loss, liability,
or expense incurred due to its willful misfeasance, bad faith, or gross
negligence in the performance of duties under this Agreement or due to its
reckless disregard of its obligations under this Agreement.
The Master Servicer need not appear in, prosecute, or defend any legal
action that is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement, and that in its opinion may involve it in any
expense or liability. The Master Servicer may in its sole discretion undertake
any action that it deems appropriate with respect to this Agreement and the
interests of the Noteholders. If so, the reasonable legal expenses and costs of
the action and any resulting liability shall be expenses, costs, and liabilities
of the Trust, and the Master Servicer shall only be entitled to be reimbursed
pursuant to Section 8.03(a)(viii) of the Indenture. The Master Servicer's right
to indemnity or reimbursement pursuant to this Section shall survive any
resignation or termination of the Master Servicer pursuant to Section 5.04 or
6.01 with respect to any losses, expenses, costs, or liabilities arising before
its resignation or termination (or arising from events that occurred before its
resignation or termination).
Section 5.04. Master Servicer Not to Resign.
Subject to Section 5.02, the Master Servicer shall not resign as Master
Servicer under this Agreement except
(i) if the performance of its obligations under this Agreement are no
longer permissible under applicable law or due to applicable law are in
material conflict with any other activities carried on by it or its
subsidiaries or Affiliates that are of a type and nature carried on by the
Master Servicer or its subsidiaries or Affiliates at the date of this
Agreement or
(ii) if
(a) the Master Servicer has proposed a successor Master Servicer
to the Indenture Trustee and the proposed successor Master Servicer is
reasonably acceptable to the Indenture Trustee;
(b) each Rating Agency has delivered a letter to the Indenture
Trustee before the appointment of the successor Master Servicer
stating that the proposed appointment of the successor Master Servicer
as Master Servicer under this Agreement will not result in the
reduction or withdrawal of the then current rating of the Notes
without regard to the Policy; and
(c) the proposed successor Master Servicer is reasonably
acceptable to the Credit Enhancer in its sole discretion, as evidenced
by a letter to the Indenture Trustee.
No resignation by the Master Servicer shall become effective until the
Indenture Trustee or successor Master Servicer designated by the Master Servicer
has assumed the Master Servicer's obligations under this Agreement or the
Indenture Trustee has designated a successor Master Servicer in accordance with
Section 6.02. Any resignation shall not relieve the Master Servicer of
responsibility for any of the obligations specified in Sections 6.01 and 6.02 as
obligations that survive the resignation or termination of the Master Servicer.
Any determination permitting the resignation of the Master Servicer pursuant to
clause (i) above
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shall be evidenced by an Opinion of Counsel to that effect delivered to the
Indenture Trustee and the Credit Enhancer. The Master Servicer shall have no
claim (whether by subrogation or otherwise) or other action against the
Transferor, any Noteholder, or the Credit Enhancer for any amounts paid by the
Master Servicer pursuant to any provision of this Agreement.
Section 5.05. Delegation of Duties.
In the ordinary course of business, the Master Servicer may delegate any of
its duties under this Agreement at any time to any person who agrees to act in
accordance with standards comparable to those with which the Master Servicer
complies pursuant to Section 3.01, including any of its Affiliates or any
subservicer referred to in Section 3.01. This delegation shall not relieve the
Master Servicer of its obligations under this Agreement and shall not constitute
a resignation within the meaning of Section 5.04.
Section 5.06. Indemnification by the Master Servicer.
The Master Servicer shall indemnify the Trust, the Owner Trustee, and the
Indenture Trustee against any loss, liability, expense, damage, or injury
suffered or sustained due to the Master Servicer's actions or omissions in
servicing or administering the Mortgage Loans that are not in accordance with
this Agreement, including any judgment, award, settlement, reasonable attorneys'
fees, and other costs or expenses incurred in connection with the defense of any
actual or threatened action, proceeding, or claim. This indemnification is not
payable from the assets of the Trust. This indemnity shall run directly to and
be enforceable by an injured party subject to any applicable limitations. The
provisions of this Section shall survive termination of this Agreement or the
resignation or removal of the Indenture Trustee.
Section 5.07. Credit Enhancer's Rights Regarding Actions, Proceedings, or
Investigations. Until the Notes have been paid in full, all amounts owed to the
Credit Enhancer have been paid in full, the Insurance Agreement has terminated
and the Policy has been returned to the Credit Enhancer for cancellation,
notwithstanding anything contained in this Agreement or in the other Transaction
Documents to the contrary, the Credit Enhancer shall have the right to
participate in, to direct the enforcement or defense of, and, at the Credit
Enhancer's sole option, to institute or assume the defense of, any action,
proceeding or investigation (other than foreclosure proceedings involving the
Mortgage Loans and other actions constituting ordinary servicing activities)
that could adversely affect the Collateral, the Issuer, the Series 2002-C
Subtrust, or the rights or obligations of the Credit Enhancer under this Series
2002-C Subtrust or under the Policy or the Transaction Documents, including any
insolvency or bankruptcy proceeding in respect of the Master Servicer, the
Sponsor, the Depositor, the Series 2002-C Subtrust, the Issuer, or any affiliate
of any of them. Following notice to the Owner Trustee and the Indenture Trustee,
the Credit Enhancer shall have exclusive right to determine, in its sole
discretion, the actions necessary to preserve and protect the Collateral, the
Issuer, and the Series 2002-C Subtrust. All costs and expenses of the Credit
Enhancer in connection with such action, proceeding, or investigation, including
any judgment or settlement entered into affecting the Credit Enhancer or the
Credit Enhancer's interests, shall be included in reimbursement amount owed to
the Credit Enhance under Section 8.03(a)(vii) of the Indenture.
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ARTICLE VI
SERVICING TERMINATION
Section 6.01. Events of Servicing Termination.
