RECONSTITUTED SERVICING AGREEMENT
This RECONSTITUTED SERVICING AGREEMENT (this "Agreement"), entered into as
of December 1, 2006, by and between HSBC BANK USA, NATIONAL ASSOCIATION ("HSBC"
or the "Seller"), HSI ASSET SECURITIZATION CORPORATION ("HASCO" or the
"Depositor") and XXXXX FARGO BANK, N.A., as servicer (in such capacity, the
"Servicer"), and is acknowledged by CITIMORTGAGE, INC., as master servicer (the
"Master Servicer") and, acknowledged by DEUTSCHE BANK NATIONAL TRUST COMPANY
(the "Trustee"), recites and provides as follows:
RECITALS
WHEREAS, the Seller has conveyed certain Mortgage Loans (the "Mortgage
Loans") to the Depositor, which in turn has conveyed the Mortgage Loans to the
Trustee, pursuant to a pooling and servicing agreement, dated as of December 1,
2006 (the "Pooling and Servicing Agreement"), attached as Exhibit B hereto,
among the Trustee, Citibank, N.A., as securities administrator (the "Securities
Administrator"), the Master Servicer, the Depositor and Xxxxx Fargo Bank, N.A.,
as the custodian;
WHEREAS, the Mortgage Loans are currently serviced by the Servicer
pursuant to (i) the Servicing Agreement between HSBC, as owner, and the
Servicer, as servicer, dated June 30, 2006 (the "Servicing Agreement"), annexed
hereto as Exhibit C, and (ii) the First Addendum to Servicing Agreement between
HSBC, as owner, and the Servicer, as servicer, dated July 15, 2006 (the "First
Addendum");
WHEREAS, the Seller desires that the Servicer continue to service the
Mortgage Loans, and the Servicer has agreed to do so, pursuant to the Servicing
Agreement, subject to the rights of the Seller and the Master Servicer to
terminate the rights and obligations of the Servicer hereunder as set forth
herein and to the other conditions set forth herein;
WHEREAS, the Seller and the Servicer agree that the provisions of the
Servicing Agreement shall apply to the Mortgage Loans, but only to the extent
provided herein and that this Agreement shall govern the Mortgage Loans for so
long as such Mortgage Loans remain subject to the provisions of the Pooling and
Servicing Agreement;
WHEREAS, the Seller and the Servicer agree that the provisions of the
First Addendum shall not apply to the Mortgage Loans for so long as such
Mortgage Loans remain subject to the provisions of the Pooling and Servicing
Agreement;
WHEREAS, the Master Servicer and any successor master servicer shall be
obligated, among other things, to supervise the servicing of the Mortgage Loans
on behalf of the Trustee, and shall have the right, under certain circumstances,
to terminate the rights and obligations of the Servicer under this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth and for other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Seller and the Servicer hereby agree as
follows:
AGREEMENT
1. Definitions. Capitalized terms used and not defined in this Agreement,
including Exhibit A hereto and any provisions of the Servicing Agreement
incorporated by reference herein (regardless if such terms are defined in the
Servicing Agreement), shall have the meanings ascribed to such terms in the
Pooling and Servicing Agreement.
2. Custodianship. The parties hereto acknowledge that Xxxxx Fargo Bank,
N.A. will act as custodian (the "Custodian") of the Custodial Mortgage Files for
the Trustee pursuant to the Pooling and Servicing Agreement.
3. Servicing. The Servicer agrees, with respect to the Mortgage Loans, to
perform and observe the duties, responsibilities and obligations that are to be
performed and observed under the provisions of the Servicing Agreement, except
as otherwise provided herein and on Exhibit A hereto, and that the provisions of
the Servicing Agreement, as so modified, are and shall be a part of this
Agreement to the same extent as if set forth herein in full.
The Servicer additionally agrees that the Servicer will fully furnish, in
accordance with the Fair Credit Reporting Act of 1970, as amended (the "Fair
Credit Reporting Act") and its implementing regulations, accurate and complete
information (e.g., favorable and unfavorable) on its borrower credit files to
Equifax, Experian, and Trans Union Credit Information Company (three of the
credit repositories) on a monthly basis.
4. Trust Cut-off Date. The parties hereto acknowledge that by operation of
Section 4.05 and Section 5.01 of the Servicing Agreement, the remittance on
January 18, 2007 to the Trust Fund is to include principal due after December 1,
2006 (the "Trust Cut-off Date") plus interest, at the Mortgage Loan Remittance
Rate collected during the related Due Period exclusive of any portion thereof
allocable to a period prior to the Trust Cut-off Date, with the adjustments
specified in clauses (b), (c) and (d) of Section 5.01 of the Servicing
Agreement.
5. Master Servicing; Termination of Servicer. The Servicer, including any
successor servicer hereunder, shall be subject to the supervision of the Master
Servicer, which Master Servicer shall be obligated to ensure that the Servicer
services the Mortgage Loans in accordance with the provisions of this Agreement.
The Master Servicer, acting on behalf of the HSI Asset Loan Obligation Trust
2006-2 Trust Fund (the "Trust Fund") created pursuant to the Pooling and
Servicing Agreement, shall have the same rights as the Seller under the
Servicing Agreement to enforce the obligations of the Servicer under the
Servicing Agreement and the term "Owner" as used in the Servicing Agreement in
connection with any rights of the Owner shall refer to the Master Servicer,
except as otherwise specified in Exhibit A hereto. The Master Servicer shall be
entitled to terminate the rights and obligations of the Servicer under this
Agreement upon the failure of the Servicer to perform any of its obligations
under this Agreement, as provided in Article X (Default) of the Servicing
Agreement. Notwithstanding anything herein to the contrary, in no event shall
the Master Servicer be required to assume any obligations of the Seller under
the Servicing Agreement; and, in connection with the performance of the Master
Servicer's duties hereunder, the parties and other signatories hereto agree that
the Master Servicer shall be entitled to all of the rights, protections and
limitations of liability afforded to the Master Servicer under the Pooling and
Servicing Agreement.
6. No Representations. Neither the Servicer nor the Master Servicer shall
be obligated or required to make any representations and warranties regarding
the characteristics of the Mortgage Loans (other than those representations and
warranties made by the Servicer in Section 3.01 of the Servicing Agreement,
which the Servicer hereby restates as of the Closing Date) in connection with
the transactions contemplated by the Pooling and Servicing Agreement and
issuance of the Certificates issued pursuant thereto.
7. Notices. All notices and communications between or among the parties
hereto (including any third party beneficiary thereof) or required to be
provided to the Trustee shall be in writing and shall be deemed received or
given when mailed first-class mail, postage prepaid, addressed to each other
party at its address specified below or, if sent by facsimile or electronic
mail, when facsimile or electronic confirmation of receipt by the recipient is
received by the sender of such notice. Each party may designate to the other
parties in writing, from time to time, other addresses to which notices and
communications hereunder shall be sent.
All notices required to be delivered to the Master Servicer under this
Agreement shall be delivered to the Master Servicer at the following address:
CitiMortgage Mortgage, Inc.
0000 Xxxxxx Xxxx.
Xxxxxx, XX 00000
Attention: Master Servicing Division,
Compliance Manager - HALO 2006-2
All notices required to be delivered to the Securities Administrator under
this Agreement shall be delivered to the Securities Administrator at the
following address:
Citbank, N.A.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance Agency and Trust, HALO 2006-2
All remittances required to be made to the Securities Administrator under
this Agreement shall be made on a scheduled/scheduled basis to the following
wire account:
Bank Name: CitiBank (West)
Bank City/State: Glendale, CA
ABA Number: 000000000
Account Name: CMI MSD Clearing
Account Number: #[ ]
Re: HALO 2006-2
All notices required to be delivered to the Trustee hereunder shall be
delivered to the Trustee at the following address:
Deutsche Bank National Trust Company
0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Attention: Trust Administration - [to be provided]
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
All written information required to be delivered to the Seller hereunder
shall be delivered to HSBC at the following address:
HSBC Bank USA, National Association
Re: HALO 2006-2
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Head of MBS Principal Finance
All notices required to be delivered to the Servicer hereunder shall be
delivered to its office at the address for notices as set forth in the Servicing
Agreement.
8. [Reserved]
9. Acknowledgement. The Servicer hereby acknowledges that the rights and
obligations of HSBC under the Servicing Agreement will be assigned to HASCO on
the Closing Date under the Mortgage Loan Purchase Agreement; and that such
rights and obligations will simultaneously be re-assigned by HASCO to the Trust
Fund under the Pooling and Servicing Agreement. The Servicer agrees that the
Mortgage Loan Purchase Agreement and the Pooling and Servicing Agreement will
each be a valid assignment and assumption agreement or other assignment document
required pursuant to Sections 2.02 and 12.10 of the Servicing Agreement and will
constitute a valid assignment and assumption of the rights and obligations of
HSBC under the Servicing Agreement to HASCO, and by HASCO to the Trust Fund, as
applicable. In addition, the Trust Fund will make a REMIC election. The Servicer
hereby consents to each such assignment and assumption and acknowledges the
Trust Fund's REMIC election.
10. 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
CONFLICT OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all of which counterparts shall together constitute but one and the same
instrument.
12. Reconstitution. The Seller and the Servicer agree that this Agreement
is a reconstitution agreement executed in connection with a "Securitization
Transaction," and that the date hereof is the "Reconstitution Date," each as
defined in the Servicing Agreement.
Executed as of the day and year first above written.
HSBC BANK USA, NATIONAL ASSOCIATION,
as Seller
By:
--------------------------------
Name: Xxx X. Xxxxxxxx
Title: Managing Director #14311
HSI ASSET SECURITIZATION CORPORATION
as Depositor
By:
--------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
XXXXX FARGO BANK, N.A.,
as Servicer
By:
--------------------------------
Name:
Title:
CITIMORTGAGE, INC.,
as Master Servicer
By:
--------------------------------
Name:
Title:
Acknowledged:
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee and not individually
By:
--------------------------
Name:
Title:
EXHIBIT A
Modifications to the Servicing Agreement
1. Unless otherwise specified herein, any provisions of the Servicing
Agreement, including definitions, relating to (i) representations and
warranties relating to the Mortgage Loans and not relating to the
servicing of the Mortgage Loans, (ii) Mortgage Loan repurchase
obligations, (iii) Whole Loan Transfers, Securitization Transactions and
Reconstitution, and (iv) Assignments of Mortgage, shall be disregarded for
purposes relating to this Agreement. The exhibits to the Servicing
Agreement and all references to such exhibits shall also be disregarded.
2. The definition of "Accepted Servicing Practices" in Article I is hereby
amended in its entirety to read as follows:
Accepted Servicing Practices: With respect to any Mortgage Loan,
those mortgage servicing practices (i) of prudent mortgage lending
institutions which service mortgage loans of the same type as such
Mortgage Loan in the jurisdiction where the related Mortgaged
Property is located and (ii) in accordance with applicable state,
local and federal laws, rules and regulations.
3. The definition of "Custodial Agreement" shall be inapplicable to this
Agreement.
4. The definition of "Custodian" in Article I is hereby amended to read as
follows:
Custodian: means Xxxxx Fargo Bank, N.A., and its successors and
assigns.
5. A new definition of "Document Transfer Event" is hereby added to Article I
immediately following the definition of "Determination Date" to read as
follows:
Document Transfer Event: The day on which (i) Xxxxx Fargo Bank, N.A.
or any successor thereto is no longer the servicer of any of the
Mortgage Loans, (ii) the senior, unsecured long-term debt rating of
Xxxxx Fargo & Company is less than "BBB-" by Fitch or (iii) any
Rating Agency requires the Servicer to deliver the Retained Mortgage
Files to the Custodian.
6. A new definition of "MERS Eligible Mortgage Loan" is hereby added to
Article I immediately following the definition of "MERS" to read as
follows:
MERS Eligible Mortgage Loan: Any Mortgage Loan that has been
designated by the Servicer as recordable in the name of MERS, as
nominee.
7. The definition of "Mortgage Interest Rate" in Article I is hereby amended
by adding the phrase "net of any Relief Act Reduction" to the end of such
definition.
8. New definitions of "Non-MERS Eligible Mortgage Loan" and "Non-MERS
Mortgage Loans" are hereby added to Article I immediately following the
definition of "Mortgagor" to read as follows:
Non-MERS Eligible Mortgage Loan: Any Mortgage Loan other than a
MERS Eligible Mortgage Loan.
Non-MERS Mortgage Loan: Any Mortgage Loan other than a MERS
Mortgage Loan.
9. A new definition of "Prepayment Charge" is added to Article I to
immediately precede the definition of "Prepayment Interest Shortfall" and
to read as follows:
Prepayment Charge: means with respect to any Mortgage Loan and
Distribution Date, the charges or premiums, if any, exclusive of any
servicing charges collected by the Servicer in connection with a
Mortgage Loan payoff, due in connection with a full prepayment of
such Mortgage Loan during the Principal Prepayment Period in
accordance with the terms thereof (other than any Servicer
Prepayment Charge Payment Amount).
10. The definition of "Prepayment Interest Shortfall" in Article I is hereby
amended to read as follows:
Prepayment Interest Shortfall: means, with respect to any Mortgage
Loan that was subject to a Principal Prepayment in full or in part
during any Principal Prepayment Period, which Principal Prepayment
was applied to such Mortgage Loan prior to such Mortgage Loan's Due
Date in such Principal Prepayment Period, the amount of interest
(net of the related Servicing Fee for Principal Prepayments in full
only) that would have accrued on the amount of such Principal
Prepayment during the period commencing on the date as of which such
Principal Prepayment was applied to such Mortgage Loan and ending on
the day immediately preceding such Due Date, inclusive.
11. The definition of "Prepayment Penalty" is hereby deleted in its entirety.
In addition, all references to "Prepayment Penalty" in the Servicing
Agreement is hereby replaced with "Prepayment Charge".
12. A new definition of "Realized Loss" is added to Article I immediately
following the definition of "Rating Agency" to read as follows:
Realized Loss: With respect to each Liquidated Mortgage Loan (as
defined in the Pooling and Servicing Agreement), an amount equal to
(i) the unpaid principal balance of such Mortgage Loan as of the
date of liquidation, minus (ii) Liquidation Proceeds received, to
the extent allocable to principal, net of amounts that are
reimbursable therefrom to the Master Servicer or the Servicer with
respect to such Mortgage Loan (other than Monthly Advances of
principal) including expenses of liquidation.
13. A new definition of "Relief Act Reduction" is hereby added to Article I
immediately following the definition of "Regulation AB" to read as
follows:
Relief Act Reduction: With respect to any Mortgage Loan as to which
there has been a reduction in the amount of the interest collectible
thereon as a result of the application of the Servicemembers Civil
Relief Act, any amount by which interest collectible on such
Mortgage Loan for the Due Date in the related Due Period is less
than the interest accrued thereon for the applicable one-month
period at the Mortgage Interest Rate without giving effect to such
reduction.
14. A new definition of "Servicer Prepayment Charge Payment Amount" is added
to Article I immediately after the new definition of "Servicer
Information" to read as follows:
Servicer Prepayment Charge Payment Amount: Any amount paid by the
Servicer as a result of an impermissible waiver of a Prepayment
Charge pursuant to Section 4.01 of this Agreement.
15. Section 2.01 (Possession of Mortgage Files; Maintenance of Servicing
Files) is hereby amended as follows:
(i) by replacing the word "Owner" with the words "Trustee and the
Trust Fund" in each instance; and
(ii) by adding the following after the word "Owner" in the
fourteenth line of the first paragraph:
or within 60 days of the occurrence of a Document Transfer Event
16. Section 2.02 (Books and Records; Transfers of Mortgage Loans) is hereby
amended as follows:
(i) by replacing the reference to "Owner" in the first paragraph of such
section with "Trustee and the Trust Fund;" and
(ii) by adding the following paragraph as the last paragraph of such
section:
Only if so requested by the Seller or the Master Servicer, the
Servicer, at the Depositor's expense, shall cause to be properly
prepared and recorded as Assignment of Mortgage in favor of the
Trustee with respect to each Non-MERS Mortgage Loan in each public
recording office where such Non-MERS Mortgage Loans are recorded, as
soon as practicable after the Closing Date (but in no event more
than 90 days thereafter to the extent delays are caused by the
applicable recording office).
17. The parties acknowledge that the fourth paragraph of Section 2.02 shall be
inapplicable to this Agreement.
18. The parties acknowledge that Section 2.03 (Custodial Agreement; Delivery
of Documents) shall be superseded by the provisions of the Pooling and
Servicing Agreement.
19. The first paragraph of Section 3.01 (Servicer Representations and
Warranties) is hereby amended by replacing the words "to the Owner" with
"to the Trust Fund, the Master Servicer, the Depositor, the Trustee and
the Securities Administrator."
20. Section 3.01(k) (No Brokers' Fees) shall be inapplicable to this
Agreement.
21. A new paragraph is hereby added at the end of Section 3.01 (Servicer
Representations and Warranties) to read as follows:
It is understood and agreed that the representations and
warranties set forth in Section 3.01 (a) through (j) and (l) through
(o) shall survive the engagement of the Servicer to perform the
servicing responsibilities hereunder and the delivery of the
Servicing Files to the Servicer and shall inure to the benefit of
the Depositor, the Trustee, the Trust Fund and the Master Servicer.
Upon discovery by either the Servicer, the Depositor, the Master
Servicer or the Trustee of a breach of any of the foregoing
representations and warranties which materially and adversely
affects the ability of the Servicer to perform its duties and
obligations under this Agreement or otherwise materially and
adversely affects the value of the Mortgage Loans, the Mortgaged
Property or the priority of the security interest on such Mortgaged
Property or the interest of the Depositor, Trustee or the Trust
Fund, the party discovering such breach shall give prompt written
notice to the other.
Within sixty (60) days of the earlier of either discovery by
or notice to the Servicer of any breach of a representation or
warranty set forth in Section 3.01 which materially and adversely
affects the ability of the Servicer to perform its duties and
obligations under this Agreement or otherwise materially and
adversely affects the value of the Loans, the Mortgaged Property or
the priority of the security interest on such Mortgaged Property,
the Servicer shall use its best efforts promptly to cure such breach
in all material respects and, if such breach cannot be cured, the
Servicer shall, at the Trustee's or Master Servicer's option, assign
the Servicer's rights and obligations under this Agreement (or
respecting the affected Loans) to a successor Servicer selected by
the Master Servicer with prior written notice to the Trustee (if and
to the extent required under the Pooling and Servicing Agreement).
Such assignment shall be made in accordance with Section 12.01.
In addition, the Servicer shall indemnify (from its own funds)
the Depositor, the Trustee, the Trust Fund and the Master Servicer
and hold each of them harmless against any costs resulting from any
claim, demand, defense or assertion based on or grounded upon, or
resulting from, a breach of the Servicer's representations and
warranties contained in this Agreement. It is understood and agreed
that the remedies set forth in this Section 3.01 constitute the sole
remedies of the Depositor, the Master Servicer, the Trust Fund and
the Trustee respecting a breach of the foregoing representations and
warranties.
Any cause of action against the Servicer relating to or
arising out of the breach of any representations and warranties made
in Section 3.01 shall accrue upon (i) discovery of such breach by
the Servicer or notice thereof by the Trustee or Master Servicer to
the Servicer, (ii) failure by the Servicer to cure such breach
within the applicable cure period, and (iii) demand upon the
Servicer by the Depositor, the Trustee or the Master Servicer for
compliance with this Agreement.
22. Section 4.01 (Servicer to Act as Servicer) is hereby amended by:
(i) replacing the second paragraph of such section with the following:
Consistent with the terms of this Agreement, the Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to
the postponement of any such term or in any manner grant indulgence
to any Mortgagor if in the Servicer's reasonable and prudent
determination such waiver, modification, postponement or indulgence
is not materially adverse to the Owner, provided, however, that
unless the Mortgagor is in default with respect to the Mortgage Loan
or such default is, in the judgment of the Servicer, imminent, the
Servicer shall not permit any modification with respect to any
Mortgage Loan that would change the Mortgage Interest Rate, forgive
the payment of principal or interest, reduce or increase the
outstanding principal balance (except for actual payments of
principal) or change the final maturity date on such Mortgage Loan.
Without limiting the generality of the foregoing, the Servicer shall
continue, and is hereby authorized and empowered, to execute and
deliver on behalf of itself and the Owner, all instruments of
satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments, with respect to the
Mortgage Loans and with respect to the Mortgaged Properties;
provided, further, that upon the full release or discharge, the
Servicer shall notify the related Custodian of the related Mortgage
Loan of such full release or discharge. If reasonably required by
the Servicer, the Owner shall furnish the Servicer with any powers
of attorney and other documents necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties
under this Agreement. Promptly after the execution of any
assumption, modification, consolidation or extension of any Mortgage
Loan, the Servicer shall forward to the Master Servicer copies of
any documents evidencing such assumption, modification,
consolidation or extension. Notwithstanding anything to the contrary
contained in this Agreement, the 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 Pooling and
Servicing Agreement to fail to qualify as a REMIC or result in the
imposition of any tax under Section 860F(a) or Section 860G(d) of
the Code.
(ii) by replacing the reference to "the tenth (10th) Business Day of each
month" with "tenth calendar day of each month (or if such calendar
day is not a Business Day, the immediately preceding Business Day)"
in the second to last sentence of the sixth paragraph.
23. Section 4.04 (Establishment of and Deposits to Custodial Account) is
hereby amended by replacing the words "in trust for the Owner and/or
subsequent owners of Mortgage Loans, and various Mortgagors - P&I" in the
fourth and fifth lines of the first sentence of the first paragraph with
the following:
"in trust for the HSI Asset Loan Obligation Trust 2006-2 and various
Mortgagors".
Section 4.05 (Permitted Withdrawals From Custodial Account) is hereby
amended as follows:
(i) by replacing the last two lines of clause (iii) with the
following:
shall be prior to the rights of the Trust Fund; provided
however, that in the event that the Servicer determines in
good faith that any unreimbursed Monthly Advances will not be
recoverable from amounts representing late recoveries of
payments of principal or interest respecting the particular
Mortgage Loan as to which such Monthly Advance was made or
from Liquidation Proceeds or Insurance Proceeds with respect
to such Mortgage Loan, the Servicer may reimburse itself for
such amounts from the Custodial Account, it being understood,
in the case of any such reimbursement, that the Servicer's
right thereto shall be prior to the rights of the Trust Fund;
(ii) by amending clause (v) thereof by adding the words "Section
4.01 and" before the reference to Section 8.01.
24. Section 4.06 (Establishment of and Deposits to Escrow Account) is hereby
amended by deleting the words "Owner and/or subsequent Owners of
Residential Mortgage Loans, and various Mortgagors - T&I" in the fourth
and fifth lines of the first sentence of the first paragraph, and
replacing it with the following:
HSI Asset Loan Obligation Trust 2006-2 and various Mortgagors.
25. Section 4.07 (Permitted Withdrawals from Escrow Account) is hereby amended
by removing the word "and" at the end of clause (viii), replacing the
period at the end of clause (ix) with "; and" and adding a new clause (x)
to read as follows:
(x) to transfer funds to another Eligible Institution in accordance
with Section 4.09 hereof.
26. Section 4.09 (Protection of Accounts) is hereby amended as follows:
(i) by replacing the words "the Owner" with "the Master Servicer"
in each instance; and
(ii) by adding the following sentence as the last sentence of such
section:
The Servicer shall give notice to the Master Servicer of any
transfer of the Custodial Account or the Escrow Account to a
different Qualified Depository no later than thirty (30) days after
any such transfer is made and deliver to the Master Servicer, upon
request, a certification notice in the form of Exhibit E or Exhibit
F, as applicable, with respect to such Qualified Depository.
27. Section 4.16 (Title, Management and Disposition of REO Property) is hereby
amended by (i) replacing the reference to "one year" in the fifteenth line
of the second paragraph thereof with "three years", (ii) adding two new
paragraphs after the second paragraph thereof to read as follows:
In the event that the Trust Fund acquires any REO Property in
connection with a default or imminent default on a Mortgage Loan,
the Servicer shall dispose of such REO Property not later than the
end of the third taxable year after the year of its acquisition by
the Trust Fund unless the Servicer has applied for and received a
grant of extension from the Internal Revenue Service (and provided a
copy of the same to the Master Servicer and the Trustee) to the
effect that, under the REMIC Provisions and any relevant proposed
legislation and under applicable state law, the applicable Trust
REMIC may hold REO Property for a longer period without adversely
affecting the REMIC status of such REMIC or causing the imposition
of a federal or state tax upon such REMIC. If the Servicer has
received such an extension, then the Servicer shall continue to
attempt to sell the REO Property for its fair market value for such
period longer than three years as such extension permits (the
"Extended Period"). If the Servicer has not received such an
extension and the Servicer is unable to sell the REO Property within
the period ending 3 months before the end of such third taxable year
after its acquisition by the Trust Fund or if the Servicer has
received such an extension, and the Servicer is unable to sell the
REO Property within the period ending three months before the close
of the Extended Period, the Servicer shall, before the end of the
three year period or the Extended Period, as applicable, (i)
purchase such REO Property at a price equal to the REO Property's
fair market value or (ii) auction the REO Property to the highest
bidder (which may be the Servicer) in an auction reasonably designed
to produce a fair price prior to the expiration of the three-year
period or the Extended Period, as the case may be. The Trustee shall
sign any document or take any other action reasonably requested by
the Servicer which would enable the Servicer, on behalf of the Trust
Fund, to request such grant of extension.
Notwithstanding any other provisions of this Agreement, no REO
Property acquired by the Trust Fund shall be rented (or allowed to
continue to be rented) or otherwise used by or on behalf of the
Trust Fund in such a manner or pursuant to any terms that would: (i)
cause such REO Property to fail to qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) of the Code; or (ii)
subject any Trust REMIC to the imposition of any federal income
taxes on the income earned from such REO Property, including any
taxes imposed by reason of Sections 860F or 860G(c) of the Code,
unless the Servicer has agreed to indemnify and hold harmless the
Trust Fund with respect to the imposition of any such taxes.
(iii) deleting the first sentence of the third paragraph thereto,
and (iv) by adding the following to the end of such Section:
Prior to acceptance by the Servicer of an offer to sell any REO
Property for a sale price that is less than 90% of the unpaid
principal balance of the related Mortgage Loan, the Servicer shall
notify the Master Servicer of such offer in writing which
notification shall set forth all material terms of said offer (each
a "Notice of Sale"). The Master Servicer shall be deemed to have
approved the sale of any REO Property unless the Master Servicer
notifies the Servicer in writing, within two (2) Business Days after
its receipt of the related Notice of Sale, that it disapproves of
the related sale, in which case the Servicer shall not proceed with
such sale.
28. Section 5.02 (Statements to Owner) is hereby amended to read as follows:
Section 5.02 Statements to Master Servicer.
Not later than the tenth calendar day of each month (or if
such calendar day is not a Business Day, the immediately preceding
Business Day), the Servicer shall furnish to the Master Servicer (i)
a monthly remittance advice in a mutually agreed-upon format, a
monthly defaulted loan report in a mutually agreed upon format
relating to the period ending on the last day of the preceding
calendar month and a monthly loan loss report in a mutually agreed
upon format and (ii) all such information required pursuant to
clause (i) above on a magnetic tape or other similar media
reasonably acceptable to the Master Servicer. No later than two
Business Days after the thirteenth day of each calendar month, the
Servicer shall furnish to the Master Servicer a monthly report
containing such information regarding prepayments of Mortgage Loans
during the applicable Principal Prepayment Period and in a format as
mutually agreed to between the Servicer and the Master Servicer.
