EXHIBIT 99.4
GMAC Mortgage Corporation,
as HELOC Back-Up Servicer,
AMERICAN HOME MORTGAGE TRUST 2005-1,
as Issuer
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Indenture Trustee
AMERICAN HOME MORTGAGE ACCEPTANCE, INC.
as Seller
and
AMERICAN HOME MORTGAGE SERVICING, INC.
as HELOC Servicer
HELOC SERVICING AGREEMENT
Dated as of March 23, 2005
HELOC Mortgage Loans
American Home Mortgage Investment Trust 2005-1
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TABLE OF CONTENTS
PAGE
ARTICLE I
Definitions
Section 1.01 Definitions............................................................................7
Section 1.02 Other Definitional Provisions..........................................................7
Section 1.03 Interest Calculations..................................................................8
ARTICLE II
Representations and Warranties
Section 2.01 Representations and Warranties Regarding the HELOC Servicer............................8
Section 2.02 Existence..............................................................................9
Section 2.03 Enforcement of Representations and Warranties..........................................9
ARTICLE III
Administration and Servicing of HELOC Mortgage Loans
Section 3.01 HELOC Servicer to Service.............................................................11
Section 3.02 Subservicing Agreements Between HELOC Servicer and Subservicers.......................13
Section 3.03 Successor Subservicers................................................................14
Section 3.04 Liability of the HELOC Servicer.......................................................14
Section 3.05 Assumption or Termination of Subservicing Agreements by HELOC Back-Up Servicer........15
Section 3.06 Collection of Mortgage Loan Payments..................................................16
Section 3.07 Withdrawals from the Collection Account...............................................18
Section 3.08 Collection of Taxes Assessments and Similar Items.....................................20
Section 3.09 Access to Certain Documentation and Information Regarding the HELOC Mortgage Loans....20
Section 3.10 Reserved..............................................................................20
Section 3.11 Maintenance of Hazard Insurance and Fidelity Coverage.................................21
Section 3.12 Due-on-Sale Clauses; Assumption Agreements............................................22
Section 3.13 Realization Upon Defaulted HELOC Mortgage Loans.......................................22
Section 3.14 Indenture Trustee to Cooperate; Release of Mortgage Files.............................24
Section 3.15 Servicing Compensation................................................................25
Section 3.16 Annual Statements of Compliance.......................................................25
Section 3.17 Annual Independent Public Accountants' Servicing Report...............................26
Section 3.18 Optional Purchase of Defaulted Mortgage Loans.........................................27
Section 3.19 Information Required by the Internal Revenue Service Generally and Reports of
Foreclosures and Abandonments of Mortgaged Property...................................27
Section 3.20 Fair Credit Reporting Act.............................................................27
Section 3.21 Advances on the HELOC Mortgage Loans..................................................27
Section 3.22 Transfers of HELOC Mortgage Loans at Election of the Seller...........................28
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Section 3.23 Transfers of HELOC Mortgage Loans with Locked Balances................................29
ARTICLE IV
Servicing Certificate
Section 4.01 Remittance Reports....................................................................29
Section 4.02 Reserved..............................................................................30
Section 4.03 Reserved..............................................................................30
Section 4.04 Reserved..............................................................................30
Section 4.05 Reserved..............................................................................30
Section 4.06 Annual Certification..................................................................30
ARTICLE V
The HELOC Servicer
Section 5.01 Liability of the HELOC Servicer.......................................................31
Section 5.02 Merger or Consolidation of or Assumption of the Obligations of the HELOC Servicer.....31
Section 5.03 Limitation on Liability of the HELOC Servicer and Others..............................31
Section 5.04 HELOC Servicer Not to Resign..........................................................32
Section 5.05 Delegation of Duties..................................................................32
Section 5.06 Indemnification.......................................................................32
Section 5.07 Duties of the HELOC Servicer With Respect to the Indenture............................33
ARTICLE VI
Default
Section 6.01 Servicing Default.....................................................................35
Section 6.02 HELOC Back-Up Servicer to Act; Appointment of Successor...............................38
Section 6.03 Reserved..............................................................................39
Section 6.04 Waiver of Defaults....................................................................39
ARTICLE VII
Miscellaneous Provisions
Section 7.01 Amendment.............................................................................41
Section 7.02 GOVERNING LAW.........................................................................41
Section 7.03 Notices...............................................................................41
Section 7.04 Severability of Provisions............................................................42
Section 7.05 Third-Party Beneficiaries.............................................................43
Section 7.06 Counterparts..........................................................................43
Section 7.07 Effect of Headings and Table of Contents..............................................43
Section 7.08 Termination...........................................................................43
Section 7.09 No Petition...........................................................................43
Section 7.10 No Recourse...........................................................................43
Section 7.11 Consent to Jurisdiction...............................................................43
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EXHIBIT A - HELOC MORTGAGE LOAN SCHEDULE.....................................A-1
EXHIBIT B - FORM OF REQUEST FOR RELEASE......................................B-1
EXHIBIT C-1 - FORM OF CERTIFICATION TO BE PROVIDED BY
THE HELOC SERVICER..................................................C-1
EXHIBIT C-2 - RESERVED.......................................................C-2
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This HELOC Servicing Agreement, dated as of March 23, 2005,
among GMAC Mortgage Corporation, as HELOC Back-Up Servicer ("HELOC Back-Up
Servicer"), American Home Mortgage Investment Trust 2005-1, as Issuer (the
"Issuer"), American Home Mortgage Acceptance, Inc. as Seller (the "Seller"),
Deutsche Bank National Trust Company, as Indenture Trustee (the "Indenture
Trustee") and American Home Mortgage Servicing, Inc., as HELOC Servicer ("HELOC
Servicer").
W I T N E S S E T H T H A T :
------------------------------
WHEREAS, pursuant to the terms of the Mortgage Loan Purchase
Agreement and the related Group I, Group II, Group III, Group IV, Group V, Group
VI, Group VII, Group VIII and Group IX Subsequent Mortgage Loan Purchase
Agreement, American Home Mortgage Securities LLC (the "Company" or "Depositor")
will acquire the Mortgage Loans and the related Group I, Group II, Group III,
Group IV, Group V, Group VI, Group VII, Group VIII and Group IX Subsequent
Mortgage Loans;
WHEREAS, the Company will create American Home Mortgage
Investment Trust 2005-1, a Delaware statutory trust (the "Issuer"), and will
transfer the Mortgage Loans and the related Subsequent Mortgage Loans and all of
its rights under the Mortgage Loan Purchase Agreement and the related Group I,
Group II, Group III, Group IV, Group V, Group VI, Group VII, Group VIII and
Group IX Subsequent Mortgage Loan Purchase Agreement to the Issuer;
WHEREAS, pursuant to the terms of an Amended and Restated
Trust Agreement dated as of March 23, 2005 ("Trust Agreement") among the
Company, as depositor, Wilmington Trust Company, as owner trustee ("Owner
Trustee") and Xxxxx Fargo Bank, N.A., as securities administrator (the
"Securities Administrator"), the Company will convey the Mortgage Loans to the
Issuer in exchange for the Certificates (as defined below);
WHEREAS, pursuant to the terms of the Trust Agreement, the
Issuer will issue and transfer to or at the direction of the Depositor, the
Trust Certificates, 2005-1 ("Certificates");
WHEREAS, pursuant to the terms of an Indenture dated as of
March 23, 2005 ("Indenture") among the Issuer, the Securities Administrator and
the Indenture Trustee, the Issuer will pledge the Mortgage Loans and issue and
transfer to or at the direction of the Purchaser the Mortgage-Backed Notes,
Series 2005-1, Class I-A-1, Class I-A-2, Class I-A-3, Class II-A-1, Class
II-A-2, Class III-A-1, Class III-A-2, Class IV-A-1, Class IV-A-2, Class V-A-1,
Class V-A-2, Class VI-A, Class VII-A-1, Class VII-A-2, Class VIII-A-1, Class
VIII-A-2, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6,
Class M-7, Class M-8, Class B-1, Class VIII-M-1, Class VIII-M-2, Class VIII-M-3,
Class VIII-M-4, Class VIII-M-5, Class VIII-M-6, Class IX-A, Class B and Class N
Notes; and
WHEREAS, pursuant to the terms of the HELOC Back-Up Servicing
Agreement, the HELOC Back-Up Servicer will back-up service the HELOC Mortgage
Loans set forth on the HELOC Mortgage Loan Schedule for the benefit of the
holders of the Class IX-A Notes, the Issuer, the Insurer and the Indenture
Trustee;
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WHEREAS, pursuant to the terms of this HELOC Servicing
Agreement, the HELOC Servicer shall service the HELOC Mortgage Loans for the
benefit of the HELOC Back-Up Servicer, the Issuer, the Indenture Trustee, the
Insurer and the holders of the Class IX-A Notes;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS. For all purposes of this HELOC Servicing
Agreement, except as otherwise expressly provided herein or unless the context
otherwise requires, capitalized terms not otherwise defined herein shall have
the meanings assigned to such terms in the Definitions contained in Appendix A
to the Indenture which is incorporated by reference herein. All other
capitalized terms used herein shall have the meanings specified herein.
Section 1.02 Other Definitional Provisions.
(a) All terms defined in this HELOC Servicing Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(b) As used in this HELOC Servicing Agreement and in any certificate or
other document made or delivered pursuant hereto or thereto, accounting terms
not defined in this HELOC Servicing Agreement or in any such certificate or
other document, and accounting terms partly defined in this HELOC Servicing
Agreement or in any such certificate or other document, to the extent not
defined, shall have the respective meanings given to them under generally
accepted accounting principles. To the extent that the definitions of accounting
terms in this HELOC Servicing Agreement or in any such certificate or other
document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this HELOC
Servicing Agreement or in any such certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar
import when used in this HELOC Servicing Agreement shall refer to this HELOC
Servicing Agreement as a whole and not to any particular provision of this HELOC
Servicing Agreement; Section and Exhibit references contained in this HELOC
Servicing Agreement are references to Sections and Exhibits in or to this HELOC
Servicing Agreement unless otherwise specified; and the term "including" shall
mean "including without limitation".
(d) The definitions contained in this HELOC Servicing Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to herein
or in any instrument or
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certificate delivered in connection herewith means such agreement, instrument or
statute as from time to time amended, modified or supplemented and includes (in
the case of agreements or instruments) references to all attachments thereto and
instruments incorporated therein; references to a Person are also to its
permitted successors and assigns.
Section 1.03 INTEREST CALCULATIONS. All calculations of interest
hereunder that are made in respect of the Stated Principal Balance of a HELOC
Mortgage Loan shall be made on the basis of a 365/366 day year and the actual
number of days elapsed.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01 REPRESENTATIONS AND WARRANTIES REGARDING THE HELOC
SERVICER. The HELOC Servicer represents and warrants to the HELOC Back-Up
Servicer, the Issuer, the Indenture Trustee and the Insurer, that:
(i) The HELOC Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland
and has the corporate power to own its assets and to transact the business in
which it is currently engaged. The HELOC Servicer is duly qualified to do
business and is in good standing in each jurisdiction in which the character of
the business transacted by it or properties owned or leased by it requires such
qualification and in which the failure to so qualify would have a material
adverse effect on the business, properties, assets, or condition (financial or
other) of the HELOC Servicer or the validity or enforceability of the HELOC
Mortgage Loans;
(ii) The HELOC Servicer has the power and authority to make,
execute, deliver and perform this HELOC Servicing Agreement and all of the
transactions contemplated under this HELOC Servicing Agreement, and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this HELOC Servicing Agreement. When executed and delivered, this
HELOC Servicing Agreement will constitute the legal, valid and binding
obligation of the HELOC Servicer enforceable in accordance with its terms,
except as enforcement of such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally and by
availability of equitable remedies;
(iii) The HELOC Servicer is not required to obtain the consent
of any other Person or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this HELOC Servicing Agreement, except for such consent,
license, approval or authorization, or registration or declaration, as shall
have been obtained or filed, as the case may be;
(iv) The execution and delivery of this HELOC Servicing
Agreement and the performance of the transactions contemplated hereby by the
HELOC Servicer will not violate any provision of any existing law or regulation
or any order or decree of any court applicable to the HELOC Servicer or any
provision of the charter or bylaws of the HELOC Servicer, or constitute a
material breach of any mortgage, indenture, contract or other agreement to which
the HELOC Servicer is a party or by which the HELOC Servicer may be bound;
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(v) No litigation or administrative proceeding of or before any court, tribunal
or governmental body is currently pending (other than litigation with respect to
which pleadings or documents have been filed with a court, but not served on the
HELOC Servicer), or to the knowledge of the HELOC Servicer threatened, against
the HELOC Servicer or any of its properties or with respect to this HELOC
Servicing Agreement or the Class IX-A Notes or the Certificates which, to the
knowledge of the HELOC Servicer, has a reasonable likelihood of resulting in a
material adverse effect on the transactions contemplated by this HELOC Servicing
Agreement; and
(vi) The HELOC Servicer is a member of MERS in good standing,
and will comply in all material respects with the rules and procedures of MERS
in connection with the servicing of the HELOC Mortgage Loans that are registered
with MERS.
The foregoing representations and warranties shall survive any
termination of the HELOC Servicer hereunder.
Section 2.02 EXISTENCE. The Issuer will keep in full effect its
existence, rights and franchises as a statutory trust under the laws of the
State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other state or of the United States of
America, in which case the Issuer will keep in full effect its existence, rights
and franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this HELOC Servicing Agreement.