If any one of the following events ("Events of Servicing Termination")
shall occur and be continuing:
(i) any failure by the Master Servicer to deposit in the Collection
Account any deposit required to be made under this Agreement that continues
unremedied either beyond the relevant Payment Date or for five Business
Days (or, if the Master Servicer is permitted to remit collections on a
monthly basis pursuant to Section 3.02(b), three Business Days) after the
date when notice of the failure has been given to the Master Servicer by
the Indenture Trustee or to the Master Servicer and the Indenture Trustee
by the Credit Enhancer or Holders of Notes representing not less than 25%
of the Outstanding Amount; or
(ii) failure by the Master Servicer duly to observe or perform in any
material respect any other covenants or agreements of the Master Servicer
in the Notes or in this Agreement that materially and adversely affects the
interests of the Noteholders or the Credit Enhancer and continues
unremedied for a period of 60 days after the date on which notice of the
failure, requiring it to be remedied, and stating that the notice is a
"Notice of Default" under this Agreement, has been given to the Master
Servicer by the Indenture Trustee or to the Master Servicer and the
Indenture Trustee by the Credit Enhancer or the Holders of Notes
representing not less than 25% of the Outstanding Amount; or
(iii) an Insolvency Event occurs with respect to the Master Servicer;
then, until the Event of Servicing Termination has been remedied by the
Master Servicer, either the Indenture Trustee, the Credit Enhancer, or the
Holders of Notes representing not less than 51% of the Outstanding Amount with
the consent of the Credit Enhancer by notice then given to the Master Servicer
(and to the Indenture Trustee if given by the Credit Enhancer or the Holders of
Notes) may terminate all of the rights and obligations of the Master Servicer as
servicer under this Agreement. This notice to the Master Servicer shall also be
given to each Rating Agency and the Credit Enhancer.
From the receipt by the Master Servicer of the notice, all the rights and
obligations of the Master Servicer under this Agreement, whether with respect to
the Notes or the Mortgage Loans or otherwise, shall pass to and be vested in the
Indenture Trustee pursuant to this Section; and the Indenture Trustee is
authorized to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, any documents, and to do anything else
appropriate to effect the purposes of the notice of termination, whether to
complete the transfer and endorsement of each Mortgage Loan and related
documents, or otherwise. The Master Servicer agrees to
40
cooperate with the Indenture Trustee in effecting the termination of the rights
and obligations of the Master Servicer under this Agreement, including the
transfer to the Indenture Trustee for the administration by it of all cash
amounts that are held by the Master Servicer and are to be deposited by it in
the Collection Account, or that have been deposited by the Master Servicer in
the Collection Account or are subsequently received by the Master Servicer with
respect to the Mortgage Loans. All reasonable costs and expenses (including
attorneys' fees) incurred in connection with transferring the Mortgage Files to
the successor Master Servicer and amending this Agreement to reflect the
succession as Master Servicer pursuant to this Section shall be paid by the
predecessor Master Servicer (or if the predecessor Master Servicer is the
Indenture Trustee, the initial Master Servicer) on presentation of reasonable
documentation of the costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance under
Section 6.01(i) for a period of five or more Business Days or under Section
6.01(ii) for a period of 60 or more days, shall not constitute an Event of
Servicing Termination if the delay or failure could not be prevented by the
exercise of reasonable diligence by the Master Servicer and the delay or failure
was caused by an act of God or the public enemy, acts of declared or undeclared
war, public disorder, rebellion or sabotage, epidemics, landslides, lightning,
fire, hurricanes, earthquakes, floods, or similar causes. The preceding sentence
shall not relieve the Master Servicer from using its best efforts to perform its
obligations in a timely manner in accordance with the terms of this Agreement,
and the Master Servicer shall provide the Indenture Trustee, the Depositor, the
Transferor, the Credit Enhancer, and the Noteholders with an Officers'
Certificate giving prompt notice of its failure or delay, together with a
description of its efforts to perform its obligations. The Master Servicer shall
immediately notify the Indenture Trustee of any Events of Servicing Termination.
In connection with the termination of the Master Servicer if any mortgage
is registered on the MERS(R) System, then, either (i) the successor Master
Servicer, including the Indenture Trustee if the Indenture Trustee is acting as
successor Master Servicer, shall represent and warrant that it is a member of
MERS in good standing and shall agree to comply in all material respects with
the rules and procedures of MERS in connection with the servicing of the
Mortgage Loans that are registered with MERS, or (ii) the predecessor Master
Servicer shall cooperate with the successor Master Servicer in causing MERS to
execute and deliver an assignment of mortgage in recordable form to transfer all
the mortgages registered on the MERS(R) System from MERS to the Indenture
Trustee and to execute and deliver any other notices and documents appropriate
to effect a transfer of those mortgages or the servicing of the Mortgage Loan on
the MERS(R) System to the successor Master Servicer. The predecessor Master
Servicer shall file the assignment in the appropriate recording office. The
successor Master Servicer shall deliver the assignment to the Indenture Trustee
promptly upon receipt of the original with evidence of recording on it or a copy
certified by the public recording office in which the assignment was recorded.
Section 6.02. Indenture Trustee to Act; Appointment of Successor.
(a) From the time the Master Servicer receives a notice of termination
pursuant to Section 6.01 or resigns pursuant to Section 5.04, the Indenture
Trustee shall be the successor in
41
all respects to the Master Servicer in its capacity as Master Servicer under
this Agreement and the transactions contemplated by this Agreement and shall be
subject to all the obligations of the Master Servicer under this Agreement
except (i) the obligation to repurchase or substitute for any Mortgage Loan,
(ii) with respect to any representation or warranty of the Master Servicer, or
(iii) for any act or omission of either a predecessor or successor Master
Servicer other than the Indenture Trustee. As its compensation under this
Agreement, the Indenture Trustee shall be entitled to the compensation the
Master Servicer would have been entitled to under this Agreement if no notice of
termination had been given. In addition, the Indenture Trustee will be entitled
to compensation with respect to its expenses in connection with conversion of
certain information, documents, and record keeping, as provided in Section 6.01.