The Servicer shall provide the Master Servicer with such
information available to it concerning the Mortgage Loans as is
necessary for the Securities Administrator to prepare the Trust
Fund's federal income tax return as the Securities Administrator may
reasonably request from time to time.
29. Section 6.04 (Annual Statement as to Compliance) is hereby amended as
follows:
(i) by replacing the words "the Owner or any Master Servicer or Depositor"
with "the Master Servicer" in each instance.
30. Section 6.05 (Annual Independent Public Accountants' Servicing Report) is
hereby deleted in its entirety.
31. Section 6.06 (Report on Assessment of Compliance and Attestation) is
hereby amended as follows:
(i) by replacing the last three lines of subsection (i) with the
following:
"Applicable Servicing Criteria" specified on Exhibit H.
(ii) by replacing any reference to "the Owner, any Master Servicer
or any Depositor" with "the Master Servicer";
(iii) by replacing any reference to "the Owner, such Master Servicer
and such Depositor" with "the Master Servicer."
32. Section 8.01 (Indemnification; Third Party Claims) is hereby amended in
its entirety to read as follows:
The Servicer shall indemnify the Owner, the Depositor, the
Trust Fund, the Trustee, the Securities Administrator and the Master
Servicer and hold each of them harmless against any and all claims,
losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and any other
costs, fees and expenses that any of such parties may sustain the
failure of the Servicer to perform its duties and service the
Mortgage Loans in strict compliance with the terms of this Agreement
(including, but not limited to its obligations to provide any
information, report, certification, accountants' letter or other
material pursuant to Sections 6.04 and 6.06 hereunder) or for any
inaccurate or misleading information provided pursuant to Sections
6.04 and 6.06 hereunder. The Servicer immediately shall notify the
Owner, the Master Servicer, the Securities Administrator and the
Trustee or any other relevant party if a claim is made by a third
party with respect to this Agreement or the Mortgage Loans, assume
(with the prior written consent of the indemnified party, which
consent shall not be unreasonably withheld or delayed) the defense
of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or any of such
parties in respect of such claim. The Servicer shall follow any
written instructions received from the Master Servicer, the
Securities Administrator or the Trustee in connection with such
claim. The Servicer shall provide the Trustee (with a copy to the
Master Servicer and the Securities Administrator) with a written
report of all expenses and advances incurred by the Servicer
pursuant to this Section 8.01, and the Trustee (at the written
direction of the Master Servicer or the Securities Administrator)
from the assets of the Trust Fund promptly shall reimburse the
Servicer for all amounts advanced by it pursuant to the preceding
sentence except when the claim is in any way relates to the failure
of the Servicer to service and administer the Mortgage Loans in
strict compliance with the terms of this Agreement or the gross
negligence, bad faith or willful misconduct of this Servicer.
33. Section 9.01 (Removal of Mortgage Loans from Inclusion Under this
Agreement Upon a Securitization Transaction) is hereby amended as follows:
(a) Subsection (f)(J) is hereby amended in its entirety to read as
follows:
a description of any affiliation or relationship (of a type
described in Item 1119 of Regulation AB) between the Servicer,
each Third-Party Originator, each Subservicer and any of the
parties listed on Exhibit J hereto.
(b) Subsection (i)(i)(7) is hereby amended in its entirety to read
as follows:
there are no affiliations, relationships or transactions
relating to the Servicer, any Subservicer or any Third-Party
Originator with respect to any Securitization Transaction and
any party listed on Exhibit J hereto.
(c) Subsection (m) is hereby amended by (1) changing the reference
to "the Owner, each affiliate of the Owner" to "the Trust
Fund, the Master Servicer, the Depositor and the Trustee," (2)
deleting the reference to "or the Depositor," and (3) deleting
the reference to "and of the Depositor"; and
(d) by changing any reference to "Owner" to "Master Servicer" in
each instance in subsection (e) and the last four paragraphs
of Section 9.01.
34. Section 10.01 (Events of Default) is hereby amended by:
(a) changing any reference to "Owner" to "Master Servicer";
(b) adding the words "except with respect to clause (xi) of this
Section 10.01," at the beginning of Subpart (ii) of the first
paragraph; and
(c) adding the words "within the applicable cure period" after the
word "remedied" in the first line of the second paragraph.
(d) removing subsections (viii) & (ix) and replacing with the
following:
(viii) Servicer's residential servicer rating for servicing mortgage loans
is qualified, withdrawn or reduced below an "average" rating anytime
after the date of this Agreement.
(ix) the Delinquency Ratio exceeds a certain threshold as mutually agreed
upon and reasonably determined by Owner and Servicer, as to each
Securitization Transaction, which such determination shall be in
accordance with the standards of prudent lenders in the secondary
mortgage market.
35. Section 10.02 (Waiver of Defaults) is hereby amended by changing the
reference to "Owner" to "Master Servicer".
36. Section 11.01 (Termination) is hereby amended by restating subclause (ii)
thereof to read as below and adding the following sentence at the end of
the first paragraph of Section 11.01:
(ii) mutual consent of the Servicer and the Master Servicer in
writing, provided such termination is also acceptable to the
Rating Agencies.
At the time of any termination of the Servicer pursuant
to Section 11.01, the Servicer shall be entitled to all
accrued and unpaid Servicing Fees and unreimbursed Servicing
Advances and Monthly Advances; provided, however, in the event
of a termination for cause under Sections 10.01 hereof, such
unreimbursed amounts shall not be reimbursed to the Servicer
until such amounts are received by the Trust Fund from the
related Mortgage Loans.
37. Section 11.02 (Termination Without Cause) is hereby amended by adding the
following to the end of the second paragraph:
In addition, the Servicer shall be entitled to receive from the
Owner, with respect to each Mortgage Loan subject to termination,
pursuant to this Section 11.02, an amount equal to the sum of: (i)
unreimbursed Monthly Advances and Servicing Advances; (ii) costs to
transfer the Mortgage Loans to the successor servicer; and (iii)
Servicing Fees and REO Disposition Fees earned but not yet
collected.
38. Section 12.01 (Successor to Servicer) is hereby amended in its entirety to
read as follows:
Simultaneously with the termination of the Servicer's
responsibilities and duties under this Agreement pursuant to
Sections 8.04, 10.01, 11.01(ii) or 11.02, the Master Servicer shall,
in accordance with the provisions of the Pooling and Servicing
Agreement (i) succeed to and assume all of the Servicer's
responsibilities, rights, duties and obligations under this
Agreement, or (ii) appoint a successor meeting the eligibility
requirements of this Agreement, and which shall succeed to all
rights and assume all of the responsibilities, duties and
liabilities of the Servicer under this Agreement with the
termination of the Servicer's responsibilities, duties and
liabilities under this Agreement. Any successor to the Servicer that
is not at that time a Servicer of other mortgage loans for the Trust
Fund shall be subject to the approval of the Master Servicer, the
Owner and each Rating Agency (as such term is defined in the Pooling
and Servicing Agreement). Unless the successor servicer is at that
time a servicer of other mortgage loans for the Trust Fund, each
Rating Agency must deliver to the Trustee a letter to the effect
that such transfer of servicing will not result in a qualification,
withdrawal or downgrade of the then-current rating of any of the
Certificates. In connection with such appointment and assumption,
the Master Servicer or the Owner, as applicable, may make such
arrangements for the compensation of such successor out of payments
on the Mortgage Loans as it and such successor shall agree;
provided, however, that no such compensation shall be in excess of
that permitted the Servicer under this Agreement. In the event that
the Servicer's duties, responsibilities and liabilities under this
Agreement should be terminated pursuant to the aforementioned
sections, the Servicer shall discharge such duties and
responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with
the same degree of diligence and prudence which it is obligated to
exercise under this Agreement, and shall take no action whatsoever
that might impair or prejudice the rights or financial condition of
its successor. The resignation or removal of the Servicer pursuant
to the aforementioned sections shall not become effective until a
successor shall be appointed pursuant to this Section 12.01 and
shall in no event relieve the Servicer of the representations and
warranties made pursuant to Sections 3.01 and 3.02 and the remedies
available to the Trustee on behalf of the Trust Fund under Section
3.03 shall be applicable to the Servicer notwithstanding any such
resignation or termination of the Servicer, or the termination of
this Agreement.
Within a reasonable period of time, but in no event longer
than 30 days of the appointment of a successor entity, the Servicer
shall prepare, execute and deliver to the successor entity any and
all documents and other instruments, place in such successor's
possession all Servicing Files, and do or cause to be done all other
acts or things necessary or appropriate to effect the purposes of
such notice of termination. The Servicer shall cooperate with the
Trustee and the Master Servicer, as applicable, and such successor
in effecting the termination of the Servicer's responsibilities and
rights hereunder and the transfer of servicing responsibilities to
the successor Servicer, including without limitation, the transfer
to such successor for administration by it of all cash amounts which
shall at the time be credited by the Servicer to the Account or any
Escrow Account or thereafter received with respect to the Mortgage
Loans.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Trustee, the Servicer and the Master
Servicer an instrument (i) accepting such appointment, wherein the
successor shall make an assumption of the due and punctual
performance and observance of each covenant and condition to be
performed and observed by the Servicer under this Agreement,
whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer, with like effect as if originally named
as a party to this Agreement. Any termination or resignation of the
Servicer or termination of this Agreement pursuant to Sections 8.04,
10.01, 11.01 or 11.02 shall not affect any claims that the Master
Servicer or the Trustee may have against the Servicer arising out of
the Servicer's actions or failure to act prior to any such
termination or resignation.
The Servicer shall deliver, within three (3) Business Days of
the appointment of a successor Servicer, the funds in the Custodial
Account and Escrow Account and all collateral files, credit files
and related documents and statements held by it hereunder to the
successor Servicer and the Servicer shall account for all funds and
shall execute and deliver such instruments and do such other things
as may reasonably be required to more fully and definitively vest in
the successor all such rights, powers, duties, responsibilities,
obligations and liabilities of the Servicer.
Upon a successor's acceptance of appointment as such, the
Servicer shall notify the Trustee and Master Servicer of such
appointment in accordance with the notice procedures set forth
herein.
Except as otherwise provided in this Agreement, all reasonable
costs and expenses incurred in connection with any transfer of
servicing hereunder (whether as a result of termination pursuant to
Section 10.01 or removal of the Servicer or resignation of the
Servicer or otherwise), including, without limitation, the costs and
expenses of the Master Servicer or any other Person in appointing a
successor servicer, or of the Master Servicer in assuming the
responsibilities of the Servicer hereunder, or of transferring the
Servicing Files and the other necessary data to the successor
servicer shall be paid by the terminated, removed or resigning
Servicer from its own funds without reimbursement. Notwithstanding
anything to the contrary in this paragraph, such expenses will only
be paid by the Servicer if such Servicer is resigning or has been
terminated for cause.
39. Section 12.02 (Amendment) is hereby amended by adding the words ", with
the written consent of the Master Servicer and the Trustee" after the word
"Owner".
40. Section 12.04 (Duration of Agreement) is hereby amended by deleting the
last sentence thereof.
41. Section 12.10 (Assignment by Owner) is hereby replaced with "[Reserved]".
42. Section 12.18 (Third Party Beneficiaries) is hereby amended in its
entirety to read as follows:
Section 12.18 Intended Third Party Beneficiaries.
Notwithstanding any provision herein to the contrary, the parties to
this Agreement agree that it is appropriate, in furtherance of the
intent of such parties as set forth herein, that the Trust Fund, the
Securities Administrator, Master Servicer, the Depositor and the
Trustee receive the benefit of the provisions of this Agreement as
intended third party beneficiaries of this Agreement to the extent
of such provisions. The Servicer shall have the same obligations to
the Trust Fund, the Master Servicer, the Depositor and the Trustee
as if they were parties to this Agreement, and the Trust Fund, the
Master Servicer, the Securities Administrator, the Depositor and the
Trustee shall have the same rights and remedies to enforce the
provisions of this Agreement as if they were parties to this
Agreement. The Servicer shall only take direction from the Master
Servicer (if direction by the Master Servicer is required under this
Agreement) unless otherwise directed by this Agreement.
Notwithstanding the foregoing, all rights and obligations of the
Trust Fund, the Master Servicer, the Securities Administrator, the
Depositor and the Trustee hereunder (other than the right to
indemnification) shall terminate upon termination of the Pooling and
Servicing Agreement and of the Trust Fund pursuant to the Pooling
and Servicing Agreement.
43. [Reserved]
44. Exhibit H to the Servicing Agreement is hereby replaced in its entirety by
Exhibit D attached hereto.
45. A new Exhibit J (Transaction Parties) is hereby added to the Servicing
Agreement and is attached hereto as Exhibit E.
EXHIBIT B
Pooling and Servicing Agreement
EXHIBIT C
Servicing Agreement
EXHIBIT D
SERVICING CRITERIA TO BE ADDRESSED
IN REPORT ON ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by Xxxxx Fargo Bank, N.A.
shall address, at a minimum, the criteria identified as below as "Applicable
Servicing Criteria", as identified by a xxxx in the column titled "Applicable
Servicing Criteria":
-------------------- -------------------------------------------------------------------------- ---------------
Regulation AB Servicing Criteria Applicable
Reference Servicing
Criteria
-------------------- -------------------------------------------------------------------------- ---------------
General Servicing Considerations
-------------------- -------------------------------------------------------------------------- ---------------
Policies and procedures are instituted to monitor any performance or X
other triggers and events of default in accordance with the transaction
1122(d)(1)(i) agreements.
-------------------- -------------------------------------------------------------------------- ---------------
If any material servicing activities are outsourced to third parties, X
policies and procedures are instituted to monitor the third party's
1122(d)(1)(ii) performance and compliance with such servicing activities.
-------------------- -------------------------------------------------------------------------- ---------------
Any requirements in the transaction agreements to maintain a back-up
1122(d)(1)(iii) servicer for the mortgage loans are maintained.
-------------------- -------------------------------------------------------------------------- ---------------
A fidelity bond and errors and omissions policy is in effect on the X
party participating in the servicing function throughout the reporting
period in the amount of coverage required by and otherwise in accordance
1122(d)(1)(iv) with the terms of the transaction agreements.
-------------------- -------------------------------------------------------------------------- ---------------
Cash Collection and Administration
-------------------- -------------------------------------------------------------------------- ---------------
Payments on mortgage loans are deposited into the appropriate custodial X
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 X
1122(d)(2)(ii) investor are made only by authorized personnel.
-------------------- -------------------------------------------------------------------------- ---------------
Advances of funds or guarantees regarding collections, cash flows or X
distributions, and any interest or other fees charged for such advances,
are made, reviewed and approved as specified in the transaction
1122(d)(2)(iii) agreements.
-------------------- -------------------------------------------------------------------------- ---------------
The related accounts for the transaction, such as cash reserve accounts X
or accounts established as a form of overcollateralization, are
separately maintained (e.g., with respect to commingling of cash) as set
1122(d)(2)(iv) forth in the transaction agreements.
-------------------- -------------------------------------------------------------------------- ---------------
Each custodial account is maintained at a federally insured depository X
institution as set forth in the transaction agreements. For purposes of
this criterion, "federally insured depository institution" with respect
to a foreign financial institution means a foreign financial institution
that meets the requirements of Rule 13k-1(b)(1) of the Securities
1122(d)(2)(v) Exchange Act.
-------------------- -------------------------------------------------------------------------- ---------------
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent unauthorized access. X
-------------------- -------------------------------------------------------------------------- ---------------
Reconciliations are prepared on a monthly basis for all asset-backed X
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
1122(d)(2)(vii) number of days specified in the transaction agreements.
-------------------- -------------------------------------------------------------------------- ---------------
-------------------- -------------------------------------------------------------------------- ---------------
Regulation AB Servicing Criteria Applicable
Reference Servicing
Criteria
-------------------- -------------------------------------------------------------------------- ---------------
Investor Remittances and Reporting
-------------------- -------------------------------------------------------------------------- ---------------
Reports to investors, including those to be filed with the Commission, X
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
1122(d)(3)(i) principal balance and number of mortgage loans serviced by the Servicer.
-------------------- -------------------------------------------------------------------------- ---------------
Amounts due to investors are allocated and remitted in accordance with X
timeframes, distribution priority and other terms set forth in the
1122(d)(3)(ii) transaction agreements.
-------------------- -------------------------------------------------------------------------- ---------------
Disbursements made to an investor are posted within two business days to X
the Servicer's investor records, or such other number of days specified
1122(d)(3)(iii) in the transaction agreements.
-------------------- -------------------------------------------------------------------------- ---------------
Amounts remitted to investors per the investor reports agree with X
cancelled checks, or other form of payment, or custodial bank
1122(d)(3)(iv) statements.
-------------------- --------------------------------------------------------------------------- --------------
Pool Asset Administration
-------------------- --------------------------------------------------------------------------- --------------
Collateral or security on mortgage loans is maintained as required by the X
1122(d)(4)(i) transaction agreements or related mortgage loan documents.
-------------------- --------------------------------------------------------------------------- --------------
Mortgage loan and related documents are safeguarded as required by the X
1122(d)(4)(ii) transaction agreements
-------------------- --------------------------------------------------------------------------- --------------
Any additions, removals or substitutions to the asset pool are made, X
reviewed and approved in accordance with any conditions or requirements
1122(d)(4)(iii) in the transaction agreements.
-------------------- --------------------------------------------------------------------------- --------------
Payments on mortgage loans, including any payoffs, made in accordance X
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
1122(d)(4)(iv) accordance with the related mortgage loan documents.
-------------------- --------------------------------------------------------------------------- --------------
The Servicer's records regarding the mortgage loans agree with the X
1122(d)(4)(v) Servicer's records with respect to an obligor's unpaid principal balance.
-------------------- --------------------------------------------------------------------------- --------------
Changes with respect to the terms or status of an obligor's mortgage X
loans (e.g., loan modifications or re-agings) are made, reviewed and
approved by authorized personnel in accordance with the transaction
1122(d)(4)(vi) agreements and related pool asset documents.
-------------------- --------------------------------------------------------------------------- --------------
Loss mitigation or recovery actions (e.g., forbearance plans, X
modifications and deeds in lieu of foreclosure, foreclosures and
repossessions, as applicable) are initiated, conducted and concluded in
accordance with the timeframes or other requirements established by the
1122(d)(4)(vii) transaction agreements.
-------------------- --------------------------------------------------------------------------- --------------
Records documenting collection efforts are maintained during the period a X
mortgage loan is delinquent in accordance with the transaction
agreements. Such records are maintained on at least a monthly basis, or
such other period specified in the transaction agreements, and describe
the entity's activities in monitoring delinquent mortgage loans
including, for example, phone calls, letters and payment rescheduling
plans in cases where delinquency is deemed temporary (e.g., illness or
1122(d)(4)(viii) unemployment).
-------------------- --------------------------------------------------------------------------- --------------
-------------------- -------------------------------------------------------------------------- ---------------
Regulation AB Servicing Criteria Applicable
Reference Servicing
Criteria
-------------------- -------------------------------------------------------------------------- ---------------
Adjustments to interest rates or rates of return for mortgage loans with X
1122(d)(4)(ix) variable rates are computed based on the related mortgage loan documents.
-------------------- --------------------------------------------------------------------------- --------------
Regarding any funds held in trust for an obligor (such as escrow X
accounts): (A) such funds are analyzed, in accordance with the obligor's
mortgage loan documents, on at least an annual basis, or such other
period specified in the transaction agreements; (B) interest on such
funds is paid, or credited, to obligors in accordance with applicable
mortgage loan documents and state laws; and (C) such funds are returned
to the obligor within 30 calendar days of full repayment of the related
mortgage loans, or such other number of days specified in the transaction
1122(d)(4)(x) agreements.
-------------------- --------------------------------------------------------------------------- --------------
Payments made on behalf of an obligor (such as tax or insurance payments) X
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
1122(d)(4)(xi) transaction agreements.
-------------------- --------------------------------------------------------------------------- --------------
Pool Asset Administration cont.
-------------------- --------------------------------------------------------------------------- --------------
Any late payment penalties in connection with any payment to be made on X
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 X
days to the obligor's records maintained by the servicer, or such other
1122(d)(4)(xiii) number of days specified in the transaction agreements.
-------------------- --------------------------------------------------------------------------- --------------
Delinquencies, charge-offs and uncollectible accounts are recognized and X
1122(d)(4)(xiv) recorded in accordance with the transaction agreements.
-------------------- --------------------------------------------------------------------------- --------------
Any external enhancement or other support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation AB, is maintained as set forth in
1122(d)(4)(xv) the transaction agreements.
-------------------- --------------------------------------------------------------------------- --------------
EXHIBIT E
TRANSACTION PARTIES
Trustee: Deutsche Bank National Trust Company
Securities Administrator: Citibank, N.A.
Master Servicer: CitiMortgage, Inc.
PMI Insurer(s): [T.B.A.]
Interest Rate Cap Counterparty: Bear Xxxxxxx Financial Products, Inc.
Servicer(s): Countrywide Home Loans Servicing LP, Xxxxx Fargo Bank, N.A., HSBC
Mortgage Corporation and Wachovia Mortgage Corporation
Originator(s): Countrywide Home Loans, Inc., HSBC Mortgage Corporation, Wachovia
Mortgage Corporations and American Home Mortgage Corporation
Custodian(s): Xxxxx Fargo Bank, N.A.
Seller: HSBC Bank USA, National Association
Execution Copy
HSBC BANK (USA) INC.
Owner
and
XXXXX FARGO BANK, N.A.
Servicer
-----------------------------------
SERVICING AGREEMENT
Dated as of June 30, 2006
-----------------------------------
Stand Alone Servicing Agreement Sch/Sch
TABLE OF CONTENTS
ARTICLE ...................................................................... 1
DEFINITIONS .................................................................. 1
ARTICLE II .................................................................. 12
POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS; CUSTODIAL
AGREEMENT; DELIVERY OF DOCUMENTS ............................................ 12
ARTICLE III ................................................................. 14
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH .......................... 14
ARTICLE IV .................................................................. 19
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS .............................. 19
ARTICLE V ................................................................... 38
PAYMENTS TO OWNER ........................................................... 38
ARTICLE VI .................................................................. 40
GENERAL SERVICING PROCEDURES ................................................ 40
ARTICLE VII ................................................................. 46
SERVICER TO COOPERATE ....................................................... 46
ARTICLE VIII ................................................................ 47
THE SERVICER ................................................................ 47
ARTICLE IX .................................................................. 49
SECURITIZATION TRANSACTIONS ................................................. 49
ARTICLE X ................................................................... 58
DEFAULT ..................................................................... 58
ARTICLE XI .................................................................. 61
TERMINATION ................................................................. 61
ARTICLE XII ................................................................. 61
MISCELLANEOUS PROVISIONS .................................................... 61
EXHIBITS
Exhibit A Form of Acknowledgment Agreement
Exhibit B Form of Assignment and Assumption
Exhibit C Reserved
Exhibit D Reserved
Exhibit E Form of Custodial Account Certification
Exhibit F Form of Escrow Account Certification
Exhibit G Form of Power or Attorney
Exhibit H Servicing Criteria
Exhibit I Sarbanes Certification
ii
This is a Servicing Agreement for fixed-rate and adjustable-rate
residential first lien and second lien mortgage loans, dated and effective as of
June 30, 2006, and is executed between HSBC Bank (USA) Inc., as owner (the
"Owner"), and Xxxxx Fargo Bank, N.A., as servicer (the "Servicer").
W I T N E S S E T H
WHEREAS, the Owner has agreed to sell, from time to time, and the Servicer
shall purchase, from time to time, the servicing rights pursuant to that certain
Flow Servicing Rights Purchase and Sale Agreement dated as of between the Owner
and the Servicer;
WHEREAS, the parties desire to set forth the terms and conditions as to the
servicing of the Mortgage Loans in which Servicer owns the servicing rights,
pursuant to this Servicing Agreement;
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the Owner and the Servicer agree as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the content
otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, those
customary mortgage servicing practices (including collection procedures) of
prudent mortgage lending institutions which service mortgage loans of the same
type as the Mortgage Loans in the jurisdiction where the related Mortgaged
Property is located. Such standard of care shall not be lower than that the
Company or its designee customarily employs and exercises in servicing and
administering similar mortgage loans for its own account and shall be in full
compliance with the terms of the Mortgage Loan Documents and all applicable
federal, state and local legal and regulatory requirements.
Acknowledgment Agreement: An acknowledgment agreement substantially in the
form of Exhibit A, agreed to by the parties hereto that makes specific reference
to this Agreement to be executed on or prior to each Sale Date with respect to
servicing of Mortgage Loans by the Servicer.
1
Adjustment Date: As to each adjustable rate Mortgage Loan, the date on
which the Mortgage Interest Rate is adjusted in accordance with the terms of the
related Mortgage Note and Mortgage.
Agency/Agencies: Xxxxxx Mae, Xxxxxxx Mac or GNMA, or any of them as
applicable.
Agency Sale: Any sale or transfer of some or all of the Mortgage Loans by
the Owner to an Agency which sale or transfer is not a Securitization
Transaction or Whole Loan Transfer.
Agreement: This Servicing Agreement and all exhibits and amendments hereof
and
supplements hereto.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
ownership of the Mortgage to the Owner, or if the related Mortgage has been
recorded in the name of MERS or its designee, such actions as are necessary to
cause the Owner to be shown as the owner of the related Mortgage on the records
of MERS for purposes of the system of recording transfers of beneficial
ownership of mortgages maintained by MERS, including assignment of the MIN
Number which will appear either on the Mortgage or the Assignment of Mortgage to
MERS.
Assignment of Mortgage Note and Pledge Agreement: With respect to a
Cooperative Loan, an assignment of the Mortgage Note and Pledge Agreement.
Assignment of Proprietary Lease: With respect to a Cooperative Loan, an
assignment of the Proprietary Lease sufficient under the laws of the
jurisdiction wherein the related Cooperative Apartment is located to effect the
assignment of such Proprietary Lease.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day
on which banking and savings and loan institutions in the states where the
parties are located are authorized or obligated by law or executive order to be
closed.
Buydown Agreement: An agreement between the originator of a Mortgage Loan
and a Mortgagor, or an agreement among the originator, a Mortgagor and a seller
of a Mortgaged Property or a third party with respect to a Mortgage Loan which
provides for the application of Buydown Funds.
Buydown Funds: In respect of any Buydown Mortgage Loan, any amount
contributed by the seller of a Mortgaged Property subject to a Buydown Mortgage
Loan, the buyer of such property, or any other source, plus interest earned
thereon, in order to enable the Mortgagor to reduce the payments required to be
made from the Mortgagor's funds in the early years of a Mortgage Loan.
Buydown Mortgage Loan: Any Mortgage Loan in respect of which, pursuant to
a Buydown Agreement, (i) the Mortgagor pays less than the full monthly payments
specified in the
2
Mortgage Note for a specified period, and (ii) the difference between the
payments required under such Buydown Agreement and the Mortgage Note is provided
from Buydown Funds.
Buydown Period: The period of time when a Buydown Agreement is in effect
with respect to a related Buydown Mortgage Loan.
Code: The Internal Revenue Code of 1986, as it may be amended from time to
time or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.