Section 2.03 ENFORCEMENT OF REPRESENTATIONS AND WARRANTIES. The
Indenture Trustee, as pledgee of the Mortgage Loans shall enforce the
representations and warranties and related obligations for breaches thereof of
the Seller pursuant to the Mortgage Loan Purchase Agreement or the Group IX
Subsequent Mortgage Loan Purchase Agreement. Upon the discovery by the Seller,
the HELOC Servicer, the Indenture Trustee, the Insurer or the Company of a
breach of any of the representations and warranties made in the Mortgage Loan
Purchase Agreement or the Group IX Subsequent Mortgage Loan Purchase Agreement
in respect of any HELOC Mortgage Loan which materially and adversely affects the
interests of the Class IX-A Noteholders, the Insurer or the Certificateholders,
the party discovering the same shall give prompt written notice to the other
parties. The Indenture Trustee shall promptly notify the Seller and request
that, pursuant to the terms of the Mortgage Loan Purchase Agreement or the Group
IX Subsequent Mortgage Loan Purchase Agreement, the Seller either (i) cure such
breach in all material respects or (ii) purchase such HELOC Mortgage Loan or
such Subsequent Mortgage Loan, in each instance in accordance with the Mortgage
Loan Purchase Agreement or the Group IX Subsequent Mortgage Loan Purchase
Agreement; provided that the Seller shall, subject to the conditions set forth
in the Mortgage Loan Purchase Agreement, have the option to substitute an
Eligible Substitute Mortgage Loan or Eligible Substitute Mortgage Loans for such
HELOC Mortgage Loan upon delivery of an Officer's Certificate to the Indenture
Trustee stating that such Eligible Substitute Mortgage Loan satisfies the
definition of Eligible Substitute Mortgage Loan set forth in Appendix A to the
Indenture and that the Substitution Adjustment Amount, if any, has been
deposited into the Collection Account. Monthly Payments due with respect to
Eligible Substitute Mortgage Loans in the month of substitution shall not be
part of the Trust Estate and will be retained by the HELOC Servicer and remitted
by the HELOC Servicer to the Seller on the next succeeding Payment Date.
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For the month of substitution, distributions to the Payment Account pursuant to
this Agreement will include the Monthly Payment due on a Deleted Mortgage Loan
for such month and thereafter the Seller shall be entitled to retain all amounts
received in respect of such Deleted Mortgage Loan. The HELOC Servicer shall
amend or cause to be amended the HELOC Mortgage Loan Schedule to reflect the
removal of such Deleted Mortgage Loan and the substitution of the related
Eligible Substitute Mortgage Loan and the HELOC Servicer shall promptly deliver
the amended HELOC Mortgage Loan Schedule to the HELOC Back-Up Servicer, the
Securities Administrator, Owner Trustee, the Insurer and Indenture Trustee.
In connection with the substitution of one or more Eligible Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the HELOC Servicer will
determine the amount (such amount, a "Substitution Adjustment Amount"), if any,
by which the aggregate Stated Principal Balance of all such Eligible Substitute
Mortgage Loans as of the date of substitution is less than the aggregate
principal balance of all such Deleted Mortgage Loans (after application of the
principal portion of the Monthly Payments due on such Deleted Mortgage Loans in
the month of substitution). The Seller shall pay the Substitution Adjustment
Amount to the HELOC Servicer and the HELOC Servicer shall deposit such
Substitution Adjustment Amount into the Collection Account upon receipt.
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ARTICLE III
ADMINISTRATION AND SERVICING OF HELOCMORTGAGE LOANS
Section 3.01 HELOC SERVICER TO SERVICE. (a) The HELOC Servicer shall
service, or take such actions as are necessary to ensure, the servicing and
administration of the HELOC Mortgage Loans and any REO Property in accordance
with this HELOC Servicing Agreement and its normal servicing practices, which
generally shall conform to the standards of an institution prudently servicing
home equity line of credit mortgage loans for its own account and shall have
full authority to do anything it reasonably deems appropriate or desirable in
connection with such servicing and administration. The HELOC Servicer may
perform its responsibilities relating to servicing through other agents or
independent contractors, but shall not thereby be released from any of its
responsibilities for the servicing and administration of the HELOC Mortgage
Loans. The authority of the HELOC Servicer, in its capacity as HELOC Servicer,
and any Subservicer acting on its behalf, shall include, without limitation, the
power on behalf of the Issuer and the Indenture Trustee to (i) consult with and
advise any Subservicer regarding administration of a related HELOC Mortgage
Loan, (ii) approve any recommendation by a Subservicer to foreclose on a related
HELOC Mortgage Loan, (iii) supervise the filing and collection of insurance
claims and take or cause to be taken such actions on behalf of the insured
Person thereunder as shall be reasonably necessary to prevent the denial of
coverage thereunder, and (iv) effectuate foreclosure or other conversion of the
ownership of the Mortgaged Property securing a related HELOC Mortgage Loan,
including the employment of attorneys, the institution of legal proceedings, the
collection of deficiency judgments, acceptance of compromise proposals and any
other matter pertaining to a delinquent HELOC Mortgage Loan. authority of the
HELOC Servicer shall include, in addition, the power to (i) execute and deliver
customary consents or waivers and other instruments and documents, (ii) consent
to transfer of any related Mortgaged Property and assumptions of the related
Mortgage Notes (in the manner provided in this HELOC Servicing Agreement) and
(iii) collect any Insurance Proceeds and Liquidation Proceeds. Without limiting
the generality of the foregoing, the HELOC Servicer and any Subservicer acting
on its behalf may, and is hereby authorized, and empowered by the Indenture
Trustee, to execute and deliver any instruments of satisfaction, cancellation,
partial or full release, discharge and all other comparable instruments, with
respect to the related HELOC Mortgage Loans, the insurance policies and accounts
related thereto, and the Mortgaged Properties. The HELOC Servicer may exercise
this power in its own name or in the name of a Subservicer.
Notwithstanding the foregoing or anything else to the contrary in this
HELOC Servicing Agreement, for so long as a Servicing Default or HELOC Servicer
Termination Event is not in effect as provided in Section 6.01 herein, the
responsibilities of the HELOC Back-Up Servicer shall be limited to review of the
reports provided by the HELOC Servicer in connection with the creation of the
Remittance Reports required of the HELOC Servicer pursuant to Section 4.01 of
this HELOC Servicing Agreement and the HELOC Back-Up Servicer's obligations
under Sections 3.01, 4.02, 4.03 and 4.04 of the HELOC Back-Up Servicing
Agreement.
The relationship of the HELOC Servicer (and of any successor to the
HELOC Servicer under this Agreement) to the HELOC Back-Up Servicer and the other
parties hereto under this Agreement is intended by the parties to be that of an
independent contractor and not that of a
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joint venturer, partner or agent; provided, however, that the HELOC Servicer is
authorized and empowered by the Indenture Trustee, in its own name or in the
name of any Subservicer, when the HELOC Servicer or such Subservicer, as the
case may be, believes it is appropriate in its best judgment to register any
HELOC Mortgage Loan on the MERS(R) System, or cause the removal from the
registration of any HELOC Mortgage Loan on the MERS(R) System, to execute and
deliver, on behalf of the Indenture Trustee, any and all instruments of
assignment and other comparable instruments with respect to such assignment or
re-recording of a Mortgage in the name of MERS, solely as nominee for the
Indenture Trustee and its successors and assigns. Any expenses incurred in
connection with the actions described in the preceding sentence shall be borne
by the HELOC Servicer in accordance with Section 3.15, with no right of
reimbursement; provided, that if, as a result of MERS discontinuing or becoming
unable to continue operations in connection with the MERS System, it becomes
necessary to remove any HELOC Mortgage Loan from registration on the MERS System
and to arrange for the assignment of the related Mortgages to the Indenture
Trustee, then any related expenses shall be reimbursable to the HELOC Servicer
from the Trust Estate.
(b) With respect to each HELOC Mortgage Loan, consistent with the terms
of this HELOC Servicing Agreement, the HELOC Servicer may consent to the placing
of a lien senior to that of the Mortgage on the related Mortgaged Property;
provided,
(i) the Combined Loan-to-Value Ratio, which may be based on a
new appraisal, of the related HELOC Mortgage Loan immediately following the
modification is not greater than the Combined Loan-to-Value Ratio of such HELOC
Mortgage Loan as of the date such HELOC Mortgage Loan was originated; or
(ii) in the case of any such action that would result in an
increase in the Combined Loan-to-Value Ratio over the Combined Loan-to-Value
Ratio as of the date such HELOC Mortgage Loan was originated, aggregate number
of HELOC Mortgage Loans with respect to which a new senior lien is consented to
by the HELOC Servicer does not exceed 5% of the number of HELOC Mortgage Loans
as of the Cut-off Date or 30% of aggregate Stated Principal Balance of the HELOC
Mortgage Loans as of such date, and the Combined Loan-to-Value Ratio after
giving effect to the modification does not exceed 100%.
(c) The HELOC Servicer or the related Subservicer, as the case may be,
shall be entitled to (A) execute assumption agreements, substitution agreements,
and instruments of satisfaction or cancellation or of full release or discharge,
or any other document contemplated by this HELOC Servicing Agreement and other
comparable instruments with respect to the HELOC Mortgage Loans and with respect
to the Mortgaged Properties subject to the Mortgages (and the Indenture Trustee
shall promptly execute or cause to be executed any such documents on request of
the HELOC Servicer and prepared by it) and (B) approve the granting of an
easement thereon in favor of another Person, any alteration or demolition of the
related Mortgaged Property or other similar matters, if it has determined,
exercising its good faith business judgment in the same manner as it would if it
were the owner of the related HELOC Mortgage Loan, that the security for, and
the timely and full collectability of, such HELOC Mortgage Loan would not be
adversely affected thereby. An assumption pursuant to this Section 3.01 is
permitted solely if the creditworthiness of the prospective purchaser of a
Mortgaged Property meets the same or better underwriting guidelines as those
which were applied to the
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original borrower and the security for such HELOC Mortgage Loan is not impaired
by the assumption. Any fee collected by the HELOC Servicer or the related
Subservicer for processing such request will be retained by the HELOC Servicer
or such Subservicer as additional servicing compensation.
(d) Notwithstanding the provisions of Subsection 3.01(a), the HELOC
Servicer shall not take any action inconsistent with the interests of the
Indenture Trustee or with the rights and interests of the HELOC Back-Up Servicer
under this HELOC Servicing Agreement.
(e) The Indenture Trustee shall execute and return to the HELOC
Servicer any limited powers of attorney and other documents in form as provided
to the Indenture Trustee necessary or appropriate to enable the HELOC Servicer
to service and administer the related HELOC Mortgage Loans and REO Property.
(f) With respect to each HELOC Mortgage Loan, the HELOC Servicer may
also, without approval from the Rating Agencies or the Insurer, increase the
Credit Limit on a HELOC Mortgage Loan if such increase is consistent with the
HELOC Servicer's underwriting policies and a new Appraised Value is obtained and
the Combined Loan-to-Value Ratio of the HELOC Mortgage Loan after giving effect
to the increase is less than or equal to the Combined Loan-to-Value Ratio of the
HELOC Mortgage Loan as of the Cut-off Date.
(g) With respect to each HELOC Mortgage Loan, the HELOC Servicer may
increase the Credit Limits on up to 10% of the number of HELOC Mortgage Loans as
of the Cut-off Date if the increase in the Credit Limit of any single HELOC
Mortgage Loan does not cause the Combined Loan-to-Value Ratio of such HELOC
Mortgage Loan to exceed 100%.
(h) With respect to each HELOC Mortgage Loan, the HELOC Servicer,
without prior approval from the Rating Agencies, the Indenture Trustee or the
Insurer, may solicit Mortgagors for a reduction in Margins on up to 10% of the
number of HELOC Mortgage Loans as of the Cut-off Date, provided that the
cumulative impact of any such Margin reductions shall not result in the
reduction of the weighted average Margin of the HELOC Mortgage Loans as of the
Cut-off Date by more than 25 basis points taking into account any prior
reductions.
In no event shall the HELOC Servicer modify the maturity of any HELOC Mortgage
Loan to a maturity that is later than the Final Scheduled Payment Date. Nothing
in this HELOC Servicing Agreement shall limit the right of the HELOC Servicer to
solicit mortgagors with respect to new loans (including mortgage loans) that are
not HELOC Mortgage Loans.
Section 3.02 SUBSERVICING AGREEMENTS BETWEEN HELOC SERVICER AND
SUBSERVICERS. (a) The HELOC Servicer may enter into Subservicing Agreements with
Subservicers for the servicing and administration of the HELOC Mortgage Loans
and for the performance of any and all other activities of the HELOC Servicer
hereunder. Each Subservicer shall be either (i) an institution the accounts of
which are insured by the FDIC or (ii) another entity that engages in the
business of originating or servicing mortgage loans comparable to the HELOC
Mortgage Loans, and in either case shall be authorized to transact business in
the state or states in which the related Mortgaged Properties it is to service
are situated, if and to the extent required by applicable law to enable the
Subservicer to perform its obligations hereunder and under the related
Subservicing
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Agreement, and in either case shall be a Xxxxxxx Mac or Xxxxxx Mae approved
mortgage servicer. Any Subservicing Agreement entered into by the HELOC Servicer
shall include the provision that such Agreement may be terminated with or
without cause and without the payment of any termination fee by any successor
HELOC Servicer (including, without limitation, the HELOC Back-Up Servicer as
successor HELOC Servicer) under this HELOC Servicing Agreement. In addition,
each Subservicing Agreement shall provide for servicing of the HELOC Mortgage
Loans consistent with the terms of this HELOC Servicing Agreement. The HELOC
Servicer and the Subservicers may enter into Subservicing Agreements and make
amendments to the Subservicing Agreements or enter into different forms of
Subservicing Agreements providing for, among other things, the delegation by the
HELOC Servicer to a Subservicer of additional duties regarding the
administration of the HELOC Mortgage Loans; provided, however, that any such
amendments or different forms shall be consistent with and not violate the
provisions of this HELOC Servicing Agreement, and that no such amendment or
different form shall be made or entered into which could be reasonably expected
to be materially adverse to the interests of the Indenture Trustee and the
Noteholders, without the consent of the HELOC Back-Up Servicer.
