Exhibit 99.5
Execution Copy
XXXXXXX XXXXX MORTGAGE CAPITAL, INC.
PURCHASER
AND
XXXXX FARGO HOME MORTGAGE, INC.
COMPANY
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SELLER'S WARRANTIES AND SERVICING AGREEMENT
DATED AS OF AUGUST 1, 2002
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SUBPRIME MORTGAGE LOANS
WFMR 2002-M09
TABLE OF CONTENTS
ARTICLE I...................................................................................... 1
DEFINITIONS.................................................................................... 1
ARTICLE II..................................................................................... 9
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
DELIVERY OF DOCUMENTS.......................................................................... 9
ARTICLE III.................................................................................... 11
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH............................................. 11
ARTICLE IV..................................................................................... 26
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS................................................. 26
ARTICLE V...................................................................................... 40
PAYMENTS TO PURCHASER.......................................................................... 40
ARTICLE VI..................................................................................... 41
GENERAL SERVICING PROCEDURES................................................................... 41
ARTICLE VII.................................................................................... 44
COMPANY TO COOPERATE........................................................................... 44
ARTICLE VIII................................................................................... 45
THE COMPANY.................................................................................... 45
ARTICLE IX..................................................................................... 47
PASS-THROUGH TRANSFER.......................................................................... 47
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ARTICLE X...................................................................................... 48
DEFAULT........................................................................................ 48
ARTICLE XI..................................................................................... 50
TERMINATION.................................................................................... 50
ARTICLE XII.................................................................................... 51
MISCELLANEOUS PROVISIONS....................................................................... 51
EXHIBITS
Exhibit A Mortgage Loan Schedule
Exhibit B Contents of Each Mortgage Loan File
Exhibit C Custodial Agreement
Exhibit D Form of Assignment and Assumption
Exhibit E Form of Custodial Account Certification
Exhibit F Form of Escrow Account Certification
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This is a Seller's Warranties and Servicing Agreement for residential
first lien mortgage loans, dated and effective as of August 1, 2002 and is
executed between Xxxxxxx Xxxxx Mortgage Capital Inc., as purchaser (the
"Purchaser"), and Xxxxx Fargo Home Mortgage, Inc., as seller and servicer (the
"Company").
W I T N E S S E T H
WHEREAS, the Purchaser has agreed to purchase from the Company and the
Company has agreed to sell to the Purchaser certain Mortgage Loans which have an
aggregate outstanding principal balance as of the close of business on the
Cut-off Date, after deduction of payments due on or before such date, of
$264,654,046.70;
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of
trust or other security instrument creating a first lien on a residential
dwelling located in the jurisdiction indicated on the Mortgage Loan Schedule,
which is annexed hereto as Exhibit A; and
WHEREAS, the Purchaser and the Company wish to prescribe the manner of
purchase of the Mortgage Loans and the conveyance, servicing and control of the
Mortgage Loans.
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 Purchaser and the Company 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
mortgage servicing practices 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.
Adjustment Date: As to each Mortgage Loan, the date on which the
Mortgage Interest Rate is adjusted in accordance with the terms of the related
Mortgage Note and Mortgage.
Agreement: This Seller's Warranties and Servicing Agreement and all
amendments hereof and supplements hereto.
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ALTA: The American Land Title Association or any successor thereto.
Appraised Value: With respect to any Mortgage Loan, the lesser of (i)
the value set forth on the appraisal made in connection with the origination of
the related Mortgage Loan as the value of the related Mortgaged Property, or
(ii) the purchase price paid for the Mortgaged Property, provided, however, that
in the case of a refinanced Mortgage Loan, such value shall be based solely on
the appraisal made in connection with the origination of such Mortgage Loan.
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 sale of the Mortgage to the Purchaser.
BIF: The Bank Insurance Fund, or any successor thereto.
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 State of Iowa or
the State of Maryland or the State of New York are authorized or obligated by
law or executive order to be closed.