Commission: The United States Securities and Exchange Commission.
Commitment Letter: The commitment by Servicer to purchase the Servicing
Rights from Owner, pursuant to the Purchase Agreement.
Condemnation Proceeds: All awards or settlements in respect of a Mortgaged
Property, whether permanent or temporary, partial or entire, by exercise of the
power of eminent domain or condemnation, to the extent not required to be
released to a Mortgagor in accordance with the terms of the related Mortgage
Loan Documents.
Cooperative: The entity that holds title (fee or an acceptable leasehold
estate) to all of the real property that the Project comprises, including the
land, separate dwelling units and all common areas.
Cooperative Apartment: The specific dwelling unit relating to a
Cooperative Loan.
Cooperative Loan: A Mortgage Loan that is secured by a first lien on and a
perfected security interest in Cooperative Shares and a Proprietary Lease
granting exclusive rights to occupy the related Cooperative Apartment in the
building owned by the related cooperative.
Cooperative Shares: The shares of stock issued by a Cooperative, owned by
the Mortgagor, and allocated to a Cooperative Apartment and represented by a
Stock Certificate.
Custodial Account: The separate account or accounts created and maintained
pursuant to Section 4.04.
Custodial Agreement: The agreement governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents.
Custodian: The custodian under the Custodial Agreement, or its successor
in interest or assigns, or any successor to the Custodian under the Custodial
Agreement as provided therein.
Cut-off Date: With respect to the transfer of servicing by the Owner to
the Servicer for any group of Mortgage Loans, the date so specified in the
related Acknowledgment Agreement.
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Depositor: The depositor, as such term is defined in Regulation AB, with
respect to any Securitization Transaction.
Determination Date: The Business Day prior to the Remittance Date.
Due Date: The first day of the month on which the Monthly Payment is due
on a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period commencing on
the second day of the month preceding the month of the Remittance Date and
ending on the first day of the month of the Remittance Date.
Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated A-1 by S&P or Prime-1 by Moody's (or a comparable rating if another rating
agency is specified by the Owner by written notice to the Servicer) at the time
any amounts are held on deposit therein, (ii) an account or accounts the
deposits in which are fully insured by the FDIC or (iii) a trust account or
accounts maintained with a federal or state chartered depository institution or
trust company acting in its fiduciary capacity. Eligible Accounts may bear
interest.
Errors and Omissions Insurance Policy: An errors and omissions insurance
policy to be maintained by the Servicer pursuant to Section 4.12.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 4.06.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other related
document.
Event of Default: Any one of the conditions or circumstances enumerated in
Section 10.01.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Xxxxxx Mae: The entity formerly known as Federal National Mortgage
Association (FNMA), or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
Fidelity Bond: A fidelity bond to be maintained by the Servicer pursuant
to Section 4.12.
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First Remittance Date: With respect to each Mortgage Loan, the 18th day
(or if such day is not a Business Day, the immediately following Business Day)
of the month following the month in which the related Cut-off Date occurs, or
such other day of the month as may be specified in the related Acknowledgment
Agreement.
Fitch: Fitch Ratings or any successor in interest.
Xxxxxxx Mac: The entity also known as the Federal Home Loan Mortgage
Corporation (FHLMC), or any successor thereto.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Liquidation Proceeds: Cash received in connection with the liquidation of
a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the
related Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage Loan, other than amounts received following the acquisition of
REO Property.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the ratio
of the original loan amount of the Mortgage Loan at its origination (unless
otherwise indicated) to the Appraised Value of the Mortgaged Property.
LPMI Policy: A policy of primary mortgage guaranty insurance issued by a
Qualified Insurer pursuant to which the related premium is to be paid by the
servicer of the related Mortgage Loan from payments of interest made by the
Mortgagor.
Master Servicer: With respect to any Securitization Transaction, the
"master servicer," if any, identified in the related transaction documents.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
MERS Mortgage Loan: Any Mortgage Loan as to which the related Mortgage or
Assignment of Mortgage has been registered with MERS on the MERS System
MERS System: The system of recording transfers of mortgages electronically
maintained by MERS.
MIN: The Mortgage Identification Number used to identify mortgage loans
registered under MERS.
Monthly Advance: The portion of each Monthly Payment that is delinquent
with respect to each Mortgage Loan at the close of business on the Determination
Date required to be advanced by the Servicer pursuant to Section 5.03 on the
Business Day immediately preceding the Remittance Date of the related month.
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Monthly Payment: The scheduled monthly payment of principal and interest
or, with respect to an interest only Mortgage Loan, payments of (i) interest, or
(ii) principal and interest, if applicable, on a Mortgage Loan.
Moody's: Xxxxx'x Investors Service, Inc. or any successor in interest.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on an unsubordinated estate in fee
simple in real property securing the Mortgage Note or the Pledge Agreement
securing the Mortgage Note for a Cooperative Loan.
Mortgage File: The Mortgage Loan Documents, and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as described in Section 4.11.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note in accordance with the provisions of the Mortgage Note.
Mortgage Loan: An individual mortgage loan or a Cooperative Loan which is
the subject of this Agreement, each Mortgage Loan or a Cooperative Loan
originally sold and subject to this Agreement being identified on the Mortgage
Loan Schedule, which Mortgage Loan or a Cooperative Loan includes without
limitation the Servicing File, the Monthly Payments, Principal Prepayments,
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, REO Disposition
Proceeds and all other rights, benefits, proceeds and obligations arising from
or in connection with such Mortgage Loan or a Cooperative Loan.
Mortgage Loan Documents: With respect to a Mortgage Loan, the original
related Mortgage Note with applicable addenda and riders, the original related
Mortgage and the originals of any required addenda and riders, the original
related Assignment of Mortgage and any original intervening related Assignments
of Mortgage, the original related title insurance policy and evidence of the
related PMI Policy or LPMI Policy, if any.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Owner, which shall be equal to the
related Mortgage Interest Rate minus the Servicing Fee Rate and minus any lender
paid PMI Policy premiums, if applicable.
Mortgage Loan Schedule: A schedule of Mortgage Loans subject to this
Agreement, annexed to each Acknowledgment Agreement.
Mortgage Note: The original executed note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage and riders thereto.
Mortgaged Property: The real property consisting of a fee simple interest
in a single parcel of real property improved by a residential dwelling securing
repayment of the debt
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evidenced by a Mortgage Note, or with respect to a Cooperative Loan, the
Cooperative Apartment.
Mortgagor: The obligor on a Mortgage Note, the owner of the Mortgaged
Property and the grantor or mortgagor named in the related Mortgage and such
grantor's or mortgagor's successor in title to the Mortgaged Property.
Nonrecoverable Monthly Advance: Any Monthly Advance previously made or
proposed to be made in respect of a Mortgage Loan or REO Property that, in the
good faith business judgment of the Servicer, will not, or, in the case of a
proposed Monthly Advance, would not be, ultimately recoverable from related late
payments, Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or
REO Property as provided herein.
Officer's Certificate: A certificate signed by the Chairman of the Board
or the Vice Chairman of the Board or the President or a Vice President or an
Assistant Vice President and certified by the Treasurer or the Secretary or one
of the Assistant Treasurers or Assistant Secretaries of the Servicer, and
delivered to the Owner as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an employee
of the Servicer, reasonably acceptable to the Owner.
Owner: HSBC Bank (USA) Inc. or its successor in interest or any successor
to the Owner under this Agreement as herein provided.
Person: Any individual, corporation, partnership, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
Pledge Agreement: With respect to a Cooperative Loan, the specific
agreement creating a first lien on and pledge of the Cooperative Shares and the
appurtenant Proprietary Lease.
Pledge Instruments: With respect to a Cooperative Loan, the Stock Power,
the Assignment of the Proprietary Lease and the Assignment of the Mortgage Note
and Pledge Agreement.
PMI Policy: A policy of primary mortgage guaranty insurance evidenced by
an electronic form and certificate number issued by a Qualified Insurer, as
required by this Agreement with respect to certain Mortgage Loans.
Prepayment Interest Shortfall: As to any Remittance Date and each Mortgage
Loan subject to a Principal Prepayment received during the calendar month
preceding such Remittance Date, the amount, if any, by which one month's
interest at the related Mortgage Loan Remittance Rate on such Principal
Prepayment exceeds the amount of interest paid in connection with such Principal
Prepayment.
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Prepayment Penalty: Payments, penalties, fees or charges calculated
pursuant to the Mortgage Note and due pursuant to the terms of the Mortgage Loan
Documents as the result of a Principal Prepayment of the Mortgage Loan, not
otherwise due thereon in respect of principal or interest.
Prime Rate: The prime rate announced to be in effect from time to time, as
published as the average rate in The Wall Street Journal.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any prepayment penalty or premium thereon and which is not accompanied by an
amount of interest representing scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.
Principal Prepayment Period: Either A(i) with respect to any Principal
Prepayment in full, the period that commences on and includes the 14th day of
the month immediately preceding the month in which such Remittance Date occurs
and ends on and includes the 13th day of the month in which such Remittance Date
occurs, and (ii) with respect to any partial Principal Prepayment, the calendar
month preceding the month in which the Remittance Date occurs, or (B) the
calendar month preceding the month in which the Remittance Date occurs, as set
forth in the related Commitment Letter .
Project: With respect to a Cooperative Loan, all real property owned by
the related Cooperative including the land, separate dwelling units and all
common areas.
Proprietary Lease: With respect to a Cooperative Loan, a lease on a
Cooperative Apartment evidencing the possessory interest of the Mortgagor in
such Cooperative Apartment.
Purchase Agreement: The Flow Servicing Rights Purchase and Sale Agreement
dated as of June 30, 2006 between the Owner and the Servicer;
Qualified Depository: A deposit account or accounts maintained with a
federal or state chartered depository institution the deposits in which are
insured by the FDIC to the applicable limits and the short-term unsecured debt
obligations of which (or, in the case of a depository institution that is a
subsidiary of a holding company, the short-term unsecured debt obligations of
such holding company) are rated A-1 by Standard & Poor's Ratings Services or
Prime-1 by Xxxxx'x Investors Service, Inc. (or a comparable rating if another
rating agency is specified by the Owner by written notice to the Servicer) at
the time any deposits are held on deposit therein.
Qualified Insurer: A mortgage guaranty insurance company duly authorized
and licensed where required by law to transact mortgage guaranty insurance
business and approved as an insurer by Xxxxxx Mae or Xxxxxxx Mac.
Rating Agency: Each of Fitch, Moody's and S&P or their respective
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such
8
nationally recognized statistical rating agencies, or other comparable person,
agreed upon and designated by the Owner.
Reconstitution: Any Securitization Transaction or Whole Loan Transfer.
Reconstitution Agreement: The agreement or agreements entered into by the
Servicer and the Owner and/or certain third parties on the Reconstitution Date
or Dates with respect to any or all of the Mortgage Loans serviced hereunder, in
connection with a Whole Loan Transfer or Securitization Transaction.
Reconstitution Date: The date on which any or all of the Mortgage Loans
serviced under this Agreement may be removed from this Agreement and
reconstituted as part of an Agency Sale, Securitization Transaction or Whole
Loan Transfer pursuant to Section 9.01 hereof. The Reconstitution Date shall be
such date which the Owner shall designate. On such date, the Mortgage Loans
transferred may cease to be covered by this Agreement and the Servicer's
servicing responsibilities may cease under this Agreement with respect to the
related transferred Mortgage Loans.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from time to time, and
subject to such clarification and interpretation as have been provided by the
Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff
of the Commission, or as may be provided by the Commission or its staff from
time to time.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to a
REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter 1,
Subtitle A of the Code, and related provisions, regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The 18th calendar day (or if such 18th day is not a
Business Day, the first Business Day immediately following) of any month,
beginning with the First Remittance Date.
REO Account: The account or accounts created and maintained pursuant to
Section 4.16 of this Agreement.
REO Disposition: The final sale by the Servicer of any REO Property.
REO Disposition Fee: The REO Disposition fee shall be the greater of one
percent (1%) of the gross sales price of the REO Property or $1,000.00 per REO
Property.
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REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 4.16.
REO Property: A Mortgaged Property acquired by the Servicer on behalf of
the Owner through foreclosure or by deed in lieu of foreclosure, as described in
Section 4.16.
Sale Date: Each date on which the Servicer acquires the right, title and
interest in and to the Servicing Rights attendant to Mortgage Loans.
Sarbanes Certifying Party: A Person who files a Xxxxxxxx-Xxxxx
certification directly with the Securities and Exchange Commission pursuant to
the Xxxxxxxx-Xxxxx Act of 2002.
Securities Act of 1933 or the 1933 Act: The Securities Act of 1933, as
amended.
Securitization Transaction: Any transaction involving either (a) a sale or
other transfer of some or all of the Mortgage Loans directly or indirectly to an
issuing entity in connection with an issuance of publicly offered or privately
placed, rated or unrated mortgage-backed securities or (b) an issuance of
publicly offered or privately placed, rated or unrated securities, the payments
on which are determined primarily by reference to one or more portfolios of
residential mortgage loans consisting, in whole or in part, of some or all of
the Mortgage Loans.
Seller: Each person who sold Mortgage Loans to the Owner.
Servicer: Xxxxx Fargo Bank, N.A., or its successor in interest or assigns,
or any successor to the Servicer under this Agreement appointed as herein
provided.
Servicer Information: As defined in Section 9.01(h)(i)(A).
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorney's fees and
disbursements) incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or
judicial proceedings, including foreclosures, (c) the management and liquidation
of any REO Property and (d) compliance with the obligations under Section 4.08
(excluding the Servicer's obligation to pay the premiums on LPMI Policies).
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.
Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual fee the Owner shall pay to the Servicer, which shall, for a period of one
full month, be equal to onetwelfth of the product of (a) the Servicing Fee Rate
and (b) the outstanding principal balance of such Mortgage Loan. Such fee shall
be payable monthly, computed on the basis of the same principal amount and
period respecting which any related interest payment on a Mortgage Loan is
received. The obligation of the Owner to pay the Servicing Fee is limited to,
and the Servicing Fee is payable solely from, the interest portion (including
recoveries with respect to interest from
10
Liquidation Proceeds, to the extent permitted by Section 4.05) of such Monthly
Payment collected by the Servicer, or as otherwise provided under Section 4.05.
Servicing Fee Rate: the percentage per annum with respect to each Mortgage
Loan set forth in the applicable Mortgage Loan Schedule.
Servicing File: With respect to each Mortgage Loan, the file retained by
the Servicer consisting of originals of all documents in the Mortgage File which
are not delivered to the Owner or the Custodian and copies of the Mortgage Loan
Documents listed in the Custodial Agreement, if applicable, the originals of
which are delivered to the Custodian or the Owner pursuant to Section 2.03.
Servicing Officer: Any officer of the Servicer involved in or responsible
for the administration and servicing of the Mortgage Loans whose name appears on
a list of servicing officers furnished by the Servicer to the Owner upon
request, as such list may from time to time be amended.
S&P: Standard & Poor's Rating Services, A Division of The XxXxxx-Xxxx
Companies, Inc. or any successor in interest.
Stated Principal Balance: As to each Mortgage Loan and as of any date of
determination, (i) the principal balance of the Mortgage Loan at the Cut-off
Date after giving effect to payments of principal due on or before such date,
whether or not received, minus (ii) all amounts previously distributed to the
Owner with respect to the related Mortgage Loan representing payments or
recoveries of principal.
Stock Certificate: With respect to a Cooperative Loan, a certificate
evidencing ownership of the Cooperative Shares issued by the Cooperative
Stock Power: With respect to a Cooperative Loan, an assignment of the
Stock Certificate or an assignment of the Cooperative Shares issued by the
Cooperative.
Subcontractor: Any vendor, subcontractor or other Person that is not
responsible for the overall servicing (as "servicing" is commonly understood by
participants in the mortgage-backed securities market) of Mortgage Loans but
performs one or more discrete functions identified in Item 1122(d) of Regulation
AB with respect to Mortgage Loans under the direction or authority of the
Servicer or a Subservicer.
Subservicer: Any person that services Mortgage Loans on behalf of the
Servicer or any Subservicer and is responsible for the performance (whether
directly or through Subservicers or Subcontractors) of a substantial portion of
the material servicing functions required to be performed by the Servicer under
this Agreement or any Reconstitution Agreement that are identified in Item
1122(d) of Regulation AB.
Transfer Date: Each date on which Servicing Rights are transferred to the
Servicer hereunder.
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Whole Loan Transfer: Any sale or transfer of some or all of the Mortgage
Loans by the Owner to a third party, which sale or transfer is not a
Securitization Transaction or Agency Sale.
ARTICLE II
POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS; CUSTODIAL
AGREEMENT; DELIVERY OF DOCUMENTS
Section 2.01 Possession of Mortgage Files; Maintenance of Servicing Files.
From and after each Transfer Date or Sale Date, as applicable, the
contents of each Mortgage File not delivered to the Owner or held by the
Custodian shall be held in trust by the Servicer for the benefit of the Owner as
the owner thereof. The Servicer shall maintain a Servicing File consisting of a
copy of the contents of each Mortgage File and the originals of the documents in
each Mortgage File not delivered to the Owner or the Custodian, as applicable.
The possession of each Servicing File by the Servicer is at the will of the
Owner for the sole purpose of servicing the related Mortgage Loan, and such
retention and possession by the Servicer is in a custodial capacity only. The
ownership of each Mortgage Note, the related Mortgage and the related Mortgage
File are vested in the Owner, and the ownership of all records and documents
with respect to the related Mortgage Loan prepared by or which come into the
possession of the Servicer shall vest immediately in the Owner and shall be
retained and maintained by the Servicer, in trust, at the will of the Owner and
only in such custodial capacity. The Servicer shall release its custody of the
contents of any Servicing File only in accordance with written instructions from
the Owner, unless such release is required as incidental to the Servicer's
servicing of the Mortgage Loans or is in connection with a repurchase of any
Mortgage Loan. All such costs associated with the release, transfer and
re-delivery of any Servicing Files to the Servicer shall be the responsibility
of the party in possession of such file or files, unless otherwise provided
herein.
In addition, in connection with the assignment of any MERS Mortgage Loan,
the Servicer agrees that it will cause the MERS System to indicate that such
Mortgage Loan has been assigned by the Servicer to the Owner in accordance with
this Agreement by including (or deleting, in the case of a Mortgage Loan
repurchased in accordance with this Agreement) in such computer files the
information required by the MERS System to identify the Owner as the beneficial
owner of such Mortgage Loan.
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Section 2.02 Books and Records; Transfers of Mortgage Loans.
All rights arising out of the Mortgage Loans, including, but not limited
to, all funds received on or in connection with the Mortgage Loans, shall be
received and held by the Servicer in trust for the benefit of the Owner as owner
of the Mortgage Loans, and the Servicer shall retain record title to the related
Mortgages for the sole purpose of facilitating the servicing and the supervision
of the servicing of the Mortgage Loans. Notwithstanding the foregoing,
beneficial ownership of each Mortgage and the related Mortgage Note shall be
vested solely in the Owner or the appropriate designee of the Owner, as the case
may be.
To the extent that original documents are not required for purposes of
realization of Liquidation Proceeds or Insurance Proceeds, documents maintained
by the Servicer may be in the form of microfilm or microfiche or such other
reliable means of recreating original documents, including but not limited to,
optical imagery techniques so long as the Servicer complies with the
requirements of the Xxxxxx Xxx Selling and Servicing Guide, as amended from time
to time.
The Servicer shall maintain with respect to each Mortgage Loan and shall
make available for inspection by any Owner or its designee the related Servicing
File during the time the Owner retains ownership of a Mortgage Loan and
thereafter in accordance with applicable laws and regulations.
The Servicer shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the Servicer
shall note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be
made unless such transfer is in compliance with the terms hereof. For the
purposes of this Agreement, the Servicer shall be under no obligation to deal
with any Person with respect to this Agreement or the Mortgage Loans unless the
books and records show such Person as the owner of the Mortgage Loan. The Owner
may, subject to the terms of this Agreement, sell and transfer one or more of
the Mortgage Loans. Upon receipt of notice of the transfer, the Servicer shall
xxxx its books and records to reflect the ownership of the Mortgage Loans of
such assignee, and shall release the previous Owner from its obligations
hereunder with respect to the Mortgage Loans sold or transferred. Such
notification of a transfer shall include a final loan schedule which shall be
received by the Servicer no fewer than five (5) Business Days before the last
Business Day of the month. If such notification is not received as specified
above, the Servicer's duties to remit and report as required by Section 5 shall
begin with the following Due Period.
Section 2.03 Custodial Agreement; Delivery of Documents.
The Servicer shall forward to the Owner or the Custodian, as applicable,
original documents evidencing an assumption, modification, consolidation or
extension of any Mortgage Loan entered into in accordance with Section 4.01 or
6.01 within one week of their execution, provided, however, that the Servicer
shall provide the Owner or the Custodian, as applicable, with a certified true
copy of any such document submitted for recordation within ten (10) days of its
execution, and shall provide the original of any document submitted for
recordation or a copy
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of such document certified by the appropriate public recording office to be a
true and complete copy of the original within 60 days of its submission for
recordation.
In the event the public recording office is delayed in returning any
original document, the Servicer shall deliver to the Owner or the Custodian
within 180 days of its submission for recordation, a copy of such document and
an Officer's Certificate, which shall (i) identify the recorded document; (ii)
state that the recorded document has not been delivered to the Custodian due
solely to a delay by the public recording office, (iii) state the amount of time
generally required by the applicable recording office to record and return a
document submitted for recordation, and (iv) specify the date the applicable
recorded document will be delivered to the Custodian. The Servicer will be
required to deliver the document to the Owner or the Custodian by the date
specified in (iv) above. An extension of the date specified in (iv) above may be
requested from the Owner, which consent shall not be unreasonably withheld;
provided that in any event, the Servicer shall cause such document to be
delivered to the Owner within one year of its submission for recordation.
In the event that new, replacement, substitute or additional Stock
Certificates are issued with respect to existing Cooperative Shares, the
Servicer immediately shall deliver to the Owner or the Custodian the new Stock
Certificates, together with the related Stock Powers in blank. Such new Stock
Certificates shall be subject to the related Pledge Instruments and shall be
subject to all of the terms, covenants and conditions of this Agreement.
The Owner shall designate the Servicer to obtain Mortgage Files from the
Custodian on behalf of the Owner. From time to time and as appropriate for the
servicing or foreclosure of a Mortgage Loan, including for this purpose
collection under any Primary Insurance Policy, the Servicer may request the
release of a Mortgage File held by the Custodian. The Servicer will provide the
Custodian with two copies of a release request or an electronic release request
in a format acceptable to the Custodian. The Servicer will be obligated to
return the related Mortgage File to the Custodian when the need therefore by the
Servicer no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Custodial Account or the Mortgage File has been delivered to an attorney, or to
a public trustee or other public official as required by law, for purposes of
initiating or pursuing legal action or other proceedings for the foreclosure of
the Mortgaged Loan either judicially or non-judicially.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH
Section 3.01 Servicer Representations and Warranties.
The Servicer hereby represents and warrants to the Owner that, as of each
Transfer Date and Sale Date:
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(a) Due Organization and Authority.
The Servicer is a national banking association duly organized, validly
existing and in good standing under the laws of the United States and has
all licenses necessary to carry on its business as now being conducted and
is licensed, qualified and in good standing in each state where a
Mortgaged Property is located if the laws of such state require licensing
or qualification in order to conduct business of the type conducted by the
Servicer, and in any event the Servicer is in compliance with the laws of
any such state to the extent necessary to ensure the enforceability of the
related Mortgage Loan and the servicing of such Mortgage Loan in
accordance with the terms of this Agreement; the Servicer has the full
power and authority to execute and deliver this Agreement and to perform
in accordance herewith; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered pursuant
to this Agreement) by the Servicer and the consummation of the
transactions contemplated hereby have been duly and validly authorized;
this Agreement evidences the valid, binding and enforceable obligation of
the Servicer; and all requisite action has been taken by the Servicer to
make this Agreement valid and binding upon the Servicer in accordance with
its terms. No licenses or approvals obtained by the Servicer have been
suspended or revoked by any court, administrative agency, arbitrator or
governmental body and no proceedings are pending which might result in
such suspension or revocation;
(b) Ordinary Course of Business.
The consummation of the transactions contemplated by this Agreement are in
the ordinary course of business of the Servicer, who is in the business of
selling and servicing loans, and are not subject to the bulk transfer or
any similar statutory provisions in effect in any applicable jurisdiction;
(c) No Conflicts.
Neither the execution and delivery of this Agreement, or the transactions
contemplated hereby, nor the fulfillment of or compliance with the terms
and conditions of this Agreement will conflict with or result in a breach
or acceleration of any of the terms, articles of incorporation or by-laws
or any legal restriction or any agreement or instrument to which the
Servicer is now a party or by which it is bound, or constitute a default
or result in the violation of any law, rule, regulation, order, judgment
or decree to which the Servicer or its property is subject, or impair the
ability of the Owner to realize on the Mortgage Loans, or impair the value
of the Mortgage Loans;
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(d) Ability to Service.
The Servicer is an approved seller/servicer of conventional residential
mortgage loans for Xxxxxx Xxx and Xxxxxxx Mac, with the facilities,
procedures, and experienced personnel necessary for the sound servicing of
mortgage loans of the same type as the Mortgage Loans. The Servicer is a
HUD approved mortgagee pursuant to Section 203 of the National Housing Act
and is in good standing to sell mortgage loans to and service mortgage
loans for Xxxxxx Mae or Xxxxxxx Mac, and no event has occurred, including
but not limited to a change in insurance coverage, which would make the
Servicer unable to comply with Xxxxxx Mae or Xxxxxxx Mac eligibility
requirements or which would require notification to either Xxxxxx Mae,
Xxxxxxx Mac or HUD;
(e) Reasonable Servicing Fee.
The Servicer acknowledges and agrees that the Servicing Fee represents
reasonable compensation for performing such services and that the entire
Servicing Fee shall be treated by the Servicer, for accounting and tax
purposes, as compensation for the servicing and administration of the
Mortgage Loans pursuant to this Agreement;
(f) Ability to Perform.
The Servicer does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in this
Agreement and the Servicer is solvent;
(g) No Litigation Pending.
There is no action, suit, proceeding or investigation pending or
threatened against the Servicer before any court, administrative agency or
other tribunal which, either in any one instance or in the aggregate, may
result in any material adverse change in the business, operations,
financial condition, properties or assets of the Servicer, or in any
material impairment of the right or ability of the Servicer to carry on
its business substantially as now conducted, or in any material liability
on the part of the Servicer, or which would draw into question the
validity of this Agreement or of any action taken or to be contemplated
herein, or which would be likely to impair materially the ability of the
Servicer to enter into or perform under the terms of this Agreement;
(h) No Consent Required.
No consent, approval, authorization or order of any court or governmental
agency or body is required for the execution, delivery and performance by
the Servicer of or compliance by the Servicer with this Agreement, or if
required, such approval has been obtained prior to the respective Transfer
Date or Sale Date Servicer has
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complied with, and is not in default under, any law, ordinance,
requirement, regulation, rule, or order applicable to its business or
properties, the violation of which would materially and adversely affect
the operations or financial condition of Servicer or its ability to
perform its obligations hereunder;
(i) No Untrue Information.
