Exhibit 99.1
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CWHEQ, INC.
Depositor
COUNTRYWIDE HOME LOANS, INC.
Sponsor and Master Servicer
CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 2006-G
Trust
JPMORGAN CHASE BANK, N.A.
Indenture Trustee
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SALE AND SERVICING AGREEMENT
Dated as of August 30, 2006
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REVOLVING HOME EQUITY LOAN ASSET BACKED NOTES,
SERIES 2006-G
Table of Contents
Page
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ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01 Definitions...............................................................................1
Section 1.02 Other Terms...............................................................................1
Section 1.03 Rules of Construction.....................................................................1
Section 1.04 Interest Calculations.....................................................................3
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TAX TREATMENT
Section 2.01 Conveyance of Mortgage Loans; Retention of Obligation to Fund
Advances Under Credit Line Agreements....................................................3
Section 2.02 Acceptance by Indenture Trustee...........................................................8
Section 2.03 Representations, Warranties, and Covenants Regarding the Master
Servicer................................................................................10
Section 2.04 Representations and Warranties Regarding the Mortgage Loans;
Retransfer of Certain Mortgage Loans....................................................11
Section 2.05 Covenants of the Depositor...............................................................14
Section 2.06 Transfers of Mortgage Loans at Election of the Holder of the Class R-1
Certificates.............................................................................15
Section 2.07 Retransfers and Transfer Deficiencies....................................................16
Section 2.08 Tax Reporting............................................................................17
Section 2.09 Representations and Warranties of the Depositor..........................................18
Section 2.10 Substitution and Repurchase Opinions.....................................................18
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 The Master Servicer......................................................................19
Section 3.02 Collection of Certain Mortgage Loan Payments; Establishment of
Accounts................................................................................23
Section 3.03 Deposits to Payment Account..............................................................25
Section 3.04 Maintenance of Hazard Insurance; Property Protection Expenses............................26
Section 3.05 Assumption and Modification Agreements...................................................26
Section 3.06 Realization Upon Defaulted Mortgage Loans; Repurchase of Certain
Mortgage Loans..........................................................................27
Section 3.07 Indenture Trustee to Cooperate...........................................................28
Section 3.08 Servicing Compensation; Payment of Certain Expenses by Master Servicer...................30
Section 3.09 Annual Statement as to Compliance........................................................30
Section 3.10 Access to Certain Documentation and Information Regarding the
Mortgage Loans..........................................................................31
Section 3.11 Maintenance of Certain Servicing Insurance Policies......................................31
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01 Servicing Certificate....................................................................31
Section 4.02 Acknowledgement and Cooperation..........................................................34
Section 4.03 Optional Advances of the Master Servicer.................................................35
Section 4.04 Statements to Noteholders................................................................35
ARTICLE V
THE MASTER SERVICER, THE SPONSOR, AND THE DEPOSITOR
Section 5.01 Liability of the Sponsor, the Master Servicer, and the Depositor.........................36
Section 5.02 Merger or Consolidation of, or Assumption of the Obligations of, the
Master Servicer or the Depositor........................................................36
Section 5.03 Limitation on Liability of the Master Servicer and Others................................36
Section 5.04 Master Servicer Not to Resign............................................................37
Section 5.05 Delegation of Duties.....................................................................38
Section 5.06 Indemnification by the Master Servicer...................................................38
Section 5.07 Credit Enhancer's Rights Regarding Actions, Proceedings, or Investigations...............38
ARTICLE VI
SERVICING TERMINATION
Section 6.01 Events of Servicing Termination..........................................................39
Section 6.02 Indenture Trustee to Act; Appointment of Successor.......................................41
Section 6.03 Notification to Noteholders and the Transferor...........................................43
ARTICLE VII
EXCHANGE ACT REPORTING
Section 7.01 Filing Obligations.......................................................................43
Section 7.02 Form 10-D Filings........................................................................43
Section 7.03 Form 8-K Filings.........................................................................44
Section 7.04 Form 10-K Filings........................................................................44
Section 7.05 Xxxxxxxx-Xxxxx Certification.............................................................45
Section 7.06 Form 15 Filing...........................................................................46
Section 7.07 Report on Assessment of Compliance and Attestation.......................................46
Section 7.08 Use of Subservicers and Subcontractors...................................................47
Section 7.09 Amendments...............................................................................48
ARTICLE VIII
TERMINATION
Section 8.01 Termination..............................................................................49
Section 8.02 Additional Termination Requirements......................................................50
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01 Amendment................................................................................51
Section 9.02 Governing Law............................................................................51
Section 9.03 Notices..................................................................................52
Section 9.04 Severability of Provisions...............................................................53
Section 9.05 Assignment...............................................................................53
Section 9.06 Third-Party Beneficiaries................................................................53
Section 9.07 Counterparts; Electronic Delivery........................................................53
Section 9.08 Effect of Headings and Table of Contents.................................................54
EXHIBIT A - MORTGAGE LOAN SCHEDULE...................................................................A-1
EXHIBIT B - FORM OF REQUEST FOR RELEASE..............................................................B-1
EXHIBIT C - FORM OF TRANSFER DOCUMENT................................................................C-1
EXHIBIT D - MONTHLY STATEMENT........................................................................D-1
EXHIBIT E-1 - FORM OF PERFORMANCE CERTIFICATION (SUBSERVICER)......................................E-1-1
EXHIBIT E-2 - FORM OF PERFORMANCE CERTIFICATION (INDENTURE TRUSTEE)................................E-2-1
EXHIBIT F - FORM OF SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE STATEMENT.........F-1
EXHIBIT G - XXXXXXXX-XXXXX CERTIFICATION (REPLACEMENT OF MASTER SERVICER)............................G-1
EXHIBIT H - FORM OF RELIANCE CERTIFICATE.............................................................H-1
This SALE AND SERVICING AGREEMENT, dated as of August 30, 2006, among
CWHEQ, INC., as depositor, COUNTRYWIDE HOME LOANS, Inc., as sponsor and master
servicer, CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 2006-G, and JPMORGAN
CHASE BANK, N.A., as Indenture Trustee,
WITNESSETH THAT:
The parties agree as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01 Definitions.
Unless the context requires a different meaning, capitalized terms are
used in this Agreement as defined in the Master Glossary of Defined Terms
attached as Annex 1 to the Indenture dated as of the date hereof between CWHEQ
Revolving Home Equity Loan Trust, Series 2006-G and JPMorgan Chase Bank, N.A.,
as indenture trustee.
Section 1.02 Other Terms.
Defined terms used in this Agreement are sometimes defined after their
first use without a reference such as "(as hereinafter defined)."
Section 1.03 Rules of Construction.
Except as otherwise expressly provided in this Agreement or unless the
context clearly requires otherwise:
(a) Defined terms include, as appropriate, all genders and the plural as
well as the singular.
(b) References to designated articles, sections, subsections, exhibits,
and other subdivisions of this Agreement, such as "Section 6.12 (a)," refer to
the designated article, section, subsection, exhibit, or other subdivision of
this Agreement as a whole and to all subdivisions of the designated article,
section, subsection, exhibit, or other subdivision. The exhibits and other
attachments to this Agreement are a part of this Agreement. The words
"herein," "hereof," "hereto," "hereunder," and other words of similar import
refer to this Agreement as a whole and not to any particular article, section,
exhibit, or other subdivision of this Agreement.
(c) Any term that relates to a document or a statute, rule, or
regulation includes any amendments, modifications, supplements, or any other
changes that may have occurred since the document, statute, rule, or
regulation came into being, including changes that occur after the date of
this Agreement. References to law are not limited to statutes. References to
statutes include any rules or regulations promulgated under them by a
governmental authority charged
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with the administration of the statute. Any reference to any person includes
references to its successors and assigns.
(d) Any party may execute any of the requirements under this Agreement
either directly or through others, and the right to cause something to be done
rather than doing it directly shall be implicit in every requirement under
this Agreement. Unless a provision is restricted as to time or limited as to
frequency, all provisions under this Agreement are implicitly available from
time to time.
(e) The term "including" and all its variations mean "including but not
limited to." Except when used in conjunction with the word "either," the word
"or" is always used inclusively (for example, the phrase "A or B" means "A or
B or both," not "either A or B but not both").
(f) A reference to "a [thing]" or "any [of a thing]" does not imply the
existence or occurrence of the thing referred to even though not followed by
"if any," and "any [of a thing]" is any and all of it. A reference to the
plural of anything as to which there could be either one or more than one does
not imply the existence of more than one (for instance, the phrase "the
obligors on a note" means "the obligor or obligors on a note"). "Until
[something occurs]" does not imply that it must occur, and will not be
modified by the word "unless." The word "due" and the word "payable" are each
used in the sense that the stated time for payment has passed. The word
"accrued" is used in its accounting sense, i.e., an amount paid is no longer
accrued. In the calculation of amounts of things, differences and sums may
generally result in negative numbers, but when the calculation of the excess
of one thing over another results in zero or a negative number, the
calculation is disregarded and an "excess" does not exist. Portions of things
may be expressed as fractions or percentages interchangeably. The word "shall"
is used in its imperative sense, as for instance meaning a party agrees to
something or something must occur or exist.
(g) All accounting terms used in an accounting context and not otherwise
defined, and accounting terms partly defined in this Agreement, to the extent
not completely defined, shall be construed in accordance with generally
accepted accounting principles in the United States. To the extent that the
definitions of accounting terms in this Agreement are inconsistent with their
meanings under generally accepted accounting principles, the definitions in
this Agreement shall control. Capitalized terms used in this Agreement without
definition that are defined in the Uniform Commercial Code of the relevant
jurisdiction are used in this Agreement as defined in that Uniform Commercial
Code.
(h) In the computation of a period of time from a specified date to a
later specified date or an open-ended period, the words "from" and "beginning"
mean "from and including," the word "after" means "from but excluding," the
words "to" and "until" mean "to but excluding," and the word "through" means
"to and including." Likewise, in setting deadlines or other periods, "by"
means "on or before." The words "preceding," "following," and words of similar
import, mean immediately preceding or following. References to a month or a
year refer to calendar months and calendar years.
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(i) Any reference to the enforceability of any agreement against a party
means that it is enforceable against the party in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, and other
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
Section 1.04 Interest Calculations.
All calculations of interest on the Asset Balance of a Mortgage Loan
under this Agreement are on a daily basis using a 365-day year. All
calculations of interest on the Notes are on the basis of the actual number of
days in an Interest Period and a year of 360 days. The calculation of the
Servicing Fee is on the basis of a 360-day year consisting of twelve 30-day
months. All dollar amounts calculated under this Agreement are rounded to the
nearest cent with one-half of one cent being rounded down.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TAX TREATMENT
Section 2.01 Conveyance of Mortgage Loans; Retention of Obligation to
Fund Advances Under Credit Line Agreements.
(a) Concurrently with the execution and delivery of this Agreement, the
Depositor hereby transfers to the Trust without recourse (subject to Sections
2.02 and 2.04) all of its right, title, and interest in
(1) each Initial Mortgage Loan, including its Asset Balance
(including all Additional Balances), the related Mortgage File, all
property that secures the Mortgage Loan, and all collections received on
it after the Cut-off Date (excluding payments due by the Cut-off Date);
(2) property that secured an Initial Mortgage Loan that is
acquired by foreclosure or deed in lieu of foreclosure;
(3) the Depositor's rights under the Purchase Agreement;
(4) the Depositor's rights under the hazard insurance policies;
(5) all rights under any guaranty executed in connection with a
Mortgage Loan;
(6) all other assets included or to be included in the Trust for
the benefit of the Secured Parties; and
(7) all proceeds of the foregoing.
This transfer to the Trust is to the Owner Trustee, on behalf of the Trust,
and each reference in this Agreement to this transfer shall be construed
accordingly. In addition, by the Closing Date, the Depositor shall cause the
Credit Enhancer to deliver the Policy to the Indenture Trustee for the benefit
of the Holders of the Insured Notes.
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(b) Additional Transfers; Conditions Precedent to Subsequent Additions.
(1) The Depositor may sell to the Trust Additional Home Equity
Loans on any Subsequent Closing Date designated by the Depositor by the
Latest Subsequent Closing Date. The Depositor shall notify the Owner
Trustee, the Indenture Trustee, the Credit Enhancer, and each Rating
Agency of its designation of a Subsequent Closing Date at least one
Business Day in advance. On each Subsequent Closing Date the Depositor
shall deliver a properly completed and executed Transfer Document to the
Owner Trustee and furnish to the Owner Trustee, the Credit Enhancer and
the Indenture Trustee
(A) the Officer's Certificate referred to in Section
2.01(b)(2)(H),
(B) the revised Mortgage Loan Schedule reflecting the
addition of the Additional Home Equity Loans covered by the
Transfer Document,
(C) an Opinion of Counsel relating to the Subsequent Closing
Date to the effect that a court in a bankruptcy context addressing
the transfer of the Additional Home Equity Loans would
characterize the transfer as a sale rather than as a secured
lending substantially in the form delivered on the Closing Date,
(D) an Opinion of Counsel relating to the perfection of
security interest in the Additional Home Equity Loans
substantially in the form delivered on the Closing Date, and
(E) an Opinion of Counsel to the effect that the purchase of
Additional Home Equity Loans will not result in the imposition of
the tax on prohibited transactions on the Trust or contributions
after the Startup Date, as defined in Sections 860F(a)(2) and
860G(d) of the Code, respectively or cause any REMIC created under
the Trust Agreement to fail to qualify as a REMIC,
and the Indenture Trustee shall pay, on behalf of the Trust, to the
order of the Depositor, from the Additional Loan Account, the purchase
price in an amount equal to the Cut-off Date Asset Balance specified in
the Transfer Document, up to the amount of funds remaining in that
Additional Loan Account.
Upon delivery of the Transfer Document and payment of the purchase
price, the Depositor hereby transfers to the Trust without recourse
(subject to Sections 2.02 and 2.04) all of its right, title, and
interest in each Additional Home Equity Loan identified in the Transfer
Document, including its Asset Balance (including all Additional
Balances) and all collections received on it after the relevant
Subsequent Cut-off Date (excluding payments due by the Subsequent
Cut-off Date) and all proceeds of the foregoing. This transfer to the
Trust is to the Owner Trustee, on behalf of the Trust, and each
reference in this Agreement to this transfer shall be construed
accordingly.
(2) The obligation of the Indenture Trustee on behalf
of the Trust to pay the purchase price from the relevant
Additional Loan Account for the benefit of the
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Depositor and the acceptance by the Owner Trustee of the transfer of the
Additional Home Equity Loans and the other property and rights relating
to them on the related Subsequent Closing Date are subject to the
satisfaction of each of the following conditions by the Subsequent
Closing Date:
(A) as of the related Subsequent Closing Date, neither the
Sponsor nor the Depositor is insolvent nor shall either of them be
made insolvent by the transfer of the Additional Home Equity Loans
nor is either of them aware of any pending insolvency;
(B) the addition shall not result in a material adverse
federal tax consequence to the Trust, the Transferor, or the
Noteholders;
(C) the Subsequent Closing Date is not after the Latest
Subsequent Closing Date;
(D) neither the Depositor nor the Trust shall have been
advised in writing by any Rating Agency that the transfer of the
Additional Home Equity Loans would result in a reduction or
withdrawal of the Rating Agency's then current rating of the Notes
(without regard to the Policy).
(E) the Sponsor represents and warrants that on the
Subsequent Closing Date each of the representations and warranties
in Section 2.04(a) by virtue of repetition of Section 3.02(a) of
the Purchase Agreement (excluding clauses (18), (30), (32), (33),
and (34) of Section 3.02(a) of the Purchase Agreement) are true
with respect to the Additional Home Equity Loans;
(F) the Sponsor represents and warrants that the addition of
the Additional Home Equity Loans will not result in a significant
variance as of the Subsequent Closing Date, after taking into
account the addition of the Additional Home Equity Loans, from the
Mortgage Loan pool characteristics covered by the representations
and warranties in Section 3.02(a)(18), (30), (32), (33), and (34)
of the Purchase Agreement;
(G) as of the relevant Subsequent Closing Date, the Sponsor
is not aware of any mechanics' or similar liens or claims that
have been filed for work, labor, or material affecting the related
Mortgaged Property that are, or may be, liens prior or equal to
the lien of the related mortgage, except liens that are fully
insured against by the title insurance policy referred to in
Section 3.02(a)(16) of the Purchase Agreement; and
(H) the Depositor shall have delivered or caused the Sponsor
to deliver to the Owner Trustee, the Indenture Trustee, and the
Credit Enhancer an Officer's Certificate confirming the
satisfaction of each of these conditions precedent.
Neither the Owner Trustee nor the Indenture Trustee need investigate or
otherwise verify compliance with these conditions, except for its
receipt of the documents
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specified to be delivered to it in Section 2.01(b)(1), and they may rely
on the Officer's Certificate specified in Section 2.01(b)(2)(H).
(c) Additional Balances; Future Fundings. Additional Balances shall be
part of the Asset Balance and are hereby transferred to the Trust on the
Closing Date for the Initial Mortgage Loans and on the relevant Subsequent
Closing Date for the Additional Home Equity Loans pursuant to this Section
2.01, and therefore are part of the Trust property. Neither the Owner Trustee
nor the Trust nor the Indenture Trustee assumes the obligation under any
Credit Line Agreement that provides for the funding of future advances to the
mortgagor under it, and neither the Trust nor the Owner Trustee nor the
Indenture Trustee may fund these future advances.
(d) Delayed Delivery. In connection with the transfer under Section
2.01(a) by the Depositor, the Depositor shall effect delivery of the Mortgage
Loan Schedule to the Trust and the Indenture Trustee by the Closing Date and
delivery of the Mortgage Files to the Trust, and the Trust shall deliver them
to the Indenture Trustee,
(1) no later than the Closing Date, with respect to no less than
50% of the Initial Mortgage Loans in each Loan Group,
(2) no later than the twentieth day after the Closing Date, with
respect to no less than 40% of the Initial Mortgage Loans in each Loan
Group in addition to those delivered on the Closing Date, and
(3) within thirty days following the Closing Date, with respect to
the remaining Initial Mortgage Loans.
In connection with the transfers by the Depositor under Section 2.01(b),
the Depositor shall effect delivery of a revised Mortgage Loan Schedule
reflecting the addition of the Additional Home Equity Loans to the Indenture
Trustee following the relevant Subsequent Closing Date and of the relevant
Mortgage Files to the Custodian,
(A) no later than the relevant Subsequent Closing Date, with
respect to no less than 10% of the relevant Additional Home Equity
Loans, and
(B) within twenty days following the relevant Subsequent
Closing Date, with respect to the remaining relevant Additional
Home Equity Loans.
In lieu of delivery of original documentation, the Depositor may deliver
documents that have been imaged optically on delivery of an opinion of counsel
to the Indenture Trustee and the Credit Enhancer that the imaged documents are
enforceable to the same extent as the originals and do not impair the
enforceability of the transfer to the Trust of the Mortgage Loans, if the
retention of the imaged documents in the delivered format will not result in a
reduction in the then current rating of the Notes without regard to the
Policy.
(e) Xxxx Records. The Sponsor hereby confirms to the Owner Trustee and
the Indenture Trustee, on behalf of itself and any other Seller, that each
Seller has caused the portions of the Electronic Ledgers relating to the
Initial Mortgage Loans to be clearly and unambiguously marked, and has made
the appropriate entries in its general accounting records,
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to indicate that the Initial Mortgage Loans have been transferred to the Trust
at the direction of the Depositor. The Master Servicer hereby confirms to the
Owner Trustee and the Indenture Trustee that it has clearly and unambiguously
made appropriate entries in its general accounting records indicating that those
Initial Mortgage Loans constitute part of the Trust and are serviced by it on
behalf of the Trust in accordance with this Agreement.
By the relevant Subsequent Closing Date, the Sponsor shall cause the
portions of the Electronic Ledgers relating to the Additional Home Equity Loans
to be clearly and unambiguously marked, and shall make appropriate entries in
its general accounting records, to indicate that those Additional Home Equity
Loans have been transferred to the Trust at the direction of the Depositor. By
the relevant Subsequent Closing Date, the Master Servicer shall clearly and
unambiguously make appropriate entries in its general accounting records
indicating that those Additional Home Equity Loans constitute part of the Trust
and are serviced by it on behalf of the Trust in accordance with this Agreement.