(b) As part of its servicing activities hereunder, the HELOC Servicer
shall enforce the obligations of each Subservicer under the related Subservicing
Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Subservicing Agreements and the pursuit of
other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the HELOC Servicer, in its good faith business
judgment, would require were it the owner of the related HELOC Mortgage Loans.
The HELOC Servicer shall pay the costs of such enforcement at its own expense,
but shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement only to the extent, if any, that such recovery exceeds all
amounts due in respect of the related Mortgage Loan or (ii) from a specific
recovery of costs, expenses or attorneys' fees against the party against whom
such enforcement is directed.
Section 3.03 SUCCESSOR SUBSERVICERS. The HELOC Servicer shall be
entitled to terminate any Subservicing Agreement that may exist in accordance
with the terms and conditions of such Subservicing Agreement subject to the
terms of Section 3.02(a) of this HELOC Servicing Agreement; provided, however,
that upon termination, the HELOC Servicer shall either act as servicer of the
related Mortgage Loan or enter into an appropriate contract with a successor
Subservicer and in conformance with the terms of Section 3.02(a) of this HELOC
Servicing Agreement pursuant to which such successor Subservicer will be bound
by all relevant terms of the related Subservicing Agreement and this HELOC
Servicing Agreement pertaining to the servicing of such HELOC Mortgage Loan.
Section 3.04 LIABILITY OF THE HELOC SERVICER. (a) Notwithstanding any
Subservicing Agreement, any of the provisions of this HELOC Servicing Agreement
relating to agreements or arrangements between the HELOC Servicer and a
Subservicer or reference to actions taken through a Subservicer or otherwise,
the HELOC Servicer shall under all circumstances remain obligated and primarily
liable to the Indenture Trustee, the Issuer, the Insurer and the Noteholders for
the servicing and administering of the HELOC Mortgage Loans and any REO Property
in accordance with this HELOC Servicing Agreement. The obligations and liability
of the HELOC Servicer shall not be diminished by virtue of Subservicing
Agreements or by virtue of indemnification of the HELOC Servicer by any
Subservicer, or any other Person. The obligations
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and liability of the HELOC Servicer shall remain of the same nature and under
the same terms and conditions as if the HELOC Servicer alone were servicing and
administering the related HELOC Mortgage Loans. The HELOC Servicer shall,
however, be entitled to enter into indemnification agreements with any
Subservicer or other Person and nothing in this HELOC Servicing Agreement shall
be deemed to limit or modify such indemnification. For the purposes of this
HELOC Servicing Agreement, the HELOC Servicer shall be deemed to have received
any payment on a HELOC Mortgage Loan on the date the Subservicer received such
payment; provided, however, that this sentence shall not apply to the HELOC
Back-Up Servicer as the successor HELOC Servicer.
Any Subservicing Agreement that may be entered into and any
transactions or services relating to the HELOC Mortgage Loans involving a
Subservicer in its capacity as such shall be deemed to be between the
Subservicer and the HELOC Servicer alone, and none of the HELOC Back-Up
Servicer, the Issuer, the Indenture Trustee or the Noteholders shall be deemed a
party thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Subservicer except as set forth in Section 3.05.
Section 3.05 ASSUMPTION OR TERMINATION OF SUBSERVICING AGREEMENTS BY
HELOC BACK-UP SERVICER. (a) If the HELOC Back-Up Servicer or a successor HELOC
Servicer shall assume the servicing obligations of the HELOC Servicer in
accordance with Section 6.02 below, the HELOC Back-Up Servicer, to the extent
necessary to permit the HELOC Back-Up Servicer to carry out the provisions of
Section 6.02 with respect to the HELOC Mortgage Loans, shall succeed to all of
the rights and obligations of the HELOC Servicer under each of the Subservicing
Agreements. In such event, the HELOC Back-Up Servicer or its designee as the
successor servicer shall be deemed to have assumed all of the HELOC Servicer's
rights and obligations therein and to have replaced the HELOC Servicer as a
party to such Subservicing Agreements to the same extent as if such Subservicing
Agreements had been assigned to the HELOC Back-Up Servicer or its designee as a
successor servicer, except that the HELOC Back-Up Servicer or its designee as a
successor HELOC Servicer shall not be deemed to have assumed any obligations or
liabilities of the HELOC Servicer arising prior to such assumption and the HELOC
Servicer shall not thereby be relieved of any liability or obligations under
such Subservicing Agreements arising prior to such assumption. Nothing in the
foregoing shall be deemed to entitle the HELOC Back-Up Servicer or its designee
as a successor HELOC Servicer at any time to receive any portion of the
servicing compensation provided under Section 3.15 except for such portion as
the HELOC Servicer would be entitled to receive.
(b) In the event that the HELOC Back-Up Servicer or a successor HELOC
Servicer assumes the servicing obligations of the HELOC Servicer under Section
6.02, upon the reasonable request of the HELOC Back-Up Servicer or such
successor HELOC Servicer, the HELOC Servicer shall at its own expense (or the
expense of the Trust, if the HELOC Servicer fails to do so) deliver to the HELOC
Back-Up Servicer, or to such successor HELOC Servicer photocopies of all
documents, files and records, electronic or otherwise, relating to the
Subservicing Agreements and the related HELOC Mortgage Loans or REO Property
then being serviced and an accounting of amounts collected and held by it, if
any, and will otherwise cooperate and use its reasonable efforts to effect the
orderly and efficient transfer of the Subservicing Agreements, or
responsibilities hereunder to the HELOC Back-Up Servicer, or to such successor
HELOC Servicer. Section 3.06 COLLECTION OF MORTGAGE LOAN PAYMENTS. (a) The HELOC
Servicer will coordinate and monitor remittances by Subservicers to it with
respect to the HELOC Mortgage Loans in accordance with this HELOC Servicing
Agreement.
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(b) The HELOC Servicer shall make its best reasonable efforts to
collect or cause to be collected all payments required under the terms and
provisions of the HELOC Mortgage Loans and shall follow, and use its best
reasonable efforts to cause Subservicers to follow, collection procedures
comparable to the collection procedures of prudent mortgage lenders servicing
home equity line of credit mortgage loans for their own account to the extent
such procedures shall be consistent with this HELOC Servicing Agreement.
Consistent with the foregoing, the HELOC Servicer or the related Subservicer may
in its discretion (i) waive or permit to be waived any late payment charge,
prepayment charge, assumption fee, or any penalty interest in connection with
the prepayment of a Mortgage Loan, (ii) permit a Mortgagor to make Draws up to
$500 in excess of the Credit Limit, and (iii) arrange or permit an arrangement
with a Mortgagor for the payment of interest due and unpaid; provided, however,
that the HELOC Servicer or the related Subservicer may permit the foregoing only
if it believes, in good faith, that recoveries of Monthly Payments will be
maximized; provided further, however, that Monthly Payments may not be suspended
during the twelve months prior to the final maturity of the Class IX-A Notes.
(c) Within five Business Days after the HELOC Servicer has determined
that all amounts which it expects to recover from or on account of a HELOC
Mortgage Loan have been recovered and that no further Liquidation Proceeds or
Recoveries will be received in connection therewith, the HELOC Servicer shall
provide to the HELOC Back-Up Servicer and the Securities Administrator a
certificate of a Servicing Officer that such HELOC Mortgage Loan became a
Liquidated Mortgage Loan or a Charged-Off HELOC Mortgage Loan as of the date of
such determination. The HELOC Servicer shall provide to the HELOC Back-Up
Servicer and the Securities Administrator a monthly summary of each HELOC
Mortgage Loan that became a Liquidated Mortgage Loan or a Charged-Off HELOC
Mortgage Loan.
(d) The HELOC Servicer shall establish a segregated account in the name
of the Indenture Trustee for the benefit of the Class IX-A Noteholders
("Collection Account"), which shall be an Eligible Account, in which the HELOC
Servicer shall deposit or cause to be deposited any amounts representing
payments on and any collections in respect of the HELOC Mortgage Loans due
subsequent to the Cut-off Date (other than in respect of the payments referred
to in the following paragraph) within 48 hours following receipt thereof (or
otherwise on or prior to the Closing Date), including the following payments and
collections received or made by it (without duplication):
(i) all payments of principal, including Principal
Prepayments, of or interest on the HELOC Mortgage Loans (including advances by a
Subservicer) received by the HELOC Servicer directly from Mortgagors or from the
respective Subservicer;
(ii) aggregate Repurchase Price of the HELOC Mortgage Loans
purchased by the HELOC Servicer pursuant to Section 3.18;
(iii) Net Liquidation Proceeds;
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(iv) all proceeds of any HELOC Mortgage Loans repurchased by
the Seller pursuant to the Mortgage Loan Purchase Agreement and amount of any
Transferor Deposit Amount paid by the Seller during the related Due Period
pursuant to the Mortgage Loan Purchase Agreement and all Substitution Adjustment
Amounts required to be deposited in connection with the substitution of an
Eligible Substitute Mortgage Loan pursuant to the Mortgage Loan Purchase
Agreement;
(v) Insurance Proceeds, other than Net Liquidation Proceeds,
resulting from any insurance policy maintained on a Mortgaged Property;
(vi) [Reserved];
(vii) Released Mortgaged Property Proceeds;
(viii) Net Recoveries;
(ix) the amount of any losses incurred by the HELOC Servicer
with respect to the investment of funds in the Collection Account; and
(x) any other amounts received by the HELOC Servicer,
including any fees or penalties not retained by a Subservicer, required to be
deposited in the Collection Account pursuant to this HELOC Servicing Agreement.
PROVIDED, HOWEVER, that with respect to each Due Period, the HELOC Servicer
shall be permitted to retain from payments in respect of interest on the HELOC
Mortgage Loans, the HELOC Servicing Fee for such Due Period and any unreimbursed
advance made by the HELOC Servicer pursuant to Section 3.21. The foregoing
requirements respecting deposits to the Collection Account are exclusive, it
being understood that, without limiting the generality of the foregoing, the
HELOC Servicer need not deposit in the Collection Account fees (including annual
fees or assumption fees) or late charge and prepayment penalties, payable by
Mortgagors, each as further described in Section 3.15. In the event any amount
not required to be deposited in the Collection Account is so deposited, the
HELOC Servicer may at any time (prior to being terminated under this Agreement)
withdraw such amount from the Collection Account, any provision herein to the
contrary notwithstanding. The HELOC Servicer shall keep records that accurately
reflect the funds on deposit in the Collection Account that have been identified
by it as being attributable to the HELOC Mortgage Loans and shall hold all
collections in the Collection Account for the benefit of the Class IX-A
Noteholders. The HELOC Servicer shall be entitled to retain all Foreclosure
Profits and shall not be obligated to deposit any Foreclosure Profits in the
Collection Account.
Funds in the Collection Account may not be invested with, and shall not
be commingled with, the HELOC Servicer's own funds or general assets or with
funds respecting payments on mortgage loans or with any other funds not related
to the Class IX-A Notes. Funds in the Collection Account shall be invested
solely in Eligible Investments, designated in the name of the Indenture Trustee
for the benefit of the Class IX-A Noteholders, which shall mature not later than
the Business Day next preceding the HELOC Servicer Remittance Date next
following the date of such investment and shall not be sold or disposed of prior
to maturity. All income and
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gain realized from any such investment shall be for the benefit of the HELOC
Servicer or the related Subservicer. The amount of any losses incurred with
respect to any such investments shall be deposited in the Collection Account by
the HELOC Servicer on the Business Day prior to the HELOC Servicer Remittance
Date.
(e) The HELOC Servicer will require each Subservicer to hold all funds
constituting collections on the HELOC Mortgage Loans, pending remittance thereof
to the HELOC Servicer, in one or more accounts meeting the requirements of an
Eligible Account, and invested in Eligible Investments, and in the name of the
Indenture Trustee for the benefit of the Class IX-A Noteholders. The related
Subservicer shall segregate and hold all funds collected and received pursuant
to each HELOC Mortgage Loan separate and apart from any of its own funds and
general assets and any other funds.