Neither this Agreement nor any statement, report or other document
furnished or to be furnished pursuant to this Agreement or in connection
with the transactions contemplated hereby contains any untrue statement of
fact or omits to state a fact necessary to make the statements contained
therein not misleading;
(j) No Material Change.
There has been no material adverse change in the business, operations,
financial condition or assets of the Servicer since the date of the
Servicer's most recent financial statements;
(k) No Brokers' Fees.
The Servicer has not dealt with any broker, investment banker, agent or
other Person that may be entitled to any commission or compensation in the
connection with the transactions contemplated hereunder;
(l) MERS.
The Servicer is a member of MERS in good standing and is current in
payment of all fees and assessments imposed by MERS;
(m) Compliance with Applicable Laws.
The Servicer is not in violation of, and the execution and delivery of
this Agreement by the Servicer and its performance and compliance with the
terms of this Agreement will not constitute a violation with respect to,
any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction over
the Servicer or its assets, which violation might have consequences that
would materially and adversely affect the condition (financial or
otherwise) or the operation of the Servicer or its assets or might have
consequences that would materially and adversely affect the performance of
its obligations and duties hereunder;
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(n) Regulation AB.
The Servicer hereby represents to the Owner, that, except as disclosed in
writing to the Owner: (i) no default, early amortization or other
performance triggering event has occurred as to any securitization due to
any act or failure to act of the Servicer; (ii) the Servicer has not been
terminated as servicer in a residential mortgage loan securitization,
either due to a servicing default or to application of a servicing
performance test or trigger; (iii) no material noncompliance with the
applicable servicing criteria with respect to other securitizations of
residential mortgage loans involving the Servicer as servicer has been
disclosed or reported by the Servicer; (iv) no material changes to the
Servicer's policies or procedures with respect to the servicing function
it will perform under this Agreement and any Reconstitution Agreement for
mortgage loans of a type similar to the Mortgage Loans have occurred
during the three-year period immediately preceding the related
Securitization Transaction; (v) there are no aspects of the Servicer's
financial condition that could have a material adverse impact on the
performance by the Servicer of its obligations under this Agreement or any
Reconstitution Agreement; (vi) there are no material legal or governmental
proceedings pending (or known to be contemplated) against the Servicer or
any Subservicer; and (vii) there are no affiliations, relationships or
transactions relating to the Servicer or any Subservicer with respect to
any Securitization Transaction and any party thereto of a type described
in Item 1119 of Regulation AB; and
(o) Effective Agreement.
The execution, delivery and performance of this Agreement by Servicer and
consummation of the transactions contemplated hereunder have been or will be
duly and validly authorized by all necessary organizational or other action;
this Agreement is valid and a legally binding agreement of Servicer enforceable
against Servicer in accordance with its terms, subject to the effect of
insolvency, liquidation, conservatorship and similar laws administered by the
Federal Deposit Insurance Corporation affecting the contract obligations of
insured banks and the discretion of a court to grant specific performance.
Section 3.02 Remedies.
The Servicer shall indemnify the Owner and hold it harmless against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments, and other costs and expenses resulting from
any claim, demand, defense or assertion based on or grounded upon, or resulting
from a breach of the Servicer's representations and warranties contained in this
Agreement. It is understood and agreed that the obligations of the Servicer to
indemnify the Owner as provided in this Section 3.02 constitute the sole
remedies of the Owner respecting a breach of the foregoing representations and
warranties. The
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indemnification obligation of the Servicer as set forth herein shall survive the
termination of this Agreement.
Any cause of action against the Servicer relating to or arising out of the
breach of any representations and warranties made in Section 3.01 shall accrue
as to any Mortgage Loan upon (i) discovery of such breach by the Owner or notice
thereof by the Servicer to the Owner, (ii) failure by the Servicer to cure such
breach, and (iii) demand upon the Servicer by the Owner for compliance with this
Agreement.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Servicer to Act as Servicer.
The Servicer, as an independent contractor, shall service and administer
the Mortgage Loans and shall have full power and authority, acting alone or
through the utilization of a Subservicer or a Subcontractor, to do any and all
things in connection with such servicing and administration which the Servicer
may deem necessary or desirable, consistent with the terms of this Agreement and
with Accepted Servicing Practices and, in the case of any Mortgage Loan
transferred to a REMIC, with the REMIC Provisions. The Servicer shall be
responsible for any and all acts of a Subservicer and a Subcontractor, and the
Servicer's utilization of a Subservicer or a Subcontractor shall in no way
relieve the liability of the Servicer under this Agreement.
Consistent with the terms of this Agreement and subject to the REMIC
Provisions if a Mortgage Loan has been transferred to a REMIC, the Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer's reasonable and prudent
determination such waiver, modification, postponement or indulgence is not
materially adverse to the Owner, provided, however, that the Servicer shall not
permit any modification with respect to any Mortgage Loan that would change the
Mortgage Interest Rate, defer or forgive the payment thereof or of any principal
or interest payments, reduce the outstanding principal amount (except for actual
payments of principal) make additional advances of additional principal or
change the final maturity date on such Mortgage Loan, unless the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Servicer, imminent. In the event that no default exists or is imminent, the
Servicer shall request written consent from the Owner to permit such a
modification and the Owner shall provide written consent or notify the Servicer
of its objection to such modification within three (3) Business Days of its
receipt of the Servicer's request. Without limiting the generality of the
foregoing, the Servicer shall continue, and is hereby authorized and empowered,
to execute and deliver on behalf of itself and the Owner, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties. If reasonably required by the Servicer, the
Owner shall furnish the Servicer, within five (5) Business Days of Servicer's
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request, any powers of attorney and other documents necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties under
this Agreement.
The Servicer is authorized and empowered by the Owner, in its own name,
when the Servicer believes it appropriate in its reasonable judgment to register
any Mortgage Loan on the MERS System, or cause the removal from MERS
registration of any Mortgage Loan on the MERS System, to execute and deliver, on
behalf of the Owner, any and all instruments of assignment and other comparable
instruments with respect to such assignment or re-recording of a Mortgage in the
name of MERS, solely as nominee for the Owner and its successors and assigns.
The Servicer will 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.
In servicing and administering the Mortgage Loans, the Servicer shall
employ procedures (including collection procedures) and exercise the same care
that it customarily employs and exercises in servicing and administering similar
mortgage loans for similar investors, giving due consideration to Accepted
Servicing Practices where such practices do not conflict with the requirements
of this Agreement, and the Owner's reliance on the Servicer.
The Servicer shall cause to be maintained for each Cooperative Loan a copy
of the financing statements and shall file and such financing statements and
continuation statements as necessary, in accordance with the Uniform Commercial
Code applicable in the jurisdiction in which the related Cooperative Apartment
is located, to perfect and protect the security interest and lien of the Owner.
The Servicer shall not waive any Prepayment Penalty with respect to any
Mortgage Loan which contains a Prepayment Penalty which prepays during the term
of the charge. If the Servicer fails to collect the Prepayment Penalty upon any
prepayment of any Mortgage Loan which contains a Prepayment Penalty, the
Servicer shall pay the Owner at such time (by deposit to the Custodial Account)
an amount equal to amount of the Prepayment Penalty which was not collected.
Notwithstanding the above, the Servicer may waive (and shall waive, in the case
of (vi) below) a Prepayment Penalty without paying the Owner the amount of the
Prepayment Penalty (i) if the Mortgage Loan is in default (defined as 61 days or
more delinquent) and such waiver would maximize recovery of total proceeds
taking into account the value of such Prepayment Penalty and the related
Mortgage Loan, (ii) if the prepayment is not a result of a refinancing by the
Servicer or any of its affiliates and the Mortgage Loan is foreseen to be in
default and such waiver would maximize recovery of total proceeds taking into
account the value of such Prepayment Penalty and the related Mortgage Loan,
(iii) if the collection of the Prepayment Penalty would be in violation of
applicable laws, (iv) if the collection of such Prepayment Penalty would be
considered "predatory" pursuant to written guidance published or issued by any
applicable federal, state or local regulatory authority acting in its official
capacity and having jurisdiction over such matters (v) the Mortgage Loan is
accelerated or paid off in connection with the workout of a delinquency or due
to the borrower's default, notwithstanding that the terms of the Mortgage Loan
or state or federal law might permit the imposition of such penalty and (vi)
notwithstanding any state or federal law to the contrary, any instance when a
Mortgage Loan is in foreclosure. The Servicer will provide to the Owner, no
later than the tenth (10th) Business Day of each month, a report as of the prior
month's end, of all Mortgage Loans
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subject to a Principal Prepayment in full during such month, including a
description of the applicable Prepayment Penalty, the estimated amount to be
collected and the amount actually collected. Upon request, the Servicer shall
provide the Owner with documentation and explanation supporting the Servicer's
determination to waive any Prepayment Charge.
The Servicer shall pay the amount of any Prepayment Penalty (to the extent
not collected and remitted to the Owner) to the Owner or its assignees if the
Servicer waives any Prepayment Penalty other than as permitted under this
Section 4.01. The Servicer shall pay the amount of such Prepayment Penalty, for
the benefit of the Owner or any assignee of the Owner, by depositing such amount
into the Custodial Account at the time that the amount prepaid on the related
Mortgage Loan is required to be deposited into the Custodial Account.
Section 4.02 Liquidation of Mortgage Loans.
In the event that any payment due under any Mortgage Loan and not
postponed pursuant to Section 4.01 is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Servicer shall take such action as (1) the Servicer
would take under similar circumstances with respect to a similar mortgage loan
held for its own account for investment, (2) shall be consistent with Accepted
Servicing Practices, (3) the Servicer shall determine prudently to be in the
best interest of Owner, and (4) is consistent with any related PMI Policy or
LPMI Policy or any other primary mortgage guaranty insurance policies obtained
and paid for by the Owner. In the event that any payment due under any Mortgage
Loan is not postponed pursuant to Section 4.01 and remains delinquent for a
period of 90 days or any other default continues for a period of 90 days beyond
the expiration of any grace or cure period, the Servicer shall commence
foreclosure proceedings. In such connection, the Servicer shall from its own
funds make all necessary and proper Servicing Advances, provided, however, that
the Servicer shall not be required to expend its own funds in connection with
any foreclosure or towards the restoration or preservation of any Mortgaged
Property in excess of $2,000, unless it shall determine (a) that such
preservation, restoration and/or foreclosure will increase the proceeds of
liquidation of the Mortgage Loan to Owner after reimbursement to itself for such
expenses and (b) that such expenses will be recoverable by it either through
Liquidation Proceeds (respecting which it shall have priority for purposes of
withdrawals from the Custodial Account pursuant to Section 4.05) or through
Insurance Proceeds (respecting which it shall have similar priority). The
Servicer be responsible for all costs and expenses incurred by it in any such
proceedings; provided, however, that it shall be entitled to reimbursement
thereof from the related Mortgaged Property, as contemplated herein.
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure or acceptance of a deed in lieu of foreclosure, in the event
the Servicer has reasonable cause to believe that a Mortgaged Property is
contaminated by hazardous or toxic substances or wastes, or if the Owner
otherwise requests an environmental inspection or review of such Mortgaged
Property, such an inspection or review is to be conducted by a qualified
inspector. The cost for such inspection or review shall be borne by the Owner.
Upon completion of the inspection or review, the Servicer shall promptly provide
the Owner with a written report of the environmental inspection.
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After reviewing the environmental inspection report, the Owner shall
determine how the Servicer shall proceed with respect to the Mortgaged Property.
In the event (a) the environmental inspection report indicates that the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes
and (b) the Owner directs the Servicer to proceed with foreclosure or acceptance
of a deed in lieu of foreclosure, the Servicer shall be reimbursed for all
reasonable costs associated with such foreclosure or acceptance of a deed in
lieu of foreclosure and any related environmental clean up costs, as applicable,
from the related Liquidation Proceeds, or if the Liquidation Proceeds are
insufficient to fully reimburse the Servicer, the Servicer shall be entitled to
be reimbursed from amounts in the Custodial Account pursuant to Section 4.05
hereof. In the event the Owner directs the Servicer not to proceed with
foreclosure or acceptance of a deed in lieu of foreclosure, the Servicer shall
be reimbursed for all Servicing Advances made with respect to the related
Mortgaged Property from the Custodial Account pursuant to Section 4.05 hereof.
Section 4.03 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, the Servicer shall proceed diligently to
collect all payments due under each of the Mortgage Loans when the same shall
become due and payable and shall take special care in ascertaining and
estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Loan and the Mortgaged Property, to the end
that the installments payable by the Mortgagors will be sufficient to pay such
charges as and when they become due and payable.
Section 4.04 Establishment of and Deposits to Custodial Account.
The Servicer shall segregate and hold all funds collected and received in
connection with a Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand accounts, titled "Xxxxx Fargo Bank, N.A.,
in trust for the Owner and/or subsequent owners of Mortgage Loans, and various
Mortgagors - P & I." The Custodial Account shall be established with a Qualified
Depository. Within ten (10) days of the Transfer Date the Servicer shall provide
the Owner with written confirmation of the existence of such Custodial Account
in the form attached hereto as Exhibit E. The Custodial Account shall at all
times be insured to the fullest extent allowed by applicable law. Funds
deposited in the Custodial Account may be drawn on by the Servicer in accordance
with Section 4.05.
The Servicer shall deposit in a clearing account on a daily basis, and in
the Custodial Account within two Business Days of receipt, and retain therein,
the following collections received by the Servicer and any other amounts
required to be deposited by the Servicer pursuant to this Agreement after the
Cut-off Date, or received by the Servicer prior to the Cut-off Date but
allocable to a period subsequent thereto, other than payments of principal and
interest due on or before the Cut-off Date, as follows:
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(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments and all Prepayment Charges;
(ii) all payments on account of interest on the Mortgage Loans adjusted
to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be deposited
pursuant to Section 4.10 (other than proceeds to be held in the
Escrow Account and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with
Section 4.14), Section 4.11, Section 4.15, the Servicer's normal
servicing procedures, the loan documents and applicable law;
(v) all Condemnation Proceeds which are not applied to the restoration
or repair of the Mortgaged Property or released to the Mortgagor in
accordance with Section 4.14, the Servicer's normal servicing
procedures, the loan documents and applicable law;
(vi) any amount required to be deposited in the Custodial Account
pursuant to Sections 4.01, 6.01 or 6.02;
(vii) any amounts payable in connection with the repurchase of any
Mortgage Loan pursuant to Section 5.04;
(viii) any amounts required to be deposited by the Servicer pursuant to
Section 4.11 in connection with the deductible clause in any blanket
hazard insurance policy;
(ix) any amounts received with respect to or related to any REO Property
and all REO Disposition Proceeds pursuant to Section 4.16;
(x) with respect to each Principal Prepayment, the Prepayment Interest
Shortfall (to be paid by the Servicer out of its funds); provided,
however, that in no event shall the aggregate of deposits made by
the Servicer pursuant to this sub clause (x) exceed the aggregate
amount of the Servicer's Servicing Fee for the related Due Period;
(xi) any amount required to be deposited in the Custodial Account
pursuant to this Agreement
The foregoing requirements for deposit into the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges and assumption
fees, to the extent permitted by Section 6.01, need not be deposited by the
Servicer into the Custodial Account. Such Custodial Account shall be an Eligible
Account. Any interest paid on funds deposited in the Custodial Account by the
depository institution shall accrue to the benefit of the Servicer and the
Servicer shall be entitled
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to retain and withdraw such interest from the Custodial Account pursuant to
Section 4.05. The Servicer shall give notice to the Owner of the location of the
Custodial Account when established and with respect to any change thereof to
another Qualified Depository.
If the balance on deposit in the Custodial Account exceeds $75,000 as of
the commencement of business on any Business Day and the Custodial Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of Eligible Account, the Servicer shall, on or before twelve o'clock noon
Eastern time on such Business Day, withdraw from the Custodial Account any and
all amounts payable to the Owner and remit such amounts to the Owner by wire
transfer of immediately available funds. If the Servicer elects or is required
by law to deposit a Mortgagor's escrow funds into an interest-bearing account,
the Servicer shall remain obligated to pay the Mortgagor's taxes and insurance
premiums when due, even if the Mortgagor's escrow funds are not withdrawable on
demand.
Section 4.05 Permitted Withdrawals From Custodial Account.
The Servicer shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
(i) to make payments to the Owner in the amounts and in the manner
provided for in Section 5.01;
(ii) to reimburse itself for unreimbursed Servicing Advances, and for any
unpaid Servicing Fees, the Servicer's right to reimburse itself
pursuant to this subclause (ii) with respect to any Mortgage Loan
being limited to related Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds and such other amounts as may be
collected by the Servicer from the Mortgagor or otherwise relating
to the Mortgage Loan, it being understood that, in the case of any
such reimbursement, the Servicer's right thereto shall be prior to
the rights of Owner;
(iii) to reimburse itself for Monthly Advances of the Servicer's funds
made pursuant to Section 5.03, the Servicer's right to reimburse
itself pursuant to this sub clause (iii) being limited to amounts
received on the related Mortgage Loan which represent late Monthly
Payments, Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds and such other amounts as may be collected by the Servicer
respecting the Mortgage Loan as to which any such advance was made,
it being understood that, in the case of any such reimbursement, the
Servicer's right thereto shall be prior to the rights of Owner, and
all other amounts required to be paid to the Owner with respect to
such Mortgage Loan;
(iv) to pay itself interest on funds deposited in the Custodial Account
(all such interest to be withdrawn monthly not later than each
Remittance Date);
(v) to reimburse itself for expenses incurred and reimbursable to it
pursuant to Section 8.01;
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(vi) to pay any amount required to be paid pursuant to Section 4.16
related to any REO Property, it being understood that, in the case
of any such expenditure or withdrawal related to a particular REO
Property, the amount of such expenditure or withdrawal from the
Custodial Account shall be limited to amounts on deposit in the
Custodial Account with respect to the related REO Property;
(vii) to reimburse itself for any Servicing Advances or REO expenses after
liquidation of the Mortgaged Property not otherwise reimbursed
above;
(viii) to remove funds inadvertently placed in the Custodial Account by
the Servicer; and
(x) to clear and terminate the Custodial Account upon the termination of
this Agreement.
In the event that the Custodial Account is interest bearing, on each
Remittance Date, the Servicer shall withdraw all funds from the Custodial
Account except for those amounts which, pursuant to Section 5.01, the Servicer
is not obligated to remit on such Remittance Date. The Servicer may use such
withdrawn funds only for the purposes described in this Section 4.05.
The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Custodial Account pursuant to subclauses (i), (ii), (iii), (v) and (vii)
above. The Servicer shall provide written notification in the form of an
Officers' Certificate to the Owner, on or prior to the next succeeding
Remittance Date, upon making any withdrawals from the Custodial Account pursuant
to subclause (v) above.
Section 4.06 Establishment of and Deposits to Escrow Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Escrow Accounts, in the form of time deposit or demand accounts, titled,
"Xxxxx Fargo Bank, N.A., in trust for the Owner and/or subsequent Owners of
Residential Mortgage Loans, and various Mortgagors - T & I." The Escrow Accounts
shall be established with a Qualified Depository, in a manner which shall
provide maximum available insurance thereunder. Within ten (10) days of the
Transfer Date , the Servicer shall provide the Owner with written confirmation
of the existence of such Escrow Account in the form attached hereto as Exhibit
F. Funds deposited in the Escrow Account may be drawn on by the Servicer in
accordance with Section 4.07.
The Servicer shall deposit in a clearing account on a daily basis and in
the Escrow Account or Accounts within two Business Days of the Servicer's
receipt, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans, for
the purpose of effecting timely payment of any such items as
required under the terms of this Agreement;
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(ii) all amounts representing Insurance Proceeds or Condemnation Proceeds
which are to be applied to the restoration or repair of any
Mortgaged Property; and
(iii) all payments on account of Buydown Funds.
The Servicer shall make withdrawals from the Escrow Account only to effect
such payments as are required under this Agreement, as set forth in Section
4.07. The Servicer shall be entitled to retain any interest paid on funds
deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Servicer shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or
that interest paid thereon is insufficient for such purposes.
Section 4.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the
Servicer only:
(i) to effect timely payments of ground rents, taxes, assessments, water
rates, mortgage insurance premiums, condominium charges, fire and
hazard insurance premiums, or other items constituting Escrow
Payments for the related Mortgage;
(ii) to reimburse the Servicer for any Servicing Advances made by the
Servicer pursuant to Section 4.08 with respect to a related Mortgage
Loan, but only from amounts received on the related Mortgage Loan
which represent late payments or collections of Escrow Payments
thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess of the amounts
required under the terms of the related Mortgage Loan;
(iv) for transfer to the Custodial Account for application to reduce the
principal balance of the Mortgage Loan in accordance with the terms
of the related Mortgage, Mortgage Note and this Agreement;
(v) for application to the restoration or repair of the Mortgaged
Property in accordance with the procedures outlined in Section 4.14;
(vi) to pay to the Servicer, or any Mortgagor to the extent required by
law, any interest paid on the funds deposited in the Escrow Account;
(vii) to remove funds inadvertently placed in the Escrow Account by the
Servicer;
(viii) to remit to Owner payments on account of Buydown Funds as
applicable; and
(ix) to clear and terminate the Escrow Account on the termination of this
Agreement.
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Section 4.08 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Servicer shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates,
sewer rents, and other charges which are or may become a lien upon the Mortgaged
Property and the status of PMI Policy or LPMI Policy premiums and fire and
hazard insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges (including insurance renewal premiums) and shall effect
payment thereof prior to the applicable penalty or termination date and at a
time appropriate for securing maximum discounts allowable, employing for such
purpose deposits of the Mortgagor in the Escrow Account which shall have been
estimated and accumulated by the Servicer in amounts sufficient for such
purposes, as allowed under the terms of the Mortgage and applicable law. To the
extent that the Mortgage does not provide for Escrow Payments, the Servicer
shall determine that any such payments are made by the Mortgagor at the time
they first become due. The Servicer assumes full responsibility for the timely
payment of all such bills and shall effect timely payment of all such charges
irrespective of each Mortgagor's faithful performance in the payment of same or
the making of the Escrow Payments, and the Servicer shall make advances from its
own funds to effect such payments.
Section 4.09 Protection of Accounts.
The Servicer may transfer the Custodial Account or the Escrow Account to a
different Qualified Depository from time to time, so long as such accounts
remain Eligible Accounts. The Servicer shall promptly notify the Owner of such
transfer.
Section 4.10 Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Mortgage Loan fire and
hazard insurance with extended coverage such that all buildings upon the
Mortgaged Property are insured by an insurer acceptable to Xxxxxx Xxx or Xxxxxxx
Mac against loss by fire, hazards of extended coverage and such other hazards as
are customary in the area where the Mortgaged Property is located, in an amount
which is at least equal to the lesser of: (i) 100% of the insurable value on a
replacement cost basis of the improvements on the related Mortgaged Property and
(ii) the greater of (a) the outstanding principal balance of the Mortgage Loan
and (b) an amount such that the proceeds of such insurance shall be sufficient
to prevent the application to the Mortgagor or the loss payee of any coinsurance
clause under the policy. In the event a hazard insurance policy shall be in
danger of being terminated, or in the event the insurer shall cease to be
acceptable to Xxxxxx Mae or Xxxxxxx Mac, the Servicer shall notify the Owner and
the related Mortgagor, and shall use its best efforts, as permitted by
applicable law, to obtain from another qualified insurer a replacement hazard
insurance policy substantially and materially similar in all respects to the
original policy. In no event, however, shall a Mortgage Loan be without a hazard
insurance policy at any time, subject only to Section 4.11 hereof.
If the related Mortgaged Property is located in an area identified by the
Flood Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) the Servicer shall cause to be
maintained a flood insurance policy meeting the
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requirements of the current guidelines of the Federal Insurance Administration
is in effect with a generally acceptable insurance carrier acceptable to Xxxxxx
Mae or Xxxxxxx Mac in an amount representing coverage equal to the lesser of (i)
the minimum amount required, under the terms of coverage, to compensate for any
damage or loss on a replacement cost basis (or the unpaid balance of the
mortgage if replacement cost coverage is not available for the type of building
insured) and (ii) the maximum amount of insurance which is available under the
Flood Disaster Protection Act of 1973, as amended. If at any time during the
term of the Mortgage Loan, the Servicer determines in accordance with applicable
law and pursuant to the Xxxxxx Mae Guides that a Mortgaged Property is located
in a special flood hazard area and is not covered by flood insurance or is
covered in an amount less than the amount required by the Flood Disaster
Protection Act of 1973, as amended, the Servicer shall notify the related
Mortgagor that the Mortgagor must obtain such flood insurance coverage, and if
said Mortgagor fails to obtain the required flood insurance coverage within
forty-five (45) days after such notification, the Servicer shall immediately
force place the required flood insurance on the Mortgagor's behalf.
If a Mortgage is secured by a unit in a condominium project, the Servicer
shall use reasonable efforts to verify that the coverage required of the owner's
association, including hazard, flood, liability, and fidelity coverage, is being
maintained.
In the event that the Owner or the Servicer shall determine that the
Mortgaged Property should be insured against loss or damage by hazards and risks
not covered by the insurance required to be maintained by the Mortgagor pursuant
to the terms of the Mortgage, the Servicer shall communicate and consult with
the Mortgagor with respect to the need for such insurance and bring to the
Mortgagor's attention the required amount of coverage for the Mortgaged Property
and if the Mortgagor does not obtain such coverage, the Servicer shall
immediately force place the required coverage on the Mortgagor's behalf.
All policies required hereunder shall name the Servicer as loss payee and
shall be endorsed with standard mortgagee clauses, without contribution, which
shall provide for at least 30 days prior written notice of any cancellation,
reduction in amount or material change in coverage.
The Servicer shall not interfere with the Mortgagor's freedom of choice in
selecting either his insurance carrier or agent.. The Servicer shall determine
that such policies provide sufficient risk coverage and amounts, that they
insure the property owner, and that they properly describe the property address.
The Servicer also shall maintain on any REO Property, fire and hazard
insurance with extended coverage in an amount which is at least equal to the
lesser of (i) the maximum insurable value of the improvements which are a part
of such property and (ii) the outstanding principal balance of the related
Mortgage Loan at the time it became an REO Property plus accrued interest at the
Mortgage Interest Rate and related Servicing Advances, liability insurance and,
to the extent required and available under the National Flood Insurance Act of
1968 or the Flood Disaster Protection Act of 1973, as amended, flood insurance
in an amount as provided above.
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Pursuant to Section 4.04, any amounts collected by the Servicer under any
such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property, or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Servicer's normal servicing procedures as
specified in Section 4.14) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.05.
Any cost incurred by the Servicer in maintaining any such insurance shall
not, for the purpose of calculating distributions to the Owner, be added to the
unpaid principal balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit. It is understood and agreed that no
earthquake or other additional insurance need be required by the Servicer of the
Mortgagor or maintained on property acquired in respect of the Mortgage Loan,
other than pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance.
Section 4.11 Maintenance of Mortgage Impairment Insurance.