(f) UCC Filings. The Depositor and the Trust agree (subject to Section
2.01(h)) to effect any actions and execute any documents necessary to perfect
and protect the Trust's, the Indenture Trustee's and the Secured Parties'
interests in each Cut-off Date Asset Balance and Additional Balances and their
proceeds, including filing all necessary Continuation Statements for the UCC1
Financing Statements filed in the State of Delaware (which shall have been filed
by the Closing Date) describing the Cut-off Date Asset Balances and Additional
Balances and naming the Depositor as debtor and the Trust as secured party or
naming the Trust as debtor and the Indenture Trustee as secured party and any
amendments to UCC1 Financing Statements required to reflect a change in the UCC
or in the name or organizational structure of the Depositor or the Trust or the
filing of any additional UCC1 Financing Statements due to the change in the
state of organization of the Depositor or the Trust (within 30 days of any event
necessitating the filing).
(g) Sponsor Rating Downgrade. If either an Event of Servicing Termination
has occurred and not been waived or the long term senior unsecured corporate
debt rating of Countrywide Home Loans, Inc. falls below "BBB" by Standard &
Poor's or "Baa2" by Xxxxx'x, then as promptly as practicable but in any case
within 90 days of the event, the Master Servicer shall, at its expense, either
(x) request that the Indenture Trustee deliver to it the original
Assignment of Mortgage previously delivered to the Indenture Trustee
pursuant to Section 2.01(d) and then record the Assignment of Mortgage in
favor of the Indenture Trustee (which may be a blanket assignment if
permitted by applicable law) in the appropriate real property or other
records,
(y) deliver to the Indenture Trustee an Opinion of Counsel addressed
to the Indenture Trustee and the Credit Enhancer to the effect that
recording is not required to protect the Indenture Trustee's interest in
the related Mortgage Loan or, in case a court should recharacterize the
sale of the Mortgage Loans as a financing, to perfect a first priority
Security Interest in favor of the Indenture Trustee in the related
Mortgage Loan,
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which Opinion of Counsel also shall be reasonably acceptable to each of
the Rating Agencies (as evidenced in writing) and the Credit Enhancer, or
(z) cause the MERS(R) System to indicate (and provide evidence to
the Indenture Trustee that it has done so) that the Mortgage Loans have
been assigned by the Trust to the Indenture Trustee in accordance with
this Agreement for the benefit of the Noteholders and the Credit Enhancer
by including (or deleting, in the case of Mortgage Loans that are
repurchased in accordance with this Agreement) in the MERS computer files
(a) the appropriate code that identifies the Indenture Trustee in the
field for identifying the assignee and (b) the appropriate code that has
been assigned to identify the Notes to the MERS(R) System in the field
"Pool Field" identifying the Notes issued in connection with the Mortgage
Loans.
(h) Sale Treatment. The transfer of the Mortgage Loans is a sale by each
Seller to the Depositor and by the Depositor to the Trust of all of each
Seller's and then all the Depositor's interest in the Mortgage Loans and other
property described above. From the time the Notes are issued until such time as
all or a portion of the Notes are sold to one or more unaffiliated parties, each
Seller will report the transfer of the Mortgage Loans and the related Additional
Balances to the Depositor as a transfer of assets in exchange for beneficial
interests in the form of asset-backed securities and servicing rights. If the
transfer were to be characterized as a transfer for security and not as a sale,
however, then the Depositor hereby grants to the Trust a Security Interest in
all of the Depositor's right, title, and interest in the Mortgage Loans whether
existing now or in the future, all monies due or to become due on the Mortgage
Loans, and all their proceeds; and this Agreement shall constitute a Security
Agreement under applicable law.
Section 2.02 Acceptance by Indenture Trustee.
(a) On the Closing Date, the Custodian shall execute and deliver to the
Depositor, the Master Servicer, and the Sponsor (with a copy to the Credit
Enhancer) the Initial Certification pursuant to the Custodial Agreement. If
Mortgage Files with respect to either Initial Mortgage Loans have been delivered
after the Closing Date or Additional Home Equity Loans have been delivered after
the Subsequent Closing date pursuant to Section 2.01(d), the Custodian shall
execute and deliver to the Depositor, the Master Servicer, and the Sponsor (with
a copy to the Credit Enhancer) a Delay Delivery Certification pursuant to the
Custodial Agreement within the period specified in the Custodial Agreement.
Within 180 days after the Closing Date, Custodian shall deliver to the
Depositor, the Master Servicer, and the Sponsor (with a copy to the Credit
Enhancer) a Final Certification pursuant to the Custodial Agreement. The Sponsor
shall correct any defect noted in the Final Certification within 90 days of its
receipt and in no event later than 270 days after the Closing Date.
(b) Upon the satisfaction of the requirements of Section 2.07, all
interest of the Trust in a Mortgage Loan shall automatically be retransferred no
later than the 270th day after the Closing Date without recourse,
representation, or warranty to the Sponsor and the Asset Balance of the Mortgage
Loan shall be deducted from the Loan Group Balance of the related Loan Group, if
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(1) the Indenture Trustee does not receive the Mortgage File for any
Mortgage Loan as required by Section 2.01(d),
(2) the time to correct any defect in the Mortgage Loan noted on the
Final Certification has expired,
(3) the Trust ever incurs any loss on the Mortgage Loan because any
document in its Mortgage File is defective, or
(4) an Assignment of Mortgage to the Indenture Trustee has not been
recorded in accordance with Section 2.01(g) and the Mortgage Loan is not
registered on the MERS(R) System.
Subject to the prior satisfaction of the requirements of Section 2.07, the
Owner Trustee shall execute any documents of transfer presented by the Sponsor,
without recourse, representation, or warranty, and take any other actions
reasonably requested by the Sponsor to effect the transfer by the Trust of the
Defective Mortgage Loan pursuant to this Section as promptly as practical.
The sole remedy of the Secured Parties, the Transferor, the Owner Trustee,
and the Indenture Trustee against the Sponsor for the transfer of a Defective
Mortgage Loan to the Trust is the Sponsor's obligation to accept a transfer of a
Defective Mortgage Loan and to convey an Eligible Substitute Mortgage Loan or to
make a deposit of any Transfer Deposit Amount into the Collection Account in
accordance with Section 2.07. The foregoing shall not preclude the Credit
Enhancer from pursuing any independent remedies or rights it has against the
Sponsor under the Insurance Agreement, the Indenture, and the Trust Agreement.
Promptly following the transfer of any Defective Mortgage Loan from the
Trust pursuant to this Section or Section 2.07, the Master Servicer shall amend
the Mortgage Loan Schedule, deliver the amended Mortgage Loan Schedule to the
Indenture Trustee, and make appropriate entries in its general account records
to reflect the transfer. Following the retransfer, the Master Servicer shall
appropriately xxxx its records to indicate that it is no longer servicing the
Mortgage Loan on behalf of the Trust. The Sponsor shall appropriately xxxx its
Electronic Ledger and make appropriate entries in its general account records to
reflect the transfer promptly following the transfer.
(c) The Sponsor shall deliver to the Indenture Trustee any documents
required to be held by the Indenture Trustee in accordance with Section 2.01
with respect to any Eligible Substitute Mortgage Loans. The Master Servicer
shall determine the Transfer Deposit Amount in any Collection Period during
which the Sponsor substitutes Eligible Substitute Mortgage Loans and the Sponsor
shall deposit that amount in the Collection Account at the time of substitution.
All amounts received on the Eligible Substitute Mortgage Loans during the
Collection Period in which the circumstances giving rise to their transfer to
the Trust occur shall not be a part of the Trust and shall not be deposited by
the Master Servicer in the Collection Account. All amounts received on a removed
Defective Mortgage Loan during the Collection Period in which the circumstances
giving rise to its transfer to the Trust occur shall be a part of the Trust and
shall be deposited by the Master Servicer in the Collection Account. An Eligible
9
Substitute Mortgage Loan will be subject to the terms of this Agreement in all
respects when transferred to the Trust, and the Sponsor hereby makes the
representations, warranties, and covenants in Section 2.04 with respect to the
Eligible Substitute Mortgage Loan as of the date of substitution.
(d) The Custodian shall retain possession of each Mortgage File on behalf
of the Indenture Trustee in accordance with the Custodial Agreement. The Master
Servicer shall promptly deliver to the Indenture Trustee the originals of any
other documents constituting the Mortgage File coming into its possession on
their execution or receipt. Any documents to be delivered to the Indenture
Trustee under this Agreement may be delivered to the Custodian acting on behalf
of the Indenture Trustee.
Section 2.03 Representations, Warranties, and Covenants Regarding the
Master Servicer.
The Master Servicer represents and warrants to the Indenture Trustee and
the Credit Enhancer that as of the Closing Date:
(1) The Master Servicer is a New York corporation, validly existing
and in good standing under the laws of the State of New York, and has the
corporate power to own its assets and to transact the business in which it
is currently engaged. The Master Servicer is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in
which the character of its business or any properties owned or leased by
it requires such qualification and in which the failure so to qualify
would have a material adverse effect on the business, properties, assets,
or condition (financial or other) of the Master Servicer.
(2) The Master Servicer has the power and authority to make,
execute, deliver, and perform this Agreement and all of the transactions
contemplated under this Agreement, and has taken all necessary corporate
action to authorize the execution, delivery, and performance of this
Agreement. When executed and delivered, this Agreement will constitute a
valid and legally binding obligation of the Master Servicer enforceable in
accordance with its terms.
(3) The Master Servicer is not required to obtain the consent of any
other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau, or
agency in connection with the execution, delivery, performance, validity,
or enforceability of this Agreement, except for consents, licenses,
approvals or authorizations, or registrations or declarations that have
been obtained or filed, as the case may be, before the Closing Date.
(4) The execution, delivery, and performance of this Agreement by
the Master Servicer will not violate any existing law or regulation or any
order or decree of any court applicable to the Master Servicer or the
certificate of incorporation or bylaws of the Master Servicer, or
constitute a material breach of any mortgage, indenture, contract, or
other agreement to which the Master Servicer is a party or by which the
Master Servicer may be bound.
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(5) No litigation or administrative proceeding of or before any
court, tribunal, or governmental body is currently pending, or to the
knowledge of the Master Servicer threatened, against the Master Servicer
or any of its properties or with respect to this Agreement, the Indenture,
or the Notes that in the opinion of the Master Servicer has a reasonable
likelihood of resulting in a material adverse effect on the transactions
contemplated by the Transaction Documents.
(6) If any Mortgage Loan has been registered on the MERS(R) System,
the Master Servicer is a member of MERS in good standing.
The Master Servicer covenants that it will fully furnish, in accordance
with the Fair Credit Reporting Act and its implementing regulations, accurate
and complete information (i.e., favorable and unfavorable) on its credit files
for the related Mortgagor for each Mortgage Loan to Equifax, Experian, and Trans
Union Credit Information Company on a monthly basis.
The representations, warranties, and covenants in this Section shall
survive the transfer of the Mortgage Loans to the Trust. Upon discovery of a
breach of any representation, warranty, or covenant that materially and
adversely affects the interests of the Transferor, the Noteholders, or the
Credit Enhancer, the person discovering the breach shall give prompt notice to
the other parties and to the Credit Enhancer. The Master Servicer shall cure in
all material respects any breach of any representation, warranty, or covenant
within 90 days of becoming aware of it or, if the Mortgage Loan represents a
"qualified mortgage" within the meaning of Section 860(a)(3) of the Code (but
without regard to the rule in Treasury Regulation ss. 1.860G-2(f)(2) that treats
a defective obligation as a qualified mortgage, or any substantially similar
successor provision) and if a Responsible Officer of the Indenture Trustee
consents, any longer period specified in the consent.
Section 2.04 Representations and Warranties Regarding the Mortgage Loans;
Retransfer of Certain Mortgage Loans.
(a) The Sponsor by this reference repeats and incorporates in this
Agreement each representation and warranty made by it (as a Seller) in Section
3.02(a) of the Purchase Agreement (other than Section 3.02(a)(1) and (2)) to the
Indenture Trustee, the Credit Enhancer, and the Trust and, in addition,
represents and warrants to the Indenture Trustee, the Credit Enhancer, and the
Trust that as of the Cut-off Date, unless specifically stated otherwise:
(1) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date with respect to any Additional
Home Equity Loans, or the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, this Agreement constitutes a valid
and legally binding obligation of the Sponsor, enforceable against the
Sponsor in accordance with its terms.
(2) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date with respect to any Additional
Home Equity Loans, or the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, either
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(A) the Purchase Agreement constitutes a valid transfer to the
Depositor of all right, title, and interest of the Sellers in the
applicable Mortgage Loans, all collections received from the
Mortgage Loans after the Cut-off Date (excluding payments due by the
Cut-off Date), all proceeds of the applicable Mortgage Loans, and
any funds from time to time deposited in the Collection Account and
in the Payment Account and all other property specified in Section
2.01(a) or (b), as applicable, and this Agreement constitutes a
valid transfer to the Trust of the foregoing property such that, on
execution of this Agreement, it is owned by the Trust free of all
liens and other encumbrances, and is part of the corpus of the Trust
conveyed to the Trust by the Depositor, and upon payment for the
Additional Balances, the Purchase Agreement and this Agreement will
constitute a valid transfer to the Trust of all right, title, and
interest of the Sellers in the Additional Balances, all monies due
or to become due on them, all proceeds of the Additional Balances,
and all other property specified in Section 2.01(a) relating to the
Additional Balances free of all liens and other encumbrances, or
(B) the Purchase Agreement or this Agreement, as appropriate,
constitutes a Grant of a Security Interest to the Owner Trustee on
behalf of the Trust in the property described in clause (A) above
and the Indenture constitutes a Grant of a Security Interest to the
Indenture Trustee in the Collateral. The Indenture Trustee has a
first priority perfected Security Interest in the Collateral,
subject to the effect of Section 9-315 of the UCC with respect to
collections on the Mortgage Loans that are deposited in the
Collection Account in accordance with the next to last paragraph of
Section 3.02(b), and if this Agreement constitutes the Grant of a
Security Interest in the property described in clause (A) above to
the Trust, the Trust has a first priority perfected Security
Interest in the property, subject to the same limitations. This
Security Interest is enforceable as such against creditors of and
purchasers from the Trust, the Depositor, and each Seller.
(b) If the substance of any representation and warranty in this Section
made to the best of the Sponsor's knowledge or as to which the Sponsor has no
knowledge is inaccurate and the inaccuracy materially and adversely affects the
interest of the Trust, the Noteholders or the Credit Enhancer in the related
Mortgage Loan then, notwithstanding that the Sponsor did not know the substance
of the representation and warranty was inaccurate at the time the representation
or warranty was made, the inaccuracy shall be a breach of the applicable
representation or warranty.
(c) The representations and warranties in this Section shall survive
delivery of the respective Mortgage Files to the Custodian pursuant to the
Custodial Agreement and the termination of the rights and obligations of the
Master Servicer pursuant to Section 5.04 or 6.02. If the Sponsor, the Depositor,
the Master Servicer, the Credit Enhancer, or a Responsible Officer of the
Indenture Trustee discovers a breach of any of the foregoing representations and
warranties, without regard to any limitation concerning the knowledge of the
Sponsor, that
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materially and adversely affects the interests of the Trust, the Indenture
Trustee under the Indenture, the Noteholders, or the Credit Enhancer in the
Mortgage Loan, the party discovering the breach shall give prompt notice to the
other parties and the Credit Enhancer.
(d) The Sponsor shall use all reasonable efforts to cure in all material
respects any breach of any of the foregoing representations and warranties
(other than a breach of the representation and warranty in Section 2.04 by
virtue of the repetition of Section 3.02(a)(5) of the Purchase Agreement) within
90 days of becoming aware of it or, not later than the Business Day before the
Payment Date in the month following the Collection Period in which the cure
period expired (or any later date that the Indenture Trustee and the Credit
Enhancer consent to), all interest of the Trust in the Defective Mortgage Loan
shall, subject to the satisfaction of the requirements of Section 2.07,
automatically be retransferred without recourse, representation, or warranty to
the Sponsor and the Asset Balance of the Mortgage Loan shall be deducted from
the Loan Balance.
The cure for any breach of a representation and warranty relating to the
characteristics of the Mortgage Loans in the related Loan Group in the aggregate
shall be a repurchase of or substitution for only the Mortgage Loans necessary
to cause the characteristics to comply with the related representation and
warranty.
Subject to the prior satisfaction of the requirements of Section 2.07, the
Owner Trustee shall execute any documents of transfer presented by the Sponsor,
without recourse, representation, or warranty, and take any other actions
reasonably requested by the Sponsor to effect the transfer by the Trust of the
Defective Mortgage Loan pursuant to this Section as promptly as practical.
Promptly following the transfer of any Defective Mortgage Loan from the
Trust pursuant to this Section, the Master Servicer shall amend the Mortgage
Loan Schedule, deliver the amended Mortgage Loan Schedule to the Indenture
Trustee, and make appropriate entries in its general account records to reflect
the transfer. Following the retransfer, the Master Servicer shall appropriately
xxxx its records to indicate that it is no longer servicing the Mortgage Loan on
behalf of the Trust. The Sponsor shall appropriately xxxx its Electronic Ledger
and make appropriate entries in its general account records to reflect the
transfer promptly following the transfer.
(e) The sole remedy of the Secured Parties, the Indenture Trustee on
behalf of Secured Parties, and the Owner Trustee against the Sponsor for the
breach of a representation or warranty (other than the representation and
warranty in Section 2.04(a) by virtue of the repetition of Section 3.02(a)(5) of
the Purchase Agreement) is the Sponsor's obligation to accept a transfer of a
Mortgage Loan as to which a breach has occurred and is continuing and to make
any required deposit in the Collection Account or to substitute an Eligible
Substitute Mortgage Loan.
(f) If the representation and warranty in Section 2.04(a) by virtue of the
repetition of Section 3.02(a)(5) of the Purchase Agreement is breached, the
transfer of the affected Mortgage Loans to the Trust shall be void and the
Sponsor shall pay to the Trust the sum of (i)
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the amount of the related Asset Balances, plus accrued interest on each Asset
Balance at the applicable Loan Rate to the date of payment and (ii) the amount
of any loss or expense incurred by the Transferor, the Noteholders, the Credit
Enhancer, or the Trust with respect to the affected Mortgage Loans. The
Indenture Trustee may enforce the Sponsor's obligations under this Section in
its own right or as the owner of the Trust's right to seek enforcement as the
assignee of the Trust's rights under this Agreement pursuant to the Indenture.
(g) A breach of any one of the representations in Sections 3.02(a)(58) to
(71) of the Purchase Agreement will be considered to materially adversely affect
the interests of the Noteholders and the Credit Enhancer.
(h) The Sponsor shall defend and indemnify the Indenture Trustee, the
Owner Trustee, and the Secured Parties against all reasonable costs and
expenses, and all losses, damages, claims, and liabilities, including reasonable
fees and expenses of counsel and the amount of any settlement entered into with
the consent of the Sponsor (this consent not to be unreasonably withheld), that
may be asserted against or incurred by any of them as a result of any
third-party action arising out of any breach of a representation and warranty.
Section 2.05 Covenants of the Depositor.
The Depositor covenants that:
(a) Security Interests. Except for the transfer under this Agreement, the
Depositor will not transfer any Mortgage Loan to any other person, or create or
suffer to exist any Lien on any Mortgage Loan or any interest in one, whether
existing now or in the future; the Depositor will notify the Indenture Trustee
of the existence of any Lien on any Mortgage Loan immediately on its discovery;
and the Depositor will defend the right, title, and interest of the Trust in the
Mortgage Loans, whether existing now or in the future, against all claims of
third parties claiming through the Depositor. Nothing in this Section shall
prohibit the Depositor from suffering to exist on any Mortgage Loan any Liens
for municipal or other local taxes and other governmental charges if the taxes
or governmental charges are not due at the time or if the Depositor is
contesting their validity in good faith by appropriate proceedings and has set
aside on its books adequate reserves with respect to them.
(b) Negative Pledge. The Depositor shall not transfer or grant a Security
Interest in the Transferor Certificates except in accordance with Section 3.10
of the Trust Agreement.
(c) Additional Indebtedness. So long as the Notes are outstanding the
Depositor will not incur any debt other than debt that (i) is non-recourse to
the assets of the Depositor other than the mortgage loans specifically pledged
as security for the debt, (ii) is subordinated in right of payment to the rights
of the Noteholders, or (iii) is assigned a rating by each of the Rating Agencies
that is the same as the then current rating of the Notes.