Closing Date: August 28, 2002.
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.
Company: Xxxxx Fargo Home Mortgage, Inc., or its successor in interest
or assigns, or any successor to the Company under this Agreement appointed as
herein provided.
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.
Custodial Account: One or more accounts created and maintained pursuant
to Section 4.04, which accounts shall be held as a special deposit by the
depository institution maintaining such accounts in a fiduciary capacity,
separate and apart from its funds or general assets and shall not be held in any
capacity that would create a debtor-creditor relationship between the depository
institution maintaining the accounts and the Company or Purchaser.
Custodial Agreement: The agreement governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents, a form of which is annexed hereto as Exhibit C.
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.
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Cut-off Date: August 1, 2002.
Deleted Mortgage Loan: A Mortgage Loan which is repurchased by the
Company in accordance with the terms of this Agreement and which is, in the case
of a substitution pursuant to Section 3.03, replaced or to be replaced with a
Qualified Substitute Mortgage Loan.
Determination Date: The Business Day immediately preceding the related
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.
Errors and Omissions Insurance Policy: An errors and omissions
insurance policy to be maintained by the Company 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.
Xxxxxx Xxx: 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 Company pursuant
to Section 4.12.
First Remittance Date: September 18l, 2002.
Xxxxxxx Mac: The entity formerly known as the Federal Home Loan
Mortgage Corporation (FHLMC), or any successor thereto.
Gross Margin: With respect to each Mortgage Loan, the fixed percentage
amount set forth in the related Mortgage Note which is added to the Index in
order to determine the related Mortgage Interest Rate, as set forth in the
Mortgage Loan Schedule.
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Index: On each Adjustment Date, the applicable index shall be the index
set forth in the related Mortgage Note.
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.
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.
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 Company pursuant to Section 5.03 on the
Business Day immediately preceding the Remittance Date of the related month.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Loan.
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.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit B annexed hereto, 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 which is the subject of this
Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule, which Mortgage Loan includes
without limitation the Mortgage 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.
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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 and any original intervening related Assignments, the
original related title insurance policy, related PMI policy, if any, and the
related appraisal report.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
related Mortgage Interest Rate minus the Servicing Fee Rate.
Mortgage Loan Schedule: A schedule of Mortgage Loans annexed hereto as
Exhibit A, such schedule setting forth the following information with respect to
each Mortgage Loan: (1) the Company's Mortgage Loan number; (2) the city
state and zip code of the Mortgaged Property; (3) a code indicating whether the
Mortgaged Property is a single family residence, two-family residence,
three-family residence, four-family residence, PUD or Condominium; (4) the
current Mortgage Interest Rate; (5) the current net Mortgage Interest Rate; (6)
the current Monthly Payment; (7) the Gross Margin; (8) the original term to
maturity; (9) the scheduled maturity date; (10) the principal balance of the
Mortgage Loan as of the Cut-off Date after deduction of payments of principal
due on or before the Cut-off Date whether or not collected; (11) the
Loan-to-Value Ratio; (12) the next Adjustment Date; (13) the lifetime Mortgage
Interest Rate cap; (14) whether the Mortgage Loan is convertible or not; (15) a
code indicating the mortgage guaranty insurance company; and (16) the Servicing
Fee.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The real property securing repayment of the debt
evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
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 by the Treasurer or the Secretary or one of the
Assistant Treasurers or Assistant Secretaries of the Company, and delivered to
the Purchaser as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Company, reasonably acceptable to the Purchaser.
Pass-Through Transfer: The sale or transfer of some or all of the
Mortgage Loans by the Purchaser to a trust to be formed as part of a publicly
issued or privately placed mortgage-backed securities transaction.
Payment Clearing Account: An account designated "Xxxxx Fargo Home
Mortgage, Inc. Payment Clearing Account in trust for various investors and
mortgagors" maintained by the
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Company at a Qualified Depository through which funds collected on behalf of the
Seller are deposited prior to being posted to the respective Custodial or Escrow
Account.