Section 3.07 WITHDRAWALS FROM THE COLLECTION ACCOUNT. (a) The HELOC
Servicer shall, from time to time as provided herein, make withdrawals from the
Collection Account of amounts on deposit therein pursuant to Section 3.06 that
are attributable to the HELOC Mortgage Loans for the following purposes (without
duplication):
(i) to remit to the Indenture Trustee, by the HELOC Servicer
Remittance Date, all amounts required to be deposited in the Collection Account
as of the close of business on the related Determination Date;
(ii) to the extent deposited to the Collection Account, to
reimburse itself or the related Subservicer for previously unreimbursed expenses
incurred in maintaining individual insurance policies pursuant to Section 3.11,
or Liquidation Expenses, paid pursuant to Section 3.13 or otherwise reimbursable
pursuant to the terms of this HELOC Servicing Agreement, such withdrawal right
being limited to amounts received on the related HELOC Mortgage Loans (other
than any Repurchase Price in respect thereto) which represent late recoveries of
the payments for which such advances were made, or from related Liquidation
Proceeds or related Recoveries;
(iii) to pay to itself out of each payment received on account
of interest on a HELOC Mortgage Loan as contemplated by Section 3.15, an amount
equal to the related HELOC Servicing Fee (to the extent not retained pursuant to
Section 3.06);
(iv) to pay to itself or the Seller, with respect to any HELOC
Mortgage Loan or property acquired in respect thereof that has been purchased or
otherwise transferred to the Seller, the HELOC Servicer or other entity, all
amounts received thereon and not required to be distributed to Class IX-A
Noteholders as of the date on which the related Purchase Price or Repurchase
Price is determined;
(v) to pay to the HELOC Back-Up Servicer the HELOC Back-Up
Servicing Fee;
(vi) to reimburse the HELOC Servicer or any Subservicer from
Insurance Proceeds, Liquidation Proceeds or Recoveries relating to a particular
HELOC Mortgage Loan for amounts expended by the HELOC Servicer or such
Subservicer pursuant to Section 3.13 in good
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faith in connection with the restoration of the related Mortgaged Property which
was damaged by the Uninsured Cause or in connection with the liquidation of such
HELOC Mortgage Loan;
(vii) to pay the HELOC Servicer or any Subservicer (payment to
any Subservicer to be subject to prior payment to the HELOC Servicer of an
amount equal to the HELOC Servicing Fee), as appropriate, from Liquidation
Proceeds, Insurance Proceeds or Recoveries received in connection with the
liquidation of any HELOC Mortgage Loan, the amount which it or such Subservicer
would have been entitled to receive under subclause (iii) of this Subsection
3.07(a) as servicing compensation on account of each defaulted Monthly Payment
on such HELOC Mortgage Loan if paid in a timely manner by the related Mortgagor,
but only to the extent that the aggregate of Liquidation Proceeds, Insurance
Proceeds and Recoveries with respect to such HELOC Mortgage Loan, after any
reimbursement to the HELOC Servicer or any Subservicer, pursuant to other
subclauses of this Subsection 3.07(a), exceeds the outstanding Stated Principal
Balance of such HELOC Mortgage Loan plus accrued and unpaid interest thereon at
the related Mortgage Rate less the HELOC Servicing Fee Rate to but not including
the date of payment (in any event, the aggregate amount of servicing
compensation received by a Subservicer and the HELOC Servicer with respect to
any defaulted Monthly Payment shall not exceed the applicable HELOC Servicing
Fee);
(viii) to reimburse the HELOC Servicer or any Subservicer for
any Nonrecoverable Advance previously made, and not otherwise reimbursed
pursuant to this Subsection 3.07(a);
(ix) to withdraw any other amount deposited in the Collection
Account that was not required to be deposited therein pursuant to Section 3.06;
(x) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the Bankruptcy Code in accordance with a final,
nonappealable order of a court having competent jurisdiction;
(xi) to reimburse the HELOC Servicer for costs incurred by it
associated with the environmental report specified in Section 3.13(e);
(xii) to pay to the Seller, on behalf of the Depositor, to the
extent that principal collections exceed Draws, the outstanding principal
balance of each Additional Balance purchased by the Depositor from the Seller
pursuant to the Mortgage Loan Purchase Agreement; and
(xiii) to clear and terminate the Collection Account following
a termination of the Trust pursuant to Section 8.01 of the Trust Agreement.
In connection with withdrawals pursuant to clauses (ii), (iii), (iv), (vi) and
(vii), the HELOC Servicer's entitlement thereto is limited to collections or
other recoveries on the related HELOC Mortgage Loan, and the HELOC Servicer
shall keep and maintain separate accounting, on a HELOC Mortgage Loan by HELOC
Mortgage Loan basis, for the purpose of justifying any withdrawal from the
Collection Account pursuant to such clauses. Notwithstanding any other
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provision of this HELOC Servicing Agreement, the HELOC Servicer shall be
entitled to reimburse itself for any previously unreimbursed expenses incurred
pursuant to Section 3.13 or otherwise reimbursable expenses incurred pursuant to
the terms of this HELOC Servicing Agreement, but only to the extent of
collections or other recoveries on the related HELOC Mortgage Loan.
(b) Notwithstanding the provisions of this Section 3.07, the HELOC
Servicer may, but is not required to, allow the Subservicers to deduct from
amounts received by them or from the related account maintained by a
Subservicer, prior to deposit in the Collection Account, any portion to which
such Subservicers are entitled hereunder as servicing compensation (including
income on Eligible Investments) or reimbursement of any reimbursable Servicing
Advances made by such Subservicers.
(c) The HELOC Servicer shall pay to the Indenture Trustee interest on
any payments to the Payment Account which were due on a HELOC Servicer
Remittance Date but were made after the related HELOC Servicer Remittance Date
at a rate equal to the federal funds rate from the date due to the date paid,
both inclusive. This interest shall be solely an obligation of the HELOC
Servicer and shall not be recoverable by the Indenture Trustee from the Trust or
from any other source.
Section 3.08 COLLECTION OF TAXES ASSESSMENTS AND SIMILAR ITEMS.
The HELOC Servicer and any Subservicers shall not be required to
maintain records relating to the payment of taxes, or deposit or retain any
collections from the Mortgagors for the payment of taxes, assessments, insurance
premiums, or comparable items, with respect to the HELOC Mortgage Loans.
Section 3.09 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE HELOC MORTGAGE LOANS. The HELOC Servicer shall provide, and shall cause any
Subservicer to provide, to the HELOC Back-Up Servicer, the Owner Trustee and the
Indenture Trustee or its designee access to the documentation regarding the
related HELOC Mortgage Loans and REO Property and to the Class IX-A Noteholders,
the FDIC, and the supervisory agents and examiners of the FDIC access to the
documentation regarding the related HELOC Mortgage Loans required by applicable
regulations, such access being afforded without charge but only upon reasonable
request and during normal business hours at the offices of the HELOC Servicer or
the Subservicers that are designated by these entities; PROVIDED, HOWEVER, that,
unless otherwise required by law, the HELOC Servicer or the Subservicer shall
not be required to provide access to such documentation if the provision thereof
would violate the legal right to privacy of any Mortgagor; PROVIDED, FURTHER,
HOWEVER, that the HELOC Back-Up Servicer, the Owner Trustee and the Indenture
Trustee shall coordinate their requests for such access so as not to impose an
unreasonable burden on, or cause an unreasonable interruption of, the business
of the HELOC Servicer or any Subservicer. The HELOC Servicer and the
Subservicers shall allow representatives of the above entities to photocopy any
of the documentation and shall provide equipment for that purpose at a charge
that covers their own actual out-of-pocket costs.
Section 3.10 Reserved.
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Section 3.11 MAINTENANCE OF HAZARD INSURANCE AND FIDELITY COVERAGE. (a)
The HELOC Servicer shall maintain and keep, or cause each Subservicer to
maintain and keep, with respect to each Mortgage Loan and REO Property, in full
force and effect hazard insurance (fire insurance with extended coverage) equal
to the lesser of (i) the maximum insurable value of the improvements securing
such HELOC Mortgage Loan from time to time, (ii) the combined principal balance
owing on such HELOC Mortgage Loan and any mortgage loan senior to such HELOC
Mortgage Loan and (iii) the minimum amount required to compensate for damage or
loss on a replacement cost basis, and containing a standard mortgagee clause,
PROVIDED, HOWEVER, that the amount of hazard insurance may not be less than the
amount necessary to prevent loss due to the application of any co-insurance
provision of the related policy. Unless applicable state law requires a higher
deductible, the deductible on such hazard insurance policy may be no more than
$1,000 or 1% of the applicable amount of coverage, whichever is less. In the
case of a condominium unit or a unit in a planned unit development, the required
hazard insurance shall take the form of a multi-peril policy covering the entire
condominium project or planned unit development, in an amount equal to at least
100% of the insurable value based on replacement cost.
(b) Any amounts collected by the HELOC Servicer or a Subservicer under
any such hazard insurance policy (other than amounts to be applied to the
restoration or repair of the Mortgaged Property or amounts released to the
Mortgagor in accordance with the HELOC Servicer's or a Subservicer's normal
servicing procedures, the Mortgage Note or applicable law) shall be deposited
initially in a Collection Account, for transmittal to the Payment Account,
subject to withdrawal pursuant to Section 3.07.
(c) Any cost incurred by a HELOC Servicer or a Subservicer in
maintaining any such hazard insurance policy shall not be added to the amount
owing under the HELOC Mortgage Loan for the purpose of calculating monthly
distributions to the HELOC Back-Up Servicer, notwithstanding that the terms of
the HELOC Mortgage Loan so permit. Such costs shall be recoverable by the HELOC
Servicer or a Subservicer out of related late payments by the Mortgagor or out
of Insurance Proceeds or Liquidation Proceeds or by the HELOC Servicer from the
Repurchase Price, or as otherwise provided in Section 3.07.
(d) No earthquake or other additional insurance is to be required of
any Mortgagor other than pursuant to such applicable laws and regulations as
shall at any time be in force and shall require such additional insurance.
(e) If insurance has not been maintained complying with Subsection
3.11(a) and there shall have been a loss which would have been covered by such
insurance had it been maintained, the HELOC Servicer shall pay, or cause the
related Subservicer to pay, for any necessary repairs.
(f) The HELOC Servicer shall present, or cause the related Subservicer
to present, claims under the related hazard insurance.
(g) The HELOC Servicer shall obtain and maintain at its own expense and
for the duration of this HELOC Servicing Agreement and shall cause each
Subservicer to obtain and maintain a blanket fidelity bond and an errors and
omissions insurance policy covering such Person's officers, employees and other
persons acting on its behalf in connection with its
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activities under this HELOC Servicing Agreement or the related Subservicing
Agreement. The amount of coverage shall be at least equal to the coverage
maintained by the HELOC Servicer acceptable to Xxxxxx Xxx or Xxxxxxx Mac to
service loans for it or otherwise in an amount as is commercially available at a
cost that is generally not regarded as excessive by industry standards. The
HELOC Servicer shall promptly notify the HELOC Back-Up Servicer of any material
change in the terms of such bond or policy. The HELOC Servicer shall provide
annually to the HELOC Back-Up Servicer a certificate of insurance that each such
bond and policy are in effect. If any such bond or policy ceases to be in
effect, the HELOC Servicer shall, to the extent possible, give the HELOC Back-Up
Servicer ten days' notice prior to any such cessation and the HELOC Servicer
shall use its reasonable best efforts to obtain a comparable replacement bond or
policy, as the case may be. Any amounts relating to the HELOC Mortgage Loans
collected under each such bond or policy shall be deposited initially in a
Collection Account for transmittal to the Payment Account, subject to withdrawal
pursuant to Section 3.07.
Section 3.12 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS. (a) In any
case in which the HELOC Servicer is notified by any Mortgagor or Subservicer
that a Mortgaged Property relating to a HELOC Mortgage Loan has been or is about
to be conveyed by the Mortgagor, the HELOC Servicer shall enforce, or shall
instruct such Subservicer to enforce, any due-on-sale clause contained in the
related Mortgage to the extent permitted under the terms of the related Mortgage
Note and by applicable law. If the HELOC Servicer reasonably believes that such
due-on-sale clause cannot be enforced under applicable law or if the HELOC
Mortgage Loan does not contain a due-on-sale clause, the HELOC Servicer is
authorized, and may authorize any Subservicer, to consent to a conveyance
subject to the lien of the Mortgage, and to take or enter into an assumption
agreement from or with the Person to whom such property has been or is about to
be conveyed, pursuant to which such Person becomes liable under the related
HELOC Mortgage Note and unless prohibited by applicable state law, such
Mortgagor remains liable thereon, on condition, however, that the related HELOC
Mortgage Loan shall continue to be covered by a hazard policy. In connection
with any such assumption, no material term of the related Mortgage Note may be
changed. The HELOC Servicer shall forward to the Indenture Trustee the original
copy of such assumption agreement, which copy shall be added by the Indenture
Trustee to the related Mortgage File and which shall, for all purposes, be
considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. A portion, equal to up to
2% of the Stated Principal Balance of the related HELOC Mortgage Loan, of any
fee or additional interest collected by the HELOC Servicer or the related
Subservicer for consenting in any such conveyance or entering into any such
assumption agreement may be retained by the HELOC Servicer as additional
servicing compensation.
(b) Notwithstanding the foregoing paragraph or any other provision of
this HELOC Servicing Agreement, the HELOC Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reason of
any assumption of a HELOC Mortgage Loan by operation of law or any conveyance by
the Mortgagor of the related Mortgaged Property or assumption of a HELOC
Mortgage Loan which the HELOC Servicer reasonably believes it may be restricted
by law from preventing, for any reason whatsoever or if the exercise of such
right would impair or threaten to impair any recovery under any applicable
insurance policy.
Section 3.13 REALIZATION UPON DEFAULTED HELOC MORTGAGE LOANS. (a) The
HELOC Servicer shall, or shall direct the related Subservicer to, foreclose upon
or otherwise comparably
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convert the ownership of properties securing any HELOC Mortgage Loans that come
into and continue in default and as to which no satisfactory arrangements can be
made for collection of delinquent payments pursuant to Section 3.06 only if the
HELOC Servicer determines that there is sufficient equity in the related
Mortgaged Property to justify such foreclosure, except that the HELOC Servicer
shall not, and shall not direct the related Subservicer to, foreclose upon or
otherwise comparably convert a Mortgaged Property if there is evidence of toxic
waste or other environmental hazards thereon unless the HELOC Servicer follows
the procedures in Subsection (e) below.
(b) The HELOC Servicer shall foreclose or shall direct the related
Subservicer to foreclose on any Mortgaged Property in the name of the Indenture
Trustee for the benefit of the Class IX-A Noteholders.
(c) In connection with such foreclosure or other conversion, the HELOC
Servicer in conjunction with the related Subservicer, if any, shall use its best
reasonable efforts to preserve REO Property and to realize upon defaulted HELOC
Mortgage Loans in such manner (including short sales) as to maximize the receipt
of principal and interest by the Class IX-A Noteholders, taking into account,
among other things, the timing of foreclosure and the considerations set forth
in Subsection 3.13(d). The foregoing is subject to the proviso that the HELOC
Servicer shall not be required to expend its own funds in connection with any
foreclosure or towards the restoration of any property unless it determines in
good faith (i) that such restoration or foreclosure will increase the proceeds
of liquidation of the HELOC Mortgage Loan to the Class IX-A Noteholders after
reimbursement to itself for such expenses and (ii) that such expenses will be
recoverable to it either through Liquidation Proceeds (respecting which it shall
have priority for purposes of reimbursements from the Collection Account
pursuant to Section 3.07) or through Insurance Proceeds (respecting which it
shall have similar priority). The HELOC Servicer shall be responsible for all
other costs and expenses incurred by it in any such proceedings; PROVIDED,
HOWEVER, that it shall be entitled to reimbursement thereof (as well as its
normal servicing compensation). Any income from or other funds (net of any
income taxes) generated by REO Property shall be deemed for purposes of this
HELOC Servicing Agreement to be Insurance Proceeds.