Notwithstanding the above, (i) if the Indenture Trustee is unwilling to act
as successor Master Servicer, or (ii) if the Indenture Trustee is legally unable
to so act, the Indenture Trustee may (in the situation described in clause (i))
or shall (in the situation described in clause (ii)) appoint, or petition a
court of competent jurisdiction to appoint, any established housing and home
finance institution, bank, or other mortgage loan or home equity loan servicer
having a net worth of not less than $15,000,000 as the successor to the Master
Servicer under this Agreement to assume of any obligations of the Master
Servicer under this Agreement. The successor Master Servicer must be acceptable
to the Credit Enhancer in its sole discretion, as evidenced by the Credit
Enhancer's prior consent, as applicable, which consent shall not be unreasonably
withheld. The appointment of the successor Master Servicer must not result in
the qualification, reduction, or withdrawal of the ratings assigned to the Notes
by the Rating Agencies without regard to the Policy.
Pending appointment of a successor to the Master Servicer, unless the
Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act as Master Servicer. In connection with this appointment and
assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Loans in an amount equal to the compensation that the
Master Servicer would otherwise have received pursuant to Section 3.08 (or any
lesser compensation the Indenture Trustee and the successor agree to). The
Indenture Trustee and the successor shall take any action, consistent with this
Agreement, necessary to effectuate the succession.
(b) The appointment of a successor Master Servicer shall not affect any
liability of the predecessor Master Servicer that may have arisen under this
Agreement before its termination as Master Servicer (including any deductible
under an insurance policy pursuant to Section 3.04), nor shall any successor
Master Servicer be liable for any acts or omissions of the predecessor Master
Servicer or for any breach by the predecessor Master Servicer of any of its
representations or warranties contained in this Agreement. Except for any
compensation agreement with the Indenture Trustee, any successor Master Servicer
shall be subject to all the terms of this Agreement from the time that it
accepts its appointment to the same extent as if it were originally named as
Master Servicer.
42
Section 6.03. Notification to Noteholders and the Transferor.
Upon any termination or appointment of a successor to the Master Servicer
pursuant to this Article or Section 5.04, the Indenture Trustee shall give
prompt notice of it to the Noteholders at their respective addresses appearing
in the Note Register, the Transferor, the Credit Enhancer, and each Rating
Agency.
ARTICLE VII
TERMINATION
Section 7.01. Termination.
(a) The respective obligations and responsibilities of the Sponsor, the
Master Servicer, the Depositor, the Trust, and the Indenture Trustee created by
this Agreement (other than the obligation of the Master Servicer to send certain
notices) shall terminate on the earlier of
(i) the transfer of all the Mortgage Loans pursuant to Section
7.01(b),
(ii) the termination of the Trust Agreement or the Indenture, and
(iii) the final payment or other liquidation of the last Mortgage Loan
remaining in the Trust or the disposition of all property acquired in
foreclosure or by deed in lieu of foreclosure of any Mortgage Loan.
Upon termination in accordance with this Section, the Indenture Trustee
shall execute any documents and instruments of transfer presented by the
Transferor, in each case without recourse, representation, or warranty, and take
any other actions the Transferor reasonably requests to effect the transfer of
the Mortgage Loans to the Transferor. Notwithstanding the termination of this
Agreement, the Master Servicer shall comply with this Agreement in winding up
activities under this Agreement after termination if necessary.
(b) With the consent of the Credit Enhancer and after making the required
determination, the Transferor may effect the transfer of all the Mortgage Loans
at their termination purchase price on any Payment Date from the Payment Date
immediately before which the aggregate Note Principal Balance is less than or
equal to 10% of the aggregate Original Note Principal Balance. If the Transferor
does not effect this transfer, the Credit Enhancer, with the prior consent of
the Transferor (which consent will not be unreasonably withheld), may elect to
purchase all the Mortgage Loans at their termination purchase price. The
termination purchase price is the sum of:
(i) the aggregate Note Principal Balance,
(ii) accrued aggregate Note Interest through the day preceding the
final Payment Date, and
(iii) interest accrued on any aggregate Unpaid Investor Interest
Shortfall, to the extent legally permissible.
The Transferor may effect the transfer of the Mortgage Loans under this
subsection only if the Master Servicer determines that the customary and
reasonable costs and expenses
43
incurred in the performance by the Master Servicer of its servicing obligations
under this Agreement exceed the benefits accruing to the Master Servicer.
(c) The Transferor or the Credit Enhancer, as applicable, must notify the
Transferor, the Credit Enhancer, the Trust, and the Indenture Trustee of any
election to effect the transfer of the Mortgage Loans pursuant to Section
7.01(b) no later than the first day of the month before the month in which the
transfer is to occur. The proceeds from the purchase of the Mortgage Loans, for
purposes of payments on the Notes, shall be considered to have been received in
the Collection Period before the Collection Period in which the Payment Date on
which the purchase takes place occurs.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Amendment.
This Agreement may be amended from time to time by the Sponsor, the Master
Servicer, the Depositor, the Owner Trustee, and the Indenture Trustee, if the
Rating Agency Condition is satisfied (in connection with which the consent of
the Credit Enhancer shall not be unreasonably withheld). However, no amendment
that significantly changes the permitted activities of the Trust may be
promulgated without the consent of a majority of the aggregate Outstanding
Amount of the Notes. For this purpose no Notes owned by the Sponsor or any of
its affiliates may vote, nor shall their Notes be considered outstanding. This
Agreement may also be amended from time to time by the Sponsor, the Master
Servicer, the Depositor, the Owner Trustee, and the Indenture Trustee, with the
consent of the Credit Enhancer (which consent shall not be unreasonably
withheld) and Holders of not less than 66 2/3% of the aggregate Outstanding
Amount of the Notes.