(d) Downgrading. The Depositor will not engage in any activity that would
result in a downgrading of the Notes without regard to the Policy.
(e) Amendment to Certificate of Incorporation. The Depositor will not
amend its Certificate of Incorporation or state of incorporation without prior
notice to the Rating Agencies
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and the Indenture Trustee, and the consent of the Credit Enhancer (which will
not be unreasonably withheld).
Section 2.06 Transfers of Mortgage Loans at Election of the Holder of the
Class R-1 Certificates.
Subject to the conditions below, the holder of the Class R-1 Certificates
may require the transfer of Mortgage Loans in a Loan Group from the Trust to the
holder of the Class R-1 Certificates as of the close of business on a Payment
Date (the "Transfer Date") in an amount not in excess of the Net Draws relating
to that Loan Group. In connection with any transfer, the related Net Draws shall
be reduced by the aggregate Asset Balances as of the Transfer Date of the
Mortgage Loans transferred. On the fifth Business Day (the "Transfer Notice
Date") before the Transfer Date designated in the notice, the holder of the
Class R-1 Certificates shall give the Owner Trustee, the Indenture Trustee, the
Master Servicer, and the Credit Enhancer a notice of the proposed transfer that
contains a list of the Mortgage Loans to be transferred. These transfers of
Mortgage Loans shall be permitted if the following conditions are satisfied:
(1) No Rapid Amortization Event has occurred,
(2) On the Transfer Date
(A) the Allocated Transferor Interest with respect to the
related Loan Group (after giving effect to the removal of the
Mortgage Loans proposed to be transferred) exceeds
(B) the related Required Transferor Subordinated Amount.
(3) The transfer of any Mortgage Loans from either Loan Group on any
Transfer Date during the Managed Amortization Period shall not, in the
reasonable belief of the holder of the Class R-1 Certificates, 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.
(4) By the Transfer Date, the holder of the Class R-1 Certificates
shall have delivered to the Indenture Trustee a revised Mortgage Loan
Schedule, reflecting the proposed transfer and the Transfer Date, and the
Master Servicer shall have marked the Electronic Ledger to show that the
Mortgage Loans transferred to the holder of the Class R-1 Certificates are
no longer owned by the Trust.
(5) The holder of the Class R-1 Certificates shall represent and
warrant that the Mortgage Loans to be removed from the Trust were selected
randomly.
(6) In connection with each transfer of Mortgage Loans pursuant to
this Section, each Rating Agency and the Credit Enhancer shall have
received by the related Transfer Notice Date notice of the proposed
transfer of Mortgage Loans and, before the Transfer Date, each Rating
Agency shall have notified in writing the holder of the Class R-1
Certificates and the Indenture Trustee, and the Credit Enhancer that the
transfer of Mortgage Loans would not result in a reduction or withdrawal
of its then current rating of the Notes without regard to the Policy.
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(7) The holder of the Class R-1 Certificates shall have delivered to
the Owner Trustee, the Indenture Trustee, and the Credit Enhancer an
Officer's Certificate certifying that the items in subparagraphs (1)
through (6), (8) and (9) 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.
(8) an Opinion of Counsel is furnished to the Indenture Trustee and
the Credit Enhancer that the transfer will not result in a tax on any
REMIC created under the Trust Agreement pursuant to the REMIC Provisions
or cause any REMIC created under the Trust Agreement to fail to qualify as
a REMIC at any time that any Securities are outstanding.
(9) On or after the Stepdown Date, the holder of the Class R-1
Certificates shall pay the purchase price of any transferred Mortgage Loan
allocated to either Allocated Transferor Interest for the benefit of the
Class C Certificates subject to the terms of the Trust Agreement.
Upon receiving the requisite information from the holder of the Class R-1
Certificates, the Master Servicer shall perform in a timely manner those acts
required of it, as specified above. Upon satisfaction of the above conditions,
on the Transfer Date the Indenture Trustee shall effect delivery to the holder
of the Class R-1 Certificates the Mortgage File for each Mortgage Loan being so
transferred, and the Indenture Trustee shall execute and deliver to the holder
of the Class R-1 Certificates any other documents prepared by the holder of the
Class R-1 Certificates reasonably necessary to transfer the Mortgage Loans to
the holder of the Class R-1 Certificates. This transfer of the Trust's interest
in Mortgage Loans shall be without recourse, representation, or warranty by the
Indenture Trustee or the Trust to the holder of the Class R-1 Certificates.
Section 2.07 Retransfers and Transfer Deficiencies.
(a) The Indenture Trustee shall determine if reducing the relevant Loan
Group Balance by the Asset Balance of any retransferred Mortgage Loan pursuant
to Section 2.02(b) or 2.04(d) would cause a Transfer Deficiency. If so, the
Indenture Trustee shall notify the Sponsor of the deficiency, and the Sponsor
shall transfer to the Trust within five Business Days (but only if the transfer
occurs within two years of the Closing Date) Eligible Substitute Mortgage Loans
or deposit into the Collection Account an amount in immediately available funds
equal to the amount of the Transfer Deficiency reduced by the Asset Balance of
any Eligible Substitute Mortgage Loans transferred to the Trust (the "Transfer
Deposit Amount").
(b) The Sponsor shall deliver to the Indenture Trustee any documents
required to be held by the Indenture Trustee in accordance with Section 2.01
with respect to any Eligible Substitute Mortgage Loans.
(c) All amounts received on Eligible Substitute Mortgage Loans during the
Collection Period in which the circumstances giving rise to their transfer to
the Trust occur shall
16
not be a part of the Trust and shall not be deposited by the Master Servicer in
the Collection Account.
All amounts received on a removed Defective Mortgage Loan during the
Collection Period in which the circumstances giving rise to its transfer to the
Trust occur shall be a part of the Trust and shall be deposited by the Master
Servicer in the Collection Account.
(d) An Eligible Substitute Mortgage Loan will be subject to the terms of
this Agreement in all respects when transferred to the Trust, and the Sponsor
hereby makes the representations, warranties, and covenants in Section 2.04 with
respect to the Eligible Substitute Mortgage Loan as of the date of its transfer
to the Trust.
(e) Promptly following the transfer of any Eligible Substitute Mortgage
Loan to the Trust pursuant to this Section, the Master Servicer shall amend the
Mortgage Loan Schedule, deliver the amended Mortgage Loan Schedule to the
Indenture Trustee, and make appropriate entries in its general account records
to reflect the transfer. The Sponsor shall appropriately xxxx its Electronic
Ledger and make appropriate entries in its general account records to reflect
the transfer promptly following the transfer.
Section 2.08 Tax Reporting.
(a) The Administrator pursuant to the Administration Agreement will
prepare and file all tax reports required under this Agreement on behalf of the
Trust, including tax reporting and withholding required by Sections 1445 and
6050J of the Code with respect to foreclosures and abandonments, the tax
reporting required by Section 6050H of the Code with respect to the receipt of
mortgage interest from individuals, and any tax reporting required by Section
6050P of the Code with respect to the cancellation of indebtedness by certain
financial entities, by preparing any tax and information returns required and
delivering them to the Owner Trustee for filing.
(b) The Indenture Trustee will act as agent on behalf of the Trust with
respect to certain tax matters pursuant to Section 9.06 of the Indenture.
(c) If any tax is imposed on "prohibited transactions" of any REMIC as
defined in Section 860F(a)(2) of the Code, on the "net income from foreclosure
property" of a REMIC as defined in section 860G(c) of the Code, on any
contribution to a REMIC after the Startup Day pursuant to Section 860G(d) of the
Code, or any other tax is imposed on any REMIC (including any federal, state, or
local tax), the tax shall be paid by
o the Indenture Trustee, if the tax arises out of a breach by
the Indenture Trustee of any of its obligations described in Section
9.06(b) of the Indenture,
o the Master Servicer, in the case of any minimum tax imposed
on any REMIC pursuant to Sections 23153 and 24874 of the California
Revenue and Taxation Code, or if the tax arises out of a breach by
the Master Servicer or a Seller of any of their obligations under
any Transaction Document,
17
o the Seller, if the tax arises out of the Seller's obligation
to repurchase a Mortgage Loan pursuant to Section 2.02(b) or
2.04(d), or
o in all other cases, or if any liable party fails to honor
its obligations to pay the tax as provided above, the tax will be
paid
First, from amounts otherwise to be distributed on the Class C
Certificates pursuant to the Trust Agreement,
Second, from amounts otherwise to be distributed on the Class R-1
Certificates pursuant to the Trust Agreement, and
Third, from amounts otherwise to be distributed on the Notes as
provided in the Indenture.
Section 2.09 Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Indenture Trustee on behalf
of the Noteholders and the Credit Enhancer as follows:
(1) This Agreement constitutes a valid and legally binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms.
(2) Immediately before the sale and assignment by the Depositor to
the Trust of each Mortgage Loan, the Depositor was the sole beneficial
owner of each Mortgage Loan (insofar as the title was conveyed to it by
the Sellers) subject to no prior lien, claim, participation interest,
mortgage, Security Interest, pledge, charge, or other encumbrance or other
interest of any nature.
(3) As of the Closing Date with respect to the Initial Mortgage
Loans, the relevant Subsequent Closing Date with respect to any Additional
Home Equity Loans, or the applicable date of substitution with respect to
any Eligible Substitute Mortgage Loan, the Depositor has transferred all
right, title, and interest in the Eligible Substitute Mortgage Loan to the
Trust.
(4) The Depositor has not transferred the Mortgage Loans to the
Trust with any intent to hinder, delay, or defraud any of its creditors.
Section 2.10 Substitution and Repurchase Opinions.
Notwithstanding any contrary provision of this Agreement, with respect to
any Mortgage Loan that is not in default or as to which default is not imminent,
no repurchase or substitution pursuant to Sections 2.02, 2.03, 2.04, or 2.06
shall be made unless the party repurchasing or substituting delivers to the
Indenture Trustee an Opinion of Counsel to the effect that the repurchase or
substitution would not result in the imposition of the tax on prohibited
transactions of the Trust or contributions after the Startup Date, as defined in
Sections 860F(a)(2) and 860G(d) of the Code, respectively or cause the any REMIC
created under the Trust Agreement to fail to qualify as a REMIC at any time that
any Notes or Certificates are outstanding. Any Mortgage Loan whose repurchase or
substitution was delayed pursuant to this Section shall be repurchased or
substituted for upon the earlier of
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the occurrence of a default or imminent default with respect to the Mortgage
Loan and satisfaction of the requirements of this Section.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 The Master Servicer.
(a) The Master Servicer shall service and administer the Mortgage
Loans in a manner consistent with the terms of this Agreement and with general
industry practice and shall have full power and authority, acting alone or
through a subservicer,
o to execute and deliver, on behalf of the Secured Parties, the
Trust, and the Indenture Trustee, customary consents or waivers and other
instruments and documents,
o to consent to transfers of any Mortgaged Property and assumptions
of the Mortgage Notes and related Mortgages (but only in the manner
provided in this Agreement),
o to collect any Insurance Proceeds and other Liquidation Proceeds,
and
o to effectuate foreclosure or other conversion of the ownership of
the Mortgaged Property securing any Mortgage Loan.
The Master Servicer shall remain responsible to the parties to this
Agreement and the Credit Enhancer for its obligations under this Agreement. Any
amounts received by any subservicer on a Mortgage Loan shall be considered to
have been received by the Master Servicer whether or not actually received by
it. Without limiting the generality of the foregoing, the Master Servicer may
execute and deliver, on behalf of itself, the Noteholders, and the Indenture
Trustee, or any of them, any instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Properties, in
each case to the extent not inconsistent with this Agreement. Notwithstanding
anything herein to the contrary, the Master Servicer shall not make or permit
any modification, waiver, or amendment of any term of any Mortgage Loan that
would cause any REMIC created under the Trust Agreement to fail to qualify as a
REMIC or result in the imposition of any tax under Section 860F(a) or Section
860G of the Code.
At the request of a Servicing Officer, the Indenture Trustee shall furnish
the Master Servicer with any powers of attorney and other documents appropriate
to enable the Master Servicer to carry out its servicing and administrative
duties under this Agreement.
(b) The Master Servicer in this capacity may consent to the placing of a
lien senior to that of any mortgage on the related Mortgaged Property, if
(1) the new senior lien secures a mortgage loan that refinances an
existing first mortgage loan; and
(2) either
(A) the Loan-to-Value Ratio of the new senior mortgage loan
(without taking into account any closing costs that may be financed
by the new
19
mortgage loan) is equal to or less than the Loan-to-Value Ratio of
the first mortgage loan to be replaced (for purposes of calculating
the Loan-to-Value Ratio, the Valuation of the Mortgaged Property
will be measured by the lesser of (A) the Valuation of the Mortgaged
Property as of the Cut-off Date and (B) the Valuation of the
Mortgaged Property as of the date of the refinancing referenced in
clause (1)) or
(B) the Combined Loan-to-Value Ratio of the new mortgage loan
(without taking into account any closing costs that may be financed
by the new mortgage loan) and the existing Mortgage Loan is equal to
less than 70% (for purposes of calculating the Combined
Loan-to-Value Ratio, the Valuation of the Mortgaged Property will be
measured as the lesser of (A) the Valuation of the Mortgage Loan as
of the Cut-off Date and (B) the Valuation of the Mortgage Loan as of
the date of the refinancing referenced in clause (1)).
The aggregate Asset Balance of all the Mortgage Loans with respect to which
the senior lien may be so modified may not exceed 50% of the Original Note
Principal Balance.
(c) The Master Servicer may also, without approval from the Rating
Agencies or the Credit Enhancer, increase the Credit Limit on any Mortgage Loan
at any time if
(1) a new appraisal is obtained and the Combined Loan-to-Value Ratio
of the Mortgage Loan after giving effect to the increase is less than or
equal to the Combined Loan-to-Value Ratio of the Mortgage Loan as of the
Cut-off Date,
(2) the increases are consistent with the Master Servicer's
underwriting policies, and
(3) either:
(A) the Credit Line Agreement allows the mortgagee to
unilaterally increase the Credit Limit;
(B) the Credit Limit increase is made within 90 days of the
Cut-off Date; or
(C) the Sponsor purchases the Mortgage Loan from the Trust in
the manner described below for rate reduction loans.
(d) In addition, the Master Servicer may increase the Credit Limits on
Mortgage Loans having aggregate Asset Balances of up to an additional 5.0% of
the Original Note Principal Balance at any time, if
(1) the increase does not cause the Combined Loan-to-Value Ratio of
the Mortgage Loans in the related Loan Group to exceed 100% or the
Loan-to-Value of the particular mortgage loan to exceed 100%,
(2) the increase in the Credit Limit of a Mortgage Loan does not
cause the Combined Loan-to-Value Ratio of the Mortgage Loan to exceed
100%,
20
(3) the increase in the Credit Limit of a Mortgage Loan does not
cause the Combined Loan-to-Value Ratio of the Mortgage Loan to increase by
more than 25% (for example, a Combined Loan-to-Value Ratio of 50% can be
increased to 75%, a Combined Loan-to-Value Ratio of 60% can be increased
to 85%, and so forth),
(4) the increase is consistent with the Master Servicer's
underwriting policies, and
(5) either:
(A) the Credit Line Agreement allows the mortgagee to
unilaterally increase the Credit Limit;
(B) the Credit Limit increase is made within 90 days of the
Cut-off Date, or
(C) the Sponsor purchases the Mortgage Loan from the Trust in
the manner described below for rate reduction loans.
(e) Furthermore, the Sponsor, without prior approval from the Rating
Agencies or the Credit Enhancer, may solicit mortgagors for a reduction in Loan
Rates. The Loan Rates of Mortgage Loans in a Loan Group having Asset Balances at
the time of the proposed modification that aggregate over time not more than
5.0% of the related Original Note Principal Balance may be subject to reduction.
If a mortgagor notifies the Sponsor or the Master Servicer that it wants a
reduction in Loan Rate, the Sponsor shall purchase the Mortgage Loan from the
Trust as described below. Effective immediately on the same Business Day on
which the Sponsor delivers the Purchase Price for the relevant Mortgage Loan to
the Master Servicer, all interest of the Trust in the relevant Mortgage Loan
shall automatically be transferred and assigned to the Sponsor and all benefits
and burdens of ownership of the relevant Mortgage Loan, including the right to
accrued interest on it from the date of purchase and the risk of default on the
Mortgage Loan, shall pass to the Sponsor.
The Master Servicer shall promptly deliver to the Indenture Trustee a
certification signed by a Servicing Officer to the effect that all of the
requirements for a purchase of a Mortgage Loan in connection with a request by a
mortgagor for a reduction in Loan Rate have been satisfied with respect to the
relevant Mortgage Loan. The Sponsor shall deliver the Purchase Price for the
relevant Mortgage Loan to the Master Servicer promptly after a mortgagor
notifies the Sponsor or the Master Servicer that it wants a reduction in Loan
Rate, and the Master Servicer shall deposit the Purchase Price for the modified
Mortgage Loan in the Collection Account pursuant to Section 3.02 within one
Business Day after its receipt of the Purchase Price for the modified Mortgage
Loan. Upon receipt by the Indenture Trustee of written notification of the
deposit signed by a Servicing Officer, the Indenture Trustee shall release to
the Sponsor the related Mortgage File and shall execute and deliver any
instruments of transfer or assignment delivered to it for execution and
reasonably acceptable to it, in each case without recourse, representation, or
warranty, necessary to release the Mortgage Loan from the lien of the Indenture
and vest in the Sponsor the Mortgage Loan previously transferred and assigned
pursuant to this provision. The certification and written notification of the
deposit each
21
from a Servicing Officer may be delivered to the Indenture Trustee
electronically, and to the extent the transmission originates on its face from a
Servicing Officer, need not be manually signed.
(f) In addition, the Master Servicer may agree to changes in the
terms of a Mortgage Loan (other than changes referred to above in this
Section) at the request of the mortgagor at any time if the changes
o do not materially and adversely affect the interests of the
Secured Parties or the Holders of the Class C Certificates,
o are consistent with prudent and customary business practice as
evidenced by a certificate signed by a Servicing Officer delivered to the
Indenture Trustee and the Credit Enhancer,
o do not extend the maturity date of the Mortgage Loan beyond the
final maturity date of the Notes of the related Class, and
o the Master Servicer has received an Opinion of Counsel to the
effect that such action will not cause any REMIC created under the Trust
Agreement to fail to qualify as a REMIC or result in the imposition of any
tax under Section 860F(a) or Section 860G of the Code.
(g) In addition, the Master Servicer may solicit mortgagors to change any
other terms of the related Mortgage Loans at any time if the changes (i) do not
materially and adversely affect the interests of the Noteholders, the
Transferor, or the Credit Enhancer (ii) are consistent with prudent and
customary business practice as evidenced by a certificate signed by a Servicing
Officer delivered to the Indenture Trustee and the Credit Enhancer, and (iii)
the Master Servicer has received an Opinion of Counsel to the effect that such
action will not cause any REMIC created under the Trust Agreement to fail to
qualify as a REMIC or result in the imposition of any tax under Section 860F(a)
or Section 860G of the Code. Nothing in this Agreement shall limit the right of
the Master Servicer to solicit mortgagors with respect to new loans (including
mortgage loans) that are not Mortgage Loans.
(h) The Master Servicer may register any Mortgage Loan on the MERS(R)
System, or cause the removal from registration of any Mortgage Loan on the
MERS(R) System, and execute and deliver, on behalf of the Owner Trustee, any
instruments of assignment and other comparable instruments with respect to the
assignment or re-recording of a mortgage in the name of MERS, solely as nominee
for the Owner Trustee and its successors and assigns.
For so long as any Mortgage Loan is registered on the MERS(R) System, the
Master Servicer shall maintain in good standing its membership in MERS and shall
comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Mortgage Loans that are registered with
MERS. If any Mortgage Loans are registered on the MERS(R) System, the Master
Servicer may cause MERS to execute and deliver an assignment of mortgage in
recordable form to transfer any of the Mortgage Loans registered on the MERS(R)
System from MERS to the Owner Trustee. The Master Servicer shall promptly notify
MERS of any transfer of beneficial ownership or release of any Security Interest
in any MOM Loan.
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The relationship of the Master Servicer to the Trust and the Indenture
Trustee under this Agreement is intended by the parties to be that of an
independent contractor and not that of a joint venturer, partner, or agent of
the Trust or the Indenture Trustee.