(d) The Trust Estate shall not acquire any real property (or any
personal property incident to such real property) except in connection with a
default or reasonably foreseeable default of a HELOC Mortgage Loan. In the event
that the Trust Estate acquires any real property (or personal property incident
to such real property) in connection with a default or imminent default of a
HELOC Mortgage Loan, such property shall be disposed of by the HELOC Servicer
(or its agent) on behalf of the Trust Estate within two years after its
acquisition by the Trust Estate.
(e) With respect to any HELOC Mortgage Loan as to which the HELOC
Servicer or a Subservicer has received notice of, or has actual knowledge of,
the presence of any toxic or hazardous substance on the Mortgaged Property, the
HELOC Servicer shall promptly notify the HELOC Back-Up Servicer and shall act in
accordance with any directions and instructions provided by the HELOC Back-Up
Servicer. If the HELOC Back-Up Servicer has not provided directions and
instructions to the HELOC Servicer in connection with any such HELOC Mortgage
Loan within 30 days of a request by the HELOC Servicer for such directions and
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instructions, then the HELOC Servicer shall take such action as it deems to be
in the best economic interest of the Trust Estate (other than proceeding against
the Mortgaged Property) and is hereby authorized at such time as it deems
appropriate to release such Mortgaged Property from the lien of the related
Mortgage. The parties hereto acknowledge that the HELOC Servicer shall not
obtain on behalf of the Issuer a deed as a result or in lieu of foreclosure, and
shall not otherwise acquire possession of or title to, or commence any
proceedings to acquire possession of or title to, or take any other action with
respect to, any Mortgaged Property, if the HELOC Back-Up Servicer, the Owner
Trustee or the Indenture Trustee could reasonably be considered to be a
responsible party for any liability arising from the presence of any toxic or
hazardous substance on the Mortgaged Property.
Section 3.14 INDENTURE TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES.
(a) Upon payment in full of any HELOC Mortgage Loan following the end of the
related Draw Period, the HELOC Servicer will immediately notify the Indenture
Trustee by a certification signed by a Servicing Officer in the form of the
request for release ("Request for Release") attached hereto as Exhibit B (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the Collection Account have been so deposited) and shall request
delivery to the HELOC Servicer or Subservicer, as the case may be, of the
related Mortgage File. Upon receipt of such certification and request, the
Indenture Trustee shall release related Mortgage File to the HELOC Servicer or
Subservicer and shall execute and deliver to the HELOC Servicer, without
recourse, representation or warranty an instrument of satisfaction of mortgage
releasing the lien of the Mortgage (furnished by the HELOC Servicer), together
with the Mortgage Note. In connection with the satisfaction of any MOM Loan, the
HELOC Servicer is authorized to cause the removal from the registration on the
MERS(R) System of such Mortgage.
(b) From time to time as is appropriate, for the servicing or
foreclosure of any HELOC Mortgage Loan or collection under an insurance policy,
the HELOC Servicer may deliver to the Indenture Trustee a Request for Release
signed by a Servicing Officer on behalf of the HELOC Servicer in substantially
the form attached as Exhibit B hereto. Upon receipt of the Request for Release,
the Indenture Trustee shall deliver the Mortgage File or any document therein to
the HELOC Servicer or Subservicer, as the case may be.
(c) The HELOC Servicer shall cause each Mortgage File or any document
therein released pursuant to Subsection 3.14(b) to be returned to the Indenture
Trustee when the need therefor no longer exists, and in any event within 21 days
of the HELOC Servicer's receipt thereof, unless the HELOC Mortgage Loan has
become a Liquidated Mortgage Loan or a Charged-Off HELOC Mortgage Loan and the
Liquidation Proceeds or Recoveries relating to the HELOC Mortgage Loan have been
deposited in the Collection Account or such Mortgage File is being used to
pursue foreclosure or other legal proceedings. Prior to return of a Mortgage
File or any document to the Indenture Trustee, the HELOC Servicer, the related
insurer or Subservicer to whom such file or document was delivered shall retain
such file or document in its respective control as bailee for the Indenture
Trustee unless the Mortgage File or such document has been delivered to an
attorney, or to a public trustee or other public official as required by law, to
initiate or pursue legal action or other proceedings for the foreclosure of the
related Mortgaged Property either judicially or non- judicially, and the HELOC
Servicer has delivered to the Indenture Trustee a certificate of a Servicing
Officer certifying as to the name and address of the
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Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery. If a HELOC Mortgage Loan becomes a
Liquidated Mortgage Loan or a Charged-Off HELOC Mortgage Loan, the HELOC
Servicer shall deliver the Request for Release with respect thereto to the
Indenture Trustee and, upon deposit of the related Liquidation Proceeds or
Recoveries in the Collection Account as certified to the Indenture Trustee, the
Indenture Trustee shall deliver the related Mortgage File or any document
therein to the HELOC Servicer or Subservicer, as applicable.
(d) The Indenture Trustee shall execute and deliver to the HELOC
Servicer any court pleadings, requests for trustee's sale or other documents
prepared and delivered to the Indenture Trustee for execution necessary to (i)
the foreclosure or trustee's sale with respect to a Mortgaged Property; (ii) any
legal action brought to obtain judgment against any Mortgagor on the Mortgage
Note; (iii) obtain a deficiency judgment against the Mortgagor; or (iv) enforce
any other rights or remedies provided by the Mortgage Note or otherwise
available at law or equity. Together with such documents or pleadings the HELOC
Servicer shall deliver to the Indenture Trustee a certificate of a Servicing
Officer in which it requests the Indenture Trustee to cause to be executed the
pleadings or documents. The Indenture Trustee and any officer, director,
employee or agent of the Indenture Trustee may rely in good faith on any such
document submitted by the HELOC Servicer. The certificate shall certify and
explain the reasons for which the pleadings or documents are required. It shall
further certify that the execution and delivery of the pleadings or documents
will not invalidate any insurance coverage under the insurance policies or
invalidate or otherwise affect the lien of the Mortgage, except for the
termination of such a lien upon completion of the foreclosure or trustee's sale.
Section 3.15 SERVICING COMPENSATION. (a) As compensation for its
activities hereunder, the HELOC Servicer shall be entitled to receive the HELOC
Servicing Fee from full payments of accrued interest on each HELOC Mortgage Loan
or as otherwise provided in Section 3.07. The HELOC Servicer shall be solely
responsible for paying any and all fees with respect to a Subservicer and
neither the Indenture Trustee nor the HELOC Back-Up Servicer shall bear any
fees, expenses or other costs directly associated with any Subservicer.
(b) The HELOC Servicer may retain additional servicing compensation in
the form of prepayment charges, if any, a portion of the assumption fees up to
2% of the Stated Principal Balance of the related HELOC Mortgage Loan, fees for
statement of account or payoff, late payment charges, or otherwise, to the
extent such fees are collected from the related Mortgagors or, with respect to a
Liquidated Mortgage Loan, to the extent such fees have accrued. The HELOC
Servicer shall be required to pay all expenses it incurs in connection with
servicing activities under this HELOC Servicing Agreement and shall not be
entitled in connection with servicing activities under this HELOC Servicing
Agreement to reimbursement except as provided in this HELOC Servicing Agreement.
Expenses to be paid by the HELOC Servicer under this Subsection 3.15(b) shall
include payment of the expenses of the accountants retained pursuant to Section
3.17.
Section 3.16 ANNUAL STATEMENTS OF COMPLIANCE. No later than March 15 of
each year, commencing in March 2006, the HELOC Servicer at its own expense shall
deliver to the Depositor and the HELOC Back-Up Servicer, with a copy to the
Insurer, the Securities Administrator and the Rating Agencies, an Officer's
Certificate stating, as to the signer thereof,
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that (i) a review of activities of the HELOC Servicer during the preceding
calendar year and of performance under this HELOC Servicing Agreement has been
made under such officer's supervision, (ii) to the best of such officer's
knowledge, based on such review, the HELOC Servicer has fulfilled all its
obligations under this HELOC Servicing Agreement for such year, or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof including the
steps being taken by the HELOC Servicer to remedy such default; (iii) a review
of activities of each Subservicer during the Subservicer's most recently ended
calendar year on or prior to December 31 of the preceding year and its
performance under its Subservicing Agreement has been made under such officer's
supervision; and (iv) to the best of the Servicing Officer's knowledge, based on
his review and the certification of an officer of the Subservicer (unless the
Servicing Officer has reason to believe that reliance on such certification is
not justified), either each Subservicer has performed and fulfilled its duties,
responsibilities and obligations under this HELOC Servicing Agreement and its
Subservicing Agreement in all material respects throughout the year, or, if
there has been a default in performance or fulfillment of any such duties,
responsibilities or obligations, specifying the nature and status of each such
default known to the Servicing Officer. Copies of such statements shall be
provided by the HELOC Servicer to the Class IX-A Noteholders upon request.
Section 3.17 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
(a) No later than March 15 of each year, commencing in March 2006, the HELOC
Servicer, at its expense, shall cause a firm of independent public accountants
which is a member of American Institute of Certified Public Accountants and
which is Deloitte & Touche LLP (or a successor thereof) to furnish a statement
to the HELOC Servicer, which will be provided to the Depositor, the Insurer, the
Securities Administrator and the Rating Agencies, to the effect that, in
connection with the firm's examination of the HELOC Servicer's financial
statements as of the end of the preceding calendar year, nothing came to their
attention that indicated that the HELOC Servicer was not in compliance with this
Agreement, including Sections 3.06, 3.07 and 3.08 except for (i) such exceptions
as such firm believes to be immaterial and (ii) such other exceptions as are set
forth in such statement.
(b) No later than March 15 of each year, commencing in March 2006, the
HELOC Servicer, at its expense, shall or shall cause each Subservicer to cause a
nationally recognized firm of independent certified public accountants to
furnish to the HELOC Servicer or such Subservicer a report stating that (i) it
has obtained a letter of representation regarding certain matters from the
management of the HELOC Servicer or such Subservicer which includes an assertion
that the HELOC Servicer or such Subservicer has complied with certain minimum
mortgage loan servicing standards (to the extent applicable to residential
mortgage loans) identified in the Uniform Single Attestation Program for
Mortgage Bankers established by the Mortgage Bankers Association of America with
respect to the servicing of mortgage loans similar to the HELOC Mortgage Loans
during the most recently completed calendar year and (ii) on the basis of an
examination conducted by such firm in accordance with standards established by
American Institute of Certified Public Accountants, such representation is
fairly stated in all material respects, subject to such exceptions and other
qualifications that may be appropriate. Immediately upon receipt of such report,
the HELOC Servicer shall or shall cause each Subservicer to furnish a copy of
such report to the Depositor, the HELOC Back-Up Servicer, the Insurer, the
Securities Administrator and the Rating Agencies. Any annual independent public
accountants' report furnished pursuant to this Section 3.17 shall be in such
form as shall permit
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such report to be filed with the Securities and Exchange Commission as part of
the Issuer's annual report on Form 10-K filed pursuant to the Securities
Exchange Act of 1934, as amended, and no such annual independent public
accountant's report shall contain any language restricting, limiting or
prohibiting such use of such report.
Section 3.18 OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS. The HELOC
Servicer may but is not obligated to, repurchase from the Issuer any Mortgage
Loan delinquent in payment for a period of 90 days or longer (a "90-Day
Delinquent Mortgage Loan") for a price equal to the Repurchase Price. Any such
90-Day Delinquent Mortgage Loan shall only be eligible for purchase pursuant to
this Section during the period beginning on the first Business Day of the
Calendar Quarter following the Calendar Quarter in which such Mortgage Loan
became a 90-Day Delinquent Mortgage Loan, and ending at the close of business on
the second-to-last Business Day of such following Calendar Quarter. Such option
if not exercised shall not thereafter be reinstated as to any Mortgage Loan,
unless the delinquency is cured and the Mortgage Loan thereafter again becomes
delinquent in payment by 90 days or more in a subsequent Calendar Quarter.
Notwithstanding the foregoing, the Indenture Trustee, whether acting as
Indenture Trustee or in the capacity of successor HELOC Back-Up Servicer, shall
have no obligation hereunder or under any other Basic Document to repurchase any
Mortgage Loan.
Section 3.19 INFORMATION REQUIRED BY THE INTERNAL REVENUE SERVICE
GENERALLY AND REPORTS OF FORECLOSURES AND ABANDONMENTS OF MORTGAGED PROPERTY.
The HELOC 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 to the effect that the HELOC Servicer or a Subservicer shall make reports
of foreclosures and abandonments of any mortgaged property for each year
beginning in 2005, the HELOC Servicer or Subservicer shall file reports relating
to each instance occurring during the previous calendar year in which the HELOC
Servicer or such Subservicer (i) acquires an interest in any Mortgaged Property
through foreclosure or other comparable conversion in full or partial
satisfaction of a HELOC Mortgage Loan, or (ii) knows or has reason to know that
any Mortgaged Property has been abandoned. The reports from the HELOC Servicer
or Subservicer shall be in form and substance sufficient to meet the reporting
requirements imposed by Section 6050J, Section 6050H (reports relating to
mortgage interest received) and Section 6050P of the Code (reports relating to
cancellation of indebtedness).
Section 3.20 FAIR CREDIT REPORTING ACT. The HELOC Servicer, in its
capacity as HELOC Servicer for each Mortgage Loan, agrees to fully furnish in
accordance with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on its
borrower credit files to Equifax, Experian and Trans Union Credit Information
Company (three of the credit reporsitories), on a monthly basis.