The Indenture Trustee may enter into any amendment of this Agreement as to
which the Rating Agency Condition is satisfied, and when so requested by an
Issuer Request, the Indenture Trustee shall enter into any amendment of this
Agreement
(i) that does not impose further obligations or liabilities on the
Indenture Trustee, and
(ii) as to which either the Rating Agency Condition is satisfied or
Holders of not less than 66 2/3% of the aggregate Outstanding Amount of
Notes and the Credit Enhancer have consented.
Following the execution and delivery of any amendment to this Agreement or
to the Policy to which the Credit Enhancer was required to consent, either the
Transferor, if the Transferor requested the amendment, or the Master Servicer,
if the Master Servicer requested the amendment, shall reimburse the Credit
Enhancer for the reasonable out-of-pocket costs and expenses incurred by them in
connection with the amendment.
44
Before the execution of the amendment, the party to this Agreement
requesting the amendment shall notify each Rating Agency of the substance of the
amendment. The Indenture Trustee shall deliver fully executed original
counterparts of the instruments effecting the amendment to the Credit Enhancer.
Section 8.02. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS THAT WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Section 8.03. Notices.
All notices, demands, instructions, consents, and other communications
required or permitted under this Agreement shall be in writing and signed by the
party giving the same and shall be personally delivered or sent by first class
or express mail (postage prepaid), national overnight courier service, or by
facsimile transmission or other electronic communication device capable of
transmitting or creating a written record (confirmed by first class mail) and
shall be considered to be given for purposes of this Agreement on the day that
the writing is delivered when personally delivered or sent by facsimile or
overnight courier or three Business Days after it was sent to its intended
recipient if sent by first class mail. A facsimile has been delivered when the
sending machine issues an electronic confirmation of transmission. Unless
otherwise specified in a notice sent or delivered in accordance with the
provisions of this Section, notices, demands, instructions, consents, and other
communications in writing shall be given to or made on the respective parties at
their respective addresses indicated below:
if to the Trust at:
CWABS Master Trust
Wilmington Trust Company, as Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Administration
Telecopy: 000-000-0000
if to the Depositor at:
CWABS, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
Telecopy:
45
if to the Master Servicer at
Countrywide Home Loans, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department,
Telecopy:
if to the Indenture Trustee at
the Corporate Trust Office
Telecopy: 000-000-0000
if to the Credit Enhancer at
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Insured Portfolio Management -
Structured Finance (IPM-SF)
CWABS Master Trust Revolving Home Equity Loan Asset
Backed Notes, Series 2002-C
Telecopy: 000-000-0000
if to Xxxxx'x at
Residential Loan Monitoring Group, 4th Floor
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
and
if to Standard & Poor's at
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Whenever a notice or other communication to the Credit Enhancer refers to
an Event of Servicing Termination or with respect to which failure on the part
of the Credit Enhancer to respond would constitute consent or acceptance, then a
copy of the notice or other communication shall also be sent to the attention of
the General Counsel of the Credit Enhancer and shall be marked to indicate
"URGENT MATERIAL ENCLOSED."
Section 8.04. Severability of Provisions.
Any provisions of this Agreement that are held invalid for any reason or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of the invalidity or unenforceability without invalidating the
remaining provisions of this Agreement, and the
46
prohibition or unenforceability in a jurisdiction shall not invalidate or render
unenforceable that provision in any other jurisdiction.
Section 8.05. Assignment.
Except as provided in Sections 5.02 and 5.04, this Agreement may not be
assigned by the Depositor or the Master Servicer without the prior consent of
the Credit Enhancer.
Section 8.06. Third-Party Beneficiaries.
This Agreement will be binding on the parties to this Agreement, and inure
to the benefit of the parties to this Agreement, the Noteholders, the
Transferor, the Note Owners, the Owner Trustee, and the Credit Enhancer and
their respective successors and permitted assigns. The Credit Enhancer is a
third party beneficiary of this Agreement. No other person will have any rights
under this Agreement.
Section 8.07. Counterparts.
This Agreement may be executed in any number of copies, and by the
different parties on the same or separate counterparts, each of which shall be
considered to be an original instrument.
Section 8.08. Effect of Headings and Table of Contents.
The Article and Section headings in this Agreement and the Table of
Contents are for convenience only and shall not affect the construction of this
Agreement.
Section 8.09. Series Trust.
The Trust is a series trust pursuant to Sections 3804 and 3806(b)(2) of the
Business Trust Statute, and each series shall be a separate series of the Trust
within the meaning of Section 3806(b)(2) of the Business Trust Statute. As such,
this Agreement is entered into only with respect to the Series of the Trust
referred to in the Adoption Annex and the debts, liabilities, obligations, and
expenses incurred, contracted for, or otherwise existing with respect to the
Series referred to in the Adoption Annex shall be enforceable against the assets
of the Series referred to in the Adoption Annex only, and not against the assets
of the Trust generally, or the assets of any other series.
47
IN WITNESS WHEREOF, the Depositor, the Sponsor and Master Servicer, the
Trust, and the Indenture Trustee have caused this Agreement to be duly executed
by their respective officers all as of the day and year first above written.
CWABS, INC.
Depositor
By: /s/ Xxxx Xxxxx
--------------
Name: Xxxx Xxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
Sponsor and Master Servicer
By: /s/ Xxxx Xxxxx
--------------
Name: Xxxx Xxxxx
Title: First Vice President
BANK ONE, NATIONAL ASSOCIATION
Indenture Trustee
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
48
CWABS MASTER TRUST
By: WILMINGTON TRUST COMPANY, not
in its individual capacity
but solely as Owner Trustee
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Financial
Services Officer
49
State of California )
) ss.:
County of Los Angeles )
On the 27th day of March, 2002 before me, a notary public in and for
the State of California, personally appeared Xxxx Xxxxx, known to me who, being
by me duly sworn, did depose and say that he resides at Calabasas, California;
that he is the Vice President of CWABS, Inc. a Delaware corporation, one of the
parties that executed the foregoing instrument; that he signed his name thereto
by order of the Board of Directors of said corporation.