(i) If the rights and obligations of the Master Servicer are terminated
under this Agreement, any successor to the Master Servicer in its sole
discretion may terminate the existing subservicer arrangements with any
subservicer or assume the terminated Master Servicer's rights under those
subservicing arrangements to the extent permitted by applicable law and the
subservicing agreements.
(j) The Sponsor agrees to indemnify the Trust against any liability for
any prohibited transaction taxes and any related interest, additions, and
penalties imposed on the Trust as a result of any modification of a Mortgage
Loan effected pursuant to this Section, the holding of any Mortgage Loan
modified pursuant to this Section by the Trust, any purchase of a modified
Mortgage Loan by the Sponsor pursuant to this Section, or the removal of any
Mortgage Loan pursuant to Section 2.06 (but such obligation shall not prevent
the Sponsor or any other appropriate person from in good faith contesting any
such tax in appropriate proceedings and shall not prevent the Sponsor from
withholding payment of the tax, if permitted by law, pending the outcome of the
proceedings). The Sponsor shall have no right of reimbursement for any amount
paid pursuant to the foregoing indemnification, except to the extent that the
amount of any tax, interest, and penalties, together with interest thereon, is
refunded to the Trust or the Sponsor.
Section 3.02 Collection of Certain Mortgage Loan Payments; Establishment
of Accounts.
(a) The Master Servicer shall make reasonable efforts to collect all
payments called for under the Mortgage Loans, and shall follow the collection
procedures it follows for mortgage loans in its servicing portfolio comparable
to the Mortgage Loans, to the extent consistent with this Agreement. Consistent
with the foregoing, and without limiting the generality of the foregoing, the
Master Servicer may in its discretion (i) waive any late payment charge or any
assumption fees or other fees that may be collected in the ordinary course of
servicing the Mortgage Loans and (ii) arrange with a mortgagor a schedule for
the payment of interest due and unpaid if the arrangement is consistent with the
Master Servicer's policies with respect to the mortgage loans it owns or
services. Notwithstanding any arrangement, the Mortgage Loans will be included
in the information regarding delinquent Mortgage Loans in the Servicing
Certificate and monthly statement to Noteholders pursuant to Section 7.04 of the
Indenture.
(b) The Master Servicer shall establish and maintain a trust account (the
"Collection Account") with the title specified in the Adoption Annex. The
Collection Account shall be an Eligible Account and will initially be
established by the Master Servicer at Countrywide Bank, N.A., which is an
affiliate of the Master Servicer (subject to the terms of the Letter Agreement,
dated September 23, 2005, by and among the Credit Enhancer, Countrywide
Financial Corporation, Countrywide Bank, N.A., and the Master Servicer). The
Master Servicer or the Sponsor, as the case may be, shall deposit or cause to be
deposited in the Collection
23
Account within two Business Days following its receipt the following payments
and collections received or made by it (without duplication):
(1) all collections on the Mortgage Loans;
(2) the amounts deposited to the Collection Account pursuant to
Section 4.03;
(3) Net Liquidation Proceeds net of any related Foreclosure Profit;
(4) Insurance Proceeds; and
(5) any amounts required to be deposited pursuant to Section 8.01.
No other amounts are to be deposited to the Collection Account, including
amounts representing Foreclosure Profits, fees (including annual fees) or late
charge penalties payable by mortgagors, or amounts received by the Master
Servicer for the accounts of mortgagors for application towards the payment of
taxes, insurance premiums, assessments, excess pay off amounts, and similar
items. The Master Servicer shall remit all Foreclosure Profits to the Sponsor.
The Master Servicer shall retain, from payments of interest on the Mortgage
Loans in each Loan Group in each Collection Period, the related Servicing Fee
for the Collection Period and any unreimbursed optional advance with respect to
the related Loan Group made by the Master Servicer pursuant to Section 4.03.
The Master Servicer may make a net deposit in the Collection Account of
the amounts required by this Section.
Upon delivery of an Officer's Certificate to the Indenture Trustee, the
Master Servicer may withdraw funds from the Collection Account for the following
purposes (to the extent that the payment has not been otherwise retained
pursuant this Section 3.02(b)):
(1) to pay to the Master Servicer its Servicing Fee;
(2) to pay to the Master Servicer net earnings on amounts on deposit
in the Collection Account;
(3) to pay from Principal Collections the amounts provided for the
purchase of Additional Balances pursuant to Section 2.01; and
(4) to pay to the Master Servicer amounts deposited by the Master
Servicer that are not required to be deposited or any amount representing
payments by mortgagors made by checks subsequently returned uncollected.
On the Business Day before each Payment Date to the extent on deposit in
the Collection Account, the Master Servicer shall withdraw from the Collection
Account and remit to the Indenture Trustee, the amount to be applied on that
Payment Date by the Indenture Trustee pursuant to Section 8.03 of the Indenture
with respect to both Loan Groups, and the Indenture Trustee will deposit that
amount in the Payment Account pursuant to the Indenture.
The Indenture Trustee shall hold amounts deposited in the Payment Account
as trustee for the Noteholders, the Transferor, and the Credit Enhancer. In
addition, the Master Servicer
24
shall notify the Indenture Trustee and the Credit Enhancer on each Determination
Date of the amount of collections in the Collection Account to be transferred to
the Payment Account and their allocation to Interest Collections and Principal
Collections for the Mortgage Loans in each Loan Group for the related Payment
Date. Following this notification, the Master Servicer may withdraw from the
Collection Account and retain any amounts that constitute income realized from
the investment of the collections. The Master Servicer will be entitled to
receive, as additional servicing compensation, income earned on the collections
in the Payment Account.
Amounts on deposit in the Collection Account will be invested in Eligible
Investments maturing no later than the day before the next Payment Date at the
direction of the Master Servicer. All income realized from any investment in
Eligible Investments of funds in the Collection Account shall be the property of
the Master Servicer and may be withdrawn from time to time from the Collection
Account. Any losses incurred on these investments that reduce their principal
amount shall be deposited in the Collection Account by the Master Servicer out
of its own funds immediately as realized.
(c) Upon its receipt of the deliveries specified in Section 2.01(b)(1) to
be delivered to it, including the Officer's Certificate specified in Section
2.01(b)(2)(H) confirming satisfaction of the conditions precedent to subsequent
additions in Section 2.01(b)(2) on a Subsequent Closing Date designated by the
Depositor, the Indenture Trustee shall withdraw from the applicable Additional
Loan Account and deliver to the order of the Depositor an amount equal to the
Cut-off Date Asset Balance in the Transfer Document to purchase the Additional
Home Equity Loans covered by the Transfer Document.
Section 3.03 Deposits to Payment Account.
The Master Servicer shall
(1) on the Business Day before each of the first two Payment Dates,
deposit in the Payment Account any shortfall in the amount required to pay
the Note Interest on those Payment Dates for each Class of Notes resulting
solely from the failure of any Mortgage Loans to be fully indexed and
(2) on the Business Day before the first Payment Date, deposit in
the Payment Account
(A) an amount for each Loan Group equal to the excess of the
aggregate amount payable pursuant to Sections 8.03(a)(i) and (ii) of
the Indenture for that Loan Group on the first Payment Date over
what the aggregate Available Interest Collections for that Loan
Group would be if the Minimum Monthly Payments on the related
Mortgage Loans due during the first Collection Period were made on
each Mortgage Loan and
(B) for each Loan Group any amounts representing payments on,
and any collections in respect of, the Mortgage Loans in each Loan
Group received after the Cut-off Date and before the Closing Date
(exclusive of payments of accrued interest due by the Cut-off Date).
25
Section 3.04 Maintenance of Hazard Insurance; Property Protection
Expenses.
The Master Servicer shall cause to be maintained for each Mortgage Loan
hazard insurance naming the Master Servicer or the related subservicer as loss
payee under it providing extended coverage in an amount that is at least equal
to the lesser of (i) the maximum insurable value of the improvements securing
the Mortgage Loan from time to time or (ii) the combined principal balance owing
on the Mortgage Loan and any mortgage loan senior to the Mortgage Loan from time
to time. The Master Servicer shall also maintain on property acquired through
foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value from time to time of the improvements that are a part of the
property or (ii) the combined principal balance owing on the Mortgage Loan and
any mortgage loan senior to the Mortgage Loan at the time of the foreclosure or
deed in lieu of foreclosure plus accrued interest and the good-faith estimate of
the Master Servicer of related Liquidation Expenses to be incurred.
Amounts collected by the Master Servicer under these policies shall be
deposited in the Collection Account to the extent called for by Section 3.02.
The hazard insurance to be maintained for the related Mortgage Loan shall
include flood insurance when the Mortgaged Property is located in a federally
designated flood area. The flood insurance shall be in the amount required under
applicable guidelines of the Federal Flood Emergency Act. No other insurance
need be carried on any Mortgaged Properties pursuant to this Agreement.
Section 3.05 Assumption and Modification Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
mortgagor, the Master Servicer shall exercise its right to accelerate the
maturity of the Mortgage Loan consistent with the then current practice of the
Master Servicer and without regard to the inclusion of the Mortgage Loan in the
Trust. If it elects not to enforce its right to accelerate or if it is prevented
from doing so by applicable law, the Master Servicer (so long as its action
conforms with the underwriting standards generally acceptable in the industry at
the time for new origination) may enter into an assumption and modification
agreement with the person to whom the Mortgaged Property has been or is about to
be conveyed, pursuant to which that person becomes liable under the Credit Line
Agreement and, to the extent permitted by applicable law, the mortgagor remains
liable on it. The Master Servicer shall notify the Indenture Trustee that any
assumption and modification agreement has been completed by delivering to the
Indenture Trustee an Officer's Certificate certifying that the agreement is in
compliance with this Section and by forwarding the original copy of the
assumption and modification agreement to the Indenture Trustee. Any assumption
and modification agreement shall be a part of the related Mortgage File. No
change in the terms of the related Credit Line Agreement may be made by the
Master Servicer in connection with the assumption to the extent that the change
would not be permitted to be made in the original Credit Line Agreement pursuant
to Section 3.01. Any fee collected by the Master Servicer for entering into the
assumption and modification agreement will be retained by the Master Servicer as
additional servicing compensation.
26
Section 3.06 Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans.
The Master Servicer shall foreclose or otherwise comparably convert to
ownership Mortgaged Properties securing defaulted Mortgage Loans when, in the
opinion of the Master Servicer based on normal and usual practices and
procedures, no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.02. Alternatively, the Master Servicer
may forego foreclosure and charge off a defaulted Mortgage Loan if in the Master
Servicer's opinion the net proceeds of foreclosure and liquidation are likely to
produce an amount less than the unpaid principal balance of senior liens on the
Mortgaged Property and statutory liens. If the Master Servicer has actual
knowledge or reasonably believes that any Mortgaged Property is affected by
hazardous or toxic wastes or substances and that the acquisition of the
Mortgaged Property would not be commercially reasonable, then the Master
Servicer will not cause the Trust to acquire title to the Mortgaged Property in
a foreclosure or similar proceeding. In connection with foreclosure or other
conversion (or a decision to forego foreclosure and charge off a defaulted
Mortgage Loan), the Master Servicer shall follow the practices and procedures it
deems appropriate and that are normal and usual in its general mortgage
servicing activities, including advancing funds to correct a default on a
related senior mortgage loan. However, the Master Servicer need not expend its
own funds in connection with any foreclosure or towards the correction of any
default on a related senior mortgage loan or restoration of any property unless
it determines, in its sole discretion, that the expenditure will increase Net
Liquidation Proceeds and the Master Servicer acts in accordance with the
servicing standards in this Agreement.
If title to any Mortgaged Property is acquired in foreclosure or by deed
in lieu of foreclosure, the deed or certificate of sale shall be issued to the
Indenture Trustee, or to its nominee on behalf of Noteholders. The Master
Servicer shall dispose of the Mortgaged Property as soon as practicable in a
manner that maximizes its Liquidation Proceeds.
The Master Servicer, in its sole discretion, may purchase for its own
account from the Trust any Mortgage Loan that is 151 days or more delinquent.
The price for any Mortgage Loan purchased shall be 100% of its Asset Balance
plus accrued interest on it at the applicable Loan Rate from the date through
which interest was last paid by the related mortgagor to the first day of the
month in which the purchase price is to be distributed to the Noteholders. The
purchase price shall be deposited in the Collection Account. The Master Servicer
may only exercise this right on or before the penultimate day of the month in
which the Mortgage Loan became 151 days delinquent. Any delinquent Mortgage Loan
that becomes current but thereafter again becomes 151 days or more delinquent
may be purchased by the Master Servicer pursuant to this Section.
Upon receipt of a certificate from the Master Servicer in the form of
Exhibit C, the Indenture Trustee shall release to the Master Servicer the
related Mortgage File and shall execute and deliver any instruments of transfer
prepared by the Master Servicer, without recourse, necessary to vest in the
purchaser of the Mortgage Loan any Mortgage Loan released to it and the Master
Servicer shall succeed to all the Trust's interest in the Mortgage Loan and all
related security and documents. This assignment shall be an assignment outright
and not for
27
security. The Master Servicer shall then own the Mortgage Loan, and all security
and documents, free of any further obligation to the Trust, the Owner Trustee,
the Indenture Trustee, the Credit Enhancer, the Transferor, or the Noteholders
with respect to it. The certification by the Master Servicer may be delivered to
the Indenture Trustee electronically, and if it is, its form may differ from
Exhibit C so long as it contains the information required by Exhibit C (that is,
the relevant loan number, at least one of the five reasons for requesting file
as found in Exhibit C, and the acknowledgment that the Mortgage File will be
held in accordance with this Agreement and will promptly be returned to the
Indenture Trustee when the need for it by the Master Servicer no longer exists
unless the Mortgage Loan has been liquidated or retransferred), and to the
extent the transmission originates on its face from a Servicing Officer, need
not be manually signed.
If the Trust acquires any Mortgaged Property in connection with a default
or imminent default on a Mortgage Loan, the Master Servicer shall dispose of the
Mortgaged Property as soon as practicable in a manner that maximizes the
liquidation proceeds, but in no event later than three years after its
acquisition by the Trust or, at the expense of the Trust, the Master Servicer
shall request, more than 60 days before the day on which the three-year period
would otherwise expire, an extension of the three-year grace period. If the
Indenture Trustee is supplied with an Opinion of Counsel to the effect that the
Trust's holding the Mortgaged Property after the three-year period will not
result in the imposition of taxes on prohibited transactions of the Trust as
defined in section 860F of the Code or cause any REMIC created under the Trust
Agreement to fail to qualify as a REMIC at any time that any Notes or
Certificates are outstanding, and the Trust may continue to hold the Mortgaged
Property (subject to any conditions in the Opinion of Counsel) after the
expiration of the three-year period. Notwithstanding any other provision of this
Agreement, no Mortgaged Property acquired by the Trust shall be rented (or
allowed to continue to be rented) or otherwise used for the production of income
by or on behalf of the Trust in such a manner or pursuant to any terms that
would cause the Mortgaged Property to fail to qualify as foreclosure property
within the meaning of section 860G(a)(8) of the Code or subject the Trust to the
imposition of any federal, state, or local income taxes on the income earned
from the Mortgaged Property under section 860G(c) of the Code or otherwise,
unless the Master Servicer has agreed to indemnify and hold harmless the Trust
with respect to the imposition of any such taxes.
If a default occurs on a Mortgage Loan one or more of whose obligors is
not a United States Person, as defined in Section 7701(a)(30) of the Code, in
connection with any foreclosure of the Mortgage Loan (including the acquisition
of a deed in lieu of foreclosure), the Master Servicer will cause compliance
with the provisions of Treasury Regulation Section 1.1445-2(d)(3) (or any
successor) necessary to assure that no withholding tax obligation arises with
respect to the proceeds of the foreclosure except to the extent that proceeds of
the foreclosure are required to be remitted to the obligors on the Mortgage
Loan.
Section 3.07 Indenture Trustee to Cooperate.
By each Payment Date, the Master Servicer will notify the Indenture
Trustee whenever the Asset Balance of any Mortgage Loan has been paid in full
during the preceding Collection Period. A Servicing Officer shall certify that
the Mortgage Loan has been paid in full and that
28
all amounts received in connection with the payment that are required to be
deposited in the Collection Account pursuant to Section 3.02 have been so
deposited or credited. Upon payment in full pursuant to Section 3.01, the Master
Servicer is authorized to execute an instrument of satisfaction regarding the
related mortgage, which instrument of satisfaction shall be recorded by the
Master Servicer if required by applicable law and be delivered to the person
entitled to it.
If the mortgage has been registered on the MERS(R) System, the Master
Servicer shall cause the removal of the mortgage from registration on the
MERS(R) System and execute and deliver, on behalf of the Indenture Trustee and
the Noteholders, any instruments of satisfaction or cancellation or of partial
or full release. No expenses incurred in connection with the instrument of
satisfaction or transfer shall be reimbursed from amounts deposited in the
Collection Account or the Payment Account.
As appropriate for the servicing or foreclosure of any Mortgage Loan, or
in connection with the payment in full of the Asset Balance of any Mortgage
Loan, upon request of the Master Servicer and delivery to the Indenture Trustee
of a Request for Release substantially in the form of Exhibit C signed by a
Servicing Officer, the Indenture Trustee shall release the related Mortgage File
to the Master Servicer and the Indenture Trustee shall execute any documents
provided by the Master Servicer necessary to the prosecution of any proceedings
or the taking of other servicing actions. The Request for Release by a Servicing
Officer may be delivered to the Indenture Trustee electronically, and if it is,
its form may differ from Exhibit C so long as it contains the information
required by Exhibit C (that is, the relevant loan number, at least one of the
five reasons for requesting file as found in Exhibit C, and the acknowledgment
that the Mortgage File will be held in accordance with this Agreement and will
promptly be returned to the Indenture Trustee when the need for it by the Master
Servicer no longer exists unless the Mortgage Loan has been liquidated or
retransferred), and to the extent the transmission originates on its face from a
Servicing Officer, need not be manually signed. The Master Servicer shall return
the Mortgage File to the Indenture Trustee when the need for it by the Master
Servicer no longer exists, unless the Mortgage Loan is liquidated, in which
case, upon receipt of a certificate of a Servicing Officer similar to that
specified above, the Request for Release shall be released by the Indenture
Trustee to the Master Servicer.
To facilitate the foreclosure of the mortgage securing any Mortgage Loan
that is in default following recordation of the assignments of mortgage in
accordance with this Agreement, if so requested by the Master Servicer, the
Indenture Trustee shall execute an appropriate assignment in the form provided
to the Indenture Trustee by the Master Servicer to assign the Mortgage Loan for
the purpose of collection to the Master Servicer or a subservicer. The
assignment shall unambiguously indicate that the assignment is for the purpose
of collection only. The Master Servicer will then bring all required actions in
its own name and otherwise enforce the terms of the Mortgage Loan and deposit
the Net Liquidation Proceeds, exclusive of Foreclosure Profits, in the
Collection Account. If all delinquent payments due under the Mortgage Loan are
paid by the mortgagor and any other defaults are cured, then the Master Servicer
shall promptly reassign the Mortgage Loan to the Indenture Trustee and return
the related Mortgage File to the place where it was being maintained.
29
Section 3.08 Servicing Compensation; Payment of Certain Expenses by Master
Servicer.
The Master Servicer may retain the Servicing Fee pursuant to Section 3.02
as compensation for its services in servicing the Mortgage Loans. Moreover,
additional servicing compensation in the form of late payment charges or other
receipts not required to be deposited in the Collection Account (other than
Foreclosure Profits) shall be retained by the Master Servicer. The Master
Servicer must pay all expenses incurred by it in connection with its activities
under this Agreement (including payment of all other fees and expenses not
expressly stated under this Agreement to be for the account of another person)
and shall not be entitled to reimbursement under this Agreement except as
specifically provided in this Agreement. Liquidation Expenses are reimbursable
to the Master Servicer
First, from related Liquidation Proceeds and
Second, from the Payment Account from funds attributable to the related
Loan Group pursuant to Section 8.03(a)(x) of the Indenture.
Section 3.09 Annual Statement as to Compliance.
(a) The Master Servicer will deliver to the Indenture Trustee, the
Credit Enhancer, and the Rating Agencies, by the date in each year specified in
the Adoption Annex, beginning on the date specified in the Adoption Annex, an
Officer's Certificate stating that (i) a review of the activities of the Master
Servicer during the preceding fiscal year (or the applicable shorter period for
the first report) and of its performance under this Agreement has been made
under the officer's supervision and (ii) to the best of the officer's knowledge,
based on the review, the Master Servicer has fulfilled all of its obligations
under this Agreement in all material respects throughout the fiscal year, or, if
there has been a default in the fulfillment of those obligations in any material
respect, specifying each default known to the officer and its nature and status.