In the event that the Servicer shall obtain and maintain mortgage
impairment or a blanket policy insuring against losses arising from fire, flood
and hazards covered under extended coverage on all of the the Mortgage
Properties securing Mortgage Loans, then, to the extent such policy provides
coverage in an amount equal to the amount required pursuant to Section 4.10, is
acceptable to Xxxxxx Xxx and Xxxxxxx Mac and otherwise complies with all other
requirements of Section 4.10, it shall conclusively be deemed to have satisfied
its obligations as set forth in Section 4.10. The Servicer shall prepare and
make any claims on the blanket policy as deemed necessary by the Servicer in
accordance with Accepted Servicing Practices. Any amounts collected by the
Servicer under any such policy relating to a Mortgage Loan shall be deposited in
the Custodial Account subject to withdrawal pursuant to Section 4.05. Such
policy may contain a deductible clause, in which case, in the event that there
shall not have been maintained on the related Mortgaged Property or REO Property
a policy complying with Section 4.10, and there shall have been one or more
losses which would have been covered by such policy, the Servicer shall deposit
in the Custodial Account at the time of such loss the amount not otherwise
payable under the blanket policy because of such deductible clause, such amount
to be deposited from the Servicer's funds, without reimbursement therefore. The
Servicer agrees to prepare and present claims under any such blanket policy in a
timely fashion in accordance with the terms of such policy. Upon request of the
Owner, the Servicer shall cause to be delivered to such Owner a certificate of
insurance and a statement from the insurer thereunder that such policy shall in
no event be terminated or materially modified without 30 days' prior written
notice to such Owner.
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions Insurance.
The Servicer shall maintain a blanket Fidelity Bond and an Errors and
Omissions Insurance Policy acceptable to Xxxxxx Mae or Xxxxxxx Mac, with broad
coverage on all officers, employees or other Persons acting in any capacity
requiring such Persons to handle funds, money, documents or papers relating to
the Mortgage Loans ("Servicer Employees"). Any such Fidelity Bond and Errors and
Omissions Insurance Policy shall be in the form of the Mortgage
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Banker's Blanket Bond and shall protect and insure the Servicer against losses,
including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such Servicer Employees. Such Fidelity Bond and Errors and
Omissions Insurance Policy also shall protect and insure the Servicer against
losses in connection with the failure to maintain any insurance policies
required pursuant to this Agreement and the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby. No provision of this Section 4.12 requiring such Fidelity Bond
and Errors and Omissions Insurance Policy shall diminish or relieve the Servicer
from its duties and obligations as set forth in this Agreement. The minimum
coverage under any such Fidelity Bond and Errors and Omissions Insurance Policy
shall be acceptable to Xxxxxx Mae or Xxxxxxx Mac. Upon the request of the Owner,
the Servicer shall cause to be delivered to the Owner a certificate of insurance
for such Fidelity Bond and Errors and Omissions Insurance Policy and a statement
from the surety and the insurer that such Fidelity Bond and Errors and Omissions
Insurance Policy shall in no event be terminated or materially modified without
thirty days' prior written notice to the Owner.
Section 4.13 Inspections.
If any Mortgage Loan is more than 60 days delinquent, the Servicer
immediately shall inspect the Mortgaged Property and shall conduct subsequent
inspections in accordance with Accepted Servicing Practices or as may be
required by the primary mortgage guaranty insurer. The Servicer shall keep a
record of each such inspection and, upon request, shall provide the Owner with
such information.
Section 4.14 Restoration of Mortgaged Property.
The Servicer need not obtain the approval of the Owner prior to releasing
any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be applied
to the restoration or repair of the Mortgaged Property if such release is in
accordance with Accepted Servicing Practices. At a minimum, the Servicer shall
comply with the following conditions in connection with any such release of
Insurance Proceeds or Condemnation Proceeds:
(i) the Servicer shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with respect
thereto;
(ii) the Servicer shall take all steps necessary to preserve the priority of the
lien of the Mortgage, including, but not limited to requiring waivers with
respect to mechanics' and materialmen's liens;
(iii) the Servicer shall verify that the Mortgage Loan is not in default; and
(iv) pending repairs or restoration, the Servicer shall place the Insurance
Proceeds or Condemnation Proceeds in the Escrow Account.
If the Owner is named as an additional loss payee, the Servicer is hereby
empowered to endorse any loss draft issued in respect of such a claim in the
name of the Owner.
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Section 4.15 Maintenance of PMI Policy or LPMI Policy; Claims.
With respect to each Mortgage Loan with an LTV in excess of 80% at the
time of origination, the Servicer shall, without any cost to the Owner maintain
or cause the Mortgagor to maintain in full force and effect a PMI Policy or LPMI
Policy issued by a Qualified Insurer insuring a portion of the unpaid principal
balance of the Mortgage Loan as to payment defaults. If the Mortgage Loan is
insured by a PMI Policy for which the Mortgagor pays all premiums, the coverage
will remain in place until (i) the LTV decreases to 78% or (ii) the PMI Policy
is otherwise terminated pursuant to the Homeowners Protection Act of 1998, 12
USC ss.4901, et seq. The Servicer will not cancel or refuse to renew any PMI
Policy or LPMI Policy in effect on the Transfer Date that is required to be kept
in force under this Agreement unless a replacement PMI Policy or LPMI Policy for
such cancelled or non-renewed policy is obtained from and maintained with a
Qualified Insurer. In the event that such PMI Policy or LPMI Policy shall be
terminated other than as required by law, the Servicer shall obtain from another
Qualified Insurer a comparable replacement policy, with a total coverage equal
to the remaining coverage of such terminated PMI Policy or LPMI Policy. If the
insurer shall cease to be a Qualified Insurer, the Servicer shall determine
whether recoveries under the PMI Policy or LPMI Policy are jeopardized for
reasons related to the financial condition of such insurer, it being understood
that the Servicer shall in no event have any responsibility or liability for any
failure to recover under the PMI Policy or LPMI Policy for such reason. If the
Servicer determines that recoveries are so jeopardized, it shall notify the
Owner and the Mortgagor, if required, and obtain from another Qualified Insurer
a replacement insurance policy. The Servicer shall not take any action which
would result in noncoverage under any applicable PMI Policy or LPMI Policy, of
any loss which, but for the actions of the Servicer would have been covered
thereunder. In connection with any assumption or substitution agreement entered
into or to be entered into pursuant to Section 6.01, the Servicer shall promptly
notify the insurer under the related PMI Policy or LPMI Policy, if any, of such
assumption or substitution of liability in accordance with the terms of such PMI
Policy or LPMI Policy and shall take all actions which may be required by the
insurer as a condition to the continuation of coverage under the PMI Policy or
LPMI Policy. If such PMI Policy or LPMI Policy is terminated as a result of such
assumption or substitution of liability, the Servicer shall obtain a replacement
PMI Policy or LPMI Policy as provided above.
In connection with its activities as servicer, the Servicer agrees to
prepare and present, on behalf of itself and the Owner, claims to the insurer
under any PMI Policy or LPMI Policy or any other primary mortgage guaranty
insurance policies obtained and paid for by the Owner, in a timely fashion in
accordance with the terms of such PMI Policy or LPMI Policy and, in this regard,
to take such action as shall be necessary to permit recovery under any PMI
Policy or LPMI Policy or any other primary mortgage guaranty insurance policies
obtained and paid for by the Owner respecting a defaulted Mortgage Loan.
Pursuant to Section 4.04, any amounts collected by the Servicer under any PMI
Policy or LPMI Policy shall be deposited in the Custodial Account, subject to
withdrawal pursuant to Section 4.05.
Section 4.16 Title, Management and Disposition of REO Property.
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In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Owner or the Owner's designee, or in the event
such person is not authorized or permitted to hold title to real property in the
state where the REO Property is located, or would be adversely affected under
the "doing business" or tax laws of such state by so holding title, the deed or
certificate of sale shall be taken in the name of such Person or Persons as
shall be consistent with an Opinion of Counsel obtained by the Servicer from an
attorney duly licensed to practice law in the state where the REO Property is
located. The Person or Persons holding such title other than the Owner shall
acknowledge in writing that such title is being held as nominee for the benefit
of the Owner.
The Servicer shall manage, conserve, protect and operate each REO Property
for the Owner solely for the purpose of its prompt disposition and sale. The
Servicer, either itself or through an agent selected by the Servicer, shall
manage, conserve, protect and operate the REO Property in the same manner that
it manages, conserves, protects and operates other foreclosed property for its
own account, in the same manner that similar property in the same locality as
the REO Property is managed and in a manner which does not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or result in the receipt by such REMIC of any
"income from non-permitted assets" within the meaning of Section 860F(a)(2)(B)
of the Code or any "net income from foreclosure property" within the meaning of
Section 860G(c)(2) of the Code. The Servicer shall cause each REO Property to be
inspected promptly upon the acquisition of title thereto and shall cause each
REO Property to be inspected at least annually thereafter. The Servicer shall
make or cause to be made an electronic report of each such inspection. Such
reports shall be retained in the Mortgage File and copies thereof shall be
forwarded by the Servicer to the Owner upon receipt. The Servicer shall attempt
to sell the same (and may temporarily rent the same for a period not greater
than one year, except as otherwise provided below) on such terms and conditions
as the Servicer deems to be in the best interest of the Owner.
The Servicer shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event within one year
after title has been taken to such REO Property, unless the Servicer determines,
and gives appropriate notice to the Owner, that a longer period is necessary for
the orderly liquidation of such REO Property. If a period longer than one year
is necessary to sell any REO property the Servicer shall report monthly to the
Owner as to the progress being made in selling such REO Property.
Notwithstanding the foregoing, if a REMIC election is made with respect to the
arrangement under which the Mortgage Loans and the REO Property are held, such
REO Property shall be disposed of before the close of the third taxable year
following the taxable year in which the Mortgage Loan became an REO Property,
unless the Servicer provides to the trustee under such REMIC an opinion of
counsel to the effect that the holding of such REO Property subsequent to the
close of the third taxable year following the taxable year in which the Mortgage
Loan became an REO Property, will not result in the imposition of taxes on
"prohibited transactions" as defined in Section 860F of the Code, or cause the
transaction to fail to qualify as a REMIC at any time that certificates are
outstanding.
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The disposition of REO Property shall be carried out by the Servicer at
such price, and upon such terms and conditions, as the Servicer deems to be in
the best interests of the Owner. The proceeds of sale of the REO Property shall
be promptly deposited in the Custodial Account. As soon as practical thereafter
the expenses of such sale shall be paid and the Servicer shall collect the
related REO Disposition Fee, reimburse itself for any related unreimbursed
Servicing Advances and unpaid Servicing Fees. On the Remittance Date immediately
following the receipt of such sale proceeds, the net cash proceeds of such sale
remaining in the Custodial Account shall be distributed to the Owner.
With respect to each REO Property, the Servicer shall segregate and hold
all funds collected and received in connection with the operation of the REO
Property separate and apart from its own funds or general assets and shall
establish and maintain a separate REO Account for each REO Property. The
Servicer shall be permitted to allow the Custodial Account to serve as the REO
Account, subject to separate ledgers for each REO Property. The Servicer shall
be entitled to retain or withdraw any interest income paid on funds deposited in
the REO Account.
Each REO Account shall be established with the Servicer or, with the prior
consent of the Owner, with a commercial bank, a mutual savings bank or a savings
association. The creation of any REO Account shall be evidenced by a letter
agreement substantially in the form of the Custodial Account Letter Agreement
attached as Exhibit E hereto. An original of such letter agreement shall be
furnished to any Owner upon request.
The Servicer shall deposit or cause to be deposited, in a clearing account
on a daily basis and in each REO Account within two Business Days of receipt,
all revenues received with respect to the related REO Property and shall
withdraw therefrom funds necessary for the proper operation, management and
maintenance of the REO Property, including the cost of maintaining any fire and
hazard insurance pursuant to this Agreement hereof and the fees of any managing
agent acting on behalf of the Servicer.
Section 4.17 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 5.02, the
Servicer shall furnish to the Owner on or before the Remittance Date each month
a statement with respect to any REO Property covering the operation of such REO
Property for the previous month and the Servicer's efforts in connection with
the sale of such REO Property and any rental of such REO Property incidental to
the sale thereof for the previous month. That statement shall be accompanied by
such other information available to the Servicer as the Owner shall reasonably
request.
Section 4.18 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Owner pursuant to a deed in lieu of foreclosure, the Servicer
shall submit to the Owner a liquidation report with respect to such Mortgaged
Property.
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Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged Property.
Following the foreclosure sale or abandonment of any Mortgaged Property,
the Servicer shall report such foreclosure or abandonment as required pursuant
to the Code. The Servicer shall file information reports with respect to the
receipt of mortgage interest received in a trade or business reports of
foreclosures and abandonments of any Mortgaged Property and information returns
relating to cancellation of indebtedness income with respect to any Mortgaged
Property as required by the Code. Such reports shall be in form and substance
sufficient to meet the reporting requirements imposed by the Code.
Section 4.20 Application of Buydown Funds.
With respect to each Buydown Mortgage Loan, the Servicer shall have
deposited into the Escrow Account, no later than the last day of the month,
Buydown Funds in an amount equal to the aggregate undiscounted amount of
payments that, when added to the amount the Mortgagor on such Mortgage Loan is
obligated to pay on all Due Dates in accordance with the terms of the Buydown
Agreement, is equal to the full scheduled Monthly Payments which are required to
be paid by the Mortgagor under the terms of the related Mortgage Note (without
regard to the related Buydown Agreement as if the Mortgage Loan were not subject
to the terms of the Buydown Agreement). With respect to each Buydown Mortgage
Loan, the Servicer will distribute to the Owner on each Remittance Date an
amount of Buydown Funds equal to the amount that, when added to the amount
required to be paid on such date by the related Mortgagor, pursuant to and in
accordance with the related Buydown Agreement, equals the full Monthly Payment
that would otherwise be required to be paid on such Mortgage Loan by the related
Mortgagor under the terms of the related Mortgage Note (as if the Mortgage Loan
were not a Buydown Mortgage Loan and without regard to the related Buydown
Agreement).
If the Mortgagor on a Buydown Mortgage Loan defaults on such Mortgage Loan
during the Buydown Period and the Mortgaged Property securing such Buydown
Mortgage Loan is sold in the liquidation thereof (either by the Servicer or the
insurer under any related Primary Insurance Policy) the Servicer shall, on the
Remittance Date following the date upon which Liquidation Proceeds or REO
Disposition proceeds are received with respect to any such Buydown Mortgage
Loan, distribute to the Owner all remaining Buydown Funds for such Mortgage Loan
then remaining in the Escrow Account. Pursuant to the terms of each Buydown
Agreement, any amounts distributed to the Owner in accordance with the preceding
sentence will be applied to reduce the outstanding principal balance of the
related Buydown Mortgage Loan. If a Mortgagor on a Buydown Mortgage Loan prepays
such Mortgage Loan in its entirety during the related Buydown Period, the
Servicer shall be required to withdraw from the Escrow Account any Buydown Funds
remaining in the Escrow Account with respect to such Buydown Mortgage Loan in
accordance with the related Buydown Agreement. If a principal prepayment by a
Mortgagor on a Buydown Mortgage Loan during the related Buydown Period, together
with any Buydown Funds then remaining in the Escrow Account related to such
Buydown Mortgage Loan, would result in a principal prepayment of the entire
unpaid principal balance of the Buydown Mortgage Loan, the Servicer shall
distribute to the Owner on the Remittance Date occurring in the month
immediately succeeding the month in which such Principal Prepayment is
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received, all Buydown Funds related to such Mortgage Loan so remaining in the
Escrow Account, together with any amounts required to be deposited into the
Custodial Account.
Section 4.21 Notification of Adjustments.
With respect to each adjustable rate Mortgage Loan, the Servicer shall
adjust the Mortgage Interest Rate on the related Adjustment Date in compliance
with the requirements of applicable law and the related Mortgage and Mortgage
Note. The Servicer shall execute and deliver any and all necessary notices
required under applicable law and the terms of the related Mortgage Note and
Mortgage regarding the Mortgage Interest Rate adjustments. Upon the discovery by
the Servicer or the receipt of notice from the Owner that the Servicer has
failed to adjust a Mortgage Interest Rate in accordance with the terms of the
related Mortgage Note, the Servicer shall immediately deposit in the Custodial
Account from its own funds the amount of any interest loss or deferral caused
the Owner thereby without any reimbursement therefor.
Section 4.22 Confidentiality/Protection of Customer Information.
Each party agrees that it shall comply with all applicable laws and
regulations regarding the privacy or security of Customer Information and shall
maintain appropriate administrative, technical and physical safeguards to
protect the security, confidentiality and integrity of Customer Information,
including maintaining security measures designed to meet the objectives of the
Interagency Guidelines Establishing Standards for Safeguarding Customer
Information, 66 Fed. Reg. 8616 (the "Interagency Guidelines"). For purposes of
this Section, the term "Customer Information" shall have the meaning assigned to
it in the Interagency Guidelines.
Section 4.23 Fair Credit Reporting Act
The Servicer, in its capacity as servicer for each Mortgage Loan, agrees
to fully furnish, in accordance with the Fair Credit Reporting Act and its
implementing regulations, accurate and complete information (e.g., favorable and
unfavorable) on its borrower credit files to Equifax, Experian and Trans Union
Credit Information Company (three of the credit repositories), on a monthly
basis.
Section 4.24 Use of Subservicers and Subcontractors.
The Servicer shall not hire or otherwise utilize the services of any
Subservicer to fulfill any of the obligations of the Servicer under this
Agreement or any Reconstitution Agreement unless the Servicer complies with the
provisions of paragraph (a) of this Section 4.24. The Servicer shall not hire or
otherwise utilize the services of any Subcontractor, and shall not permit any
Subservicer to hire or otherwise utilize the services of any Subcontractor, to
fulfill any of the obligations of the Servicer under this Agreement or any
Reconstitution Agreement unless the Servicer complies with the provisions of
paragraph (b) of this Section 4.24.
(a) It shall not be necessary for the Servicer to seek the consent of the
Owner, any Master Servicer or any Depositor to the utilization of any
Subservicer. The Servicer shall cause any Subservicer used by the Servicer
(or by any Subservicer) for the benefit of the
35
Owner and any Depositor to comply with the provisions of this Section 4.24
and with Sections 6.04, 6.06 and 9.01 of this Agreement to the same extent
as if such Subservicer were the Servicer, and to provide the information
required with respect to such Subservicer under Section 9.01(e)(iv) of
this Agreement. The Servicer shall be responsible for obtaining from each
Subservicer and delivering to the Owner and any Depositor any servicer
compliance statement required to be delivered by such Subservicer under
Section 6.04 and any assessment of compliance and attestation required to
be delivered by such Subservicer under Section 6.06 and any certification
required to be delivered to the Person that will be responsible for
signing the Sarbanes Certification under Section 6.06 as and when required
to be delivered.
(b) It shall not be necessary for the Servicer to seek the consent of the
Owner, any Master Servicer or any Depositor to the utilization of any
Subcontractor. The Servicer shall promptly upon request provide to the
Owner, any Master Servicer and any Depositor (or any designee of the
Depositor, such as a master servicer or administrator) a written
description (in form and substance satisfactory to the Owner, such Master
Servicer and such Depositor) of the role and function of each
Subcontractor utilized by the Servicer or any Subservicer, specifying (i)
the identity of each such Subcontractor, (ii) which (if any) of such
Subcontractors are "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB, and (iii) which elements of the
Servicing Criteria will be addressed in assessments of compliance provided
by each Subcontractor identified pursuant to clause (ii) of this
paragraph.
Any Subservicing arrangement and the terms of the related Subservicing
Agreement must provide for the servicing of such Mortgage Loans in a manner
consistent with the servicing arrangements contemplated hereunder. Each
Subservicer shall be (i) authorized to transact business in the state or states
where the related Mortgaged Properties it is to service are situated, if and to
the extent required by applicable law to enable the Subservicer to perform its
obligations hereunder and under the Subservicing Agreement and (ii) a Xxxxxxx
Mac or Xxxxxx Xxx approved mortgage servicer. Notwithstanding the provisions of
any Subservicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer or a Subservicer or reference to
actions taken through the Servicer or otherwise, the Servicer shall remain
obligated and liable to the Owner and its successors and assigns for the
servicing and administration of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans. Every Subservicing Agreement entered into by the Servicer
shall contain a provision giving the successor servicer the option to terminate
such agreement in the event a successor servicer is appointed. All actions of
each Subservicer performed pursuant to the related Subservicing Agreement shall
be performed as an agent of the Servicer with the same force and effect as if
performed directly by the Servicer.
For purposes of this Agreement, the Servicer shall be deemed to have received
any collections, recoveries or payments with respect to the Mortgage Loans that
are received by a Subservicer regardless of whether such payments are remitted
by the Subservicer to the Servicer.
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For purposes of this Agreement, the Assignment Agreements shall not be deemed to
be Subservicing Agreements.
As a condition to the utilization of any Subcontractor determined to be
"participating in the servicing function" within the meaning of Item 1122 of
Regulation AB, the Servicer shall cause any such Subcontractor used by the
Servicer (or by any Subservicer) for the benefit of the Owner, any Master
Servicer and any Depositor to comply with the provisions of Sections 6.04, 6.06
and 9.01 of this Agreement to the same extent as if such Subcontractor were the
Servicer. The Servicer shall be responsible for obtaining from each
Subcontractor and delivering to the Owner, any Master Servicer and any Depositor
any assessment of compliance and attestation required to be delivered by such
Subcontractor under Sections 6.04 and 6.06, in each case as and when required to
be delivered.
Section 4.25 Successor Subservicers.
Any Subservicing Agreement shall provide that the Servicer shall be
entitled to terminate any Subservicing Agreement and to either itself directly
service the related Mortgage Loans or enter into a Subservicing Agreement with a
successor Subservicer which qualifies under Section 4.27. Any Subservicing
Agreement shall include the provision that such agreement may be immediately
terminated by any successor to the Servicer without fee, in accordance with the
terms of this Agreement, in the event that the Servicer (or any successor to the
Servicer) shall, for any reason, no longer be the servicer of the related
Mortgage Loans (including termination due to an Event of Default).
Section 4.26. No Contractual Relationship Between Subservicer and the Owner.
Any Subservicing Agreement and any other transactions or services relating
to the Mortgage Loans involving a Subservicer shall be deemed to be between the
Subservicer and the Servicer alone and the Owner shall not be deemed a party
thereto and shall have no claims, rights, obligations, duties or liabilities
with respect to any Subservicer.
Section 4.27. Assumption or Termination of Subservicing Agreement by Successor
Servicer.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
a successor servicer pursuant to this Agreement, it is understood and agreed
that the Servicer's rights and obligations under any Subservicing Agreement then
in force between the Servicer and a Subservicer shall be assumed simultaneously
by such successor servicer without act or deed on the part of such successor
servicer; provided, however, that any successor servicer may terminate the
Subservicer.
The Servicer shall, upon the reasonable request of the Owner, but at its
own expense, deliver to the assuming party documents and records relating to
each Subservicing Agreement and an accounting of amounts collected and held by
it and otherwise use its best efforts to effect the orderly and efficient
transfer of the Subservicing Agreements to the assuming party.
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The Servicing Fee payable to any such successor servicer shall be payable
from payments received on the Mortgage Loans in the amount and in the manner set
forth in this Agreement.
ARTICLE V
PAYMENTS TO OWNER
Section 5.01 Remittances.
On each Remittance Date the Servicer shall remit by wire transfer of
immediately available funds to the Owner (a) all amounts deposited in the
Custodial Account as of the close of business on the Determination Date (net of
charges against or withdrawals from the Custodial Account pursuant to Section
4.05), plus (b) all amounts, if any, which the Servicer is obligated to
distribute pursuant to Section 5.03, minus (c) any amounts attributable to
Principal Prepayments received after the applicable Principal Prepayment Period
which amounts shall be remitted on the following Remittance Date, together with
any additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayment in accordance with Section 4.04(viii);
minus (d) any amounts attributable to Monthly Payments collected but due on a
Due Date or Dates subsequent to the first day of the month of the Remittance
Date, and minus (e) any amounts attributable to Buydown Funds being held in the
Custodial Account, which amounts shall be remitted on the Remittance Date next
succeeding the Due Period for such amounts.
With respect to any remittance received by the Owner after the first
Business Day following the Business Day on which such payment was due, the
Servicer shall pay to the Owner interest on any such late payment at an annual
rate equal to the Prime Rate, adjusted as of the date of each change, plus three
percentage points, but in no event greater than the maximum amount permitted by
applicable law. Such interest shall be deposited in the Custodial Account by the
Servicer on the date such late payment is made and shall cover the period
commencing with the day following such first Business Day and ending with the
Business Day on which such payment is made, both inclusive. Such interest shall
be remitted along with such late payment. The payment by the Servicer of any
such interest shall not be deemed an extension of time for payment or a waiver
by the Owner of any Event of Default by the Servicer.
Section 5.02 Statements to Owner.
Not later than the Remittance Date, the Servicer shall furnish to the
Owner, a monthly remittance advice, with a trial balance report attached
thereto, as to the remittance period ending on the last day of the preceding
month in an electronic format mutually agreed upon between the Owner and the
Servicer. In addition, the Servicer shall provide the Owner with such
information as the Owner may reasonably request from time to time concerning the
Mortgage Loans as is necessary for the Owner to prepare its federal income tax
return and any and all other tax returns, information statements or other
filings required to be delivered to any governmental authority or to the Owner
pursuant to any applicable law with respect to the Mortgage Loans and the
transactions contemplated hereby.
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Section 5.03 Monthly Advances by the Servicer.
Not later than the close of business on the Business Day immediately
preceding each Remittance Date, the Servicer shall deposit in the Custodial
Account from its own funds or from amounts held for future distribution an
amount equal to all payments not previously advanced by the Servicer, whether or
not deferred pursuant to Section 4.01, of principal (due after the Cut-off Date)
and interest not allocable to the period prior to the Cut-off Date, at the
Mortgage Loan Remittance Rate which were due on the Mortgage Loans during the
applicable Due Period and which were delinquent at the close of business on the
immediately preceding Determination Date or which were deferred pursuant to
Section 4.01. Any amounts held for future distribution and so used shall be
replaced by the Servicer by deposit in the Custodial Account on or before any
future Remittance Date if funds in the Custodial Account on such Remittance Date
shall be less than payments to the Owner required to be made on such Remittance
Date. The Servicer's obligation to make such Monthly Advances is mandatory,
notwithstanding any other provision of this Agreement, and, with respect to any
Mortgage Loan or REO Property, will continue until a Final Recovery
Determination in connection therewith, or through the last Remittance Date prior
to the Remittance Date for the distribution of all Liquidation Proceeds and
other payments or recoveries (including REO Disposition Proceeds, Insurance
Proceeds and Condemnation Proceeds) with respect to the Mortgage Loan; provided,
however, that such obligation shall cease if the Servicer determines, in its
sole reasonable opinion, that advances with respect to such Mortgage Loan are
Nonrecoverable Monthly Advances. In the event that the Servicer determines that
any such advances is a Nonrecoverable Monthly Advance, the Servicer shall
provide the Owner with an Officer's Certificate signed by an authorized officer
of the Servicer evidencing such determination. The Servicer shall not have an
obligation to make such Monthly Advances as to any Mortgage Loan with respect to
shortfalls relating to the Servicemembers Civil Relief Act or similar state and
local laws.
Section 5.04 Repurchase.
The Servicer shall cooperate with the Owner in facilitating the repurchase
of any Mortgage Loan by the Seller. Upon receipt by the Servicer of notice from
the Owner of a breach by the Seller of a representation or warranty contained in
any agreement between the Owner and the Seller, or a request by the Owner for
the Seller to repurchase any Mortgage Loan, the Servicer shall, at the direction
of the Owner, use its best efforts to cure and correct any such breach related
to such deficiencies of the related Mortgage Loans.