/s/ Xxxxxx Xxxxxx
-----------------
Notary Public
Xxxxxx X. Xxxxxx
Commission # 1325392
Notary Public - California
Los Angeles County
My Comm. Expires Oct. 15, 2005
50
State of California )
) ss.:
County of Los Angeles )
On the 27th day of March, 2002 before me, a notary public in and for
the State of California, personally appeared Xxxx Xxxxx, known to me who, being
by me duly sworn, did depose and say that he resides at Calabasas, California;
that he is the First Vice President of Countrywide Home Loans, Inc., a New York
corporation, one of the parties that executed the foregoing instrument; and that
he signed his name thereto by order of the Board of Directors of said
corporation.
/s/ Xxxxxx Xxxxxx
-----------------
Notary Public
Xxxxxx X. Xxxxxx
Commission # 1325392
Notary Public - California
Los Angeles County
My Comm. Expires October 15, 2005
51
State of Illinois )
) ss.:
County of Xxxx )
On the 27th day of March, 2002 before me, a notary public in and for
the State of Illinois, personally appeared Xxxxxxx X. Xxxxxx, known to me who,
being by me duly sworn, did depose and say that she resides at 0000 X. Xxxxx
Xxxxxxx, Xxxxxxx, XX 00000; that she is the Vice President of Bank One, National
Association, a national banking association, one of the parties that executed
the foregoing instrument; that he signed his name thereto by order of the Board
of Directors of said corporation.
/s/ Caesar Xxxxx Xxxxxx
------------------------
OFFICIAL SEAL
Notary Public, State of
Illinois
My Commission Expires:
06/06/05
52
State of Delaware )
) ss.:
County of New Castle )
On the 27th day of March, 2002 before me, a notary public in and for
the State of Delaware, personally appeared Xxxxx X. Xxxxxxx, known to me who,
being by me duly sworn, did depose and say that he resides at Wilmington,
Delaware; that she is the Senior Financial Services Officer of Wilmington Trust
Company, not in its individual capacity but in its capacity as Owner Trustee of
CWABS MASTER TRUST, one of the parties that executed the foregoing instrument;
that he signed his name thereto by order of the Board of Directors of said
corporation.
/s/ Xxxxxxxx X. Xxxxxxxx
Xxxxxxxx X. Xxxxxxxx
Notary Public
My Commission Expires October 31, 2003
53
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[Delivered to Indenture Trustee Only]
A-1
EXHIBIT B
FORM OF CREDIT LINE AGREEMENT
B-1
EXHIBIT C
FORM OF LETTER OF REPRESENTATIONS
C-1
EXHIBIT D
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
[DATE]
Bank One, National Association
as Indenture Trustee
1 Bank Xxx Xxxxx
Xxxxx XX0-0000
Xxxxxxx Xxxxxxxx 00000-000
Attn: Corporate Trust Services Division
Re: CWABS, Inc. Revolving Home Equity Loan
Asset Backed Notes, Series 0000-X
Xxxxxxxxx:
In connection with the administration of the Mortgage Loans held by you
as Indenture Trustee under the Sale and Servicing Agreement dated as of March
27, 2002, among CWABS, Inc. as Depositor, Countrywide Home Loans, Inc., as
Sponsor and Master Servicer, CWABS Master Trust and you, as Indenture Trustee
(the "Agreement"), we hereby request a release of the Mortgage File held by you
as Indenture Trustee with respect to the following described Mortgage Loan for
the reason indicated below.
Loan No.:
-------
[MIN No.]
-------
Reason for requesting file:
--------------------------
------------------ 1. Mortgage Loan paid in full. (The Master
Servicer hereby certifies that all amounts
received in connection with the payment in
full of the Mortgage Loan which are
required to be deposited in the Collection
Account pursuant to Section 4.02 of the
Agreement have been so deposited).
------------------ 2. Retransfer of Mortgage Loan. (The Master
Servicer hereby certifies that the Transfer
Deposit Amount has been deposited in the
Collection Account pursuant to the
Agreement).
------------------ 3. The Mortgage Loan is being foreclosed.
------------------ 4. The Mortgage Loan is being re-financed by
another depository institution. (The Master
Servicer hereby certifies that all amounts
received in connection with the payment in
full of the Mortgage Loan which are
required to be deposited in the Collection
Account pursuant to Section 4.02 of the
Agreement have been so deposited).
------------------ 5. Other (Describe).
The undersigned acknowledges that the above Mortgage File will be held by
the undersigned in accordance with the provisions of the Agreement and will
promptly be returned
D-1
to the Indenture Trustee when the need therefor by the Master Servicer no longer
exists unless the Mortgage Loan has been liquidated or retransferred.
Capitalized terms used herein shall have the meanings ascribed to them in
the Agreement.
COUNTRYWIDE HOME LOANS, INC.
By:_______________________________
Name:
Title: Servicing Officer
D-2
EXHIBIT E
FORM OF TRANSFER DOCUMENT
The Seller hereby transfers to the Depositor, and the Depositor hereby
transfers to the Owner Trustee for the benefit of the CWABS Master Trust the
below identified Additional Home Equity Loans.
Subsequent Closing Date: _________________
Subsequent Cut-off Date: __________________
Cut-off Date Asset Balance: $ ______________
Additional Home Equity Loans:
[Each of the Sponsor's funded Mortgage Loans owned by it for securitization
on the above referenced Subsequent Cut-off Date sequentially by date beginning
with the earliest date on which any of them were funded, and within a date
alphabetically, are hereby transferred to the Trust until either their aggregate
Cut-off Date Asset Balance is as close as possible to equal to the Cut-off Date
Asset Balance indicated above without exceeding it or all of the loans through
the Subsequent Cut-off Date have been transferred.]
This Transfer Document is delivered pursuant to the Purchase Agreement and
the Sale and Servicing Agreement, dated as of March 27, 2002, among CWABS, Inc.,
Countrywide Home Loans, Inc., CWABS Master Trust, and Bank One, National
Association, and the capitalized terms used in this document have the meanings
given to them in those agreements.