(b) Within five Business Days after obtaining knowledge of it, the Master
Servicer shall notify the Indenture Trustee, the Credit Enhancer, and each of
the Rating Agencies of any event that with the giving of notice or the lapse of
time would become an Event of Servicing Termination by delivering an Officer's
Certificate describing the event.
(c) The Master Servicer shall cause each subservicer to deliver to the
Depositor, the Credite Enhancer and the Indenture Trustee on or before March 15
of each year, beginning with its 2007 fiscal year, an Officer's Certificate
stating, as to the signing officer, that a review of the activities of the
subservicer during the preceding year and of the performance of the subservicer
under the applicable subservicing agreement or primary servicing agreement has
been made under the signing officer's supervision and to the best of the signing
officer's knowledge, based on such review, the subservicer has fulfilled all its
obligations under the applicable subservicing agreement or primary servicing
agreement in all material respects throughout its fiscal year, or, if there has
been a failure to fulfill any of its obligations in any material respect,
specifying each failure known to the signing officer and its nature and status.
(d) Copies of the statement shall be provided by the Indenture Trustee to
any Noteholder or Note Owner on request at the Master Servicer's expense.
30
Section 3.10 Access to Certain Documentation and Information Regarding the
Mortgage Loans.
(a) The Master Servicer shall provide to the Indenture Trustee, the Credit
Enhancer, any Noteholders or Note Owners that are federally insured savings and
loan associations, the Office of Thrift Supervision, successor to the Federal
Home Loan Bank Board, the FDIC, and the supervisory agents and examiners of the
Office of Thrift Supervision access to the documentation regarding the Mortgage
Loans required by applicable regulations of the Office of Thrift Supervision and
the FDIC (acting as operator of the Savings Association Insurance Fund or the
Bank Insurance Fund). The Master Servicer will provide access without charge but
only after reasonable notice and during normal business hours at the offices of
the Master Servicer. Nothing in this Section shall derogate from the obligation
of the Master Servicer to observe any applicable law prohibiting disclosure of
information regarding the mortgagors and the failure of the Master Servicer to
provide access as provided in this Section as a result of this obligation shall
not constitute a breach of this Section.
(b) The Master Servicer shall supply the information needed to make
required payments and to furnish required reports to Noteholders and to make any
claim under the Policy, in the form the Indenture Trustee reasonably requests,
to the Indenture Trustee and any Paying Agent by the start of the Determination
Date preceding the related Payment Date.
Section 3.11 Maintenance of Certain Servicing Insurance Policies.
The Master Servicer shall during the term of its service as master
servicer maintain in force (i) policies of insurance covering errors and
omissions in the performance of its obligations as master servicer under this
Agreement and (ii) a fidelity bond covering its officers, employees, or agents.
Each policy and bond together shall comply with the requirements from time to
time of Xxxxxx Xxx for persons performing servicing for mortgage loans purchased
by Xxxxxx Mae.
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01 Servicing Certificate.
Not later than each Determination Date, the Master Servicer shall deliver
(a) to the Indenture Trustee, the data necessary to prepare the statement for
Noteholders required to be prepared pursuant to Section 4.04 and (b) to the
Indenture Trustee, the Owner Trustee, the Sponsor, the Depositor, the Paying
Agent, the Credit Enhancer, and each Rating Agency a Servicing Certificate (in
written form or the form of computer readable media or such other form as may be
agreed to by the Indenture Trustee and the Master Servicer), together with an
Officer's Certificate to the effect that the Servicing Certificate is correct in
all material respects, stating the related Collection Period, Payment Date, the
series number of the Notes, the date of this Agreement, and
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(1) the aggregate amount of collections received on the Mortgage
Loans in each Loan Group by the Determination Date for the related
Collection Period;
(2) the aggregate amount of (a) Interest Collections for each Loan
Group for the related Collection Period and (b) Principal Collections for
each Loan Group for the related Collection Period;
(3) any accrued Servicing Fees for the Mortgage Loans in each Loan
Group for previous Collection Periods and the Servicing Fee for the
related Collection Period;
(4) the Liquidation Loss Amount for each Loan Group for the related
Collection Period;
(5) the aggregate Asset Balance of the Mortgage Loans in each Loan
Group as of the end of the preceding Collection Period and as of the end
of the second preceding Collection Period;
(6) the Credit Enhancement Draw Amount for each Class of Notes for
the related Payment Date;
(7) the amount to be distributed to the Credit Enhancer pursuant to
Section 8.03(a)(v), Section 8.03(a)(ix), and Section 8.03(a)(xi) of the
Indenture, stated separately;
(8) the Guaranteed Principal Payment Amount for each Class of Notes
for the Payment Date;
(9) the Credit Enhancement Draw Amount for each Class of Notes for
the related Payment Date;
(10) the aggregate amount of Additional Balances created on the
Mortgage Loans in each Loan Group during the previous Collection Period;
(11) for each Loan Group, the number and aggregate Asset Balances of
Mortgage Loans (x) as to which the Minimum Monthly Payment is delinquent
for 30-59 days, 60-89 days, and 90 or more days, respectively and (y) that
have become REO, in each case as of the end of the preceding Collection
Period;
(12) the Weighted Average Gross Loan Rate for the Mortgage Loans in
each Loan Group;
(13) the amount of any optional advances pursuant to Section 4.03 by
the Master Servicer on the Mortgage Loans in each Loan Group remaining
unpaid at the end of the Collection Period preceding the related
Collection Period;
(14) the amount of any optional advances pursuant to Section 4.03 by
the Master Servicer on the Mortgage Loans in each Loan Group made during
the related Collection Period and included in the payment on the Payment
Date;
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(15) the aggregate amount of optional advances pursuant to Section
4.03 by the Master Servicer on the Mortgage Loans in each Loan Group that
will remain outstanding as of the close of business on the Payment Date;
(16) the number and principal balances of any Mortgage Loans
transferred from each Loan Group to the Transferor pursuant to Section
2.06;
(17) with respect to the Collection Account during the Collection
Period related to the Payment Date:
(A) its balance at the beginning of the Collection Period;
(B) deposits of the aggregate Transfer Deposit amount for
retransferred Mortgage Loans pursuant to Section 2.06;
(C) deposits of the aggregate Purchase Price for delinquent
Mortgage Loans purchased by the Sponsor pursuant to
Section 3.06;
(D) deposits of the aggregate Purchase Price made by the
Sponsor in connection with modification of Mortgage Loans
pursuant to Section 3.01;
(E) deposits by the Master Servicer to account for losses
accrued on Eligible Investments;
(F) income accrued on Eligible Investments;
(G) deposits of the termination purchase price in connection
with termination pursuant to Section 8.01;
(H) other deposits;
(I) withdrawals of investment income on Eligible Investments;
(J) withdrawals for the purchase of Additional Balances;
(K) transfers to the Payment Account;
(L) other withdrawals; and
(M) its balance at the end of the Collection Period;
(18) with respect to the first and second Payment Dates, deposits by
the Master Servicer with respect to each class of Notes to account for
shortfalls in interest collections resulting from the failure of the
Mortgage Loans to be fully indexed pursuant to Section 3.03;
(19) with respect to the first Payment Date, deposits by the Master
Servicer with respect to each class of Notes to account for shortfalls in
interest collections resulting from the prefunding mechanism and the
longer first Interest Period, pursuant to Section 3.03;
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(20) with respect to the first Payment Date, the amount of
collections on the Mortgage Loans in each Loan Group for the period
between the initial Cut-off Date and the Closing Date, specifying the
interest and principal portions thereof;
(21) Liquidation Expenses and indemnification payments paid to the
Master Servicer for the related Collection Period with respect to each
Loan Group;
(22) Liquidation Expenses and indemnification payments payable to
the Master Servicer on the Payment Date from Available Interest
Collections pursuant to Section 8.03(a)(x) of the Indenture;
(23) the weighted average remaining term of the Mortgage Loans in
each Loan Group;
(24) in the Servicing Certificates for the first and second Payment
Dates, the number and Cut-off Date Asset Balance of Mortgage Loans for
each Loan Group for which the Mortgage Loan File was not delivered to the
Custodian acting on behalf Indenture Trustee within 30 days of the Closing
Date;
(25) the number and aggregate Asset Balances of Mortgage Loans in
each Loan Group as to which the Minimum Monthly Payment is delinquent for
180 or more days;
(26) the number and aggregate Asset Balances of Mortgage Loans in
each Loan Group that are in foreclosure;
(27) the number and aggregate Asset Balances of Mortgage Loans in
each Loan Group for which the Master Servicer has received a written
notice of the filing of bankruptcy or insolvency proceedings with respect
to the mortgagor;
(28) the sum of the Asset Balances for the three largest outstanding
Mortgage Loans in each Loan Group; and
(29) for each Loan Group, the Required Transferor Subordinated
Amount, the Spread Rate, the Excess Spread Percentage, the Delinquency
Rate and the Loss Percentage.
The Indenture Trustee and the Owner Trustee shall conclusively rely on the
information in a Servicing Certificate for purposes of making distributions
pursuant to Section 8.03 of the Indenture or distributions on the Transferor
Certificates, shall have no duty to inquire into this information, and shall
have no liability in so relying. The format and content of the Servicing
Certificate may be modified by the mutual agreement of the Master Servicer, the
Indenture Trustee, and the Credit Enhancer. The Master Servicer shall give
notice of any changes to the Rating Agencies.
Section 4.02 Acknowledgement and Cooperation.
The Depositor, the Master Servicer, and the Indenture Trustee acknowledge
that without the need for any further action on the part of the Credit Enhancer,
the Depositor, the Master Servicer, the Indenture Trustee, or the Note Registrar
(a) to the extent the Credit
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Enhancer makes payments, directly or indirectly, on account of principal of or
interest or other amounts on any Notes to the Holders of the Notes, the Credit
Enhancer will be fully subrogated to the rights of these Holders to receive the
principal and interest from the Trust and (b) the Credit Enhancer shall be paid
the principal and interest or other amounts but only from the sources and in the
manner provided in this Agreement for the payment of the principal and interest
or other amounts. The Indenture Trustee and the Master Servicer shall cooperate
in all respects at the Issuer's expense with any reasonable request by the
Credit Enhancer for action to preserve or enforce the Credit Enhancer's rights
or interests under this Agreement and the Indenture without limiting the rights
or affecting the interests of the Holders as otherwise stated in this Agreement
and the Indenture.
Section 4.03 Optional Advances of the Master Servicer.
The Master Servicer, in its sole discretion, may advance the interest
component of any delinquent Minimum Monthly Payment (or any portion of it) by
depositing the amount into the Collection Account by the related Determination
Date.
Section 4.04 Statements to Noteholders.
Pursuant to Section 4.01, the Master Servicer shall deliver to the
Indenture Trustee the data necessary to prepare a statement (the "Monthly
Statement") for each Payment Date with the information in Exhibit D. Such
statement shall be based solely on the information provided to the Indenture
Trustee by the Master Servicer pursuant to the preceding sentence upon which
information the Indenture Trustee may conclusively rely.
If the Monthly Statement is not accessible to any of the Noteholders, the
Master Servicer, the Credit Enhancer, or either Rating Agency on the Indenture
Trustee's internet website, the Indenture Trustee shall forward a hard copy of
it to each Noteholder, the Master Servicer, the Credit Enhancer, and each Rating
Agency immediately after the Indenture Trustee becomes aware that the Monthly
Statement is not accessible to any of them via the Indenture Trustee's internet
website. The address of the Indenture Trustee's internet website where the
Monthly Statement will be accessible is xxxxx://xxx.xxxxxxxx.xxx/xxx. Assistance
in using the Indenture Trustee's internet website may be obtained by calling the
Indenture Trustee's customer service desk at (000) 000-0000. The Indenture
Trustee shall notify each Noteholder, the Credit Enhancer, the Master Servicer,
and each Rating Agency in writing of any change in the address or means of
access to the internet website where the Monthly Statement is accessible.
Within 60 days after the end of each year, the Master Servicer shall
prepare and forward to the Indenture Trustee the information in clauses (5),
(6), (7) and (8) of the Monthly Statement aggregated for the year. This
requirement of the Master Servicer shall be satisfied if substantially
comparable information is provided by the Master Servicer or a Paying Agent
pursuant to any requirements of the Code.
The Indenture Trustee shall prepare (in a manner consistent with the
treatment of the Notes as indebtedness of the Transferor, or as may be otherwise
required by Section 3.14) Internal Revenue Service Form 1099 (or any successor
form) and any other tax forms required
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to be filed or furnished to Noteholders for payments by the Indenture Trustee
(or the Paying Agent) on the Notes and shall file and distribute such forms as
required by law.
ARTICLE V
THE MASTER SERVICER, THE SPONSOR, AND THE DEPOSITOR
Section 5.01 Liability of the Sponsor, the Master Servicer, and the
Depositor.
The Sponsor, the Depositor, and the Master Servicer shall be liable only
for their express agreements under this Agreement.
Section 5.02 Merger or Consolidation of, or Assumption of the Obligations
of, the Master Servicer or the Depositor.
Any corporation into which the Master Servicer or the Depositor may be
merged or consolidated, or any corporation resulting from any merger,
conversion, or consolidation to which the Master Servicer or the Depositor is a
party, or any corporation succeeding to the business of the Master Servicer or
the Depositor, shall be the successor of the Master Servicer or the Depositor,
as the case may be, under this Agreement, without the execution or filing of any
paper or any further act on the part of any of the parties to this Agreement,
notwithstanding anything in this Agreement to the contrary.
As a condition to the effectiveness of any merger or consolidation, at
least 15 days before the effective date of any merger or consolidation of the
Master Servicer, the Master Servicer shall provide written notice to the
Depositor of any successor pursuant to this Section and in writing and in form
and substance reasonably satisfactory to the Depositor, all information
reasonably requested by the Depositor to comply with its reporting obligation
under Item 6.02 of Form 8-K with respect to a replacement Master Servicer.
Section 5.03 Limitation on Liability of the Master Servicer and Others.
Neither the Master Servicer nor any of its directors, officers, employees,
or agents is liable to the Trust, the Owner Trustee, the Transferor, or the
Noteholders for the Master Servicer's taking any action or refraining from
taking any action in good faith pursuant to this Agreement, or for errors in
judgment. This provision shall not protect the Master Servicer or any of its
directors, officers, employees, or agents against any liability that would
otherwise be imposed for misfeasance, bad faith, or gross negligence in the
performance of the duties of the Master Servicer or for reckless disregard of
the obligations of the Master Servicer. The Master Servicer and any of its
directors, officers, employees, or agents may rely in good faith on any document
of any kind prima facie properly executed and submitted by any person about
anything arising under this Agreement.
The Master Servicer and each of its directors, officers, employees, and
agents shall be indemnified by the Trust (but only from funds available from the
applicable Loan Group) and held harmless against any loss, liability, or expense
incurred in connection with any legal action relating to this Agreement, the
Transferor Certificates, or the Notes, other than any loss, liability, or
expense related to any specific Mortgage Loan that is otherwise not reimbursable
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pursuant to this Agreement and any loss, liability, or expense incurred due to
its willful misfeasance, bad faith, or gross negligence in the performance of
duties under this Agreement or due to its reckless disregard of its obligations
under this Agreement.
The Master Servicer need not appear in, prosecute, or defend any legal
action that is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement, and that in its opinion may involve it in any
expense or liability. The Master Servicer may in its sole discretion undertake
any action that it deems appropriate with respect to this Agreement and the
interests of the Noteholders. If so, the reasonable legal expenses and costs of
the action and any resulting liability shall be expenses, costs, and liabilities
of the Trust, and the Master Servicer shall only be entitled to be reimbursed
pursuant to Section 8.03(a)(x) of the Indenture (but only from funds available
from the applicable Loan Group). The Master Servicer's right to indemnity or
reimbursement pursuant to this Section shall survive any resignation or
termination of the Master Servicer pursuant to Section 5.04 or 6.01 with respect
to any losses, expenses, costs, or liabilities arising before its resignation or
termination (or arising from events that occurred before its resignation or
termination).
Section 5.04 Master Servicer Not to Resign.
Subject to Section 5.02, the Master Servicer shall not resign as Master
Servicer under this Agreement except
(1) if the performance of its obligations under this Agreement are
no longer permissible under applicable law or due to applicable law are in
material conflict with any other activities carried on by it or its
subsidiaries or Affiliates that are of a type and nature carried on by the
Master Servicer or its subsidiaries or Affiliates at the date of this
Agreement or
(2) if
(a) the Master Servicer has proposed a successor Master
Servicer to the Indenture Trustee and the proposed successor Master
Servicer is reasonably acceptable to the Indenture Trustee;
(b) each Rating Agency has delivered a letter to the Indenture
Trustee before the appointment of the successor Master Servicer
stating that the proposed appointment of the successor Master
Servicer as Master Servicer under this Agreement will not result in
the reduction or withdrawal of the then current rating of the Notes
without regard to the Policy; and
(c) the proposed successor Master Servicer is reasonably
acceptable to the Credit Enhancer in its sole discretion, as
evidenced by a letter to the Indenture Trustee.
No resignation by the Master Servicer shall become effective unless the
Master Servicer has notified the Depositor at least 15 days before the effective
date of the resignation of the successor pursuant to this Section and has
provided all information reasonably requested by the Depositor to comply with
its reporting obligation under Item 6.02 of Form 8-K with respect to
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the resignation of the Master Servicer in form and substance reasonably
satisfactory to the Depositor.
No resignation by the Master Servicer shall become effective until the
Indenture Trustee or successor Master Servicer designated by the Master Servicer
has assumed the Master Servicer's obligations under this Agreement or the
Indenture Trustee has designated a successor Master Servicer in accordance with
Section 6.02. Any resignation shall not relieve the Master Servicer of
responsibility for any of the obligations specified in Sections 6.01 and 6.02 as
obligations that survive the resignation or termination of the Master Servicer.
Any determination permitting the resignation of the Master Servicer pursuant to
clause (1) above shall be evidenced by an Opinion of Counsel to that effect
delivered to the Indenture Trustee and the Credit Enhancer. The Master Servicer
shall have no claim (whether by subrogation or otherwise) or other action
against the Transferor, any Noteholder, or the Credit Enhancer for any amounts
paid by the Master Servicer pursuant to any provision of this Agreement.
Section 5.05 Delegation of Duties.
In the ordinary course of business, the Master Servicer may delegate any
of its duties under this Agreement at any time to any person who agrees to act
in accordance with standards comparable to those with which the Master Servicer
complies pursuant to Section 3.01, including any of its Affiliates or any
subservicer referred to in Section 3.01. This delegation shall not relieve the
Master Servicer of its obligations under this Agreement and shall not constitute
a resignation within the meaning of Section 5.04.
Section 5.06 Indemnification by the Master Servicer.
The Master Servicer shall indemnify the Trust, the Owner Trustee, and the
Indenture Trustee against any loss, liability, expense, damage, or injury
suffered or sustained due to the Master Servicer's actions or omissions in
servicing or administering the Mortgage Loans that are not in accordance with
this Agreement, including any judgment, award, settlement, reasonable attorneys'
fees, and other costs or expenses incurred in connection with the defense of any
actual or threatened action, proceeding, or claim. This indemnification is not
payable from the assets of the Trust. This indemnity shall run directly to and
be enforceable by an injured party subject to any applicable limitations.
The Indenture Trustee and any director, officer, employee, or agent of the
Indenture Trustee shall be indemnified by the Master Servicer and held harmless
against any loss, liability or expense incurred in connection with any legal
action relating to this Agreement, the Indenture, the Custodial Agreement, the
Administration Agreement, the Notes, or the Transferor Certificates, or in
connection with the performance of any of the Indenture Trustee's duties
thereunder, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of any of the
Indenture Trustee's duties under this Agreement, the Indenture, or the Custodial
Agreement or by reason of reckless disregard of the Indenture Trustee's
obligations and duties under this Agreement.
The indemnity provisions of this Section shall survive the termination of
this Agreement or the resignation or removal of the Indenture Trustee under the
Indenture.
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Section 5.07 Credit Enhancer's Rights Regarding Actions, Proceedings, or
Investigations.