At the time of repurchase, the Owner or the Custodian, as applicable, and
the Servicer shall arrange for the reassignment of the repurchased Mortgage Loan
to the Seller according to the Owner's instructions and the delivery of any
documents held by the Servicer with respect to the repurchased Mortgage Loan.
The Servicer will facilitate the remittance of repurchase funds between the
Seller and the Owner, but shall not be required to advance any funds for such
repurchase and shall be reimbursed for any expenses incurred due to such
repurchase.
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ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Transfers of Mortgaged Property.
The Servicer shall use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note and to deny assumption by
the Person to whom the Mortgaged Property has been or is about to be sold
whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains liable on the Mortgage and the Mortgage Note. When the
Mortgaged Property has been conveyed by the Mortgagor, the Servicer shall, to
the extent it has knowledge of such conveyance, exercise its rights to
accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause
applicable thereto, provided, however, that the Servicer shall not exercise such
rights if prohibited by law from doing so or if the exercise of such rights
would impair or threaten to impair any recovery under the related PMI Policy or
LPMI Policy, if any.
If the Servicer reasonably believes it is unable under applicable law to
enforce such "dueon- sale" clause, the Servicer shall enter into (i) an
assumption and modification agreement with the Person to whom such property has
been conveyed, pursuant to which such Person becomes liable under the Mortgage
Note and the original Mortgagor remains liable thereon or (ii) in the event the
Servicer is unable under applicable law to require that the original Mortgagor
remain liable under the Mortgage Note and the Servicer has the prior consent of
the primary mortgage guaranty insurer, a substitution of liability agreement
with the purchaser of the Mortgaged Property pursuant to which the original
Mortgagor is released from liability and the purchaser of the Mortgaged Property
is substituted as Mortgagor and becomes liable under the Mortgage Note. In
connection with any such assumption or substitution of liability, the Servicer
shall follow the underwriting practices and procedures of prudent mortgage
lenders in the state in which the related Mortgaged Property is located. With
respect to an assumption or substitution of liability, Mortgage Interest Rate,
the amount of the Monthly Payment, and the final maturity date of such Mortgage
Note may not be changed without the Owner's consent. The Servicer shall notify
the Owner that any such substitution of liability or assumption agreement has
been completed by forwarding to the Owner the original of any such substitution
of liability or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof.
To the extent that any Mortgage Loan is assumable, the Servicer shall
inquire diligently into the credit worthiness of the proposed transferee, and
shall use the underwriting criteria for approving the credit of the proposed
transferee which are used with respect to underwriting mortgage loans of the
same type as the Mortgage Loan. If the credit worthiness of the proposed
transferee does not meet such underwriting criteria, the Servicer diligently
shall, to the extent permitted by the Mortgage or the Mortgage Note and by
applicable law, accelerate the maturity of the Mortgage Loan.
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Notwithstanding the foregoing paragraphs of this Section 6.01 or any other
provision of this Agreement, the Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which the
Servicer may be restricted by law from preventing, for any reason whatsoever.
For purposes of this Section 6.01, the term "assumption" is deemed to also
include a sale of the Mortgaged Property subject to the Mortgage that is not
accompanied by an assumption or substitution of liability agreement.
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will promptly notify the Owner by a
certification of a servicing officer of the Servicer (a "Servicing Officer"),
which certification shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required to
be deposited in the Custodial Account have been or will be so deposited, and
shall request execution of any document necessary to satisfy the Mortgage Loan
and delivery to it of the portion of the Mortgage File held by the Owner or the
Owner's designee. Upon receipt of such certification and request, the Owner,
shall promptly release the related mortgage documents to the Servicer and the
Servicer shall prepare and process any satisfaction or release. No expense
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Custodial Account or the Owner. If such
Mortgage Loan is a MERS Mortgage Loan, the Servicer is authorized to cause the
removal from the registration on the MERS System of such Mortgage and to execute
and deliver, on behalf of the Owner, any and all instruments of satisfaction or
cancellation or of partial or full release.
If the Servicer satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage (other than
pursuant to a modification or liquidation in accordance with this Agreement) or
should the Servicer otherwise prejudice any rights the Owner may have under the
mortgage instruments, upon written demand of the Owner, the Servicer shall
deposit in the Custodial Account the entire outstanding principal balance, plus
all accrued interest on such Mortgage Loan, on the day preceding the Remittance
Date in the month following the date of such release. The Servicer shall
maintain the Fidelity Bond and Errors and Omissions Insurance Policy as provided
for in Section 4.12 insuring the Servicer against any loss it may sustain with
respect to any Mortgage Loan not satisfied in accordance with the procedures set
forth herein.
On or before each Transfer Date, the Owner will provide the Servicer with
a loan level schedule identifying the Custodian, including contact information,
with respect to each Mortgage Loan and the Custodian's reference number for each
Mortgage Loan. The Owner shall designate the Servicer to obtain Mortgage Files
from the Custodian on behalf of the Owner. Such designation will remain in
effect until revoked by the Owner. From time to time and as appropriate for the
servicing or foreclosure of a Mortgage Loan, including for this purpose
collection under any Primary Insurance Policy, the Servicer may request the
release of a Mortgage File held by the Custodian. The Servicer will provide the
Custodian with two copies of a release request or an electronic release request
in a format acceptable to the Custodian. The
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Servicer will be obligated to return the related Mortgage File to the Custodian
when the need therefore by the Servicer no longer exists, unless the Mortgage
Loan has been liquidated and the Liquidation Proceeds relating to the Mortgage
Loan have been deposited in the Custodial Account or the Mortgage File has been
delivered to an attorney, or to a public trustee or other public official as
required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Loan either judicially or
non-judicially. The Owner will instruct the Custodian to provide directly to the
Servicer loan level exception reports, missing files and documents and to
cooperate with the Servicer in the reconciliation of system data.
Section 6.03 Servicing Compensation.
As compensation for its services hereunder, the Servicer shall be entitled
to withdraw from the Custodial Account the amount of its Servicing Fee. The
Servicing Fee shall be payable monthly and shall be computed on the basis of the
unpaid principal balance and for the period respecting which any related
interest payment on a Mortgage Loan is received. The obligation of the Owner to
pay the Servicing Fee is limited to, and payable solely from, the interest
portion (including recoveries with respect to interest from Liquidation
Proceeds, to the extent permitted by Section 4.05) of such Monthly Payments.
Additional servicing compensation in the form of assumption fees, to the
extent provided in Section 6.01, late payment charges and other ancillary fees
shall be retained by the Servicer to the extent not required to be deposited in
the Custodial Account. The Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder and shall
not be entitled to reimbursement thereof except as specifically provided for
herein.
Section 6.04 Annual Statements as to Compliance.
On or before March 1 of each calendar year, commencing in 2007, the
Servicer shall deliver to the Owner or any Master Servicer or Depositor an
officer's certificate (each, an "Annual Statement of Compliance") addressed to
the Owner, any Master Servicer and such Depositor and signed by an authorized
officer of the Servicer, to the effect that (a) a review of the Servicer's
activities during the immediately preceding calendar year (or applicable portion
thereof) and of its performance under this Agreement and any applicable
Reconstitution Agreement during such period has been made under such officer's
supervision, and (b) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all of its obligations under this Agreement
and any applicable Reconstitution Agreement in all material respects throughout
such calendar year (or applicable portion thereof) or, if there has been a
failure to fulfill any such obligation in any material respect, specifically
identifying each such failure known to such officer and the nature and the
status thereof. Copies of such statement shall be provided by the Owner to any
Person identified as a prospective purchaser of the Mortgage Loans. In the event
that the Servicer has delegated any servicing responsibilities with respect to
the Mortgage Loans to a Subservicer, the Servicer shall deliver an officer's
certificate of the Subservicer as described above as to each Subservicer as and
when required with respect to the Servicer.
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Section 6.05 Annual Independent Public Accountants' Servicing Report.
Except with respect to any Mortgage Loans that are the subject of a
Securitization Transaction, on or before March 1st, the Company, at its expense,
shall cause a firm of independent public accountants which is a member of the
American Institute of Certified Public Accountants to furnish a statement to
each Purchaser to the effect that such firm has examined certain documents and
records relating to the servicing of the mortgage loans similar in nature and
that such firm is of the opinion that the provisions of this or similar
Agreements have been complied with, and that, on the basis of such examination
conducted in compliance with the Uniform Single Attestation Program for Mortgage
Bankers, nothing has come to their attention which would indicate that such
servicing has not been conducted in compliance therewith, except for (i) such
exceptions as such firm shall believe to be immaterial, and (ii) such other
exceptions as shall be set forth in such statement. By providing Purchaser a
copy of a Uniform Single Attestation Program Report from their independent
public accountant's on an annual basis, Company shall be considered to have
fulfilled its obligations under this Section 6.05. Copies of such report shall
be provided by the Owner to any Person identified as a prospective purchaser of
the Mortgage Loans. Notwithstanding the foregoing, the Servicer's obligation to
deliver such report under this Section, as to the Servicer or any Subservicer on
an annual basis beginning with the report required in March 2007, Servicer shall
be considered to have fulfilled its obligations under this Section 6.05 for such
calendar year with respect to that entity.
Section 6.06 Report on Assessment of Compliance and Attestation.
With respect to any Mortgage Loans that are the subject of a
Securitization Transaction, on or before March 1 of each calendar year,
commencing in 2007, the Servicer shall:
(i) deliver to the Owner, any Master Servicer or any Depositor a report
(in form and substance reasonably satisfactory to the Owner, such
Master Servicer and such Depositor) regarding the Servicer's
assessment of compliance with the Servicing Criteria during the
immediately preceding calendar year, as required under Rules 13a-18
and 15d-18 of the Exchange Act and Item 1122 of Regulation AB. Such
report shall be addressed to the Owner, such Master Servicer and
such Depositor and signed by an authorized officer of the Servicer
and shall address each of the "Applicable Servicing Criteria"
specified substantially on Exhibit H hereto (or those Servicing
Criteria otherwise mutually agreed to by the Owner and the Servicer
in response to evolving interpretations of Regulation AB;
(ii) deliver to the Owner, any Master Servicer or any Depositor a report
of a registered public accounting firm reasonably acceptable to the
Owner, such Master Servicer and such Depositor that attests to, and
reports on, the assessment of the compliance made by the Servicer
and delivered pursuant to the .preceding paragraph. Such attestation
shall be in accordance with Rules 1-02(a)(3) and 2- 02(g) of
Regulation S-X under the Securities Act and the Exchange Act;
(iii) cause each Subservicer and each Subcontractor, determined by the
Servicer pursuant to Section 4.24(b) to be "participating in the
servicing function" within
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the meaning of Item 1122 of Regulation AB, to deliver to the Owner,
any Master Servicer and any Depositor an assessment of compliance
and accountants' attestation as and when provided in paragraphs (i)
and (ii) of this Section 6.06; and
(iv) deliver, and cause each Subservicer and each Subcontractor described
in clause (iii) to deliver to the Owner, any Master Servicer, any
Depositor and any other Person that will be responsible for signing
the certification (a "Sarbanes Certification") required by Rules
13a-14(d) and 15d-14(d) under the Exchange Act (pursuant to Section
302 of the Xxxxxxxx-Xxxxx Act of 2002) on behalf of an asset-backed
issuer with respect to a Securitization Transaction a certification
signed by the appropriate officer of the Servicer in the form
attached hereto as Exhibit I.
Each assessment of compliance provided by a Subservicer pursuant to
Section 6.06(i) shall address each of the Servicing Criteria specified
substantially in the form of Exhibit H hereto delivered to the Owner
concurrently with the execution of this Agreement or, in the case of a
Subservicer subsequently appointed as such, on or prior to the date of such
appointment. An assessment of compliance provided by a Subcontractor pursuant to
Section 6.06(iii) need not address any elements of the Servicing Criteria other
than those specified by the Servicer pursuant to Section 4.24.
The Servicer acknowledges that the parties identified in clause (iv) above
may rely on the certification provided by the Servicer pursuant to such clause
in signing a Sarbanes Certification and filing such with the Commission. Neither
the Owner, any Master Servicer or any Depositor will request delivery of a
certification under clause (iv) above unless a Depositor is required under the
Exchange Act to file an annual report on Form 10-K with respect to an issuing
entity whose asset pool includes Mortgage Loans.
Section 6.07 Remedies.
(i) Any failure by the Servicer, any Subservicer or any Subcontractor to
deliver any information, report, certification, accountants' letter or other
material when and as required under Article IX, Section 4.24, Section 6.04,
Section 6.05 or Section 6.06, or any breach by the Servicer of a representation
or warranty set forth in Section 9.01(i)(i), or in a writing furnished pursuant
to Section 9.01(i)(ii) and made as of a date prior to the closing date of the
related Securitization Transaction, to the extent that such breach is not cured
by such closing date, or any breach by the Servicer of a representation or
warranty in a writing furnished pursuant to Section 9.01(i)(ii) to the extent
made as of a date subsequent to such closing date, shall, except as provided in
sub-clause (ii) of this Section, immediately and automatically, without notice
or grace period, constitute an Event of Default with respect to the Servicer
under this Agreement and any applicable Reconstitution Agreement, and shall
entitle the Owner, any Master Servicer or any Depositor, as applicable, in its
sole discretion to terminate the rights and obligations of the Servicer as
servicer under this Agreement and/or any applicable Reconstitution Agreement
without payment (notwithstanding anything in this Agreement or any
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applicable Reconstitution Agreement to the contrary) of any compensation
to the Servicer if the Servicer is servicing any of the Mortgage Loans in
a Securitization Transaction, appoint a successor servicer, in accordance
with the related securitization agreement, reasonably acceptable to any
Master Servicer of such Securitization Transaction; provided that to the
extent that any provision of this Agreement and/or any applicable
Reconstitution Agreement expressly provides for the survival of certain
rights or obligations following termination of the Servicer as servicer,
such provision shall be given effect.
(ii) Any failure by the Servicer, any Subservicer or any Subcontractor to
deliver any information, report, certification or accountants' letter when
and as required under Section 6.04, Section 6.05 or Section 6.06,
including (except as provided below) any failure by the Servicer to
identify any Subcontractor "participating in the servicing function"
within the meaning of Item 1122 of Regulation AB, which continues
unremedied for ten (10) calendar days after the date on which such
information, report, certification or accountants' letter was required to
be delivered shall constitute an Event of Default with respect to the
Servicer under this Agreement and any applicable Reconstitution Agreement,
and shall entitle the Owner, any Master Servicer or Depositor, as
applicable, in its sole discretion to terminate the rights and obligations
of the Servicer under this Agreement and/or any applicable Reconstitution
Agreement without payment (notwithstanding anything in this Agreement to
the contrary) of any compensation to the Servicer; provided that to the
extent that any provision of this Agreement and/or any applicable
Reconstitution Agreement expressly provides for the survival of certain
rights or obligations following termination of the Servicer as servicer,
such provision shall be given effect.
Neither the Owner nor any Depositor shall be entitled to terminate the
rights and obligations of the Servicer pursuant to this subparagraph
(b)(ii) if a failure of the 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 such
Subcontractor with respect to mortgage loans other than the Mortgage
Loans.
(iii) The Servicer shall promptly reimburse the Owner (or any designee of
the Owner, including the Master Servicer) and any Depositor, as
applicable, for all reasonable expenses incurred by the Owner (or such
designee) or such Depositor, as such are incurred, in connection with the
termination of the Servicer as servicer and the transfer of servicing of
the Mortgage Loans to a successor servicer. The provisions of this
paragraph shall not limit whatever rights the Owner or any Depositor may
have under other provisions of this Agreement and/or any applicable
Reconstitution Agreement or otherwise, whether in equity or at law, such
as an action for damages, specific performance or injunctive relief.
Section 6.08 Right to Examine Servicer Records.
The Owner, or its designee, shall have the right to examine and audit any
and all of the books, records, or other information of the Servicer, whether
held by the Servicer or by another
45
on its behalf, with respect to or concerning this Agreement or the Mortgage
Loans, during business hours or at such other times as may be reasonable under
applicable circumstances, without charge and upon reasonable advance notice. The
Owner shall pay its own expenses associated with such examination.
Section 6.09 Compliance with REMIC Provisions.
If a REMIC election has been made with respect to the arrangement under
which the Mortgage Loans and REO Property are held, the Servicer shall not take
any action, cause the REMIC to take any action or fail to take (or fail to cause
to be taken) any action that, under the REMIC Provisions, if taken or not taken,
as the case may be, could (i) endanger the status of the REMIC as a REMIC or
(ii) result in the imposition of a tax upon the REMIC (including but not limited
to the tax on "prohibited transactions" as defined in Section 860F(a) (2) of the
Code and the tax on "contributions" to a REMIC set forth in Section 860G(d) of
the Code) unless the Servicer has received an Opinion of Counsel (at the expense
of the party seeking to take such action) to the effect that the contemplated
action will not endanger such REMIC status or result in the imposition of any
such tax.
ARTICLE VII
SERVICER TO COOPERATE
Section 7.01 Provision of Information.
During the term of this Agreement, the Servicer shall furnish to the Owner
such periodic, special, or other reports or information, and copies or originals
of any documents contained in the Servicing File for each Mortgage Loan provided
for herein. All other special reports or information not provided for herein as
shall be necessary, reasonable, or appropriate with respect to the Owner or any
regulatory agency will be provided at the Owner's expense. All such reports,
documents or information shall be provided by and in accordance with all
reasonable instructions and directions which the Owner may give.
The Servicer shall execute and deliver all such instruments and take all
such action as the Owner may reasonably request from time to time, in order to
effectuate the purposes and to carry out the terms of this Agreement.
Section 7.02 Financial Statements; Servicing Facility.
In connection with marketing the Mortgage Loans, the Owner may make
available to a prospective Owner a Consolidated Statement of Operations of the
Servicer for the most recently completed three fiscal years for which such a
statement is available, as well as a Consolidated Statement of Condition at the
end of the last two fiscal years covered by such Consolidated Statement of
Operations. The Servicer, upon request, also shall make available any comparable
interim statements to the extent any such statements have been prepared by or on
behalf of the Servicer (and are available upon request to members or
stockholders of the Servicer or to the
46
public at large). The Servicer, if it has not already done so, agrees to furnish
promptly to the Owner copies of the statements specified above.
The Servicer also agrees to allow access to knowledgeable financial,
accounting and servicing officers of the Servicer for the purpose of answering
questions asked by any Owner regarding recent developments affecting the
Servicer, its servicing practices or the financial statements of the Servicer.
The Servicer also shall make available to Owner or prospective purchasers
a knowledgeable financial or accounting officer for the purpose of answering
questions respecting recent developments affecting the Servicer or the financial
statements of the Servicer, and to permit any prospective purchaser to inspect
the Servicer's servicing facilities for the purpose of satisfying such
prospective purchaser that the Servicer has the ability to service the Mortgage
Loans as provided in this Agreement.
ARTICLE VIII
THE SERVICER
Section 8.01 Indemnification; Third Party Claims.
In addition to the Indemnification otherwise provided under this
Agreement, the Servicer shall indemnify the Owner and hold it harmless against
any and all claims, losses, damages, penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs, judgments, and any other costs, fees
and expenses that the Owner may sustain in any way related to the failure of the
Servicer to perform its duties and service the Mortgage Loans in strict
compliance with the terms of this Agreement, or a related Reconstitution
Agreement or resulting from a breach of the representations and warranties
contained in this Agreement or a related Reconstitution Agreement. The Servicer
immediately shall notify the Owner if a claim is made by a third party with
respect to this Agreement or the Mortgage Loans, assume (with the prior written
consent of the Owner) the defense of any such claim and pay all expenses in
connection therewith, including counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or the Owner in
respect of such claim. The Owner promptly shall reimburse the Servicer for all
amounts advanced by it pursuant to the preceding sentence except when the claim
is in any way related to the Servicer's indemnification pursuant to Section 3.02
or Section 6.07(iii), or the failure of the Servicer to service and administer
the Mortgage Loans in strict compliance with the terms of this Agreement. The
Servicer shall follow any written instructions received from the Owner in
connection with such claim. The Servicer shall follow any written instructions
received from the Owner in connection with such claim. The indemnification
obligation of the Servicer set forth herein shall survive the termination of
this Agreement.
Section 8.02 Merger or Consolidation of the Servicer.
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The Servicer shall keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the state of its incorporation
except as permitted herein and shall obtain and preserve its qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement or any of
the Mortgage Loans and to perform its duties under this Agreement.
Any Person into which the Servicer may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall be the successor of the Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding, provided,
however, that the successor or surviving Person shall be an institution whose
deposits are insured by FDIC or a company whose business is the origination and
servicing of mortgage loans, (ii) have a GAAP net worth of not less than
$25,000,000, and (iii) be a Xxxxxx Xxx and Xxxxxxx Mac approved seller/servicer
in good standing and shall satisfy any requirements of Section 12.01 with
respect to the qualifications of a successor to the Servicer. Furthermore, in
the event the Servicer transfers or otherwise disposes of all or substantially
all of its assets to an affiliate of the Servicer, such affiliate shall satisfy
the condition above, and shall also be fully liable to the Owner for all of the
Servicer's obligations and liabilities hereunder.
Section 8.03 Limitation on Liability of Servicer and Others.
Neither the Servicer nor any of the directors, officers, employees or
agents of the Servicer shall be under any liability to the Owner for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment, provided, however, that this
provision shall not protect the Servicer or any such Person against any breach
of warranties or representations made herein, or failure to perform its
obligations in strict compliance with any standard of care set forth in this
Agreement or any other liability which would otherwise be imposed under this
Agreement. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement and which in its opinion may involve it
in any expense or liability, provided, however, that the Servicer may, with the
consent of the Owner, undertake any such action which it may deem necessary or
desirable in respect to this Agreement and the rights and duties of the parties
hereto. In such event, the Servicer shall be entitled to reimbursement from the
Owner of the reasonable legal expenses and costs of such action.
Section 8.04 Limitation on Resignation and Assignment by Servicer.
The Owner has entered into this Agreement with the Servicer and subsequent
purchasers will purchase the Mortgage Loans in reliance upon the independent
status of the Servicer, and the representations as to the adequacy of its
servicing facilities, personnel, records and procedures, its integrity,
reputation and financial standing, and the continuance thereof. Therefore, the
Servicer shall neither assign this Agreement or the servicing rights hereunder
or
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delegate its rights or duties hereunder (other than pursuant to Sections 4.01
and 4.24) or any portion hereof or sell or otherwise dispose of all of its
property or assets without the prior written consent of the Owner, which consent
shall not be unreasonably withheld.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Servicer and the Owner or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Servicer. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel to such effect delivered to the Owner which Opinion of
Counsel shall be in form and substance acceptable to the Owner. No such
resignation shall become effective until a successor shall have assumed the
Servicer's responsibilities and obligations hereunder in the manner provided in
Section 12.01.
Without in any way limiting the generality of this Section 8.04, in the
event that the Servicer either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder (other than pursuant
to Sections 4.01 and 4.24) or any portion thereof or sell or otherwise dispose
of all or substantially all of its property or assets, without the prior written
consent of the Owner, then the Owner shall have the right to terminate this
Agreement upon notice given as set forth in Section 10.01, without any payment
of any penalty or damages and without any liability whatsoever to the Servicer
or any third party.
ARTICLE IX
SECURITIZATION TRANSACTIONS
Section 9.01 Removal of Mortgage Loans from Inclusion Under this Agreement Upon
a Securitization Transaction
The Owner and the Servicer agree that with respect to some or all of the
Mortgage Loans, the Owner, at its sole option, may effect Whole Loan Transfers,
Agency Sales or Securitization Transactions, retaining the Servicer as the
servicer thereof or subservicer if a master servicer is employed, or as
applicable the "seller/servicer." On the Reconstitution Date, the Mortgage Loans
transferred may cease to be covered by this Agreement; provided, however, that,
in the event that any Mortgage Loan transferred pursuant to this Section 9 is
rejected by the transferee, the Servicer shall continue to service such rejected
Mortgage Loan on behalf of the Owner in accordance with the terms and provisions
of this Agreement.
The Servicer shall cooperate with the Owner in connection with each Whole
Loan Transfer, Agency Sale or Securitization Transaction in accordance with this
Section 9. In connection therewith the Servicer shall:
(a) cooperate fully with the Owner and any prospective purchaser with respect
to all reasonable requests and due diligence procedures including
participating in meetings with rating
49
agencies, bond insurers and such other parties as the Owner shall
designate and participating in meetings with prospective purchasers of the
Mortgage Loans or interests therein and providing information reasonably
requested by such purchasers;
(b) make all representations and warranties with respect to the servicing of
the Mortgage Loans and with respect to the Servicer itself as of the
closing date of each Whole Loan Transfer, Agency Sale or Securitization
Transaction (each, a "Reconstitution Date") modified to the extent
necessary to accurately reflect the pool statistics of the Mortgage Loans
as of the date of such Reconstitution and supplemented by additional
representations and warranties with respect to the Servicer and the
servicing of the Mortgage Loans that are not unreasonable under the
circumstances as of the date of such Reconstitution;
(c) deliver to the Owner such information, reports, letters and certifications
as are required pursuant to this Agreement and to indemnify the Owner and
its affiliates as set forth herein;
(d) deliver to the Owner, and to any Person designated by the Owner, such
legal documents and in-house Opinions of Counsel as are customarily
delivered by servicers, as the case may be, and reasonably determined by
the Owner to be necessary in connection with an Reconstitution, as the
case may be, such in-house Opinions of Counsel for a Securitization
Transaction to be in the form reasonably acceptable to the Owner, it being
understood that the cost of any opinions of outside special counsel that
may be required for a Reconstitution, as the case may be, shall be the
responsibility of the Owner;
(e) in connection with any Securitization Transaction, the Servicer shall (1)
within five (5) Business Days following request by the Owner or any
Depositor, provide to the Owner and such Depositor (or, as applicable,
cause each Subservicer to provide), in writing and in form and substance
reasonably satisfactory to the Owner and such Depositor, the information
and materials specified in subsections (f), and (i) and (2) as promptly as
practicable following notice to or discovery by the Servicer, provide to
the Owner and any Depositor (in writing and in form and substance
reasonably satisfactory to the Owner and such Depositor) the information
specified in subsection (g).
(f) If so requested by the Owner or any Depositor, the Servicer shall provide
such information regarding the Servicer, as servicer of the Mortgage
Loans, and each Subservicer (each of the Servicer and each Subservicer,
for purposes of this paragraph, a "Servicer"), as is requested for the
purpose of compliance with Items 1108, 1117 and 1119 of Regulation AB.