Dated: __________ , 2002.
COUNTRYWIDE HOME LOANS, INC. CWABS, INC.
By : ___________________ By : _____________________
Name: Name:
Title: Title:
E-1
ANNEX 1
DEFINITIONS
"Affiliate" of any person means any other person controlling, controlled by
or under common control with the person. For purposes of this definition,
"control" means the power to direct the management and policies of a person,
directly or indirectly, whether through ownership of voting securities, by
contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Agreement" means this Sale and Servicing Agreement.
"Appraised Value" for any Mortgaged Property means the value established by
any of the following: (i) with respect to Credit Line Agreements with Credit
Limits greater than $100,000, by a full appraisal, (ii) with respect to Credit
Line Agreements with Credit Limits equal to or less than $100,000, by either a
drive by inspection or electronic appraisal of the Mortgaged Property made to
establish compliance with the underwriting criteria then in effect in connection
with the application for the Mortgage Loan secured by the Mortgaged Property,
and (iii) with respect to any Mortgage Loan as to which the Servicer consents to
a new senior lien pursuant to Section 3.01(a), in compliance with the
underwriting criteria then in effect in connection with the application for the
related senior mortgage loan.
"Collection Account" means the custodial account or accounts created and
maintained for the benefit of the Noteholders, the Transferor, and the Credit
Enhancer pursuant to Section 3.02(b).
"Combined Loan-to-Value Ratio" means for any Mortgage Loan as of any date,
the percentage equivalent of the fraction, the numerator of which is the sum of
(i) the Credit Limit and (ii) the outstanding principal balance as of the date
of execution of the related original Credit Line Agreement (or any subsequent
date as of which the outstanding principal balance may be determined in
connection with an increase in the Credit Limit for the Mortgage Loan) of any
mortgage loan or mortgage loans that are senior or equal in priority to the
Mortgage Loan and which is secured by the same Mortgaged Property and the
denominator of which is the Valuation of the related Mortgaged Property.
"Credit Limit Utilization Rate" for any Mortgage Loan means a fraction
whose numerator is the Cut-off Date Asset Balance for the Mortgage Loan and
whose denominator is the related Credit Limit.
"Cumulative Loss Test Violation" has the meaning given to it in the
Insurance Agreement.
"Cut-off Date Loan Balance" means the Loan Balance calculated as of the
Cut-off Date.
"Defective Mortgage Loan" means a Mortgage Loan subject to retransfer
pursuant to Section 2.02 or 2.04.
"Delay Delivery Certification" has the meaning given to it in the Custodian
Agreement.
Xxx-1-1
"Depositor" means CWABS, Inc., a Delaware corporation, or its successor in
interest.
"Draw" for any Mortgage Loan means an additional borrowing by the mortgagor
after the Cut-off Date or Subsequent Cut-off Date, as applicable, in accordance
with the related Mortgage Note.
"Due Date" for any Mortgage Loan means the fifteenth day of the month.
"Electronic Ledger" means the electronic master record of home equity
credit line mortgage loans maintained by the Master Servicer or by the Sponsor,
as appropriate.
"Eligible Substitute Mortgage Loan" means a Mortgage Loan substituted by
the Sponsor for a Defective Mortgage Loan that must, on the date of the
substitution,
(i) have an outstanding Asset Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective Mortgage Loan,
an aggregate Asset Balance), not 10% more or 10% less than the Transfer
Deficiency relating to the Defective Mortgage Loan;
(ii) have a Loan Rate not less than the Loan Rate of the Defective
Mortgage Loan and not more than 1% in excess of the Loan Rate of the
Defective Mortgage Loan;
(iii) have a Loan Rate based on the same Index with adjustments to the
Loan Rate made on the same Interest Rate Adjustment Date as that of the
Defective Mortgage Loan;
(iv) have a FICO score not less than the FICO of the Defective
Mortgage Loan and not more than 50 points higher than the Defective
Mortgage Loan;
(v) have a Gross Margin that is not less than the Gross Margin of the
Defective Mortgage Loan and not more than 100 basis points higher than the
Gross Margin for the Defective Mortgage Loan;
(vi) have a mortgage of the same or higher level of priority as the
mortgage relating to the Defective Mortgage Loan at the time the mortgage
was transferred to the Trust;
(vii) have a remaining term to maturity not more than six months
earlier and not more than 60 months later than the remaining term to
maturity of the Defective Mortgage Loan;
(viii) comply with each representation and warranty in Section 2.04
(to be made as of the date of substitution); and
(ix) have an original Combined Loan-to-Value Ratio not greater than
that of the Defective Mortgage Loan.
More than one Eligible Substitute Mortgage Loan may be substituted for a
Defective Mortgage Loan if the Eligible Substitute Mortgage Loans meet the
foregoing attributes in the aggregate and the substitution is approved in
advance by the Credit Enhancer.
Xxx-1-2
"Event of Servicing Termination" has the meaning given to it in Section
6.01.
"Excess Spread Percentage" has the meaning given to it in the Insurance
Agreement.
"FDIC" means the Federal Deposit Insurance Corporation or any successor to
it.
"Foreclosure Profit" on a Liquidated Mortgage Loan means the amount by
which (i) the aggregate of its Net Liquidation Proceeds exceeds (ii) the related
Asset Balance (plus accrued and unpaid interest on it at the applicable Loan
Rate from the date interest was last paid to the end of the Collection Period
during which the Mortgage Loan became a Liquidated Mortgage Loan) of the
Liquidated Mortgage Loan immediately before the final recovery of its
Liquidation Proceeds.
"Gross Margin" for any Mortgage Loan means the percentage shown as the
"Gross Margin" for the Mortgage Loan on Exhibit A to the Sale and Servicing
Agreement.
"Increased Senior Lien Limitation" has the meaning given to it in Section
3.01(a).