Until the Insured Notes have been paid in full, all amounts owed to the
Credit Enhancer have been paid in full, the Insurance Agreement has terminated,
and the Policy has been returned to the Credit Enhancer for cancellation,
notwithstanding anything contained in this Agreement or in the other Transaction
Documents to the contrary, the Credit Enhancer shall have the right to
participate in, to direct the enforcement or defense of, and, at the Credit
Enhancer's sole option, to institute or assume the defense of, any action,
proceeding, or investigation (other than foreclosure proceedings involving the
Mortgage Loans and other actions constituting ordinary servicing activities)
that could adversely affect the Collateral, the Issuer, or the rights or
obligations of the Credit Enhancer under the Policy or the Transaction
Documents, including any insolvency or bankruptcy proceeding in respect of the
Master Servicer, the Sponsor, the Depositor, the Issuer, or any affiliate of any
of them. Following notice to the Owner Trustee and the Indenture Trustee, the
Credit Enhancer shall have exclusive right to determine, in its sole discretion,
the actions necessary to preserve and protect the Collateral and the Issuer. All
costs and expenses of the Credit Enhancer in connection with such action,
proceeding, or investigation, including any judgment or settlement entered into
affecting the Credit Enhancer or the Credit Enhancer's interests, shall be
included in reimbursement amount owed to the Credit Enhancer under Section
8.03(a)(ix) and Section 8.03(a)(xi) of the Indenture.
ARTICLE VI
SERVICING TERMINATION
Section 6.01 Events of Servicing Termination.
If any one of the following events ("Events of Servicing Termination")
shall occur and be continuing:
(1) any failure by the Master Servicer to deposit in the Collection
Account any deposit required to be made under this Agreement or to remit
to the Indenture Trustee amounts required to be deposited to the Payment
Account that continues unremedied either beyond the relevant Payment Date
or for five Business Days after the date when notice of the failure has
been given to the Master Servicer by the Indenture Trustee or to the
Master Servicer and the Indenture Trustee by the Credit Enhancer or
Holders of Notes representing not less than 25% of the Outstanding Amount
of all Classes of Notes; or
(2) failure by the Master Servicer duly to observe or perform in any
material respect any other covenants or agreements of the Master Servicer
in the Notes or in this Agreement (except with respect to a failure
related to a Limited Exchange Act Reporting Obligation) that materially
and adversely affects the interests of the Noteholders or the Credit
Enhancer and continues unremedied for 60 days after the date
39
on which notice of the failure, requiring it to be remedied, and stating
that the notice is a "Notice of Default" under this Agreement, has been
given to the Master Servicer by the Indenture Trustee or to the Master
Servicer and the Indenture Trustee by the Credit Enhancer or the Holders
of Notes representing not less than 25% of the Outstanding Amount of all
Classes of Notes; or
(3) an Insolvency Event occurs with respect to the Master Servicer;
then, until the Event of Servicing Termination has been remedied by the Master
Servicer, either the Indenture Trustee (with the consent of the Credit
Enhancer), the Credit Enhancer, or the Holders of Notes representing not less
than 51% of the Outstanding Amount of all Classes of Notes with the consent of
the Credit Enhancer by notice then given to the Master Servicer (and to the
Indenture Trustee if given by the Credit Enhancer or the Holders of Notes) may
terminate all of the rights and obligations of the Master Servicer as servicer
under this Agreement.
In addition, if during the period that the Depositor is required to file
Exchange Act Reports with respect to the Trust, the Master Servicer fails to
perform any of the obligations that constitute a Limited Exchange Act Reporting
Obligation or the obligations in Section 3.09(a) or Section 7.07(a)(1) and (2),
and the failure continues for the lesser of 10 days or the period in which the
applicable Exchange Act Report can be filed timely (without taking into account
any extensions), so long as the failure has not been remedied, the Indenture
Trustee shall, with the consent of the Credit Enhancer, but only at the
direction of the Depositor (who shall designate a successor to the Master
Servicer other than the Indenture Trustee with the consent of the Credit
Enhancer (which shall not unreasonably withheld or delayed), terminate all of
the rights and obligations of the Master Servicer under this Agreement and in
the Mortgage Loans and their proceeds, other than its rights as a
Certificateholder or Noteholder. The Depositor will not be entitled to terminate
the rights and obligations of the Master Servicer if a failure of the Master
Servicer to identify a Subcontractor "participating in the servicing function"
within the meaning of Item 1122 of Regulation AB was attributable solely to the
role or functions of the Subcontractor with respect to mortgage loans other than
the Mortgage Loans.
Any notice of termination provided to the Master Servicer shall also be
given by the party providing that notice to the Depositor and each Rating Agency
and the Credit Enhancer.
Within five Business Days after obtaining knowledge of it, the Master
Servicer shall notify the Indenture Trustee and each Rating Agency and the
Credit Enhancer of any event that with the giving of notice or the lapse of time
would become an Event of Servicing Termination by delivering an Officer's
Certificate describing the event.
From the receipt by the Master Servicer of the notice, all the rights and
obligations of the Master Servicer under this Agreement, whether with respect to
the Notes or the Mortgage Loans or otherwise, shall pass to and be vested in the
Indenture Trustee pursuant to this Section; and the Indenture Trustee is
authorized to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, any documents, and to do anything else
appropriate to effect the purposes of the notice of termination, whether to
complete the transfer and endorsement of each Mortgage Loan and related
documents, or otherwise. The Master Servicer agrees to
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cooperate with the Indenture Trustee in effecting the termination of the rights
and obligations of the Master Servicer under this Agreement, including the
transfer to the Indenture Trustee for the administration by it of all cash
amounts that are held by the Master Servicer and are to be deposited by it in
the Collection Account, or that have been deposited by the Master Servicer in
the Collection Account or are subsequently received by the Master Servicer with
respect to the Mortgage Loans. All reasonable costs and expenses (including
attorneys' fees) incurred in connection with transferring the Mortgage Files to
the successor Master Servicer and amending this Agreement to reflect the
succession as Master Servicer pursuant to this Section shall be paid by the
predecessor Master Servicer (or if the predecessor Master Servicer is the
Indenture Trustee, the initial Master Servicer) on presentation of reasonable
documentation of the costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance under
Section 6.01(1) for five or more Business Days or under Section 6.01(2) for 60
or more days, shall not constitute an Event of Servicing Termination if the
delay or failure could not be prevented by the exercise of reasonable diligence
by the Master Servicer and the delay or failure was caused by an act of God or
the public enemy, acts of declared or undeclared war, public disorder, rebellion
or sabotage, epidemics, landslides, lightning, fire, hurricanes, earthquakes,
floods, or similar causes. The preceding sentence shall not relieve the Master
Servicer from using its best efforts to perform its obligations in a timely
manner in accordance with the terms of this Agreement, and the Master Servicer
shall provide the Indenture Trustee, the Depositor, the Transferor, the Credit
Enhancer, and the Noteholders with an Officers' Certificate giving prompt notice
of its failure or delay, together with a description of its efforts to perform
its obligations. The Master Servicer shall immediately notify the Indenture
Trustee of any Events of Servicing Termination.
In connection with the termination of the Master Servicer if any mortgage
is registered on the MERS(R) System, then, either (i) the successor Master
Servicer, including the Indenture Trustee if the Indenture Trustee is acting as
successor Master Servicer, shall represent and warrant that it is a member of
MERS in good standing and shall agree to comply in all material respects with
the rules and procedures of MERS in connection with the servicing of the
Mortgage Loans that are registered with MERS, or (ii) the predecessor Master
Servicer shall cooperate with the successor Master Servicer in causing MERS to
execute and deliver an assignment of mortgage in recordable form to transfer all
the mortgages registered on the MERS(R) System from MERS to the Indenture
Trustee and to execute and deliver any other notices and documents appropriate
to effect a transfer of those mortgages or the servicing of the Mortgage Loan on
the MERS(R) System to the successor Master Servicer. The predecessor Master
Servicer shall file the assignment in the appropriate recording office. The
successor Master Servicer shall deliver the assignment to the Indenture Trustee
promptly upon receipt of the original with evidence of recording on it or a copy
certified by the public recording office in which the assignment was recorded.
If the Master Servicer is terminated, the Indenture Trustee will provide
the Depositor all information, in form and substance reasonably satisfactory to
the Depositor, reasonably requested by the Depositor to comply with its
reporting obligation under Item 6.02 of Form 8-K
41
with respect to a successor master servicer if the Indenture Trustee succeeds to
the duties of the Master Servicer as provided in this Agreement.
Section 6.02 Indenture Trustee to Act; Appointment of Successor.
(a) From the time the Master Servicer receives a notice of termination
pursuant to Section 6.01 or resigns pursuant to Section 5.04, the Indenture
Trustee shall be the successor in all respects to the Master Servicer in its
capacity as Master Servicer under this Agreement and the transactions
contemplated by this Agreement and shall be subject to all the obligations of
the Master Servicer under this Agreement except (i) the obligation to repurchase
or substitute for any Mortgage Loan, (ii) with respect to any representation or
warranty of the Master Servicer, or (iii) for any act or omission of either a
predecessor or successor Master Servicer other than the Indenture Trustee. As
its compensation under this Agreement, the Indenture Trustee shall be entitled
to the compensation the Master Servicer would have been entitled to under this
Agreement if no notice of termination had been given. In addition, the Indenture
Trustee will be entitled to compensation with respect to its expenses in
connection with conversion of certain information, documents, and record
keeping, as provided in Section 6.01.
Notwithstanding the above, (i) if the Indenture Trustee is unwilling to
act as successor Master Servicer, or (ii) if the Indenture Trustee is legally
unable to so act, the Indenture Trustee may (in the situation described in
clause (i)) or shall (in the situation described in clause (ii)) appoint, or
petition a court of competent jurisdiction to appoint, any established housing
and home finance institution, bank, or other mortgage loan or home equity loan
servicer having a net worth of not less than $15,000,000 as the successor to the
Master Servicer under this Agreement to assume of any obligations of the Master
Servicer under this Agreement. The successor Master Servicer must be acceptable
to the Credit Enhancer in its sole discretion, as evidenced by the Credit
Enhancer's prior consent, as applicable, which consent shall not be unreasonably
withheld. The appointment of the successor Master Servicer must not result in
the qualification, reduction, or withdrawal of the ratings assigned to the Notes
by the Rating Agencies without regard to the Policy.
No appointment of a successor to the Master Servicer will be effective
unless at least 15 days before the effective date of the appointment, the
Indenture Trustee notifies the Depositor of the successor pursuant to this
Section 6.02 and the successor Master Servicer provides to the Depositor all
information, in form and substance reasonably satisfactory to the Depositor,
reasonably requested by the Depositor to comply with its reporting obligation
under Item 6.02 of Form 8-K with respect to a replacement master servicer.
Pending appointment of a successor to the Master Servicer, unless the
Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act as Master Servicer. In connection with this appointment and
assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Loans in an amount equal to the compensation that the
Master Servicer would otherwise have received pursuant to Section 3.08 (or any
lesser compensation the Indenture Trustee and the successor agree to). The
Indenture Trustee and the successor shall take any action, consistent with this
Agreement, necessary to effectuate the succession.
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(b) The appointment of a successor Master Servicer shall not affect any
liability of the predecessor Master Servicer that may have arisen under this
Agreement before its termination as Master Servicer (including any deductible
under an insurance policy pursuant to Section 3.04), nor shall any successor
Master Servicer be liable for any acts or omissions of the predecessor Master
Servicer or for any breach by the predecessor Master Servicer of any of its
representations or warranties in this Agreement. Except for any compensation
agreement with the Indenture Trustee, any successor Master Servicer shall be
subject to all the terms of this Agreement from the time that it accepts its
appointment to the same extent as if it were originally named as Master
Servicer.
Section 6.03 Notification to Noteholders and the Transferor.
Upon any termination or appointment of a successor to the Master Servicer
pursuant to this Article or Section 5.04, the Indenture Trustee shall give
prompt notice of it to the Noteholders at their respective addresses appearing
in the Note Register, the Transferor, the Credit Enhancer, and each Rating
Agency.
ARTICLE VII
EXCHANGE ACT REPORTING
Section 7.01 Filing Obligations.
The Master Servicer, the Indenture Trustee, the Owner Trustee, and each
Seller shall reasonably cooperate with the Depositor in connection with the
satisfaction of the Depositor's reporting requirements under the Exchange Act
with respect to the Trust. In addition to the information specified below, if so
requested by the Depositor to satisfy its reporting obligation under the
Exchange Act, the Master Servicer, the Indenture Trustee, the Owner Trustee, and
each Seller shall (and the Master Servicer shall cause each subservicer to)
provide the Depositor (a) with any information available to such person without
unreasonable effort or expense and within the timeframe reasonably requested by
the Depositor to comply with the Depositor's reporting obligations under the
Exchange Act, and (b) to the extent the Master Servicer, the Indenture Trustee,
the Owner Trustee, or a Seller is a party (and the Depositor is not a party) to
any agreement or amendment required to be filed, copies of the agreement or
amendment in XXXXX-compatible form.
Section 7.02 Form 10-D Filings.
(a) The Indenture Trustee shall prepare for filing and file reports on
Form 10-D as required by Section 7.03(a) of the Indenture.
(b) No later than each Payment Date, each of the Master Servicer, the
Indenture Trustee, and the Owner Trustee shall notify (and the Master Servicer
shall cause any subservicer to notify) the Depositor, the Master Servicer and
the Indenture Trustee of any Form 10-D Disclosure Item, together with a
description of the Form 10-D Disclosure Item in form and substance reasonably
acceptable to the Depositor. In addition to the information the Master Servicer
and the Indenture Trustee are obligated to provide pursuant to other provisions
of this
43
Agreement, if so requested by the Depositor, each of the Master Servicer and the
Indenture Trustee shall provide any information available to it without
unreasonable effort or expense regarding the performance or servicing of the
Mortgage Loans (in the case of the Indenture Trustee, based on the information
provided by the Master Servicer) reasonably required to facilitate preparation
of distribution reports in accordance with Item 1121 of Regulation AB. This
information shall be provided concurrently with the information provided
pursuant to Section 4.01 in the case of the Master Servicer and the Monthly
Statement in the case of the Indenture Trustee, beginning with the first report
due not less than five Business Days following the request.
(c) The Indenture Trustee shall not have any responsibility to file any
items (other than those generated by it) that have not been received in a format
suitable (or readily convertible into a format suitable) for electronic filing
via the XXXXX system and shall not have any responsibility to convert any such
items to a format suitable (or readily convertible into a format suitable) for
electronic filing via the XXXXX system. The Indenture Trustee shall have no
liability to the Noteholders, the Certificateholders, the Trust, the Master
Servicer, the Depositor, or the Credit Enhancer with respect to any failure to
properly prepare or file any of Form 10-D to the extent that the failure is not
the result of any negligence, bad faith, or willful misconduct on its part.
Section 7.03 Form 8-K Filings.
(a) The Master Servicer shall prepare and file on behalf of the Trust any
Form 8-K required by the Exchange Act. Each Form 8-K must be signed by the
Master Servicer. Each of the Master Servicer (and the Master Servicer shall
cause any subservicer to promptly notify) and the Indenture Trustee shall
promptly notify the Depositor and the Master Servicer (if the notifying party is
not the Master Servicer), but in no event later than two Business Days after its
occurrence, of any Reportable Event relating to it of which it (in the case of
the Indenture Trustee, a Responsible Officer of the Indenture Trustee, or in the
case of the Owner Trustee, any officer of the Owner Trustee with direct
responsibility for the administration of the Trust or with knowledge or
familiarity with the particular subject) has actual knowledge. A person has
actual knowledge of a Reportable Event to the extent that it relates to it or
any action or failure to act by it.
(b) Concurrently with any sale of Additional Home Equity Loans to the
Trust, the Sponsor shall notify the Depositor, the Master Servicer, and the
Credit Enhancer, if any material pool characteristic of the actual asset pool at
the time of issuance of the Notes differs by 5% or more (other than as a result
of the pool assets converting into cash in accordance with their terms) from the
description of the asset pool in the Prospectus Supplement.
Section 7.04 Form 10-K Filings.
(a) Before March 30th of each year, beginning in 2007 (or any earlier date
required by the Exchange Act), the Depositor shall prepare and file on behalf of
the Trust a Form 10-K, in form and substance as required by the Exchange Act. A
senior officer in charge of the servicing function of the Master Servicer shall
sign each Form 10-K filed on behalf of the Trust. The Form 10-K shall include as
exhibits each
44
(1) annual compliance statement described under Section 3.09,
(2) annual Servicing Criteria Compliance Assessment Report described
under Section 7.07, and
(3) annual Accountant's Attestation described under Section 7.07.
Each Form 10-K shall also include any Xxxxxxxx-Xxxxx Certification
required to be included with it, as described in Section 7.05.
(b) If the Item 1119 Parties have changed since the Closing Date, by no
later than March 1 of each year, the Master Servicer shall provide each of the
Indenture Trustee and the Owner Trustee with an updated list of the Item 1119
Parties.
(c) No later than March 15 of each year, beginning in 2007, the Master
Servicer, the Indenture Trustee, and the Owner Trustee shall notify (and the
Master Servicer shall cause any subservicer to notify) the Depositor and the
Master Servicer of any Form 10-K Disclosure Item, together with a description of
it in form and substance reasonably acceptable to the Depositor. Additionally,
each of the Master Servicer, the Indenture Trustee, and the Owner Trustee shall
provide, and shall cause each Reporting Subcontractor retained by the Master
Servicer or the Indenture Trustee, and in the case of the Master Servicer shall
cause each subservicer, to provide the following information no later than March
15 of each year in which a Form 10-K is required to be filed on behalf of the
Trust:
(1) if the report on assessment of compliance with servicing
criteria described under Section 7.07 or related registered public
accounting firm attestation report described under Section 7.07 relating
to the relevant person identifies any material instance of noncompliance,
notification of the instance of noncompliance and
(2) if the report on assessment of compliance with servicing
criteria or related registered public accounting firm attestation report
relating to the relevant person is not provided to be filed as an exhibit
to the Form 10-K, information detailing the explanation why the report is
not included.
Section 7.05 Xxxxxxxx-Xxxxx Certification.
(a) Each Form 10-K shall include a Xxxxxxxx-Xxxxx Certification. No later
than March 15 of each year, beginning in 2007, the Master Servicer and the
Indenture Trustee shall (unless it is the Certifying Person), and the Master
Servicer shall cause each subservicer and Reporting Subcontractor and the
Indenture Trustee shall cause each Reporting Subcontractor to, provide to the
Certifying Person a Performance Certification on which the Certification Parties
may reasonably rely.
(b) The senior officer in charge of the servicing function of the Master
Servicer shall serve as the Certifying Person on behalf of the Trust. Neither
the Master Servicer nor the Depositor will request delivery of a certification
under this Section unless the Depositor is required under the Exchange Act to
file an annual report on Form 10-K with respect to the Trust. If before the
filing date of the Form 10-K in March of each year, a Responsible Officer of the
Indenture Trustee or the Depositor has actual knowledge of information material
to the
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Xxxxxxxx-Xxxxx Certification, the Indenture Trustee or the Depositor, as the
case may be, shall promptly notify the Master Servicer and the Depositor. The
respective parties to this Agreement agree to cooperate with all reasonable
requests made by any Certifying Person or Certification Party in connection with
the Certifying Person's or Certification Party's attempt to conduct any due
diligence that it reasonably believes to be appropriate to allow it to deliver
any Xxxxxxxx-Xxxxx Certification with respect to the Trust.
Section 7.06 Form 15 Filing.
Before January 30 of the first year in which the Depositor is able to do
so under applicable law, the Indenture Trustee, on behalf of the Depositor,
shall file a Form 15 relating to the automatic suspension of reporting in
respect of the Trust under the Exchange Act.
Section 7.07 Report on Assessment of Compliance and Attestation.
(a) On or before March 15 of each year, beginning in 2007 and continuing
until the year in which a Form 15 is file pursuant to Section 7.06:
(1) Each of the Master Servicer and the Indenture Trustee shall
deliver to the Depositor, the Master Servicer, and the Credit Enahncer a
Servicing Criteria Compliance Assessment Report for the pervious year so
long as a Servicing Criteria Compliance Assessment Report is required by
Regulation AB. The Servicing Criteria Compliance Assessment Report shall
be signed by an authorized officer of the Master Servicer or the Indenture
Trustee, as applicable, and shall address each of the Servicing Criteria
specified on a certification substantially in the form of Exhibit G
delivered to the Depositor concurrently with the execution of this
Agreement. To the extent any of the Servicing Criteria are not applicable
to the Master Servicer or the Indenture Trustee, as applicable, with
respect to asset-backed securities transactions taken as a whole involving
it and that are backed by the same asset type backing the Notes, the
report shall include a statement to that effect. The Depositor and the
Master Servicer, and each of their respective officers and directors, will
be entitled to rely on each Servicing Criteria Compliance Assessment
Report.