Such information shall include, at a minimum:
A. the Servicer's form of organization;
B. a description of how long the Servicer has been servicing
residential mortgage loans; a general discussion of the Servicer's
experience in servicing assets of any type as well as a more
detailed discussion of the Servicer's experience in, and procedures
for, the servicing function it will perform under this Agreement and
any Reconstitution Agreements; information regarding the size,
composition and growth of the Servicer's portfolio of residential
mortgage loans of a type similar to
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the Mortgage Loans and information on factors related to the
Servicer that may be material, in the good faith judgment of the
Owner or any Depositor, to any analysis of the servicing of the
Mortgage Loans or the related asset-backed securities, as
applicable, including, without limitation:
1. whether any prior securitizations of mortgage loans of a type
similar to the Mortgage Loans involving the Servicer have
defaulted or experienced an early amortization or other
performance triggering event because of servicing during the
three-year period immediately preceding the related
Securitization Transaction;
2. the extent of outsourcing the Servicer utilizes;
3. whether there has been previous disclosure of material
noncompliance with the applicable servicing criteria with
respect to other securitizations of residential mortgage loans
involving the Servicer as a servicer during the three-year
period immediately preceding the related Securitization
Transaction;
4. whether the Servicer has been terminated as servicer in a
residential mortgage loan securitization, either due to a
servicing default or to application of a servicing performance
test or trigger; and
5. such other information as the Owner or any Depositor may
reasonably request for the purpose of compliance with Item
1108(b)(2) of Regulation AB;
C. a description of any material changes during the three-year period
immediately preceding the related Securitization Transaction to the
Servicer's policies or procedures with respect to the servicing
function it will perform under this Agreement and any Reconstitution
Agreements for mortgage loans of a type similar to the Mortgage
Loans;
D. information regarding the Servicer's financial condition, to the
extent that there is a material risk that an adverse financial event
or circumstance involving the Servicer could have a material adverse
effect on the performance by the Servicer of its servicing
obligations under this Agreement or any Reconstitution Agreement;
E. information regarding advances made by the Servicer on the Mortgage
Loans and the Servicer's overall servicing portfolio of residential
mortgage loans for the threeyear period immediately preceding the
related Securitization Transaction, which may be limited to a
statement by an authorized officer of the Servicer to the effect
that the Servicer has made all advances required to be made on
residential mortgage loans serviced by it during such period, or, if
such statement would not be accurate,
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information regarding the percentage and type of advances not made
as required, and the reasons for such failure to advance;
F. a description of the Servicer's processes and procedures designed to
address any special or unique factors involved in servicing loans of
a similar type as the Mortgage Loans;
G. a description of the Servicer's processes for handling
delinquencies, losses, bankruptcies and recoveries, such as through
liquidation of mortgaged properties, sale of defaulted mortgage
loans or workouts;
H. information as to how the Servicer defines or determines
delinquencies and chargeoffs, including the effect of any grace
period, re-aging, restructuring, partial payments considered current
or other practices with respect to delinquency and loss experience;
and
I. a description of any material legal or governmental proceedings
pending (or known to be contemplated) against the Servicer; and
J. a description of any affiliation or relationship between the
Servicer and any of the following parties to a Securitization
Transaction, as such parties are identified to the Servicer by the
Owner or any Depositor in writing in advance of such Securitization
Transaction:
(1) the sponsor;
(2) the depositor;
(3) the issuing entity;
(4) any servicer;
(5) any trustee;
(6) any originator;
(7) any significant obligor;
(8) any enhancement or support provider; and
(9) any other material transaction party.
(g) For the purpose of satisfying the reporting obligation under the Exchange
Act with respect to any class of asset-backed securities, the Servicer
shall (or shall cause each Subservicer to) (i) provide prompt notice to
the Owner, any Master Servicer and any Depositor in writing of (A) any
material litigation or governmental proceedings involving the Servicer or
any Subservicer, (B) any affiliations or relationships that develop
following the closing date of a Securitization Transaction between the
Servicer or any Subservicer and any of the parties specified in clause (J)
of paragraph (f) of this Section (and any other parties identified in
writing by the requesting party) with respect to such Securitization
Transaction, (C) any Event of Default under the terms of this Agreement or
any Reconstitution Agreement, (D) any merger, consolidation or sale of
substantially all of the assets of the Servicer, and (E) the Servicer's
entry into an agreement with a Subservicer to perform or assist in the
performance
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of any of the Servicer's obligations under this Agreement or any
Reconstitution Agreement and (ii) provide to the Owner and any Depositor a
description of such proceedings, affiliations or relationships.
(h) As a condition to the succession to the Servicer or any Subservicer as
servicer or subservicer under this Agreement or any Reconstitution
Agreement by any Person (i) into which the Servicer or such Subservicer
may be merged or consolidated, or (ii) which may be appointed as a
successor to the Servicer or any Subservicer, the Servicer shall provide
to the Owner and any Depositor, at least 15 calendar days prior to the
effective date of such succession or appointment, (x) written notice to
the Owner and any Depositor of such succession or appointment and (y) in
writing and in form and substance reasonably satisfactory to the Owner and
such Depositor, all information reasonably requested by the Owner or any
Depositor in order to comply with its reporting obligation under Item 6.02
of Form 8-K with respect to any class of asset-backed securities.
(i) (i)The Servicer shall be deemed to represent to the Owner, to any Master
Servicer and to any Depositor, as of the date on which information is
first provided to the Owner, any Master Servicer or any Depositor under
this Section 9.01(i) that, except as disclosed in writing to the Owner,
any Master Servicer or such Depositor prior to such date: (1) the Servicer
is not aware and has not received notice that any default, early
amortization or other performance triggering event has occurred as to any
other securitization due to any act or failure to act of the Servicer; (2)
the Servicer has not been terminated as servicer in a residential mortgage
loan securitization, either due to a servicing default or to application
of a servicing performance test or trigger; (3) no material noncompliance
with the applicable servicing criteria with respect to other
securitizations of residential mortgage loans involving the Servicer as
servicer has been disclosed or reported by the Servicer; (4) no material
changes to the Servicer's policies or procedures with respect to the
servicing function it will perform under this Agreement and any
Reconstitution Agreement for mortgage loans of a type similar to the
Mortgage Loans have occurred during the three-year period immediately
preceding the related Securitization Transaction; (5) there are no aspects
of the Servicer's financial condition that could have a material adverse
effect on the performance by the Servicer of its servicing obligations
under this Agreement or any Reconstitution Agreement; (6) there are no
material legal or governmental proceedings pending (or known to be
contemplated) against the Servicer or any Subservicer ; and (7) there are
no affiliations, relationships or transactions relating to the Servicer or
any Subservicer with respect to any Securitization Transaction and any
party thereto identified by the related Depositor of a type described in
Item 1119 of Regulation AB.
(ii) On any date following the date on which information is first provided
to the Owner, any Master Servicer or any Depositor under this Section
9.01(i), the Servicer shall, within five (5) Business Days following such
request, confirm in writing the accuracy of the representations and
warranties set forth in sub clause (i) above or, if any such
representation and warranty is not accurate as of the date of such
request, provide reasonably adequate disclosure of the pertinent facts, in
writing, to the requesting party.
53
(j) In addition to such information as the Servicer, as servicer, is obligated
to provide pursuant to other provisions of this Agreement, not later than
ten days prior to the deadline for the filing of any distribution report
on Form 10-D in respect of any Securitization Transaction that includes
any of the Mortgage Loans serviced by the Servicer or any Subservicer, the
Servicer or such Subservicer, as applicable, shall provide to the party
responsible for filing such report (including, if applicable, the Master
Servicer) notice of the occurrence of any of the following events along
with all information, data, and materials related thereto as may be
required to be included in the related distribution report on Form 10-D
(as specified in the provisions of Regulation AB referenced below):
(i) any material modifications, extensions or waivers of pool asset
terms, fees, penalties or payments during the distribution period or
that have cumulatively become material over time (Item 1121(a)(11)
of Regulation AB);
(ii) material breaches of pool asset representations or warranties
or transaction covenants (Item 1121(a)(12) of Regulation AB); and
(iii) information regarding new asset-backed securities issuances
backed by the same pool assets, any pool asset changes (such as,
additions, substitutions or repurchases), and any material changes
in origination, underwriting or other criteria for acquisition or
selection of pool assets (Item 1121(a)(14) of Regulation AB).
(k) The Servicer shall provide to the Owner, any Master Servicer and any
Depositor, evidence of the authorization of the person signing any
certification or statement, evidence of Fidelity Bond Insurance and Errors
and Omission Insurance policy, financial information and reports, and such
other information related to the Servicer or any Subservicer or the
Servicer's or Subservicer's performance hereunder and which information is
available to the Servicer and necessary for compliance with Regulation AB.
(l) In addition to such information as the Servicer, as servicer, is obligated
to provide pursuant to other provisions of this Agreement, if so requested
by the Owner or any Depositor, the Servicer shall provide such additional
information as such party may reasonably request, including evidence of
the authorization of the person signing any certification or statement,
financial information and reports, and such other information related to
the Servicer or any Subservicer or the Servicer or such Subservicer's
performance hereunder and such information regarding the performance or
servicing of the Mortgage Loans as is reasonably required to facilitate
preparation of distribution reports in accordance with Item 1121 of
Regulation AB. Such information shall be provided concurrently with the
monthly reports otherwise required to be delivered by the servicer under
this Agreement, commencing with the first such report due not less than
ten (10) Business Days following such request.
(m) The Servicer shall indemnify the Owner, each affiliate of the Owner, and
each of the following parties participating in a Securitization
Transaction: each sponsor and issuing entity; each Person, including, but
not limited to, any Master Servicer, if applicable, responsible for the
preparation, execution or filing of any report required to be filed with
the Commission with respect to such Securitization Transaction, or for
execution of a
54
certification pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the
Exchange Act with respect to such Securitization Transaction; each broker
dealer acting as underwriter, placement agent or initial Owner, each
Person who controls any of such parties or the Depositor (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act); and the respective present and former directors, officers,
employees, affiliates and agents of each of the foregoing and of the
Depositor (each an "Indemnified Party"), and shall hold each of them
harmless from and against any claims, losses, damages, penalties, fines,
forfeitures, legal fees and expenses and related costs, judgments, and any
other costs, fees and expenses that any of them may sustain arising out of
or based upon:
(i) (A) any untrue statement of a material fact contained or alleged to
be contained in any information, report, certification, data,
accountants' letter or other material provided under Sections 4.24,
6.04, 6.06, 9.01(e), (f) and (l) by or on behalf of the Servicer, or
provided under Sections 4.24, 6.04, 6.06, 9.01(e), (f) and (l) by or
on behalf of any Subservicer or Subcontractor (collectively, the
"Servicer Information"), or (B) the omission or alleged omission to
state in the Servicer Information a material fact required to be
stated in the Servicer Information or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided, by way of clarification,
that clause (B) of this paragraph shall be construed solely by
reference to the Servicer Information and not to any other
information communicated in connection with a sale or purchase of
securities, without regard to whether the Servicer Information or
any portion thereof is presented together with or separately from
such other information;
(ii) any breach by the Servicer of its obligations under this Section
9.01(l), including particularly any failure by the Servicer, any
Subservicer or any Subcontractor to deliver any information, report,
certification, accountants' letter or other material when and as
required under Sections 4.24, 6.04, 6.05, 6.06, 9.01(h), (i) and
(l), including any failure by the Servicer to identify any
Subcontractor "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB;
(iii) any breach by the Servicer of a representation or warranty set forth
in Section 9.01(i)(i) or in a writing furnished pursuant to Section
9.01(i)(ii) and made as of a date prior to the closing date of the
related Securitization Transaction, to the extent that such breach
is not cured by such closing date, or any breach by the Servicer of
a representation or warranty in a writing furnished pursuant to
Section 9.01(i)(ii) to the extent made as of a date subsequent to
such closing date; or
(iv) the negligence, bad faith or willful misconduct of the Servicer in
connection with its performance under this Section 9.01(l).
55
If the indemnification provided for herein is unavailable or
insufficient to hold harmless an Indemnified party, then the
Servicer agrees that it shall contribute to the amount paid or
payable by such Indemnified Party as a result of any claims, losses,
damages or liabilities incurred by such Indemnified Party in such
proportion as is appropriate to reflect the relative fault of such
Indemnified Party on the one hand and the Servicer on the other.
In the case of any failure of performance described in sub-clause
(ii) of this Section 9.01(l), the Servicer shall promptly reimburse
the Owner, any Depositor, as applicable, and each Person responsible
for the preparation, execution or filing of any report required to
be filed with the Commission with respect to such Securitization
Transaction, or for execution of a certification pursuant to Rule
13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to
such Securitization Transaction, for all costs reasonably incurred
by each such party in order to obtain the information, report,
certification, accountants' letter or other material not delivered
as required by the Servicer, any Subservicer or any Subcontractor.
This indemnification shall survive the termination of this Agreement
or the termination of any party to this Agreement.
(n) to negotiate and execute one or more servicing agreements between the
Servicer and any master servicer which is generally considered to be a
prudent master servicer in the secondary mortgage market, designated by
the Owner in its sole discretion after consultation with the Servicer
and/or one or more custodial agreements among the Owner, the Servicer and
a third party custodian/trustee which is generally considered to be a
prudent custodian/trustee in the secondary mortgage market designated by
the Owner in its sole discretion after consultation with the Servicer, in
either case for the purpose of pooling the Mortgage Loans with other
mortgage loans for resale or securitization, which subservicing agreements
or servicing agreements in the case of a securitization shall contain
contractual provisions including, but not limited to, servicer advances of
delinquent scheduled payments of principal and interest through
liquidation (unless deemed non-recoverable) and prepayment interest
shortfalls (to the extent of the monthly servicing fee payable thereto);
(o) the Servicer shall, at the Owner's expense, make available to the Owner,
its affiliates, successors or assigns an agreed-upon procedures letter
concerning the aforementioned disclosures, which letter shall be issued by
an accounting firm selected by the Servicer and acceptable to the Owner,
its affiliates, successors or assigns, for inclusion in the offering
materials for the securities created in the Securitization Transaction;
and
(p) in the event the Owner appoints a credit risk manager in connection with a
Securitization Transaction, to execute a credit risk management agreement
and provide reports and information reasonably required by the credit risk
manager.
The Owner shall indemnify the Servicer, each affiliate of the Servicer,
each Person who controls any of such parties or the Servicer (within the meaning
of Section 15 of the Securities
56
Act and Section 20 of the Exchange Act) and the respective present and former
directors, officers, employees and agents of each of the foregoing and of the
Servicer, and shall hold each of them harmless from and against any losses,
damages, penalties, fines, forfeitures, legal fees and expenses and related
costs, judgments, and any other costs, fees and expenses that any of them may
sustain arising out of or based upon:
(i) any untrue statement of a material fact or alleged untrue statement of
material fact contained in any offering materials related to a Securitization
Transaction, including without limitation the registration statement,
prospectus, prospectus supplement, any private placement memorandum, any free
writing prospectuses, any ABS informational and computational material, and any
amendments or supplements to the foregoing (collectively, the "Securitization
Materials") or
(ii) the omission or alleged omission to state in the Securitization
Materials a material fact required to be stated in the Securitization Materials
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but only to the extent
that such untrue statement or omission is other than a statement or omission
arising out of, resulting from, or based upon the Servicer Information.
If the indemnification provided for herein is unavailable or insufficient
to hold harmless an Indemnified Party, then the Owner agrees that it shall
contribute to the amount paid or payable by such Indemnified Party as a result
of any claims, losses, damages or liabilities incurred by such Indemnified Party
in such proportion as is appropriate to reflect the relative fault of such
Indemnified Party on the one hand and the Purchaser on the other.
This indemnification shall survive the termination of this Agreement or
the termination of any party to this Agreement.
The Owner and the Servicer acknowledge and agree that the purpose of
Section 9.01(h) is to facilitate compliance by the Owner and any Depositor with
the provisions of Regulation AB and related rules and regulations of the
Commission (or the provision in a private offering of disclosure comparable to
that required under the Securities Act) and the Xxxxxxxx-Xxxxx Act. Although
Regulation AB is applicable by its terms only to offerings of asset-backed
securities that are registered under the Securities Act, the Servicer
acknowledges that investors in privately offered securities may require that the
Owner or any Depositor provide comparable disclosure in unregistered offerings.
References in this Agreement to compliance with Regulation AB include provisions
of comparable disclosure in private offerings.
Neither the Owner nor any Depositor shall exercise its right to request
delivery of information or other performance under these provisions other than
in good faith, or for purposes other than compliance with the Securities Act,
the Exchange Act and the rules and regulations of the Commission thereunder. The
Servicer acknowledges that interpretations of the requirements of Regulation AB
may change over time, whether due to interpretive guidance provided by the
Commission or its staff, consensus among participants in the asset-backed
securities markets, advice of counsel, or otherwise, and agrees to comply with
requests made by the Owner, any Master Servicer or any Depositor in good faith
for delivery of information under these provisions
57
on the basis of established and evolving interpretations of Regulation AB. In
connection with any Securitization Transaction, the Servicer shall cooperate
fully with the Owner and any Master Servicer to deliver to the Owner (including
any of its assignees or designees), any Master Servicer and any Depositor, any
and all statements, reports, certifications, records and any other information
necessary in the good faith determination of the Owner, any Master Servicer or
any Depositor to permit the Owner, such Master Servicer or such Depositor to
comply with the provisions of Regulation AB, together with such disclosures
relating to the Servicer, any Subservicer, and the Mortgage Loans, or the
servicing of the Mortgage Loans, reasonably believed by the Owner, any Master
Servicer or any Depositor to be necessary in order to effect such compliance. In
the event of any conflict between Section 9.01 and any other term or provision
in this Agreement, the provisions of Section 9.01 shall control.
The Owner (including any of its assignees or designees) shall cooperate
with the Servicer by providing timely notice of requests for information under
these provisions any by reasonably limiting such request to information
required, in the Owner's reasonable judgment to comply with regulation AB.
All Mortgage Loans (i) not sold or transferred pursuant to Whole Loan
Transfers, Agency Sales or Securitization Transactions or (ii) that are subject
to a Securitization Transaction for which the related trust is terminated for
any reason, shall remain subject to this Agreement and shall continue to be
serviced in accordance with the terms of this Agreement on an actual/actual
basis and with respect thereto this Agreement shall remain in full force and
effect.
ARTICLE X
DEFAULT
Section 10.01 Events of Default.
Each of the following shall constitute an Event of Default on the part of
the Servicer:
(i) any failure by the Servicer to remit to the Owner any payment
required to be made under the terms of this Agreement which
continues unremedied for a period of two (2) Business Days after the
date upon which written notice of such failure, requiring the same
to be remedied, shall have been given to the Servicer by the Owner;
or
(ii) failure by the Servicer duly to observe or perform in any material
respect any other of the covenants or agreements on the part of the
Servicer set forth in this Agreement or in the Custodial Agreement
which continues unremedied for a period of sixty (60) days (except
that such number of days shall be fifteen (15) in the case of a
failure to pay any premium for any insurance policy required to be
maintained under this Agreement) after the date on which written
notice of such
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failure, requiring the same to be remedied, shall have been given to
the Servicer by the Owner or by the Custodian; or
(iii) failure by the Servicer to maintain its license to do business in
any jurisdiction where the Mortgaged Property is located if such
license is required; or
(iv) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, including
bankruptcy, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Servicer and such decree or
order shall have remained in force undischarged or unstayed for a
period of 60 days; or
(v) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment
of debt, marshaling of assets and liabilities or similar proceedings
of or relating to the Servicer or of or relating to all or
substantially all of its property; or
(vi) the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of
any applicable insolvency, bankruptcy or reorganization statute,
make an assignment for the benefit of its creditors, voluntarily
suspend payment of its obligations or cease its normal business
operations; or
(vii) the Servicer ceases to meet the qualifications of a Xxxxxx
Mae/Xxxxxxx Mac servicer or the Servicer is not eligible to act as
servicer or master servicer for mortgage loans subject to
residential mortgage backed securities transactions rated by any
nationally recognized rating agency or is eligible to act as such
only with enhanced credit support; or
(viii) S&P, Xxxxx'x or any other rating agency lowers Servicer's servicing
rating anytime after the date of this Agreement; or
(ix) the Delinquency Ratio exceeds a certain threshold as specified by
Owner as to each Securitization Transaction
(x) the Servicer attempts to assign its right to servicing compensation
hereunder or the Servicer attempts, without the consent of the
Owner, to sell or otherwise dispose of all or substantially all of
its property or assets or to assign this Agreement or the servicing
responsibilities hereunder in violation of Section 8.04 or to
delegate its duties hereunder or any portion thereof; or
(xi) failure by the Servicer to duly perform, within the required time
period, its obligations under Sections 4.24, 6.04, 6.05, 6.06 and
9.01 which failure continues unremedied for a period of ten (10)
days after the date on which such information was required to be
delivered.
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In each and every such case, so long as an Event of Default shall not have
been remedied, in addition to whatever rights the Owner may have at law or
equity to damages, including injunctive relief and specific performance, the
Owner, by notice in writing to the Servicer, may terminate all the rights and
obligations of the Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof.
Upon receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in the successor appointed
pursuant to Section 12.01. Upon written request from any Owner, the Servicer
shall prepare, execute and deliver to the successor entity designated by the
Owner any and all documents and other instruments, place in such successor's
possession all Mortgage Files, and do or cause to be done all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, including but not limited to the transfer and endorsement or
assignment of the Mortgage Loans and related documents at the Servicer's sole
expense. The Servicer shall cooperate with the Owner and such successor in
effecting the termination of the Servicer's responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Servicer to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
If any of the Mortgage Loans are MERS Mortgage Loans, in connection with
the termination or resignation (as described in Section 8.04) of the Servicer
hereunder, either (i) the successor servicer shall represent and warrant that it
is a member of MERS in good standing and shall agree to comply in all material
respects with the rules and procedures of MERS in connection with the servicing
of the Mortgage Loans that are registered with MERS, or (ii) the Servicer shall
cooperate with the successor servicer either (x) in causing MERS to execute and
deliver an assignment of Mortgage in recordable form to transfer the Mortgage
from MERS to the Owner and to execute and deliver such other notices, documents
and other instruments as may be necessary to remove such Mortgage Loan(s) from
the MERS(R) System or (y) in causing MERS to designate on the MERS(R) System the
successor servicer as the servicer of such Mortgage Loan.
Section 10.02 Waiver of Defaults.
By a written notice, the Owner may waive any default by the Servicer in
the performance of its obligations hereunder and its consequences. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
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ARTICLE XI
TERMINATION
Section 11.01 Termination.
This Agreement shall terminate upon either: (i) the later of the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or the disposition of any REO Property with respect to the last
Mortgage Loan and the remittance of all funds due hereunder; or (ii) mutual
consent of the Servicer and the Owner in writing; or (iii) termination pursuant
to Section 10.01 or 11.02.
Upon written request from the Owner in connection with any such
termination, the Servicer shall prepare, execute and deliver, any and all
documents and other instruments, place in the Owner's possession all Mortgage
Files, and do or accomplish all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, whether to complete the
transfer and endorsement or assignment of the Mortgage Loans and related
documents, including any transfers on the MERS System, or otherwise, at the
Servicer's sole expense. The Servicer agrees to cooperate with the Owner and
such successor in effecting the termination of the Servicer's responsibilities
and rights hereunder as servicer, including, without limitation, the transfer to
such successor for administration by it of all cash amounts which shall at the
time be credited by the Servicer to the Custodial Account, REO Account or Escrow
Account or thereafter received with respect to the Mortgage Loans. The
indemnification obligation of the Servicer set forth herein shall survive the
termination of this Agreement.
Section 11.02 Termination Without Cause.
The Owner may terminate, at its sole option, any rights the Servicer may
have hereunder, without cause as provided in this Section 11.02. Any such notice
of termination shall be in writing and delivered to the Servicer by registered
mail as provided in Section 12.05.
The Servicer shall be entitled to receive, as liquidated damages, upon the
transfer of the Servicing Rights, an amount equal to 1.25% of the aggregate
outstanding principal balance of the terminated Mortgage Loans as of the
termination date, paid by the Owner to the Servicer with respect to all of the
Mortgage Loans so terminated.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Servicer.
Prior to termination of the Servicer's responsibilities and duties under
this Agreement pursuant to Sections 8.04, 10.01, 11.01(ii) or pursuant to
Section 11.02 the Owner shall, (i) succeed to and assume all of the Servicer's
responsibilities, rights, duties and obligations under
61
this Agreement, or (ii) appoint a successor having the characteristics set forth
in Section 8.02 and which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under this Agreement
prior to the termination of Servicer's responsibilities, duties and liabilities
under this Agreement. In connection with such appointment and assumption, the
Owner may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree. In the event
that the Servicer's duties, responsibilities and liabilities under this
Agreement should be terminated pursuant to the aforementioned sections, the
Servicer shall discharge such duties and responsibilities during the period from
the date it acquires knowledge of such termination until the effective date
thereof with the same degree of diligence and prudence which it is obligated to
exercise under this Agreement, and shall take no action whatsoever that might
impair or prejudice the rights or financial condition of the Owner or its
successor. The resignation or removal of the Servicer pursuant to the
aforementioned sections shall not become effective until a successor shall be
appointed pursuant to this Section 12.01 and shall in no event relieve the
Servicer of the representations and warranties made pursuant to Section 3.01 and
the remedies available to the Owner under Sections 3.02 and 8.01, it being
understood and agreed that the provisions of such Sections 3.01, 3.02and 8.01
shall be applicable to the Servicer notwithstanding any such sale, assignment,
resignation or termination of the Servicer, or the termination of this
Agreement.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Servicer and to the Owner an instrument accepting such
appointment, wherein the successor shall make the representations and warranties
set forth in Section 3.01, whereupon such successor shall become fully vested
with all the rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer, with like effect as if originally named as a party
to this Agreement provided, however, that such successor shall not assume, and
Servicer shall indemnify such successor for, any and all liabilities arising out
of the Servicer's acts. Any termination or resignation of the Servicer or
termination of this Agreement pursuant to Section 8.04, 10.01, 11.01 or 11.02
shall not affect any claims that any Owner may have against the Servicer arising
out of the Servicer's actions or failure to act prior to any such termination or
resignation or remedies with respect to such claims.
The Servicer shall deliver promptly to the successor servicer the funds in
the Custodial Account, REO Account and Escrow Account and all Mortgage Files and
related documents and statements held by it hereunder and the Servicer shall
account for all funds and shall execute and deliver such instruments and do such
other things as may reasonably be required to more fully and definitively vest
in the successor all such rights, powers, duties, responsibilities, obligations
and liabilities of the Servicer.
Upon a successor's acceptance of appointment as such, the Servicer shall
notify by mail the Owner of such appointment in accordance with the procedures
set forth in Section 12.05.
Section 12.02 Amendment.
This Agreement may be amended from time to time by written agreement
signed by the Servicer and the Owner.
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Section 12.03 Governing Law.
This Agreement shall be construed in accordance with the laws of the State
of New York without regard to any conflicts of law provisions and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with the laws of the State of New York, except to the extent
preempted by Federal law.
Section 12.04 Duration of Agreement.
This Agreement shall continue in existence and effect until terminated as
herein provided. This Agreement shall continue notwithstanding transfers of the
Mortgage Loans by the Owner.
Section 12.05 Notices.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid, addressed as follows:
(i) if to the Servicer with respect to servicing and investor reporting
issues:
Xxxxx Fargo Bank, N.A.
1 Home Xxxxxx
Xxx Xxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxx, MAC X2401-042
Fax: 515/000-0000
with a copy to:
Xxxxx Fargo Bank, N.A.
1 Home Campus
Xxx Xxxxxx, Xxxx 00000-0000
Attention: General Counsel MAC X2401-06T
or such other address as may hereafter be furnished to the Owner in
writing by the Servicer;
(ii) if to Owner:
HSBC Bank (USA) Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxx Xxxxxxxxxx
Telecopy: 000 000-0000
63
or such other address as may hereafter be furnished to the Servicer in
writing by the Owner.