"Indenture" means the indenture of even date with this Agreement between
the Trust and the Indenture Trustee.
"Indenture Trustee Fee" means a fee that is separately agreed to between
the Master Servicer and the Indenture Trustee.
"Indenture Trustee Fee Rate" means the per annum rate at which the
Indenture Trustee Fee is calculated.
"Index" for each Interest Rate Adjustment Date for a Mortgage Loan means
the highest "prime rate" as published in the "Money Rates" table of The Wall
Street Journal as of the first business day of the calendar month.
"Initial Mortgage Loans" means the Mortgage Loans acquired by the Trust on
the Closing Date identified on Exhibit A.
"Insurance Proceeds" means proceeds paid by any insurer (other than the
Credit Enhancer under the Policy) pursuant to any insurance policy covering a
Mortgage Loan, net of any amount (i) covering any expenses of the Master
Servicer in connection with obtaining the proceeds, (ii) applied to the
restoration or repair of the related Mortgaged Property, (iii) released to the
mortgagor in accordance with the Master Servicer's normal servicing procedures,
or (iv) required to be paid to any holder of a mortgage senior to the Mortgage
Loan.
"Interest Rate Adjustment Date" for each Mortgage Loan means any date on
which the Loan Rate is adjusted in accordance with the related Credit Line
Agreement.
"Latest Subsequent Closing Date" means the date specified in the Adoption
Annex.
"Lien" means any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority right, or interest or other Security
Agreement or preferential arrangement of any kind or nature whatsoever,
including any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
Xxx-1-3
the filing of any Financing Statement under the UCC (other than any Financing
Statement filed for informational purposes only) or comparable law of any
jurisdiction to evidence any of the foregoing except that any assignment
pursuant to Section 5.02 is not a Lien.
"Lifetime Rate Cap" for each Mortgage Loan whose related Mortgage Note
provides for a lifetime rate cap means the maximum Loan Rate permitted over the
life of the Mortgage Loan under the terms of the related Credit Line Agreement,
as shown on the Mortgage Loan Schedule.
"Liquidated Mortgage Loan" for any Payment Date means any Mortgage Loan in
respect of which the Master Servicer has determined, in accordance with the
servicing procedures specified in this Agreement, as of the end of the related
Collection Period, that all Liquidation Proceeds which it expects to recover
with respect to the disposition of the Mortgage Loan or the related REO have
been recovered.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of overhead)
that are incurred by the Master Servicer in connection with the liquidation of
any Mortgage Loan and not recovered under any insurance policy, including legal
fees and expenses, any unreimbursed amount expended pursuant to Section 3.06
(including amounts advanced to correct defaults on any mortgage loan which is
senior to the Mortgage Loan and amounts advanced to keep current or pay off a
mortgage loan that is senior to the Mortgage Loan) respecting the related
Mortgage Loan and any related and unreimbursed expenditures with respect to real
estate property taxes, water or sewer taxes, condominium association dues,
property restoration or preservation or insurance against casualty, loss or
damage.
"Liquidation Loss Amount" means, with respect to any Payment Date and any
Mortgage Loan that becomes a Liquidated Mortgage Loan during the related
Collection Period, its unrecovered Asset Balance at the end of the Collection
Period, after giving effect to the Net Liquidation Proceeds applied in reduction
of the Asset Balance. A Liquidation Loss Amount cannot be less than $0.
"Liquidation Proceeds" means proceeds (including Insurance Proceeds but not
including amounts drawn under the Policy) received in connection with the
liquidation of any Mortgage Loan or related REO, whether through trustee's sale,
foreclosure sale or otherwise.
"Loan Rate Cap" for each Mortgage Loan means the lesser of (i) the Lifetime
Rate Cap or (ii) the applicable state usury ceiling.
"Loan-to-Value Ratio" for any date of determination for any mortgage loan
means a fraction whose numerator is the outstanding principal balance of the
mortgage loan as of the date of determination and whose denominator is the
Valuation of the related Mortgaged Property.
"Loss Value" has the meaning given to it in the Insurance Agreement.
"Master Servicer" means Countrywide Home Loans, Inc., a New York
corporation and any successor to it and any successor under this Agreement.
Xxx-1-4
"Minimum Monthly Payment" for any Mortgage Loan and any month means the
minimum amount required to be paid by the related mortgagor in that month.
"Net Liquidation Proceeds" for any Liquidated Mortgage Loan means
Liquidation Proceeds net of Liquidation Expenses.
"Officer's Certificate" means a certificate (i) signed by the Chairman of
the Board, the Vice Chairman of the Board, the President, a Managing Director, a
Vice President (however denominated), an Assistant Vice President, the
Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of the Depositor, the Sponsor, the Transferor, or the Master
Servicer, or (ii), if provided for in this Agreement, signed by a Servicing
Officer.
"Opinion of Counsel" means a written opinion of counsel acceptable to the
Indenture Trustee, who may be in-house counsel for the Depositor, the Sponsor,
the Master Servicer, or the Transferor (except that any opinion pursuant to
Section 5.04 or relating to taxation must be an opinion of independent outside
counsel) and who, in the case of opinions delivered to the Credit Enhancer or
the Rating Agency, is reasonably acceptable to it.
"REO" means a Mortgaged Property that is acquired by the Trust in
foreclosure or by deed in lieu of foreclosure.
"Servicing Certificate" means a certificate completed and executed by a
Servicing Officer in accordance with Section 4.01.
"Servicing Officer" means any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Indenture Trustee (with a copy to the Credit Enhancer) by the Master
Servicer on the Closing Date, as the list may be amended from time to time.
"Sponsor" means Countrywide Home Loans, Inc., a New York corporation and
any successor to it.
"Spread Rate" has the meaning given to it in the Insurance Agreement.
"Subsequent Closing Date" means any date designated by the Depositor on
which the Trust acquires Additional Home Equity Loans pursuant to Section
2.01(b).