(2) Each of the Master Servicer and the Indenture Trustee shall
deliver to the Depositor, the Master Servicer, and the Credit Enhancer an
Accountant's Attestation with respect to the Servicing Criteria Compliance
Assessment Report furnished by Master Servicer or the Indenture Trustee,
as applicable. To the extent any of the Servicing Criteria are not
applicable to the Master Servicer or the Indenture Trustee, as applicable,
with respect to asset-backed securities transactions taken as a whole
involving it and that are backed by the same asset type backing the Notes,
the Accountant's Attestation shall include a statement that that effect.
(3) The Master Servicer shall cause each subservicer and each
Reporting Subcontractor to deliver to the Depositor a Servicing Criteria
Compliance Assessment Report and an Accountant's Attestation as and when
provided in Section 7.07(a)(1) and (2).
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(4) The Indenture Trustee shall cause each Reporting Subcontractor
to deliver to the Depositor, the Master Servicer, and the Credit Enhancer
a Servicing Criteria Compliance Assessment Report and an Accountant's
Attestation as and when provided in Section 7.07(a)(1) and (2).
(5) The Master Servicer and the Indenture Trustee shall execute (and
the Master Servicer shall cause each subservicer to execute, and the
Master Servicer and the Indenture Trustee shall cause each Reporting
Subcontractor to execute) a reliance certificate in the form of Exhibit I
to enable the Certification Parties to rely on each
(A) annual compliance statement provided pursuant to Section
3.09, if applicable,
(B) Servicing Criteria Compliance Assessment Report provided
pursuant to this Section 7.07, and
(C) Accountant's Attestation provided pursuant to this Section
7.07,
and shall include a certification that each Servicing Criteria Compliance
Assessment Report discloses any deficiencies or defaults described to the
applicable registered public accountants to enable them to render the
Accountant's Attestation provided for in this Section 7.07.
(b) If the Master Servicer, any subservicer, the Indenture Trustee, or any
Reporting Subcontractor is terminated or resigns during the term of this
Agreement, that person shall provide documents and information required by this
Section 7.07 with respect to the period it was subject to this Agreement or
provided services with respect to the Trust, the Notes, or the Mortgage Loans.
(c) Each Servicing Criteria Compliance Assessment Report provided by a
subservicer pursuant to Section 7.07(a)(3) shall address each of the Servicing
Criteria specified on a certification substantially in the form of Exhibit G
delivered to the Depositor concurrently with the execution of this Agreement or,
in the case of a subservicer subsequently appointed as such, on or before the
date of its appointment. An assessment of compliance provided by a Subcontractor
pursuant to Section 7.07(a)(3) or (4) need not address any elements of the
Servicing Criteria other than those specified by the Master Servicer or the
Indenture Trustee, as applicable, pursuant to Section 7.07(a)(1).
Section 7.08 Use of Subservicers and Subcontractors.
(a) The Master Servicer shall cause any subservicer used by the Master
Servicer (or by any subservicer) for the benefit of the Depositor to comply with
the provisions of Section 3.09(b) and this Article VII to the same extent as if
it were the Master Servicer (except with respect to the Master Servicer's duties
with respect to preparing and filing any Exchange Act Reports or as the
Certifying Person). The Master Servicer shall be responsible for obtaining from
each subservicer and delivering to the Depositor any servicer compliance
statement required to be delivered by the subservicer under Section 3.09, any a
Servicing Criteria Compliance Assessment Report and Accountant's Attestation
required to be delivered by the
47
subservicer under Section 7.07, and any certification required to be delivered
to the Certifying Person under Section 7.05 as and when required to be
delivered.
No person may become a successor subservicer in connection with this
Agreement (whether by merger or consolidation with an existing subservicer or by
appointment as a successor to any subservicer) unless the Master Servicer has
notified the Depositor at least 15 days before the effective date of the
succession or appointment of the successor and has provided all information
reasonably requested by the Depositor to comply with its reporting obligation
under Item 6.02 of Form 8-K with respect to the succession or appointment of the
successor subservicer in form and substance reasonably satisfactory to the
Depositor.
(b) It shall not be necessary for the Master Servicer, any subservicer, or
the Indenture Trustee to seek the consent of the Depositor or any other party to
the use of any Subcontractor. The Master Servicer or the Indenture Trustee, as
applicable, shall promptly on request provide to the Depositor (or any designee
of the Depositor, such as the Master Servicer or administrator) a description
(in form and substance reasonably satisfactory to the Depositor) of the role and
function of each Subcontractor used by the Master Servicer or the Indenture
Trustee (or in the case of the Master Servicer, any Subservicer). The
description shall specify for each Subcontractor
(1) its identity,
(2) whether it is "participating in the servicing function" within
the meaning of Item 1122 of Regulation AB, and
(3) which elements of the Servicing Criteria will be addressed in
Servicing Criteria Compliance Assessment Reports provided by it if it is
"participating in the servicing function" within the meaning of Item 1122
of Regulation AB.
(c) Neither the Master Servicer nor the Indenture Trustee shall use any
Subcontractor (or in the case of the Master Servicer, any subservicer) that
would be a Reporting Subcontractor unless the Subcontractor (or subservicer)
agrees for the benefit of the Depositor to comply with Sections 7.07 and 7.09 to
the same extent as if the Subcontractor (or subservicer) were the Master
Servicer (except with respect to the Master Servicer's duties with respect to
preparing and filing any Exchange Act Reports or as the Certifying Person) or
the Indenture Trustee with respect to the actions being performed by the
Subcontractor (or subservicer), as applicable. The Master Servicer or the
Indenture Trustee, as applicable, shall be responsible for obtaining from each
Subcontractor and delivering to the Depositor and the Master Servicer any
Servicing Criteria Compliance Assessment Report and Accountant's Attestation
required to be delivered by the Subcontractor under Section 7.05 and Section
7.07, in each case as and when required to be delivered.
Section 7.09 Amendments.
(a) If the parties to this Agreement desire to further clarify or amend
any provision of this Article VII, with the consent of the Credit Enhancer, this
Agreement shall be amended to reflect the new agreement between the parties
covering matters in this Article VII, which
48
amendment shall not require any Opinion of Counsel or the satisfaction of the
Rating Agency Condition or the consent of any Noteholder.
(b) The Depositor shall assume the obligations and responsibilities of the
Master Servicer in this Article VII with respect to the preparation and filing
of the Exchange Act Reports and acting as the Certifying Person if
(1) during the period that the Depositor is required to file
Exchange Act Reports with respect to the Trust, the Master Servicer is no
longer an Affiliate of the Depositor,
(2) the successor Master Servicer has agreed to provide a
Xxxxxxxx-Xxxxx Certification to the Depositor substantially in the form of
Exhibit I,
(3) the successor Master Servicer has agreed to provide the
Servicing Criteria Compliance Assessment Reports and Accountant's
Attestations as provided in Section 7.07(a)(1) and (2) and the reliance
certificate as provided in Section 7.07(a)(5),
(4) the successor Master Servicer has agreed to cause each
subservicer and each Reporting Subcontractor used by it to provide the
Servicing Criteria Compliance Assessment Reports and Accountant's
Attestations as provided in Section 7.07(a)(3), and
(5) the Depositor has received indemnity from the successor Master
Servicer satisfactory to the Depositor.
ARTICLE VIII
TERMINATION
Section 8.01 Termination.
(a) The respective obligations and responsibilities of the Sponsor, the
Master Servicer, the Depositor, the Credit Enhancer, the Trust, and the
Indenture Trustee created by this Agreement (other than the obligation of the
Master Servicer to send certain notices) shall terminate on the earlier of
(1) the transfer of all the Mortgage Loans pursuant to Section
8.01(b),
(2) the termination of the Trust Agreement or the Indenture, and
(3) the final payment or other liquidation of the last Mortgage Loan
remaining in the Trust or the disposition of all property acquired in
foreclosure or by deed in lieu of foreclosure of any Mortgage Loan.
Upon termination in accordance with this Section, the Indenture Trustee
shall execute any documents and instruments of transfer presented by the
Transferor, in each case without recourse, representation, or warranty, and take
any other actions the Transferor reasonably requests to effect the transfer of
the Mortgage Loans to the Transferor. Notwithstanding the termination of this
Agreement, the Master Servicer shall comply with this Agreement in winding up
activities under this Agreement after termination if necessary.
49
(b) With the consent of the Credit Enhancer, the Master Servicer may
effect the transfer of all the Mortgage Loans at their termination purchase
price on any Payment Date on or after the Optional Termination Date and require
the Trust to redeem the Notes pursuant to Section 10.01 of the Indenture with
the proceeds. The termination purchase price is the greater of the sum of:
(1) the aggregate Note Principal Balance for the Principal Amount
Notes,
(2) accrued aggregate Note Interest through the day preceding the
final Payment Date, and
(3) interest accrued on any aggregate Unpaid Investor Interest
Shortfall, to the extent legally permissible,
and the sum of the amounts in Section 8.02(c)(1), (2), and (3) below.
(c) The Master Servicer must notify the Trust, the Indenture Trustee, and
the Credit Enhancer of any election to effect the transfer of the Mortgage Loans
pursuant to Section 8.01(b) no later than the first day of the month before the
month in which the transfer is to occur. The proceeds from the purchase of the
Mortgage Loans, for purposes of payments on the Notes, shall be considered to
have been received in the Collection Period before the Collection Period in
which the Payment Date on which the purchase takes place occurs.
Section 8.02 Additional Termination Requirements.
(a) If the Master Servicer exercises its redemption option in Section
8.01(b), the Mortgage Loans then remaining in the Trust shall be liquidated in
accordance with the following additional requirements, unless the Indenture
Trustee has been supplied with an Opinion of Counsel to the effect that the
failure to comply with the requirements of this Section will not result in the
imposition of taxes on prohibited transactions on any REMIC as defined in
Section 860F of the Code, or cause any REMIC created under the Trust Agreement
to fail to qualify as a REMIC at any time that any Notes are outstanding:
(b) Within 90 days before the final Payment Date in the notice given by
the Indenture Trustee under Section 10.01(b) of the Indenture, the Master
Servicer shall prepare and the Indenture Trustee, at the expense of the tax
matters person, shall adopt a plan of complete liquidation within the meaning of
Section 860F(a)(4) of the Code that, as evidenced by an Opinion of Counsel,
meets the requirements of a qualified liquidation; and
(c) Within 90 days after the time of adoption of a plan of complete
liquidation, the Issuer shall sell all of the assets of the Trust to the Master
Servicer for cash greater than or equal to the sum of:
(1) 100% of the principal balance of each Mortgage Loan plus one
month's accrued interest thereon at the applicable Loan Rate,
(2) for each such property, the lesser of the appraised value of any
Mortgaged Property that has been acquired by the Trust in foreclosure or
by deed in lieu of foreclosure as determined by the higher of two
appraisals completed by two
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independent appraisers selected by the Master Servicer at the expense of
the Master Servicer and the principal balance of the related Mortgage
Loan, and
(3) any remaining unpaid costs and damages incurred by the Trust
that arise out of an actual violation of any predatory or abusive lending
law that also constitutes an actual breach of a representation and
warranty in Section 2.04, in all cases plus accrued and unpaid interest
thereon at the applicable Loan Rate.
The Indenture Trustee as agent for any REMIC created under the Trust
Agreement shall adopt and sign such a plan of complete liquidation upon the
written request of the Master Servicer and the receipt of the Opinion of Counsel
referred to in Section 8.02(a) and take any other action in connection therewith
reasonably requested by the Master Servicer.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01 Amendment.
This Agreement may be amended from time to time by the Sponsor, the Master
Servicer, the Depositor, the Credit Enhancer, the Owner Trustee, and the
Indenture Trustee, if the Rating Agency Condition is satisfied (in connection
with which the consent of the Credit Enhancer shall not be unreasonably
withheld). However, no amendment that significantly changes the permitted
activities of the Trust may be promulgated without the consent of a majority of
the aggregate Outstanding Amount of the Notes. For this purpose no Notes owned
by the Sponsor or any of its affiliates may vote, nor shall their Notes be
considered outstanding. This Agreement may also be amended from time to time by
the Sponsor, the Master Servicer, the Depositor, the Owner Trustee, and the
Indenture Trustee, with the consent of the Credit Enhancer (which consent shall
not be unreasonably withheld) and Holders of not less than 66?% of the aggregate
Outstanding Amount of the Principal Amount Notes.
The Indenture Trustee may enter into any amendment of this Agreement as to
which the Rating Agency Condition is satisfied, and when so requested by an
Issuer Request, the Indenture Trustee shall enter into any amendment of this
Agreement
(1) that does not impose further obligations or liabilities on the
Indenture Trustee, and
(2) as to which either the Rating Agency Condition is satisfied or
Holders of not less than 66?% of the aggregate Outstanding Amount of the
Principal Amount Notes and the Credit Enhancer have consented.
Following the execution and delivery of any amendment to this Agreement or
to the Policy to which the Credit Enhancer was required to consent, either the
Transferor, if the Transferor requested the amendment, or the Master Servicer,
if the Master Servicer requested the amendment, shall reimburse the Credit
Enhancer for the reasonable out-of-pocket costs and expenses incurred by them in
connection with the amendment.
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Before the execution of the amendment, the party to this Agreement
requesting the amendment shall notify each Rating Agency of the substance of the
amendment. The Indenture Trustee shall deliver fully executed original
counterparts of the instruments effecting the amendment to the Credit Enhancer.
Section 9.02 Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS THAT WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Section 9.03 Notices.
All notices, demands, instructions, consents, and other communications
required or permitted under this Agreement shall be in writing and signed by the
party giving the same and shall be personally delivered or sent by first class
or express mail (postage prepaid), national overnight courier service, or by
facsimile transmission or other electronic communication device capable of
transmitting or creating a written record (confirmed by first class mail) and
shall be considered to be given for purposes of this Agreement on the day that
the writing is delivered when personally delivered or sent by facsimile or
overnight courier or three Business Days after it was sent to its intended
recipient if sent by first class mail. A facsimile has been delivered when the
sending machine issues an electronic confirmation of transmission. Unless
otherwise specified in a notice sent or delivered in accordance with the
provisions of this Section, notices, demands, instructions, consents, and other
communications in writing shall be given to or made on the respective parties at
their respective addresses indicated below:
if to the Trust at:
CWHEQ Revolving Home Equity Loan Trust, Series 2006-G
Wilmington Trust Company, as Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Administration
Telecopy: (000) 000-0000
if to the Depositor at:
CWHEQ, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
Telecopy: (000) 000-0000
52
if to the Master Servicer at:
Countrywide Home Loans, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department,
Telecopy: (000) 000-0000
if to the Indenture Trustee at:
the Corporate Trust Office
Telecopy: (000) 000-0000
if to the Credit Enhancer at:
MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Insured Portfolio Management-Structured
Finance ("IPM-SF")
(CWHEQ Revolving Home Equity Loan Trust,
Series 2006-G)
Telecopy: (000) 000-0000
Confirmation: (000) 000-0000
if to Xxxxx'x at:
Residential Loan Monitoring Group, 4th Floor
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
and if to Standard & Poor's at:
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Whenever a notice or other communication to the Credit Enhancer refers to
an Event of Servicing Termination or with respect to which failure on the part
of the Credit Enhancer to respond would constitute consent or acceptance, then a
copy of the notice or other communication shall also be sent to the attention of
the General Counsel of the Credit Enhancer and shall be marked to indicate
"URGENT MATERIAL ENCLOSED."
Section 9.04 Severability of Provisions.
Any provisions of this Agreement that are held invalid for any reason or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of the invalidity or unenforceability without invalidating the
remaining provisions of this Agreement, and the prohibition or unenforceability
in a jurisdiction shall not invalidate or render unenforceable that provision in
any other jurisdiction.
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Section 9.05 Assignment.
Except as provided in Sections 5.02 and 5.04, this Agreement may not be
assigned by the Depositor or the Master Servicer without the prior consent of
the Credit Enhancer.
Section 9.06 Third-Party Beneficiaries.
This Agreement will be binding on the parties to this Agreement, and inure
to the benefit of the parties to this Agreement, the Noteholders, the
Transferor, the Note Owners, the Owner Trustee and the Credit Enhancer, and
their respective successors and permitted assigns. . The Credit Enhancer is a
third party beneficiary of this Agreement. No other person will have any rights
under this Agreement.
Section 9.07 Counterparts; Electronic Delivery.
This Agreement may be executed in any number of copies, and by the
different parties on the same or separate counterparts, each of which shall be
considered to be an original instrument. Any signature page to this Agreement
containing a manual signature may be delivered by facsimile transmission or
other electronic communication device capable of transmitting or creating a
printable written record, and when so delivered shall have the effect of
delivery of an original manually signed signature page.
Section 9.08 Effect of Headings and Table of Contents.
The Article and Section headings in this Agreement and the Table of
Contents are for convenience only and shall not affect the construction of this
Agreement.
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In Witness Whereof, the Depositor, the Sponsor and Master Servicer, the
Trust, and the Indenture Trustee have caused this Agreement to be duly executed
by their respective officers all as of the day and year first above written.
CWHEQ, INC.
Depositor
By: /s/ Xxxxxx Xxxxx
---------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
Sponsor and Master Servicer
By: /s/ Xxxxxx Xxxxx
---------------------------------------
Name: Xxxxxx Xxxxx
Title: Executive Vice President
JPMORGAN CHASE BANK, N.A.,
Not in its individual capacity,
but solely as Indenture Trustee
By: /s/ Xxxxx X. Xxxxxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Attorney-in-Fact
55
CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 2006-G
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee
By: /s/ W. Xxxxx Xxxxxxxxxx
---------------------------------------
Name: W. Xxxxx Xxxxxxxxxx
Title: Vice President
56
State of CALIFORNIA )
) ss.:
County of LOS ANGELES )
On the 30th day of August, 2006 before me, a notary public in and for the
State of California, personally appeared Xxxxxx Xxxxx, known to me who, being by
me duly sworn, did depose and say that he resides at Calabasas, California; that
he is the Vice President of CWHEQ, Inc. a Delaware corporation, one of the
parties that executed the foregoing instrument; that he signed his name thereto
by order of the Board of Directors of said corporation.
/s/ Xxxxxx X. Xxxxxx
------------------------------
Notary Public
Xxxxxx X. Xxxxxx
Commission # 1609859
Notary Public - California
Los Angeles County
My Comm. Expires October 15, 2009.
1
State of CALIFORNIA )
) ss.:
County of LOS ANGELES )
On the 30th day of August, 2006 before me, a notary public in and for the
State of California, personally appeared Xxxxxx Xxxxx known to me who, being by
me duly sworn, did depose and say that he resides at Calabasas, California; that
he is the Executive Vice President of Countrywide Home Loans, Inc., a New York
corporation, one of the parties that executed the foregoing instrument; and that
he signed his name thereto by order of the Board of Directors of said
corporation.
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Notary Public
Xxxxxx X. Xxxxxx
Commission # 1609859
Notary Public - California
Los Angeles County
My Comm. Expires October 15, 2009.
2
State of ILLINOIS )
) ss.:
County of XXXX )
On the 30th day of August, 2006 before me, a notary public in and for
the State of Illinois, personally appeared Xxxxx X. Xxxxxxxxxx, known to me
who, being by me duly sworn, did depose and say that he resides at Plainfield,
Illinois; that he is the Attorney-In-Fact of JPMorgan Chase Bank, N.A., a
national banking association, one of the parties that executed the foregoing
instrument; that he signed his name thereto by order of the Board of Directors
of said corporation.
/s/ Xxxxx Xxx
----------------------------
Notary Public
OFFICIAL SEAL
Xxxxx Xxx
Notary Public, State of Illinois
My Commission Expires: July 5, 2010
3
State of DELAWARE )
) ss.:
County of NEW CASTLE )
On the 24th day of August, 2006 before me, a notary public in and for the
State of Delaware, personally appeared W. Xxxxx Xxxxxxxxxx, known to me who,
being by me duly sworn, did depose and say that he/she resides at Wilmington,
Delaware; that he/she is a Vice President of Wilmington Trust Company, not in
its individual capacity but in its capacity as Owner Trustee of CWHEQ Revolving
Home Equity Loan Trust, Series 2006-G, one of the parties that executed the
foregoing instrument; that she signed her name thereto by order of the Board of
Directors of said corporation.