Section 12.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement. If the invalidity of any part, provision, representation or warranty
of this Agreement shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate, in good-faith, to
develop a structure the economic effect of which is nearly as possible the same
as the economic effect of this Agreement without regard to such invalidity.
Section 12.07 Relationship of Parties.
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of the
Servicer shall be rendered as an independent contractor and not as agent for the
Owner.
Section 12.08 Execution; Successors and Assigns.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Section 8.04, this Agreement
shall inure to the benefit of and be binding upon, and shall be enforceable by,
the Servicer and the Owner and their respective successors and assigns,
including without limitation, any trustee or master servicer appointed by the
Owner with respect any Whole Transfer or Securitization Transaction. The parties
agree that this Agreement and signature pages thereof may be transmitted between
them by facsimile and that faxed signatures may constitute original signatures
and that a faxed signature page containing the signature (faxed or original) is
binding on the parties.
Section 12.09 Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, as to each Mortgage Loan which
is not a MERS Mortgage Loan, each of the Assignments of Mortgage is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected at the Servicer's expense
in the event recordation is either necessary under applicable law or requested
by the Owner at its sole option.
64
Section 12.10 Assignment by Owner.
The Owner shall have the right, without the consent of the Servicer to
assign, in whole or in part, its interest under this Agreement with respect to
some or all of the Mortgage Loans, and designate any Person to exercise any
rights of the Owner hereunder, by executing an Assignment and Assumption
Agreement substantially in the form attached as Exhibit B, and the assignee or
designee shall accede to the rights and obligations hereunder of the Owner with
respect to such Mortgage Loans. Upon any such assignment, the Person to whom
such assignment is made (a "Successor Owner") shall succeed to all rights and
obligations of the Owner under this Agreement to the extent of the related
Mortgage Loan or Mortgage Loans and this Agreement, to the extent of the related
Mortgage Loan or Loans, shall be deemed to be a separate and distinct Agreement
between the Servicer and such Successor Owner, and a separate and distinct
Agreement between the Servicer and each other Successor Owner to the extent of
the other related Mortgage Loan or Loans. All references to the Owner in this
Agreement shall be deemed to include its assignee or designee. This Agreement
shall not be assigned, pledged or hypothecated by the Servicer to a third party
without the consent of the Owner.
Section 12.11 Solicitation of Mortgagor.
Neither the Owner nor the Servicer shall, after the Sale Date, take any
action to solicit the refinancing of any Mortgage Loan. It is understood and
agreed that neither (i) promotions undertaken by the Owner or the Servicer or
any affiliate which are directed to the general public at large, including,
without limitation, mass mailings based upon commercially acquired mailing
lists, newspaper, radio, television advertisements nor (ii) serving the
refinancing needs of a Mortgagor who, without solicitation, contacts the Owner
or the Servicer in connection with the refinance of such Mortgage or Mortgage
Loan, shall constitute solicitation under this Section.
Section 12.12 Further Agreements.
The Owner and the Servicer each agree to execute and deliver to the other
such additional documents, instruments or agreements as may be necessary or
appropriate to effectuate the purposes of this Agreement.
Section 12.13 Conflicts.
If any conflicting terms shall exist between this Agreement, the Purchase
Agreement, and any Commitment Letter, the terms and conditions of the Commitment
Letter shall govern over all other documents; the Purchase Agreement shall
govern over this Agreement.
Section 12.14 General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
65
(i) the terms defined in this Agreement have the meanings assigned to them
in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
(ii) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles;
(iii) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are
to designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
(iv) a reference to a Subsection without further reference to a Section is
a reference to such Subsection as contained in the same Section in which
the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(v) the words "herein", "hereof", "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
provision; and
(vi) the term "include" or "including" shall mean without limitation by
reason of enumeration.
Section 12.15 Waivers.
No term or provision of this Agreement may be waived or modified unless
such waiver or modification is in writing and signed by the party against whom
such waiver or
Section 12.16 Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
Section 12.17 Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
Section 12.18 Third Party Beneficiaries.
66
For purposes of Sections 4.24, 6.04, 6.06 and 9.01 and any related
provisions thereto, each Master Servicer shall be considered a third-party
beneficiary of this Agreement, entitled to all the rights and benefits hereof as
if it were a direct party to this Agreement.
[Intentionally Blank - Next Page Signature Page]
67
IN WITNESS WHEREOF, the Servicer and the Owner have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written,
HSBC BANK (USA) INC XXXXX FARGO BANK, N.A.
Owner Servicer
By: /s/Xxx Xxxxxxxxxx By: /s/Xxxx X. Xxxxxxxx
--------------------------- ---------------------------
Name: Xxx Xxxxxxxxxx Name: Xxxx X. Xxxxxxxx
------------------------- -------------------------
Title: SVP #15474 Title: Vice President
------------------------ ------------------------
STATE OF New York )
) ss:
COUNTY OF New York )
On the 11th day of July, 2006 before me, a Notary Public in and for said
State, personally appeared _____________________________________, known to me to
be the _____________________________ of ______________________________, the
corporation that executed the within instrument and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the
day and year in this certificate first above written .
/s/Xxxxxxx X. Xxxxx
------------------------------
Notary Public
My Commission Expires XXXXXXX X. XXXXX
Notary Public, State of New York
No.01SM5033548
Qualified in New York County
Commission Expires Sept. 19, 0000
XXXXX XX Xxxxxxxx )
) ss:
COUNTY OF Xxxxxxxxx )
On the 14 day of July, 2006 before me, a Notary Public in and for said
State, personally appeared Xxxx X. Xxxxxxxx, known to me to be the Vice
President of Xxxxx Fargo, the corporation that executed the within instrument
and also known to me to be the person who executed it on behalf of said
corporation, and acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the day
and year in this certificate first above written.
/s/Xxxxx X. Xxxxxx
------------------------------
Notary Public
My Commission Expires XXXXX X. XXXXXX
Notary Public State of Maryland
My Commission Expires March 1, 2007
[GRAPHIC Notary Public Seal]
{ XXXXX X. XXXXXX ]
70
EXHIBIT A
FORM ACKNOWLEDGMENT AGREEMENT
THIS ACKNOWLEDGMENT AGREEMENT, dated as of _____________, (the
"Acknowledgement Agreement"), between @, ("Owner"), and @, ("Servicer"),
(together, the "Parties").
W I T N E S S E T H:
WHEREAS, Owner has purchased certain mortgage loans [on a servicing
released basis] [on a servicing retained basis] identified on Schedule I
attached hereto, (the "Mortgage Loans").
WHEREAS, the Owner desires to retain Servicer to service and provide
management and disposition services for the Mortgage Loans on behalf of the
Owner pursuant to the terms of that certain Servicing Agreement by and between
the Owner and the Servicer dated as @ (the " Servicing Agreement");
NOW THEREFORE, for and in consideration of the mutual premises set forth
herein and other good and valuable consideration the receipt and sufficiency of
which hereby are acknowledged, and of the mutual covenants herein contained, the
parties hereto hereby agree as follows:
1. Unless otherwise amended by this Acknowledgment Agreement, all
provisions of the Servicing Agreement shall apply to the servicing of the
Mortgage Loans.
2. The Servicing Fee Rate with respect to the Mortgage Loans shall be @%
3. Capitalized terms not otherwise defined herein shall have the meanings
assigned under the Servicing Agreement.
4. This Agreement is entered into in the State of New York. Its
construction and rights, remedies, and obligations arising by, under, through,
or on account of it will be governed by the laws of the State of New York
excluding its conflict of laws rules and will be deemed performable in the State
of New York.
5. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
[SIGNATURES APPEAR ON NEXT PAGE]
71
IN WITNESS WHEREOF, the parties hereto have caused this Acknowledgment
Agreement to be duly executed on their behalf by the undersigned, duly
authorized, as of the day and year first above written.
@.
Owner
By:_______________________________
Name:
Title:
XXXXX FARGO BANK, N.A.
Servicer
By:_______________________________
Name:
Title:
72
Schedule I
EXHIBIT B
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
____________, 20__
ASSIGNMENT AND ASSUMPTION, dated ___________________, 20__ among
_________________, a _________________ corporation having an office at
_________________ ("Assignor") and _________________, having an office at
_________________ ("Assignee") and Xxxxx Fargo Bank, N.A. (the "Servicer"),
having an xxxxxx xx 0 Xxxx Xxxxxx, Xxx Xxxxxx, XX 00000-0000:
For and in consideration of the sum of one dollar ($1.00) and other
valuable consideration the receipt and sufficiency of which are hereby
acknowledge, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to Assignee all of
the right, title and interest of Assignor, as Owner, in, to and under that
certain Servicing Agreement, (the " Agreement"), dated as of _________________,
by and between _________________ (the "Owner"), and _________________ (the
"Servicer"), and the Mortgage Loans delivered thereunder by the Servicer to the
Assignor, and that certain Custodial Agreement, (the "Custodial Agreement"),
dated as of _________________, by and among the Servicer, the Owner and
_________________ (the "Custodian").
2. The Assignor warrants and represents to, and covenants with, the
Assignee that:
a. The Assignor is the lawful owner of the Mortgage Loans with the
full right to transfer the Mortgage Loans free from any and all claims and
encumbrances whatsoever;
b. The Assignor has not received notice of, and has no knowledge of,
any offsets, counterclaims or other defenses available to the Servicer with
respect to the Servicing Agreement or the Mortgage Loans;
c. The Assignor has not waived or agreed to any waiver under, or
agreed to any amendment or other modification of, the Servicing Agreement, the
Custodial Agreement or the Mortgage Loans, including without limitation the
transfer of the servicing obligations under the Servicing Agreement. The
Assignor has no knowledge of, and has not received notice of, any waivers under
or amendments or other modifications of, or assignments of rights or obligations
under, the Servicing Agreement or the Mortgage Loans; and
d. Neither the Assignor nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action which would
constitute a distribution of the Mortgage Loans under the Securities Act of 1933
(the "33 Act") or which would render the disposition of the Mortgage Loans a
violation of Section 5 of the 33 Act or require registration pursuant thereto.
3. That Assignee warrants and represent to, and covenants with, the
Assignor and the Servicer pursuant to Section 12.10 of the Servicing Agreement
that:
a. The Assignee agrees to be bound, as Owner, by all of the terms,
covenants and conditions of the Servicing Agreement, the Mortgage Loans and the
Custodial Agreement, and from and after the date hereof, the Assignee assumes
for the benefit of each of the Servicer and the Assignor all of the Assignor's
obligations as purchaser thereunder;
b. The Assignee understands that the Mortgage Loans have not been
registered under the 33 Act or the securities laws of any state;
c. The purchase price being paid by the Assignee for the Mortgage
Loans are in excess of $250,000.00 and will be paid by cash remittance of the
full purchase price within 60 days of the sale;
d. The Assignee is acquiring the Mortgage Loans for investment for
its own account only and not for any other person. In this connection, neither
the Assignee nor any person authorized to act therefor has offered to sell the
Mortgage Loans by means of any general advertising or general solicitation
within the meaning of Rule 502(c) of US Securities and Exchange Commission
Regulation D, promulgated under the 1933 Act;
e. The Assignee considers itself a substantial sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Mortgage Loans;
f. The Assignee has been furnished with all information regarding
the Mortgage Loans that it has requested from the Assignor or the Servicer;
g. Neither the Assignee nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accepted a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner which would constitute a distribution of the Mortgage Loans
under the 33 Act or which would render the disposition of the Mortgage Loans a
violation of Section 5 of the 33 Act or require registration pursuant thereto,
nor will it act, nor has it authorized or will it authorize any person to act,
in such manner with respect to the Mortgage Loans; and
h. Either (1) the Assignee is not an employee benefit plan ("Plan")
within the meaning of section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or a plan (also "Plan") within the meaning of
section 4975(e)(1) of the Internal Revenue Code of 1986 ("Code"), and the
Assignee is not directly or indirectly purchasing the Mortgage Loans on behalf
of, investment manager of, as named fiduciary of, as Trustee of, or with assets
of, a Plan; or (2) the Assignee's purchase of the Mortgage Loans will not result
in a prohibited transaction under section 406 of ERISA or section 4975 of the
Code.
i. The Assignee's address for purposes of all notices and
correspondence related to the Mortgage Loans and the Servicing Agreements is:
2
_____________________________
_____________________________
_____________________________
Attention: _________________
The Assignee's wire transfer instructions for purposes of all remittances
and payments related to the Mortgage Loans and the Servicing Agreement is:
_____________________________
_____________________________
_____________________________
Attention: _________________
4. From and after the date hereof, the Servicer shall note the
transfer of the Mortgage Loans to the Assignee in its books and records, the
Servicer shall recognize the Assignee as the owner of the Mortgage Loans and the
Servicer shall service the Mortgage Loans for the benefit of the Assignee
pursuant to the Servicing Agreement, the terms of which are incorporated herein
by reference. It is the intention of the Assignor, the Servicer and the Assignee
that the Servicing Agreement shall be binding upon and inure to the benefit of
the Servicer and the Assignee and their respective successors and assigns.
[Signatures Follow]
3
IN WITNESS WHEREOF, the parties have caused this Assignment, Assumption
and Recognition Agreement to be executed by their duly authorized officers as of
the date first above written.
_____________________________ _____________________________
Assignor Assignee
_____________________________ _____________________________
By: By:
_____________________________ _____________________________
Name: Name:
_____________________________ _____________________________
Its: Its:
Tax Payer Identification No.: Tax Payer Identification No.:
_____________________________ _____________________________
XXXXX FARGO BANK, N.A.
Servicer
By:________________________________
Name:______________________________
Its:_______________________________
4
Exhibit C
Reserved
Exhibit D
Reserved
EXHIBIT E
FORMS OF CUSTODIAL ACCOUNT CERTIFICATION
CUSTODIAL ACCOUNT CERTIFICATION
____________, 20__
Xxxxx Fargo Bank, N.A. hereby certifies that it has established the
account described below as a Custodial Account pursuant to Section 4.04 of the
Servicing Agreement, dated as of ____________, 20__,.
Title of Account: Xxxxx Fargo Bank, N.A. in trust for the Owner and/or
subsequent purchasers of Mortgage Loans - P & I
Address of office or branch
of the Servicer at which
Account is maintained: _________________________________
_________________________________
_________________________________
_________________________________
XXXXX FARGO BANK, N.A.
Servicer
By:______________________________
Name:____________________________
Title:___________________________
1
EXHIBIT F
FORMS OF ESCROW ACCOUNT CERTIFICATION
ESCROW ACCOUNT CERTIFICATION
____________, 20__
Xxxxx Fargo Bank, N.A. hereby certifies that it has established the
account described below as an Escrow Account pursuant to Section 4.06 of the
Servicing Agreement, dated as of ____________, 20__,.
Title of Account: Xxxxx Fargo Bank, N.A. in trust for the Owner and/or
subsequent purchasers of Mortgage Loans, and various
Mortgagors - T & I
Address of office or branch
of the Servicer at which
Account is maintained: _________________________________
_________________________________
_________________________________
_________________________________
XXXXX FARGO BANK, N.A.
Servicer
By:______________________________
Name:____________________________
Title:___________________________
FORM OF POWER OF ATTORNEY
When Recorded Mail To:
_____________________________________________________ Space above this line for
Recorders Use
LIMITED POWER OF ATTORNEY
Name of Servicer (hereinafter called "Owner") hereby appoints Xxxxx Fargo Bank,
N.A. (hereinafter called "Servicer"), as its true and lawful attorney-in-fact to
act in the name, place and stead of Owner for the purposes set forth below. This
limited power of attorney is given pursuant to a certain Servicing Agreement and
solely with respect to the assets serviced pursuant to such agreement by and
between Owner and Servicer dated Date of Agreement, to which reference is made
for the definition of all capitalized terms herein.
The said attorneys-in-fact, and said person designated by the Servicer, as the
attorney-in-fact, is hereby authorized, and empowered, as follows:
2
1. To execute, acknowledge, seal and deliver deed of trust/mortgage note
endorsements, lost note affidavits, assignments of deed of trust/mortgage
and other recorded documents, satisfactions/releases/reconveyances of deed
of trust/mortgage, subordinations and modifications, tax authority
notifications and declarations, deeds, bills of sale, and other
instruments of sale, conveyance and transfer, appropriately completed,
with all ordinary or necessary endorsements, acknowledgements, affidavits,
and supporting documents as may be necessary or appropriate to effect its
execution, delivery, conveyance, recordation or filing.
2. To execute and deliver insurance filings and claims, affidavits of debt,
substitutions of trustee, substitutions of counsel, non-military
affidavits, notices of rescission, foreclosure deeds, transfer tax
affidavits, affidavits of merit, verifications of complaints, notices to
quit, bankruptcy declarations for the purpose of filing motions to lift
stays, and other documents or notice filings on behalf of Seller in
connection with insurance, foreclosure, bankruptcy and eviction actions.
3. To endorse any checks or other instruments received by Servicer with
respect to assets serviced pursuant to the Servicing Agreement and made
payable to Owner.
3
Dated: Name of Servicer
_______________________________________________
Witness: Name:
________________________________________________________________________
Title: _____________________________
Name & Title: ___________________________
Witness:
_____________________________
Name & Title: ___________________________
State of
County of
Before me, ______________________, a Notary Public in and for the jurisdiction
aforesaid, on this _____ day of ____________________, _______, personally
appeared ________________________________, who is personally known to me (or
sufficiently proven) to be a _______________________________________ of
_______________________________ and the person who executed the foregoing
instrument by virtue of the authority vested in him/her and he/she did
acknowledge the signing of the foregoing instrument to be his/her free and
voluntary act and deed as a _________________________________ for the uses,
purposes and consideration therein set forth.
Witness my hand and official seal this _____ day of _____________________, _____
_______________________________________________
My Commission Expires: ________________________
EXHIBIT H
IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by [the Company][Name of
Subservicer] shall address, as a minimum, the criteria identified below as
"Applicable Servicing Criteria"
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Reg AB Servicing Criteria Applicable Inapplicable
Reference Servicing Servicing
Criteria Criteria
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General Servicing Considerations
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1122(d)(1)(i) Policies and procedures are instituted X
to monitor any performance or other
triggers and events of default in
accordance with the transaction
agreements.
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1122(d)(1)(ii) If any material servicing activities are X
outsourced to third parties, policies
and procedures are instituted to monitor
the third party's performance and
compliance with such servicing
activities.
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1122(d)(1)(iii) Any requirements in the transaction X
agreements to maintain a back-up
servicer for the mortgage loans are
maintained.
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1122(d)(1)(iv) A fidelity bond and errors and omissions X
policy is in effect on the party
participating in the servicing function
throughout the reporting period in the
amount of coverage required by and
otherwise in accordance with the terms
of the transaction agreements.
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Cash Collection and Administration
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1122(d)(2)(i) Payments on mortgage loans are deposited X
into the appropriate custodial bank
accounts and related bank clearing
accounts no more than two business days
following receipt, or such other number
of days specified in the transaction
agreements.
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1122(d)(2)(ii) Disbursements made via wire transfer on X
behalf of an obligor or to an investor
are made only by authorized personnel.
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1122(d)(2)(iii) Advances of funds or guarantees X
regarding collections, cash flows or
distributions, and any interest or other
fees charged for such advances, are
made, reviewed and approved as specified
in the transaction agreements.
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1122(d)(2)(iv) The related accounts for the X
transaction, such as cash reserve
accounts or accounts established as a
form of overcollateralization, are
separately maintained (e.g., with
respect to commingling of cash) as set
forth in the transaction agreements.
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1122(d)(2)(v) Each custodial account is maintained at X
a federally insured depository
institution as set forth in the
transaction agreements. For purposes of
this criterion, "federally insured
depository institution" with respect to
a foreign financial institution means a
foreign financial institution that meets
the requirements of Rule 13k-1(b)(1) of
the Securities Exchange Act.
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1122(d)(2)(vi) Unissued checks are safeguarded so as to X
prevent unauthorized access.
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1122(d)(2)(vii) Reconciliations are prepared on a X
monthly basis for all asset-backed
securities related bank accounts,
including custodial accounts and related
bank clearing accounts. These
reconciliations are (A) mathematically
accurate; (B) prepared within 30
calendar days after the bank statement
cutoff date, or such other number of
days specified in the transaction
agreements; (C) reviewed and approved by
someone other than the person who
prepared the reconciliation; and (D)
contain explanations for reconciling
items. These reconciling items are
resolved within 90 calendar days of
their original identification, or such
other number of days specified in the
transaction agreements.
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Investor Remittances and Reporting
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1122(d)(3)(i) Reports to investors, including those to X
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
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agreements; (B) provide information
calculated in accordance with the terms
specified in the transaction agreements;
(C) are filed with the Commission as
required by its rules and regulations;
and (D) agree with investors' or the
trustee's records as to the total unpaid
principal balance and number of mortgage
loans serviced by the Servicer.
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1122(d)(3)(ii) Amounts due to investors are allocated X
and remitted in accordance with
timeframes, distribution priority and
other terms set forth in the transaction
agreements.
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1122(d)(3)(iii) Disbursements made to an investor are X
posted within two business days to the
Servicer's investor records, or such
other number of days specified in the
transaction agreements.
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1122(d)(3)(iv) Amounts remitted to investors per the X
investor reports agree with cancelled
checks, or other form of payment, or
custodial bank statements.
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Pool Asset Administration
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1122(d)(4)(i) Collateral or security on mortgage loans X
is maintained as required by the
transaction agreements or related
mortgage loan documents.
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1122(d)(4)(ii) Mortgage loan and related documents are X
safeguarded as required by the
transaction agreements
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1122(d)(4)(iii) Any additions, removals or substitutions X
to the asset pool are made, reviewed and
approved in accordance with any
conditions or requirements in the
transaction agreements.
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1122(d)(4)(iv) Payments on mortgage loans, including X
any payoffs, made in accordance with the
related mortgage loan documents are
posted to the Servicer's obligor records
maintained no more than two business
days after receipt, or such other number
of days specified in the transaction
agreements, and allocated to principal,
interest or other items (e.g., escrow)
in accordance with the related mortgage
loan documents.
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1122(d)(4)(v) The Servicer's records regarding the X
mortgage loans agree with the Servicer's
records with respect to an obligor's
unpaid principal balance.
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1122(d)(4)(vi) Changes with respect to the terms or X
status of an obligor's mortgage loans
(e.g., loan modifications or re-agings)
are made, reviewed and approved by
authorized personnel in accordance with
the transaction agreements and related
pool asset documents.
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1122(d)(4)(vii) Loss mitigation or recovery actions X
(e.g., forbearance plans, modifications
and deeds in lieu of foreclosure,
foreclosures and repossessions, as
applicable) are initiated, conducted and
concluded in accordance with the
timeframes or other requirements
established by the transaction
agreements.
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1122(d)(4)(viii) Records documenting collection efforts X
are maintained during the period a
mortgage loan is delinquent in
accordance with the transaction
agreements. Such records are maintained
on at least a monthly basis, or such
other period specified in the
transaction agreements, and describe the
entity's activities in monitoring
delinquent mortgage loans including, for
example, phone calls, letters and
payment rescheduling plans in cases
where delinquency is deemed temporary
(e.g., illness or unemployment).
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1122(d)(4)(ix) Adjustments to interest rates or rates X
of return for mortgage loans with
variable rates are computed based on the
related mortgage loan documents.
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1122(d)(4)(x) Regarding any funds held in trust for an X
obligor (such as escrow accounts): (A)
such funds are analyzed, in accordance
with the obligor's mortgage loan
documents, on at least an annual basis,
or such other period specified in the
transaction agreements; (B) interest on
such funds is paid, or credited, to
obligors in accordance with applicable
mortgage loan documents and state laws;
and (C) such funds are returned to the
obligor within 30 calendar days of full
repayment of the related mortgage loans,
or such other number of days specified
in the transaction agreements.
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1122(d)(4)(xi) Payments made on behalf of an obligor X
(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
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support has been received by the
servicer at least 30 calendar days prior
to these dates, or such other number of
days specified in the transaction
agreements.
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1122(d)(4)(xii) Any late payment penalties in connection X
with any payment to be made on behalf of
an obligor are paid from the Servicer's
funds and not charged to the obligor,
unless the late payment was due to the
obligor's error or omission.
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1122(d)(4)(xiii) Disbursements made on behalf of an X
obligor are posted within two business
days to the obligor's records maintained
by the servicer, or such other number of
days specified in the transaction
agreements.
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1122(d)(4)(xiv) Delinquencies, charge-offs and X
uncollectible accounts are recognized
and recorded in accordance with the
transaction agreements.
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1122(d)(4)(xv) Any external enhancement or other X
support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation
AB, is maintained as set forth in the
transaction agreements.
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X
EXHIBIT I
SARBANES CERTIFICATION
Re: The [ ] agreement dated as of [ ], 200[ ] (the "Agreement"), among
[IDENTIFY PARTIES]
I, ________________________________, the _______________________ of [Name of
Servicer] (the "Servicer"), certify to [the Owner], [the Depositor], and the
[Master Servicer] [Securities Administrator] [Trustee], and their officers, with
the knowledge and intent that they will rely upon this certification, that:
(1) I have reviewed the servicer compliance statement of the Servicer
provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"), the report on assessment of the Servicer's compliance with
the servicing criteria set forth in Item 1122(d) of Regulation AB (the
"Servicing Criteria"), provided in accordance with Rules 13a-18 and 15d-18
under Securities Exchange Act of 1934, as amended (the "Exchange Act") and
Item 1122 of Regulation AB (the "Servicing Assessment"), the registered
public accounting firm's attestation report provided in accordance with
Rules 13a-18 and 15d-18 under the Exchange Act and Section 1122(b) of
Regulation AB (the "Attestation Report"), and all servicing reports,
officer's certificates and other information relating to the servicing of
the Mortgage Loans by the Servicer during 200[ ] that were delivered by
the Servicer to the [Depositor] [Master Servicer] [Securities
Administrator] [Trustee] pursuant to the Agreement (collectively, the
"Servicer Servicing Information");
(2) Based on my knowledge, the Servicer Servicing Information, taken as a
whole, does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in the light
of the circumstances under which such statements were made, not misleading
with respect to the period of time covered by the Servicer Servicing
Information;
(3) Based on my knowledge, all of the Servicer Servicing Information
required to be provided by the Servicer under the Agreement has been
provided to the [Depositor] [Master Servicer] [Securities Administrator]
[Trustee];
(4) I am responsible for reviewing the activities performed by the
Servicer under the Agreement, and based on my knowledge and the compliance
review conducted in preparing the Compliance Statement and except as
disclosed in the Compliance Statement, the Servicing Assessment or the
Attestation Report, the Servicer has fulfilled its obligations under the
Agreement; and
(5) The Compliance Statement required to be delivered by the Servicer
pursuant to the Agreement, and the Servicing Assessment and Attestation
Report required to be provided by the Servicer and by each Subservicer ad
Subcontractor pursuant to the Agreement have been provided to the
[Depositor] [Master Servicer]. Any material instances of noncompliance
described in such reports have been disclosed to the [Depositor] [Master
Servicer]. Any material instance of noncompliance with the Servicing
Criteria has been disclosed in such reports.
Date:
By:_______________________
Name:_____________________
Title:____________________