"Subsequent Cut-off Date" means the cut-off date designated by the
Depositor in a Transfer Document in connection with the acquisition of
Additional Home Equity Loans by the Trust pursuant to Section 2.01(b).
"Transfer Date" has the meaning given to it in Section 2.06.
"Transfer Deficiency" means that the Transferor Principal Balance after a
retransfer of a Mortgage Loan pursuant to Section 2.02(b) would be less than the
greater of the Minimum Transferor Interest and the Required Transferor
Subordinated Amount.
"Transfer Deposit Amount" has the meaning given to it in Section 2.02(b).
"Transfer Document" means a document substantially in the form of Exhibit
E.
Xxx-1-5
"Transfer Notice Date" has the meaning given to it in Section 2.06.
"Valuation" of any Mortgaged Property means the lesser of (i) the Appraised
Value of the Mortgaged Property and (ii) in the case of a Mortgaged Property
purchased within one year of the origination of the related Mortgage Loan, the
purchase price of the Mortgaged Property.
Xxx-1-6
The following have the meanings given to them in the Indenture:
Accelerated Principal Payment Amount MERS(R) System
Additional Balance MIN
Additional Home Equity Loans Minimum Transferor Interest
Additional Loan Account MOM Loan
Asset Balance Xxxxx'x
Assignment of Mortgage Mortgage File
Available Transferor Subordinated Amount Mortgage Loan
Basis Risk Carryforward Mortgage Loan Schedule
Business Day Mortgage Note
Closing Date Mortgaged Property
Code Note
Collection Period Note Rate
Corporate Trust Office Note Interest
Credit Enhancement Draw Amount Note Principal Balance
Credit Enhancer Noteholder or Holder
Credit Enhancer Default Note Owner
Credit Limit Note Register and Note Registrar
Credit Line Agreement Original Note Principal Balance
Custodial Agreement Outstanding Amount
Cut-off Date Paying Agent
Cut-off Date Asset Balance Payment Date
Determination Date Policy
Eligible Account Principal Collections
Eligible Investments Purchase Agreement
Guaranteed Principal Payment Amount Rapid Amortization Event
Indenture Trustee Rating Agency
Initial Mortgage File Required Transferor Subordinated
Insolvency Event Amount
Insurance Agreement Responsible Officer
Interest Collections Scheduled Principal Collections
Interest Formula Rate Payment Amount
Interest Period Servicing Fee
Investor Fixed Allocation Percentage Standard & Poor's
Investor Floating Allocation Percentage Transferor
Investor Interest Collections Transferor Certificates
Investor Loss Amount Transferor Interest
Investor Loss Reduction Amount Transferor Principal Balance
Investor Principal Collections Transferor Principal Collections
Loan Balance Trust
Loan Rate Trust Agreement
Managed Amortization Period UCC
Maximum Rate Unpaid Investor Interest Shortfall
MERS Weighted Average Net Loan Rate
Xxx-1-7
ANNEX 2
ADOPTION ANNEX
The items referred to in the representations and warranties in Section
2.04(a) are:
(xi) no more than 1% of the Initial Mortgage Loans (by Cut-off Date Loan
Balance) were 30-59 days delinquent (measured on a contractual basis).
(xvi) As of the Cut-off Date for the Initial Mortgage Loans no more than
3.00% of the Initial Mortgage Loans, by aggregate principal balance, are secured
by Mortgaged Properties located in one United States postal zip code.
(xvii) The Combined Loan-to-Value Ratio for each Initial Mortgage Loan was
not in excess of 100%.
(xxv) The weighted average remaining term to maturity of the Initial
Mortgage Loans on a contractual basis as of the Cut-off Date for the Initial
Mortgage Loans is approximately 298 months. The Loan Rate Caps for the Initial
Mortgage Loans range between 8.75% and 24.00% and the weighted average Loan Rate
Cap is approximately 17.9%. The Gross Margins for the Initial Mortgage Loans
range between -1.75% and 8.875% and the weighted average Gross Margin is
approximately 1.86% as of the Cut-off Date for the Initial Mortgage Loans. The
Loan Rates on the Initial Mortgage Loans range between 3.00% and 11.825% and the
weighted average Loan Rate on the Initial Mortgage Loans is approximately 4.12%.
(xxvii) No more than 23.82% (by Cut-off Date Loan Balance) of the Initial
Mortgage Loans are secured by real property improved by individual condominium
units, units in planned unit developments, townhouses, or two-to-four family
residences erected on them, and at least 76.18% (by Cut-off Date Loan Balance)
of the Initial Mortgage Loans are secured by real property with a detached
one-family residence erected on them.
(xxviii) The Credit Limits on the Initial Mortgage Loans range between
approximately $4,000 and $1,100,000 with an average of approximately $40,350. As
of the Cut-off Date for the Initial Mortgage Loans, no Mortgage Loan had a
principal balance in excess of approximately $1,100,000 and the average
principal balance of the Initial Mortgage Loans is equal to approximately
$29,065.
(xix) Approximately 5.51% and 94.49% of the Initial Mortgage Loans, by
aggregate principal balance as of the Cut-off Date for the Initial Mortgage
Loans, are first and second liens, respectively.
(xxx) As of the Closing Date, no more than 7.00% of the Initial Mortgage
Loans, by aggregate principal balance, were appraised electronically.
The amount of initial aggregate principal amount of Notes is
$1,150,000,000.
The title of the Collection Account is "Bank One, National Association, as
Indenture Trustee, Collection Account in trust for the registered holders of
Revolving Home Equity Loan Asset Backed Notes, Series 2002-C and MBIA Insurance
Corporation.
The date on which the Master Servicer delivers the Officer's Certificate in
each year is May 31, and the first Officer's Certificate pursuant to Section
3.09 is May 31, 2003.
The date on which the Master Servicer delivers the annual servicing report
in each year is May 31, and the first annual servicing report pursuant to
Section 3.10 is May 31, 2003.
The Series referred to in Section 8.09 is the Series 2002-C Subtrust.