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Notary Public
Xxxxxxx X. Xxxxxx
Notary Public - State of Delaware
My Commission Expires October 20, 2007
4
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[Delivered to Indenture Trustee Only]
A-1
EXHIBIT B
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
[DATE]
JPMorgan Chase Bank, N.A.
as Indenture Trustee
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Worldwide Securities Services/Structure Finance Services,
Countrywide HEL CWHEQ 2006-G
Attn: Corporate Trust Services Division
Re: CWHEQ, Inc. Revolving Home Equity Loan
Asset Backed Notes, Series 2006-G
--------------------------------------
Gentlemen:
In connection with the administration of the Mortgage Loans held by you as
Indenture Trustee under the Sale and Servicing Agreement, dated as of August 30,
2006, among CWHEQ, Inc. as Depositor, Countrywide Home Loans, Inc., as Sponsor
and Master Servicer, CWHEQ Revolving Home Equity Loan Trust, Series 2006-G and
you, as Indenture Trustee (the "Agreement"), we hereby request a release of the
Mortgage File held by you as Indenture Trustee with respect to the following
described Mortgage Loan for the reason indicated below.
Loan No.:
---------
[MIN No.]
---------
Reason for requesting file:
--------------------------
_________________________ 1. Mortgage Loan paid in full. (The Master
Servicer hereby certifies that all
amounts received in connection with the
payment in full of the Mortgage Loan
which are required to be deposited in the
Collection Account pursuant to Section
3.02 of the Agreement have been so
deposited).
_________________________ 2. Retransfer of Mortgage Loan. (The Master
Servicer hereby certifies that the
Transfer Deposit Amount has been
deposited in the Collection Account
pursuant to the Agreement).
_________________________ 3. The Mortgage Loan is being foreclosed.
_________________________ 4. The Mortgage Loan is being re-financed by
another depository institution. (The
Master Servicer hereby certifies that all
amounts received in connection with the
payment in full of the Mortgage Loan
which are required to be deposited in the
Collection Account pursuant to Section
3.02 of the Agreement have been so
deposited).
_________________________ 5. Other (Describe).
The undersigned acknowledges that the above Mortgage File will be held by
the undersigned in accordance with the provisions of the Agreement and will
promptly be returned
B-1
to the Indenture Trustee when the need therefor by the
Master Servicer no longer exists unless the Mortgage Loan has been liquidated or
retransferred.
Capitalized terms used herein shall have the meanings ascribed to them in
the Agreement.
Countrywide Home Loans, Inc.
By:_______________________________
Name:
Title: Servicing Officer
B-2
Exhibit C
FORM OF TRANSFER DOCUMENT
The Sponsor hereby transfers to the Depositor, and the Depositor hereby
transfers to the Owner Trustee for the benefit of CWHEQ Revolving Home Equity
Loan Trust, Series 2006-G the below identified Additional Home Equity Loans.
Subsequent Closing Date: _________________
Subsequent Cut-off Date: __________________
Cut-off Date Asset Balance: $ ______________
Additional Home Equity Loans:
This Transfer Document is delivered pursuant to the Purchase Agreement and
the Sale and Servicing Agreement, dated as of August 30, 2006, among CWHEQ,
Inc., Countrywide Home Loans, Inc., CWHEQ Revolving Home Equity Loan Trust,
Series 2006-G, and JPMorgan Chase Bank, N.A., and the capitalized terms used in
this document have the meanings given to them in those agreements.
Dated: __________ , 2006.
Countrywide Home Loans, Inc. CWHEQ, Inc.
By: ___________________ By: ________________________
Name: Name:
Title: Title:
C-1
EXHIBIT D
MONTHLY STATEMENT
The following information is required in each Monthly Statement. The
format of the Monthly Statement is on file with the Indenture Trustee.
(1) the Floating Allocation Percentage for each Loan Group for the related
Collection Period;
(2) the Available Interest Collections and the Investor Principal
Collections for each Loan Group for the related Collection Period;
(3) the Interest Collections that are not Available Interest Collections,
the Net Draws Principal Payment, and Interest Collections allocated to the Net
Draws, and Transferor Principal Collections, each for each Loan Group for the
related Collection Period;
(4) the aggregate amount to be paid to the each Class of Notes;
(5) the amount of Note Interest for each Class of Notes for the related
Interest Period, and the Note Rate for each Class of Notes for the related
Interest Period;
(6) the amount of the Note Interest that is not payable to the Holders of
each Class of Notes on the Payment Date because of insufficient Available
Interest Collections and Subordinated Transferor Collections;
(7) the amount of the Investor Loss Amount for each Loan Group not covered
by the applications of Available Interest Collections to pay down the related
Class of Notes, after giving effect to the payments on the Notes on that Payment
Date;
(8) the amount of the remaining Unpaid Investor Interest Shortfall for
each Class of Notes after giving effect to the payment;
(9) the amount of principal in the payment for each Class of Notes,
separately stating its components;
(10) the amount of the Investor Loss Amounts for the Payment Date and the
amount of Investor Loss Amounts that will be reimbursed in the payment for each
Loan Group;
(11) the aggregate unreimbursed Investor Loss Amounts for each Loan Group
after giving effect to the payment;
(12) the amount of any Basis Risk Carryforward for each Class of Principal
Amount Notes in the payment and the amount of Rate Cap Shortfalls for the Class
2-A Notes and any amounts due to the trust, and the amounts received, in respect
of the Cap Contract;
(13) the amount of the remaining Basis Risk Carryforward for each Class of
Principal Amount Notes giving effect to the payment;
(14) the Accelerated Principal Payment Amount and the portion of it that
will be distributed as principal on each Class of Notes pursuant to Section
8.03(a)(vi) and (vii) of the Indenture on the Payment Date;
D-1
(15) the amount of any Transfer Deposit Amount paid by the Sponsor or the
Depositor for each Loan Group during the related Collection Period in connection
with retransfer of Mortgage Loans pursuant to Section 2.07 of this Sale and
Servicing Agreement;
(16) the Servicing Fee for the Payment Date;
(17) the Note Principal Balance or Notional Balance of each Class of Notes
and the factor to seven decimal places obtained by dividing the Note Principal
Balance of each Class of Principal Amount Notes for the Payment Date by the
Original Note Principal Balance of the that Class of Principal Amount Notes
after giving effect to all payments on the Payment Date;
(18) the Allocated Transferor Interest for each Loan Group after giving
effect to the payment and to any reduction in with respect to the related
Investor Loss Amount on the Payment Date;
(19) whether a Rapid Amortization Event has occurred since the prior
Determination Date, specifying the Rapid Amortization Event if one has occurred;
(20) whether an Event of Servicing Termination has occurred since the
prior Determination Date, specifying the Event of Servicing Termination if one
has occurred;
(21) whether the Stepdown Date has occurred since the prior Determination
Date;
(22) whether the Stepup Trigger Date has occurred since the prior
Determination Date;
(23) the amount to be distributed on the Mortgage Loans to the Issuer
pursuant to Section 8.03(a)(xiv) of the Indenture;
(24) the amount to be paid to the Master Servicer from Available Interest
Collections pursuant to Section 8.03(a)(x) of the Indenture;
(25) the Maximum Rate for each Loan Group for the related Collection
Period and the Weighted Average Net Loan Rate for the Mortgage Loans for each
Loan Group for the related Collection Period;
(26) each Loan Group Balance as of the end of the preceding Collection
Period;
(27) the number and aggregate Asset Balances of Mortgage Loans in each
Loan Group as to which the Minimum Monthly Payment is delinquent for 30-59 days,
60-89 days, and 90 or more days, respectively, as of the end of the preceding
Collection Period;
(28) the book value (within the meaning of 12 C.F.R. ss. 571.13 or
comparable provision) of any real estate acquired through foreclosure or grant
of a deed in lieu of foreclosure;
(29) the amount of any optional advances on the Mortgage Loans for each
Loan Group pursuant to Section 4.03 by the Master Servicer included in the
payment on the Payment Date and the aggregate amount of optional advances
pursuant to Section 4.03 on Mortgage Loans by the Master Servicer outstanding as
of the close of business on the Payment Date;
(30) the number and principal balances of any Mortgage Loans in each Loan
Group retransferred to the Sponsor pursuant to each of Section 2.04 and to the
Class R-1 Certificate Holder pursuant to Section 2.06;
D-2
(31) the amount of Subordinated Transferor Collections included in the
payment for each Class of Notes;
(32) for the first Payment Date, the number and Cut-off Date Asset Balance
of Mortgage Loans in each Loan Group for which the Mortgage Loan File was not
delivered to the Custodian acting on behalf of the Indenture Trustee within 30
days of the Closing Date or Subsequent Closing Date, as applicable;
(33) the amount being paid to the Class R-1 Certificates,
(34) the Net Draws related to each Loan Group for the Payment Date;
(35) the Net Draws Principal Payment for the Payment Date;
(36) the Record Date for that Payment Date;
(37) the Determination Date;
(38) the Payment Date;
(39) the amount of funds received into any of the Collection Account,
Payment Account, and any other account or fund established under the Transaction
Documents, and the sources of the funds;
(40) fees paid to any party under the Transaction Documents, other than
the Servicing Fee;
(41) the premium payable to the Credit Enhancer on the Policy included in
the payments with respect to each Loan Group;
(42) the applicable Mortgage Rate;
(43) the beginning and ending balance of any of the Collection Account,
Payment Account, and any other account or fund established under the Transaction
Documents;
(44) the number and principal balance of the Mortgage Loans in each Loan
Group at the beginning and the end applicable period, and the following
information for the Mortgage Loans in each Loan Group: the weighted average
Mortgage Rate, the weighted average remaining term to maturity, and the weighted
average loan age;
(45) the pool factor;
(46) amount of prepayments for each Loan Group;
(47) amount of prepayment charges for each Loan Group;
(48) delinquency and loss information for the Mortgage Loans in each Loan
Group;
(49) any material modifications, extensions, or waiver to any terms of
Mortgage Loan in each Loan Group during the applicable period;
(50) any material breaches by any party to the Transaction Documents of
any representation, warranty, or covenant;
(51) any repurchase or substitution of a Mortgage Loan in each Loan Group;
and
D-3
(52) any material changes to the underwriting, originating, acquisition or
pool selection criteria of any Seller.
The amounts furnished pursuant to clauses (4), (5) (for Note Interest),
(7), (8), (9), (10), and (11) above shall be expressed as a dollar amount per
$1,000 increment of Notes.
D-4
EXHIBIT E-1
FORM OF PERFORMANCE CERTIFICATION
(SUBSERVICER)
[on file with Master Servicer]
E-1-1
EXHIBIT E-2
FORM OF PERFORMANCE CERTIFICATION
(INDENTURE TRUSTEE)
[on file with Indenture Trustee]
E-2-1
EXHIBIT F
FORM OF SERVICING CRITERIA TO BE ADDRESSED IN
ASSESSMENT OF COMPLIANCE STATEMENT
Each assessment of compliance to be delivered shall address, at a
minimum, the criteria identified as below as "Applicable Servicing Criteria":
------------------------------------------------------------------------------------------ ----------------------
Applicable Servicing
Servicing Criteria Criteria
------------------------------------------------------------------------------------------ ----------------------
Reference Criteria
-------------------- --------------------------------------------------------------------- ----------------------
General Servicing Considerations
-------------------- ----------------------
Policies and procedures are instituted to monitor any
performance or other triggers and events of default in
1122(d)(1)(i) accordance with the transaction agreements.
-------------------- ----------------------
If any material servicing activities are outsourced to
third parties, policies and procedures are instituted to
monitor the third party's performance and compliance with
1122(d)(1)(ii) such servicing activities.
-------------------- ----------------------
Any requirements in the transaction agreements to
maintain a back-up servicer for the mortgage loans are
1122(d)(1)(iii) maintained.
-------------------- ----------------------
A fidelity bond and errors and omissions policy is in
effect on the party participating in the servicing
function throughout the reporting period in the amount of
coverage required by and otherwise in accordance with the
1122(d)(1)(iv) terms of the transaction agreements.
-------------------- ----------------------
Cash Collection and Administration
-------------------- ----------------------
Payments on mortgage loans are deposited into the
appropriate custodial bank accounts and related bank
clearing accounts no more than two business days
following receipt, or such other number of days specified
1122(d)(2)(i) in the transaction agreements.
-------------------- ----------------------
Disbursements made via wire transfer on behalf of an
obligor or to an investor are made only by authorized
1122(d)(2)(ii) personnel.
-------------------- ----------------------
Advances of funds or guarantees regarding collections,
cash flows or distributions, and any interest or other
fees charged for such advances, are made, reviewed and
1122(d)(2)(iii) approved as specified in the transaction agreements.
-------------------- ----------------------
The related accounts for the transaction, such as cash
reserve accounts or accounts established as a form of
overcollateralization, are separately maintained (e.g.,
with respect to commingling of cash) as set forth in the
1122(d)(2)(iv) transaction agreements.
-------------------- ----------------------
Each custodial account is maintained at a federally
insured depository institution as set forth in the
transaction agreements. For purposes of this criterion,
"federally insured depository institution" with respect
1122(d)(2)(v) to a foreign
-------------------- ----------------------
F-1
------------------------------------------------------------------------------------------ ----------------------
Applicable Servicing
Servicing Criteria Criteria
------------------------------------------------------------------------------------------ ----------------------
Reference Criteria
-------------------- --------------------------------------------------------------------- ----------------------
financial institution means a foreign
financial institution that meets the requirements of Rule
13k-1(b)(1) of the Exchange Act.
-------------------- ----------------------
Unissued checks are safeguarded so as to prevent
1122(d)(2)(vi) unauthorized access.
-------------------- ----------------------
Reconciliations are prepared on a monthly basis for all
asset-backed securities related bank accounts, including custodial
accounts and related bank clearing accounts. These reconciliations
are (A) mathematically accurate; (B) prepared within 30 calendar
days after the bank statement cutoff date, or such other number of
days specified in the transaction agreements; (C) reviewed and
approved by someone other than the person who prepared the
reconciliation; and (D) contain explanations for reconciling items.
These reconciling items are resolved within 90 calendar days of
their original identification, or such other number of days
1122(d)(2)vii) specified in the transaction agreements.
-------------------- ----------------------
Investor Remittances and Reporting
-------------------- ----------------------
Reports to investors, including those to be filed with the
Commission, are maintained in accordance with the transaction
agreements and applicable Commission requirements. Specifically,
such reports (A) are prepared in accordance with timeframes and
other terms set forth in the transaction agreements; (B) provide
information calculated in accordance with the terms specified in
the transaction agreements; (C) are filed with the Commission as
required by its rules and regulations; and (D) agree with
investors' or the trustee's records as to the total unpaid
principal balance and number of mortgage loans serviced by the
1122(d)(3)(i) Servicer.
-------------------- ----------------------
Amounts due to investors are allocated and remitted in
accordance with timeframes, distribution priority and
1122(d)(3)(ii) other terms set forth in the transaction agreements.
-------------------- ----------------------
Disbursements made to an investor are posted within two
business days to the Servicer's investor records, or such
1122(d)(3)(iii) other number of days specified in the transaction agreements.
-------------------- ----------------------
Amounts remitted to investors per the investor reports
agree with cancelled checks, or other form of payment, or
1122(d)(3)(iv) custodial bank statements.
-------------------- ----------------------
Pool Asset Administration
-------------------- ----------------------
Collateral or security on mortgage loans is maintained as
required by the transaction agreements or related
1122(d)(4)(i) mortgage loan documents.
-------------------- ----------------------
Mortgage loan and related documents are safeguarded as required by
1122(d)(4)(ii) the transaction agreements.
-------------------- ----------------------
F-2
------------------------------------------------------------------------------------------ ----------------------
Applicable Servicing
Servicing Criteria Criteria
------------------------------------------------------------------------------------------ ----------------------
Reference Criteria
-------------------- --------------------------------------------------------------------- ----------------------
Any additions, removals or substitutions to the asset
pool are made, reviewed and approved in accordance with
any conditions or requirements in the transaction
1122(d)(4)(iii) agreements.
-------------------- ----------------------
Payments on mortgage loans, including any payoffs, made in
accordance with the related mortgage loan documents are posted to
the Servicer's obligor records maintained no more than two business
days after receipt, or such other number of days specified in the
transaction agreements, and allocated to principal, interest or
other items (e.g., escrow) in accordance with the related mortgage
1122(d)(4)(iv) loan documents.
-------------------- ----------------------
The Servicer's records regarding the mortgage loans agree
with the Servicer's records with respect to an obligor's
1122(d)(4)(v) unpaid principal balance.
-------------------- ----------------------
Changes with respect to the terms or status of an
obligor's mortgage loans (e.g., loan modifications or
re-agings) are made, reviewed and approved by authorized
personnel in accordance with the transaction agreements
1122(d)(4)(vi) and related pool asset documents.
-------------------- ----------------------
Loss mitigation or recovery actions (e.g., forbearance
plans, modifications and deeds in lieu of foreclosure,
foreclosures and repossessions, as applicable) are
initiated, conducted and concluded in accordance with the
timeframes or other requirements established by the
1122(d)(4)(vii) transaction agreements.
-------------------- ----------------------
Records documenting collection efforts are maintained during the
period a mortgage loan is delinquent in accordance with the
transaction agreements. Such records are maintained on at least a
monthly basis, or such other period specified in the transaction
agreements, and describe the entity's activities in monitoring
delinquent mortgage loans including, for example, phone calls,
letters and payment rescheduling plans in cases where delinquency
1122(d)(4)(viii) is deemed temporary (e.g., illness or unemployment).
-------------------- ----------------------
Adjustments to interest rates or rates of return for
mortgage loans with variable rates are computed based on
1122(d)(4)(ix) the related mortgage loan documents.
-------------------- ----------------------
Regarding any funds held in trust for an obligor (such as escrow
accounts): (A) such funds are analyzed, in accordance with the
obligor's mortgage loan documents, on at least an annual basis, or
such other period specified in the transaction agreements; (B)
interest on such funds is paid, or credited, to obligors in
accordance with applicable mortgage loan documents and state laws;
and (C) such funds are returned to the obligor within 30 calendar
days of full repayment of the related mortgage loans, or such other
1122(d)(4)(x) number of days specified in the transaction agreements.
-------------------- ----------------------
F-3
------------------------------------------------------------------------------------------ ----------------------
Applicable Servicing
Servicing Criteria Criteria
------------------------------------------------------------------------------------------ ----------------------
Reference Criteria
-------------------- --------------------------------------------------------------------- ----------------------
Payments made on behalf of an obligor (such as tax or
insurance payments) are made on or before the related
penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments, provided
that such support has been received by the servicer at
least 30 calendar days prior to these dates, or such
other number of days specified in the transaction
1122(d)(4)(xi) agreements.
-------------------- ----------------------
Any late payment penalties in connection with any payment
to be made on behalf of an obligor are paid from the
servicer's funds and not charged to the obligor, unless
the late payment was due to the obligor's error or
1122(d)(4)(xii) omission.
-------------------- ----------------------
Disbursements made on behalf of an obligor are posted
within two business days to the obligor's records
maintained by the servicer, or such other number of days
1122(d)(4)(xiii) specified in the transaction agreements.
-------------------- ----------------------
Delinquencies, charge-offs and uncollectible accounts are
recognized and recorded in accordance with the
1122(d)(4)(xiv) transaction agreements.
-------------------- ----------------------
Any external enhancement or other support, identified in
Item 1114(a)(1) through (3) or Item 1115 of Regulation
1122(d)(4)(xv) AB, is maintained as set forth in the transaction agreements.
-------------------- ----------------------
---------------------------------------------------------------------
-------------------- --------------------------------------------------------------------- ----------------------
[NAME OF MASTER SERVICER] [NAME OF INDENTURE TRUSTEE] [NAME OF SUBSERVICER]
Date: _________________________
By: ________________________________
Name:
Title:
F-4
EXHIBIT G
XXXXXXXX-XXXXX CERTIFICATION
(Replacement of Master Servicer)
G-1
EXHIBIT H
FORM OF RELIANCE CERTIFICATE
[on file with Indenture Trustee]
H-1