Section 3.21 ADVANCES ON THE HELOC MORTGAGE LOANS. The HELOC Servicer
shall be required to advance the interest component of any delinquent Minimum
Monthly Payment (or any portion of it) with respect to any HELOC Mortgage Loan
by depositing the HELOC Advance Amount into the Collection Account by the
related Determination Date, subject to reimbursement of the same. The HELOC
Servicer's obligation to make such advances as to any HELOC Mortgage Loan will
continue through the last Monthly Payment due prior to payment in full of the
Mortgage Loan, or through the last Remittance Date prior to the Remittance Date
for the
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distribution of all Liquidation Proceeds and other payments or Recoveries
(including REO Disposition Proceeds, Insurance Proceeds and Condemnation
Proceeds) with respect to the HELOC Mortgage Loan; provided, however, that such
obligation shall cease if the HELOC Servicer determines, in its sole reasonable
opinion, that advances with respect to such HELOC Mortgage Loan are, or would
constitute, a Nonrecoverable Advance.
Section 3.22 TRANSFERS OF HELOC MORTGAGE LOANS AT ELECTION OF THE
SELLER. Subject to the conditions below, the Seller may require the transfer of
HELOC Mortgage Loans from the Trust to the Seller 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 Stated Principal Balances
as of their Transfer Date of the HELOC Mortgage Loans transferred. On the fifth
Business Day (the "Transfer Notice Date") before the Transfer Date designated in
the notice, the Seller shall give the Owner Trustee, the Indenture Trustee, the
Securities Administrator, the HELOC Servicer, the Depositor and the Insurer a
notice of the proposed transfer that contains a list of randomly selected HELOC
Mortgage Loans to be transferred. These transfers of HELOC 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 Interest Principal
Balance (after giving effect to the removal of the HELOC Mortgage Loans proposed
to be transferred) exceeds the Minimum Transferor Interest.
(iii) The transfer of any HELOC Mortgage Loans on any Transfer
Date during the Managed Amortization Period shall not, in the reasonable belief
of the Seller, 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 Seller shall have delivered to
the Indenture Trustee, the Insurer and the Securities Administrator a revised
HELOC Mortgage Loan Schedule, reflecting the proposed transfer and the Transfer
Date, and the HELOC Servicer shall have marked on its general accounting records
to show that the HELOC Mortgage Loans transferred to the Seller are no longer
owned by the Trust.
(v) The Seller shall represent and warrant that no selection
procedures reasonably believed by the Seller to be adverse to the interests of
the Class IX-A Noteholders or the Insurer were used in selecting the HELOC
Mortgage Loans to be removed from the Trust.
(vi) In connection with each transfer of HELOC Mortgage Loans
pursuant to this Section, each Rating Agency and the Insurer shall have received
by the related Transfer Notice Date notice of the proposed transfer of HELOC
Mortgage Loans and, before the Transfer Date, each Rating Agency shall have
notified the Seller, the Indenture Trustee, the Depositor and the Insurer that
the transfer of HELOC Mortgage Loans would not result in a reduction or
withdrawal of its then current rating of the Class IX-A Notes without regard to
the Insurance Policy.
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(vii) The Seller shall have delivered to the Owner Trustee,
the Depositor, the Indenture Trustee and the Insurer 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 Seller, the HELOC
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
each of the Indenture Trustee and the HELOC Servicer shall cause delivery to be
effected to the Seller of the portion of the Mortgage File in its possession for
each HELOC Mortgage Loan being so transferred, and the Indenture Trustee shall
execute and deliver to the Seller any other documents prepared by the Seller
reasonably necessary to transfer the HELOC Mortgage Loans to the Seller. This
transfer of the Trust's interest in HELOC Mortgage Loans shall be without
recourse, representation, or warranty by the Indenture Trustee or the Trust to
the Seller.
Section 3.23 TRANSFERS OF HELOC MORTGAGE LOANS WITH LOCKED BALANCES. In
the event that the aggregate amount of Locked Balances exceeds 10% of the total
outstanding Stated Principal Balance of the Group IX Loans as of the end of any
Due Period the Seller will (i) accept a retransfer of related HELOC Mortgage
Loans with Locked Balances in an amount equal to the amount necessary to reduce
the aggregate amount of Locked Balances to an amount equal to or less than 10%
of the total outstanding Stated Principal Balance of the Group IX Loans at the
end of the related Due Period, and (ii) on the Business Day prior to the related
Payment Date following the end of such Due Period, deposit to the Payment
Account cash equal to the aggregate Repurchase Prices of such HELOC Mortgage
Loans. Such retransfer will be accomplished in accordance with the procedures in
the last paragraph of Section 3.20 and the HELOC Mortgage Loans subject to
retransfer will be selected randomly.
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01 REMITTANCE REPORTS. On or prior to the eighteenth (18th)
calendar day of each month (or, if such eighteenth (18th) day is not a Business
Day, the immediately preceding Business Day), the HELOC Servicer shall deliver
to the Securities Administrator and the HELOC Back-Up Servicer a report,
prepared as of the close of business on the Determination Date ("Remittance
Report"), in the form of a disk or such other electronic method as to which the
Securities Administrator, the HELOC Servicer and HELOC Back-Up Servicer shall
agree. Such report shall detail the payments and collections in respect of the
HELOC Mortgage Loans for each of the categories of deposit specified in Section
3.06(d) and each of the categories of withdrawal specified in Section 3.07(a).
In addition, the report shall detail amounts for each of the categories
specified in the preceding sentence that are to be included in interest
collections and principal collections for the related Payment Date. The
Remittance Report and any written information supplemental thereto shall include
such information with respect to the HELOC Mortgage Loans that is reasonably
available to the HELOC Servicer and that is required by the Securities
Administrator for purposes of making the calculations and providing the reports
referred to in the Indenture.
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The determination by the HELOC Servicer of such amounts shall, in
absence of obvious error, be presumptively deemed to be correct for all purposes
hereunder and the Indenture Trustee and the Securities Administrator shall be
protected in relying upon the same without any independent check or
verification. The Indenture Trustee and the Securities Administrator shall have
no obligation to recompute, recalculate or verify any information provided to it
by the HELOC Servicer.
Section 4.02 Reserved.
Section 4.03 Reserved.
Section 4.04 Reserved.
Section 4.05 Reserved.
Section 4.06 ANNUAL CERTIFICATION. For so long as the HELOC Mortgage
Loans are being back-up serviced by the HELOC Back-Up Servicer, by March 15th of
each year (or if not a Business Day, the immediately preceding Business Day), or
at any other time upon thirty (30) days written request, an officer of the HELOC
Servicer shall execute and deliver an Officer's Certificate to the HELOC Back-Up
Servicer and the Depositor for the benefit of such HELOC Back-Up Servicer and
the Depositor and their officers, directors and affiliates in the form of
Exhibit C-1.
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ARTICLE V
THE HELOC SERVICER
Section 5.01 LIABILITY OF THE HELOC SERVICER. The HELOC Servicer shall
be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the HELOC Servicer herein.
Section 5.02 MERGER OR CONSOLIDATION OF OR ASSUMPTION OF THE
OBLIGATIONS OF THE HELOC SERVICER. Any corporation into which the HELOC Servicer
may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
HELOC Servicer shall be a party, or any corporation succeeding to the business
of the HELOC Servicer, shall be the successor of the HELOC Servicer hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
PROVIDED, HOWEVER, that the successor or surviving Person to the HELOC Servicer
shall be qualified to sell mortgage loans to and service mortgage loans for
Xxxxxx Xxx or Xxxxxxx Mac.
The HELOC Servicer may assign its rights and delegate its duties and
obligations under this HELOC Servicing Agreement; PROVIDED, that the Person
accepting such assignment or delegation shall be a Person which is qualified to
service mortgage loans on behalf of Xxxxxx Mae or Xxxxxxx Mac, is reasonably
satisfactory to the HELOC Back-Up Servicer, is willing to service the HELOC
Mortgage Loans and executes and delivers to the HELOC Back-Up Servicer, the
Issuer and the Indenture Trustee an agreement, in form and substance reasonably
satisfactory to the HELOC Back-Up Servicer, which contains an assumption by such
Person of the due and punctual performance and observance of each covenant and
condition to be performed or observed by the HELOC Servicer under this HELOC
Servicing Agreement; PROVIDED, FURTHER, that each Rating Agency's rating of the
applicable Class IX-A Notes in effect immediately prior to such assignment and
delegation will not be qualified, reduced, or withdrawn as a result of such
assignment and delegation (as evidenced by a letter to such effect from each
Rating Agency) or considered to be below investment grade.
Section 5.03 LIMITATION ON LIABILITY OF THE HELOC SERVICER AND OTHERS.
The HELOC Servicer shall immediately notify the Indenture Trustee if a claim is
made by a third party with respect to this Agreement or the HELOC Mortgage
Loans, assume the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered in respect of such claim. The HELOC
Servicer agrees that it will not enter into the settlement of any such claim
without the consent of the Insurer. The HELOC Servicer also agrees that it will
not enter into the settlement of any such claim if such settlement would
materially and adversely affect the interests of the Noteholders. The HELOC
Servicer shall be entitled to reimbursement of any such costs and expenses from
funds in the Collection Account, unless such claim relates to a matter for which
the HELOC Servicer is required to indemnify the Issuer, the Indenture Trustee or
the HELOC Back-Up Servicer pursuant to Section 5.06. Neither the HELOC Servicer
nor any of the directors or officers or employees or agents of the HELOC
Servicer shall be under any liability to the HELOC Back-Up Servicer, the Issuer
and the Indenture Trustee for any action taken or for refraining from the taking
of any action in good faith pursuant to this HELOC Servicing Agreement,
PROVIDED,
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HOWEVER, that this provision shall not protect the HELOC Servicer or any such
Person against any liability which would otherwise be imposed by reason of its
willful misfeasance, bad faith or gross negligence in the performance of its
duties hereunder or by reason of its reckless disregard of its obligations and
duties hereunder. The HELOC Servicer and any director or officer or employee or
agent of the HELOC Servicer may rely in good faith on any document of any kind
PRIMA FACIE properly executed and submitted by any Person respecting any matters
arising hereunder. The HELOC Servicer's right to indemnity or reimbursement
pursuant to this Section 5.03 shall survive any resignation or termination of
the HELOC Servicer pursuant to Sections 5.04 or 6.01 with respect to any losses,
expenses, costs or liabilities arising prior to such resignation or termination
(or arising from events that occurred prior to such resignation or termination).
Section 5.04 HELOC SERVICER NOT TO RESIGN. Subject to the provisions of
Section 5.02, the HELOC Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that the performance
of its obligations or duties hereunder are no longer permissible under
applicable law (any such determination permitting the resignation of the HELOC
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the HELOC Back-Up Servicer) or (ii) upon satisfaction of the following
conditions: the HELOC Servicer has proposed a successor servicer to the HELOC
Back-Up Servicer in writing and such proposed successor servicer is reasonably
acceptable to the HELOC Back-Up Servicer; PROVIDED, HOWEVER, that no such
resignation by the HELOC Servicer shall become effective until such successor
servicer shall have assumed the HELOC Servicer's responsibilities and
obligations hereunder or another successor HELOC Servicer has been appointed in
accordance with Section 6.02 and has accepted such appointment. Any such
resignation shall not relieve the HELOC 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 HELOC Servicer. The HELOC Servicer shall
have no claim (whether by subrogation or otherwise) or other action against any
Noteholder for any amounts paid by the HELOC Servicer pursuant to any provision
of this HELOC Servicing Agreement.
Section 5.05 DELEGATION OF DUTIES. In the ordinary course of business,
the HELOC Servicer at any time may delegate any of its duties hereunder to any
Person, including any of its Affiliates, who agrees to conduct such duties in
accordance with standards comparable to those with which the HELOC Servicer
complies pursuant to Section 3.01. Such delegation shall not relieve the HELOC
Servicer of its liabilities and responsibilities with respect to such duties and
shall not constitute a resignation within the meaning of Section 5.04.
Section 5.06 INDEMNIFICATION. (a) The HELOC Servicer agrees to
indemnify each of the HELOC Back-Up Servicer, the Issuer and the Indenture
Trustee for and to hold each of the HELOC Back-Up Servicer, the Issuer and the
Indenture Trustee harmless against, any claim, tax, penalty, loss, liability or
expense of any kind whatsoever, incurred without negligence or willful
misconduct on its part, arising out of, or in connection with, the failure by
the HELOC Servicer to perform its duties in compliance with this HELOC Servicing
Agreement. In addition to the indemnification set forth in the previous
sentence, the HELOC Servicer shall indemnify and hold each of the HELOC Back-Up
Servicer, the Issuer and the Indenture Trustee harmless from and against any and
all claims, losses, damages, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses resulting from
or related to any act or omission to act of any prior servicer, owner or
originator of a HELOC Mortgage Loan or
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Mortgaged Property (or any other Person) prior to the transfer of servicing to
the HELOC Back-Up Servicer in accordance with Section 6.02 hereunder, provided
that:
(i) with respect to any such claim, the HELOC Back-Up
Servicer, the Indenture Trustee or the Issuer, as applicable, shall have given
the HELOC Servicer written notice thereof promptly after the HELOC Back-Up
Servicer, the Issuer or the Indenture Trustee, as applicable, shall have actual
knowledge thereof, it being understood that failure to give such notice shall
not relieve the HELOC Servicer of its indemnification obligations hereunder;
(ii) while maintaining control over its own defense, the HELOC
Back-Up Servicer, the Issuer or the Indenture Trustee, as applicable, shall
cooperate and consult fully with the HELOC Servicer in preparing such defense;
and
(iii) notwithstanding anything in this HELOC Servicing
Agreement to the contrary, the HELOC Servicer shall not be liable for settlement
of any claim by the HELOC Back-Up Servicer, the Issuer or the Indenture Trustee,
as applicable, entered into without the prior consent of the HELOC Servicer,
which consent shall not be unreasonably withheld.
(b) No termination of this HELOC Servicing Agreement or the resignation
or removal of the HELOC Servicer shall affect the obligations created by this
Section 5.06 of the HELOC Servicer to indemnify the HELOC Back-Up Servicer, the
Issuer and the Indenture Trustee under the conditions and to the extent set
forth herein. This section shall survive the termination of this HELOC Servicing
Agreement and the resignation or removal of the HELOC Servicer and the Indenture
Trustee. Any amounts to be paid by the HELOC Servicer pursuant to this
Subsection may not be paid from the Trust Estate.
Section 5.07 DUTIES OF THE HELOC SERVICER WITH RESPECT TO THE
INDENTURE. (a) The HELOC Servicer shall take all appropriate action that is the
duty of the Issuer to take with respect to the following matters under the
Indenture (references are to sections of the Indenture):
(i) causing the preparation of the Notes (for execution by the
Owner Trustee) upon their initial issuance and causing the preparation of an
Issuer Request (for execution by the Owner Trustee) for delivery to the
Indenture Trustee regarding authentication of the Notes (Section 2.02);
(ii) causing the preparation of an Issuer Request and
Officer's Certificate (and executing the same on behalf of the Issuer) and the
obtaining of an Opinion of Counsel and Independent Certificates, if necessary,
for the release of the Collateral (Section 8.05);
(iii) causing the preparation of Issuer Requests (and
executing the same on behalf of the Issuer) and the obtaining of Opinions of
Counsel with respect to the execution of supplemental indentures;
(iv) causing the preparation and obtaining or filing of the
instruments, opinions and certificates and other documents required for the
release of collateral (Sections 8.05 and 10.01);
(v) the delivery of notice to the Indenture Trustee and the
Rating Agencies of each Event of Default under the Indenture (Section 5.01);
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(vi) annual delivery of Opinions of Counsel, in accordance
with Section 3.07 of the Indenture, as to the Trust Estate, and the annual
delivery and execution of the Officers' Certificate (Section 3.15);
(vii) causing the preparation and execution of an Officer's
Certificate and the obtaining of the Opinion of Counsel and the Independent
Certificate relating thereto with respect to any request by the Issuer to the
Indenture Trustee to take any action under the Indenture (Sections 4.10 and
10.01);
(viii) obtaining and preserving the Issuer's qualification to
do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the
Notes, the HELOC Mortgage Loans and each other instrument and agreement included
in the Trust Estate (Section 3.04).
(b) In addition to the duties of the HELOC Servicer set forth above,
the HELOC Servicer shall prepare for execution by the Issuer or shall cause the
preparation by other appropriate persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Issuer to prepare, file or deliver pursuant to the Basic Documents, and at the
request of the Owner Trustee or the Indenture Trustee (it being understood that
in no event is the Indenture Trustee obligated to make such request or give such
direction) shall take all appropriate action that it is the duty of the Issuer
to take pursuant to the Basic Documents. In accordance with the directions of
the Owner Trustee or Indenture Trustee (it being understood that in no event is
the Indenture Trustee obligated to make such request or give such direction),
the HELOC Servicer shall administer, perform or supervise the performance of
such other activities in connection with the Collateral (including the Basic
Documents) as are not covered by any of the foregoing provisions and as are
expressly requested by the Owner Trustee or the Indenture Trustee (it being
understood that in no event is the Indenture Trustee obligated to make such
request or give such direction) and are reasonably within the capability of the
HELOC Servicer.
34
ARTICLE VI
DEFAULT
Section 6.01 SERVICING DEFAULT. If any one of the following events
(each, a "Servicing Default") shall occur and be continuing:
(i) Any failure by the HELOC Servicer to deposit in the
Collection Account or Payment Account any deposit required to be made under the
terms of this HELOC Servicing Agreement which continues unremedied for a period
of one (1) Business Day after the date upon which written notice of such failure
shall have been given to the HELOC Servicer by the Indenture Trustee, the HELOC
Back-Up Servicer or the Insurer; or
(ii) Failure on the part of the HELOC Servicer duly to observe
or perform in any material respect any representation or warranty of the HELOC
Servicer or any other covenants or agreements of the HELOC Servicer (including
the making of Servicing Advances) set forth in this HELOC Servicing Agreement,
which failure, in each case, materially and adversely affects the interests of
the Class IX-A Noteholders and which continues unremedied for a period of 30
days after the date on which written notice of such failure, requiring the same
to be remedied, and stating that such notice is a "Notice of Default" hereunder,
shall have been given to the HELOC Servicer by the Indenture Trustee, the HELOC
Back-Up Servicer or the Insurer; or
(iii) The entry against the HELOC Servicer of a decree or
order by a court or agency or supervisory authority having jurisdiction in the
premises for appointment of a trustee, conservator, receiver or liquidator in
any insolvency, conservatorship, receivership, readjustment of debt, marshaling
of assets and liabilities or similar proceedings, or for the winding up or
liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or
(iv) The HELOC Servicer shall voluntarily go into liquidation,
consent to the appointment of a conservator, receiver, liquidator or similar
person in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to the HELOC Servicer or of or
relating to all or substantially all of its property, or a decree or order of a
court, agency or supervisory authority having jurisdiction in the premises for
the appointment of a conservator, receiver, liquidator or similar person in any
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the HELOC Servicer and such decree or order shall have
remained in force undischarged, unbonded or unstayed for a period of 60 days; or
the HELOC Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations;
then, and in every such case, so long as a Servicing Default shall not have been
remedied by the HELOC Servicer, the Indenture Trustee or the HELOC Back-Up
Servicer may, or the Indenture Trustee at the direction of the holders of 51% of
the aggregate Note Principal Balance shall by
35
notice then given to the HELOC Servicer, terminate all of the rights and
obligations of the HELOC Servicer as servicer under this HELOC Servicing
Agreement other than its right to receive servicing compensation and expenses
for servicing the HELOC Mortgage Loans hereunder during any period prior to the
date of such termination and the HELOC Back-Up Servicer may exercise any and all
other remedies available at law or equity. Any such notice to the HELOC Servicer
shall also be given to each Rating Agency, the Insurer, the Company and the
Issuer. On or after the receipt by the HELOC Servicer of such written notice,
all authority and power of the HELOC Servicer under this HELOC Servicing
Agreement, whether with respect to the Class IX-A Notes or the HELOC Mortgage
Loans or otherwise, shall pass to and be vested in the HELOC Back-Up Servicer,
pursuant to and under this Section 6.01; and, without limitation, the HELOC
Back-Up Servicer is hereby authorized and empowered to execute and deliver, on
behalf of the HELOC Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each HELOC
Mortgage Loan and related documents, or otherwise. Notwithstanding the
foregoing, the parties hereto and the Securityholders by their acceptance of any
Security, acknowledge and agree that there will be a period of transition before
actual servicing functions can be fully transferred to the HELOC Back-Up
Servicer, as successor HELOC Servicer, or to a successor HELOC Servicer
appointed by the HELOC Back-Up Servicer pursuant to the provisions hereof,
provided, that the HELOC Back-Up Servicer shall use its reasonable best efforts
to succeed to actual servicing functions or find a successor HELOC Servicer as
promptly as possible. The HELOC Servicer agrees to cooperate with the HELOC
Back-Up Servicer in effecting the termination of the responsibilities and rights
of the HELOC Servicer hereunder, including, without limitation, the transfer to
the HELOC Back-Up Servicer or the successor HELOC Servicer for administration by
it of (i) the property and amounts which are then or should be part of the Trust
Estate or which thereafter become part of the Trust Estate; (ii) originals or
copies of all documents of the HELOC Servicer reasonably requested by the HELOC
Back-Up Servicer to enable it to assume the HELOC Servicer's duties thereunder
and under the Subservicing Agreements; (iii) the rights and obligations of the
HELOC Servicer under the Subservicing Agreements with respect to the HELOC
Mortgage Loans; (iv) all cash amounts which shall at the time be deposited by
the HELOC Servicer or should have been deposited to the Collection Account or
the Payment Account or thereafter be received with respect to the HELOC Mortgage
Loans; and (v) all costs or expenses associated with the complete transfer of
all servicing data and the completion, correction or manipulation of such
servicing data as may be required by the HELOC Back-Up Servicer or any successor
HELOC Servicer to correct any errors or insufficiencies in the servicing data or
otherwise to enable the HELOC Back-Up Servicer or successor HELOC Servicer to
service the HELOC Mortgage Loans properly and effectively. All reasonable costs
and expenses (including, but not limited to, attorneys' fees and disbursements)
incurred by the HELOC Back-Up Servicer or a successor HELOC Servicer in
connection with its succession as HELOC Servicer, or the Indenture Trustee in
accordance with such succession (as provided below), including amending this
HELOC Servicing Agreement to reflect such succession as HELOC Servicer pursuant
to this Section 6.01 shall be paid by the predecessor HELOC Servicer (or if the
predecessor HELOC Servicer is the HELOC Back-Up Servicer, the initial HELOC
Servicer) upon presentation of reasonable documentation of such costs and
expenses. In connection therewith, the Indenture Trustee shall establish a
reserve fund (the "Reserve Fund") into which each of the HELOC
36
Servicer and the RMBS Servicer shall deposit on the Closing Date the amount of
$325,000 each (for a total of $650,000) to be held in trust for the benefit of
each of the HELOC Back-Up Servicer, the RMBS Master Servicer and the Indenture
Trustee. Funds on deposit in the Reserve Fund shall not be invested. Funds on
deposit in the Reserve Fund shall be used to pay the costs and expenses incurred
by the HELOC Back-Up Servicer in connection with its succession as HELOC
Servicer in the event of a Servicing Default by the HELOC Servicer pursuant to
this Section 6.01, or to pay the costs and expenses incurred by the RMBS Master
Servicer in connection with its succession as RMBS Servicer in the event of a
Servicing Default by the RMBS Servicer pursuant to Section 6.01 of the RMBS
Servicing Agreement, and to pay the costs and expenses incurred by the Indenture
Trustee in connection with any such succession by the HELOC Back-Up Servicer or
RMBS Master Servicer, respectively, to the HELOC Servicer or RMBS Servicer. In
addition, at the end of each Calendar Quarter, the Indenture Trustee shall
release from the Reserve Fund and pay to the Seller an amount equal to $30 times
each Mortgage Loan which was released from the Trust Estate during such Calendar
Quarter as calculated by the Securities Administrator and provided to the
Indenture Trustee. In the event that amounts contained in the Reserve Fund are
insufficient to reimburse the HELOC Back-Up Servicer or the RMBS Master Servicer
in accordance with this Section 6.01, then any remaining amounts required to be
paid to the HELOC Back-Up Servicer or the RMBS Master Servicer in accordance
with this Section 6.01 shall be payable from the Trust Estate. The Reserve Fund
shall no longer be maintained if the HELOC Servicer is rated "SQ2" or better by
Moody's on any date as certified by the HELOC Servicer to the Indenture Trustee,
the RMBS Master Servicer, the HELOC Back-Up Servicer and the Securities
Administrator. The costs and expenses incurred by the Indenture Trustee in
connection with any such succession by the HELOC Back-Up Servicer or the RMBS
Master Servicer, respectively, to the HELOC Servicer or RMBS Servicer, as
applicable, shall be reimbursed in the first instance from the Reserve Fund. In
the event that amounts contained in the Reserve Fund are insufficient to
reimburse the Indenture Trustee in accordance with this Section 6.01, then any
remaining amounts required to be paid to the Indenture Trustee in accordance
with this Section 6.01 shall be payable by the terminated HELOC Servicer or
terminated RMBS Servicer, as applicable, and in the event the Indenture Trustee
is unable to collect any such amounts from the terminated HELOC Servicer or
terminated RMBS Servicer, as applicable, then any remaining amounts shall be
payable from the Trust Estate.
Notwithstanding any termination of the activities of the HELOC Servicer
hereunder, the HELOC Servicer shall be entitled to receive, out of any late
collection of a payment on a HELOC Mortgage Loan which was due prior to the
notice terminating the HELOC Servicer's rights and obligations hereunder and
received after such notice, that portion to which the HELOC Servicer would have
been entitled pursuant to Sections 3.07 and 3.15 as well as its HELOC Servicing
Fee in respect thereof, and any other amounts payable to the HELOC Servicer
hereunder the entitlement to which arose prior to the termination of its
activities hereunder.
The HELOC Servicer shall immediately notify the HELOC Back-Up Servicer
in writing of any Servicing Default.
In addition, upon the occurrence of any HELOC Servicer Termination
Event and upon the direction of the Insurer in connection therewith, the HELOC
Back-Up Servicer shall terminate the rights and responsibilities of the HELOC
Servicer hereunder and shall appoint a
37
successor HELOC Servicer in accordance with the provisions of this Section 6.02;
provided, however, that in the event of the appointment of the HELOC Back-Up
Servicer or other successor as successor HELOC Servicer in accordance with
Section 6.02 hereof, the HELOC Servicer Termination Event shall not apply.
Section 6.02 HELOC BACK-UP SERVICER TO ACT; APPOINTMENT OF SUCCESSOR.
(a) As promptly as possible following the time the HELOC Servicer sends a notice
pursuant to clause (i) of Section 5.04, the HELOC Back-Up Servicer, or other
successor appointed in accordance with this Section 6.02, shall be the successor
in all respects to the HELOC Servicer in its capacity as HELOC Servicer under
this HELOC Servicing Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the HELOC Servicer by the terms and provisions
hereof, including but not limited to the provisions of Article V. Nothing in
this HELOC Servicing Agreement shall be construed to permit or require the HELOC
Back-Up Servicer or any other successor HELOC Servicer to (i) be responsible or
accountable for any act or omission of the predecessor HELOC Servicer, (ii)
require or obligate the HELOC Back-Up Servicer, in its capacity as successor
HELOC Servicer, to purchase, repurchase or substitute any HELOC Mortgage Loan,
(iii) fund any losses on any Eligible Investment directed by any other HELOC
Servicer, or (iv) be responsible for the representations and warranties of the
HELOC Servicer, except as provided herein. As compensation therefor, the HELOC
Back-Up Servicer shall be entitled to such compensation as the HELOC Servicer
would have been entitled to hereunder if no such notice of termination had been
given. Notwithstanding above, (i) if the HELOC Back-Up Servicer is unwilling to
act as successor HELOC Servicer, or (ii) if the HELOC Back-Up Servicer is
legally unable so to act, the HELOC Back-Up Servicer 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 servicer
having a net worth of not less than $10,000,000 as the successor to the HELOC
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the HELOC Servicer hereunder; provided that the
appointment of any such successor HELOC Servicer will not result in the
qualification, reduction or withdrawal of the ratings assigned to the Class IX-A
Notes by the Rating Agencies (as evidenced by a letter to such effect delivered
by the Rating Agencies). Pending appointment of a successor to the HELOC
Servicer hereunder, unless the HELOC Back-Up Servicer is prohibited by law from
so acting or is unwilling to act as such, the HELOC Back-Up Servicer shall act
in such capacity as hereinabove provided. In connection with such appointment
and assumption, the successor shall be entitled to receive compensation out of
payments on HELOC Mortgage Loans in an amount equal to the compensation which
the HELOC Servicer would otherwise have received pursuant to Section 3.15 (or
such lesser compensation as the HELOC Back-Up Servicer and such successor shall
agree). appointment of a successor HELOC Servicer shall not affect any liability
of the predecessor HELOC Servicer which may have arisen under this HELOC
Servicing Agreement prior to its termination as HELOC Servicer (including,
without limitation, the obligation to pay any deductible under an insurance
policy pursuant to Section 3.11 or to indemnify the HELOC Back-Up Servicer
pursuant to Section 5.06), nor shall any successor HELOC Servicer be liable for
any acts or omissions of the predecessor HELOC Servicer or for any breach by
such HELOC Servicer of any of its representations or warranties contained herein
or in any related document or agreement. The HELOC Back-Up Servicer and such
successor shall take such action, consistent with this HELOC Servicing
Agreement, as shall be necessary to effectuate any such succession.
38
In connection with the termination or resignation of the HELOC Servicer
hereunder, either (i) the successor HELOC Servicer, including the HELOC Back-Up
Servicer if the HELOC Back-Up Servicer is acting as successor HELOC 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 HELOC Mortgage Loans that are
registered with MERS, in which case the predecessor HELOC Servicer shall
cooperate with the successor HELOC Servicer in causing MERS to revise its
records to reflect the transfer of servicing to the successor HELOC Servicer as
necessary under MERS' rules and regulations, or (ii) the predecessor HELOC
Servicer shall cooperate with the successor HELOC Servicer in causing MERS to
execute and deliver an assignment of Mortgage in recordable form to transfer the
Mortgage from MERS to the Indenture Trustee and to execute and deliver such
other notices, documents and other instruments as may be necessary or desirable
to effect a transfer of such HELOC Mortgage Loan or servicing of such HELOC
Mortgage Loan on the MERS(R) System to the successor HELOC Servicer. The
predecessor HELOC Servicer shall file or cause to be filed any such assignment
in the appropriate recording office. The predecessor HELOC Servicer shall bear
any and all fees of MERS, costs of preparing any assignments of Mortgage, and
fees and costs of filing any assignments of Mortgage that may be required under
this Section 6.02. To the extent these fees and costs are not paid by the HELOC
Servicer and are incurred by any successor HELOC Servicer, such fees and costs
will be reimbursable to the successor HELOC Servicer by the Trust. The successor
HELOC Servicer shall cause such assignment to be delivered to the Indenture
Trustee promptly upon receipt of the original with evidence of recording thereon
or a copy certified by the public recording office in which such assignment was
recorded.
(b) Any successor, including the HELOC Back-Up Servicer, to the HELOC
Servicer as servicer shall during the term of its service as servicer (i)
continue to service and administer the HELOC Mortgage Loans for the benefit of
the Securityholders, (ii) maintain in force a policy or policies of insurance
covering errors and omissions in the performance of its obligations as HELOC
Servicer hereunder and a fidelity bond in respect of its officers, employees and
agents to the same extent as the HELOC Servicer is so required pursuant to
Section 3.11(g).
(c) Any successor HELOC Servicer, including the HELOC Back-Up Servicer,
shall not be deemed to be in default or to have breached its duties hereunder if
the predecessor HELOC Servicer shall fail to deliver any required deposit to the
Collection Account or otherwise cooperate with any required servicing transfer
or succession hereunder.
(d) Notwithstanding anything else herein to the contrary, in no event
shall the HELOC Back-Up Servicer be liable for any servicing fee or any
differential in amount of the servicing fee paid hereunder and the amount
necessary to induce any successor HELOC Servicer to act as a successor HELOC
Servicer under this HELOC Servicing Agreement and the transactions set forth or
provided for herein.
Section 6.03 RESERVED.
Section 6.04 WAIVER OF DEFAULTS. The HELOC Back-Up Servicer, with the
consent of the Insurer, may waive any default by the HELOC Servicer in the
performance of its obligations hereunder and the consequences thereof, except a
default in the making of or the causing to be
39
made any required distribution. Upon any such waiver of a past default, such
default shall be deemed to cease to exist, and any Servicing Default arising
therefrom shall be deemed to have been timely remedied for every purpose of this
HELOC Servicing Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
40
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01 AMENDMENT. This HELOC Servicing Agreement may be amended
from time to time by the parties hereto, provided that any amendment be
accompanied by a letter from the Rating Agencies that the amendment will not
result in the downgrading, qualification or withdrawal of the rating then
assigned to the Class IX-A Notes.
Section 7.02 GOVERNING LAW. THIS HELOC SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 7.03 NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if when
delivered to:
(a) in the case of the HELOC Back-Up Servicer:
GMAC Mortgage Corporation
000 Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
Telecopier No.: (000) 000-0000
(b) in the case of the HELOC Servicer: American Home Mortgage
Servicing, Inc.
0000 Xxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
(c) in the case of Rating Agencies: Standard & Poor's, a division of
The XxXxxx-Xxxx Companies, Inc.
00 Xxxxx Xxxxxx - 41st Floor
New York, New York 10041
Attention: Asset Backed Surveillance Group
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
(d) in the case of the Owner Trustee, the Corporate Trust Office:
Wilmington Trust Company
00
Xxxxxx Xxxxxx Xxxxx
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
(e) in the case of the Issuer, to American Home Mortgage Investment
Trust 2005-1: c/o American Home Mortgage Securities LLC
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
(f) in the case of the Indenture Trustee: its Corporate Trust Office
(g) in the case of the Insurer,
Financial Guaranty Company
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Research and Risk Management
(h) in the case of the Securities Administrator:
Xxxxx Fargo Bank, N.A.
X.X. Xxx 00
Xxxxxxxx , Xxxxxxxx 00000
(or, in the case of overnight deliveries, 0000 Xxx Xxxxxxxxx Xxxx,
Xxxxxxxx, Xxxxxxxx 21045) (Attention: Corporate Trust Services - AHMIT
2005-1), facsimile no.: (000) 000-0000, or such other address as may
hereafter be furnished to the other parties hereto in writing;)
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party. Any notice required or permitted to be
mailed to a Noteholder shall be given by first class mail, postage prepaid, at
the address of such Noteholder as shown in the Note Register. Any notice so
mailed within the time prescribed in this HELOC Servicing Agreement shall be
conclusively presumed to have been duly given, whether or not the Noteholder
receives such notice. Any notice or other document required to be delivered or
mailed by the HELOC Back-Up Servicer to the Rating Agencies shall be given on a
reasonable efforts basis and only as a matter of courtesy and accommodation and
the HELOC Back-Up Servicer shall have no liability for failure to deliver such
notice or document to the Rating Agencies.
The HELOC Servicer shall designate a Person who shall be available to
the Insurer to provide reasonable access to information regarding the HELOC
Mortgage Loans.
Section 7.04 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this HELOC Servicing Agreement
shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this HELOC Servicing Agreement and
shall in no way affect the validity or enforceability of the other
42
provisions of this HELOC Servicing Agreement or of the Class IX-A Notes or the
rights of the Class IX-A Noteholders thereof.
Section 7.05 THIRD-PARTY BENEFICIARIES. This HELOC Servicing Agreement
will inure to the benefit of and be binding upon the parties hereto, the Class
IX-A Noteholders, the Insurer, the Owner Trustee, the Securities Administrator
and their respective successors and permitted assigns. Except as otherwise
provided in this HELOC Servicing Agreement, no other Person will have any right
or obligation hereunder.
Section 7.06 COUNTERPARTS. This instrument may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 7.07 EFFECT OF HEADINGS AND TABLE OF CONTENTS. Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 7.08 TERMINATION. The respective obligations and
responsibilities of the HELOC Servicer and the HELOC Back-Up Servicer created
hereby shall terminate upon the satisfaction and discharge of the Indenture
pursuant to Section 4.10 thereof.
Section 7.09 NO PETITION. The HELOC Servicer, by entering into this
HELOC Servicing Agreement, hereby covenants and agrees that it will not at any
time institute against the Issuer, or join in any institution against the
Issuer, any bankruptcy proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations of the Issuer. This
section shall survive the satisfaction and discharge of the Indenture by one
year.
Section 7.10 NO RECOURSE. The HELOC Servicer acknowledges that no
recourse may be had against the Issuer, except as may be expressly set forth in
this HELOC Servicing Agreement.
Section 7.11 CONSENT TO JURISDICTION. The parties to this Agreement
each hereby irrevocably submits to the nonexclusive jurisdiction of any New York
State or federal court sitting in the Borough of Manhattan in The City of New
York in any action or proceeding arising out of or relating to this HELOC
Servicing Agreement or the transactions contemplated hereby, and all such
parties hereby irrevocably agree that all claims in respect of such action or
proceeding may be heard and determined in such New York State or federal court
and hereby irrevocably waive, to the fullest extent that they may legally do so,
the defense of an inconvenient forum to the maintenance of such action or
proceeding. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS HELOC SERVICING
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
43
IN WITNESS WHEREOF, the HELOC Back-Up Servicer, the Issuer, the
Indenture Trustee, the Seller and the HELOC Servicer have caused this HELOC
Servicing Agreement to be duly executed by their respective officers or
representatives all as of the day and year first above written.
GMAC MORTGAGE CORPORATION
as HELOC Back-Up Servicer
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
AMERICAN HOME MORTGAGE SERVICING, INC. as
HELOC SERVICER
By: /s/ Xxxx X. Xxxx
----------------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
AMERICAN HOME MORTGAGE INVESTMENT TRUST
2005-1, as Issuer
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Owner
Trustee
By: /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Financial Services Officer
DEUTSCHE BANK NATIONAL TRUST COMPANY, not
in its individual capacity but solely as
Indenture Trustee
By: /s/ Xxxxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Associate
44
AMERICAN HOME MORTGAGE ACCEPTANCE, INC.
as Seller
By: /s/ Xxxx X. Xxxx
----------------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
45
EXHIBIT A
HELOC MORTGAGE LOAN SCHEDULE
(FILED MANUALLY)
46
EXHIBIT B
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE:REQUEST FOR RELEASE OF DOCUMENTS
In connection with your administration of the HELOC Mortgage Loans, we request
the release of the Mortgage File described below.
HELOC Servicing Agreement ("HELOC Servicing Agreement") Dated:
Series #:
Account #:
Pool #:
Loan #:
Borrower Name(s):
Reason for Document Request: (circle one)Mortgage Loan Prepaid in Full
Other
Mortgage Loan Repurchased
Please deliver the Mortgage File to
________________________________________________________________________________
______________________________________
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been deposited in the
Collection Account as provided in the HELOC Servicing Agreement."
___________________
[Name of HELOC Servicer]
Authorized Signature
******************************************************************************
TO INDENTURE TRUSTEE: Please acknowledge this request (if requested by us), and
check off documents being enclosed with a copy of this form. You should retain
this form for your files in accordance with the terms of the HELOC Servicing
Agreement.
Enclosed Documents: [ ]Promissory Note
[ ]Mortgage or Deed of Trust
[ ]Assignment(s) of Mortgage or Deed of Trust
[ ]Title Insurance Policy
_______________________[ ]Other:
Name
_______________________
Title
_______________________
Date
47
EXHIBIT C-1
FORM OF CERTIFICATION TO BE PROVIDED BY THE HELOC SERVICER
Re:American Home Mortgage Investment Trust 2005-1
Mortgage-Backed Notes, Series 2005-1
I, [identify the certifying individual], certify that:
l. Based on my knowledge, the information in the Annual
Statement of Compliance, the Annual Independent Public Accountants' Servicing
Report and all servicing reports, officer's certificates and other information
relating to the servicing of the Mortgage Loans submitted to the HELOC Back-Up
Servicer and the Securities Administrator taken as a whole, does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading as of the date of this certification;
2. Based on my knowledge, the servicing information required
to be provided to the HELOC Back-Up Servicer and the Securities Administrator by
the HELOC Servicer under the HELOC Servicing Agreement is included in these
reports;
3. I am responsible for reviewing the activities performed by
the HELOC Servicer under the HELOC Servicing Agreement and based upon the review
required under the HELOC Servicing Agreement, and except as disclosed in the
report, the HELOC Servicer has fulfilled its obligations under the HELOC
Servicing Agreement; and
4. I have disclosed to the Registrant's certified public
accounts all significant deficiencies relating to the HELOC Servicer's
compliance with the minimum servicing standards in accordance with a review
conducted in compliance with the Uniform Single Attestation Program for Mortgage
Bankers or similar standard as set forth in the HELOC Servicing Agreement.
Capitalized terms used but not defined herein have the
meanings ascribed to them in Appendix A to the Indenture, dated as of March 23,
2005, among American Home Mortgage Investment Trust 2005-1, as issuer, Xxxxx
Fargo Bank, N.A. as securities administrator and Deutsche Bank National Trust
Company, as indenture trustee.
AMERICAN HOME MORTGAGE SERVICING, INC.
By:____________________________
Name:
Title:
Date:
48
EXHIBIT C-2
RESERVED
49