Periodic Interest Rate Cap: As to each Mortgage Loan, the maximum
increase or decrease in the Mortgage Interest Rate on any Adjustment Date
pursuant to the terms of the Mortgage Note.
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.
PMI Policy: A policy of primary mortgage guaranty insurance issued by a
Qualified Insurer, as required by this Agreement with respect to certain
Mortgage Loans.
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: The month preceding the month in which the
related Remittance Date occurs.
Purchaser: Xxxxxxx Xxxxx Mortgage Capital, Inc, or its successor in
interest or any successor to the Purchaser under this Agreement as herein
provided.
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 Group or
Prime-1 by Xxxxx'x Investors Service, Inc. (or a comparable rating if another
rating agency is specified by the Purchaser by written notice to the Company) 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 Xxx or Xxxxxxx Mac.
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Company for a Deleted Mortgage Loan which must, on the date
of such substitution, (i) have an outstanding principal balance, after deduction
of all scheduled payments due in the month of substitution (or in the case of a
substitution of more than one mortgage loan for a Deleted
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Mortgage Loan, an aggregate principal balance), not in excess of the Stated
Principal Balance of the Deleted Mortgage Loan; (ii) have a Mortgage Loan
Remittance Rate not less than, and not more than 2% greater, than the Mortgage
Loan Remittance Rate of the Deleted Mortgage Loan; (iii) have a remaining term
to maturity not greater than and not more than one year less than that of the
Deleted Mortgage Loan; and (iv) comply with each representation and warranty set
forth in Sections 3.01 and 3.02.
Reconstitution Date: The date on which any or all of the Mortgage Loans
serviced under this Agreement shall be removed from this Agreement and
reconstituted as part of a Pass- Through Transfer or Whole Loan Transfer
pursuant to Section 9.01 hereof. The Reconstitution Date shall be such date
which the Purchaser and the shelf registrant shall designate. On such date, the
Mortgage Loans transferred shall cease to be covered by this Agreement and the
Company's servicing responsibilities shall cease under this Agreement with
respect to the related transferred Mortgage Loans.
Record Date: The close of business of the last Business Day of the
month preceding the month of the related Remittance Date.
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, and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The 18th 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 Disposition: The final sale by the Company of any REO Property.
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 Company on behalf of
the Purchaser through foreclosure or by deed in lieu of foreclosure, as
described in Section 4.16.
Repurchase Price: Within twelve (12) months following the Closing Date,
a price equal to (i) the product of the Stated Principal Balance of the Mortgage
Loan and the Purchase Price Percentage set forth in the Commitment Letter, plus
(ii) interest on such Stated Principal Balance at the Mortgage Loan Remittance
Rate from the date on which interest has last been paid and distributed to the
Purchaser through the last day of the month in which such repurchase takes
place, less amounts received or advanced in respect of such repurchased Mortgage
Loan which are being held in the Custodial Account for distribution in the month
of repurchase.
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Thirteen months or more after the Closing Date, a price equal to (i) the Stated
Principal Balance of the Mortgage Loan plus (ii) interest on such Stated
Principal Balance at the Mortgage Loan Remittance Rate from the date on which
interest has last been paid and distributed to the Purchaser through the last
day of the month in which such repurchase takes place, less amounts received or
advanced in respect of such repurchased Mortgage Loan which are being held in
the Custodial Account for distribution in the month of repurchase.
Securities Act of 1933 or the 1933 Act: The Securities Act of 1933, as
amended.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses other than Monthly Advances (including reasonable
attorney's fees and disbursements) incurred in the performance by the Company 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.
Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual fee the Purchaser shall pay to the Company, which shall, for a period of
one full month, be equal to one- twelfth 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
computed. The obligation of the Purchaser 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 Liquidation Proceeds, to the
extent permitted by Section 4.05) of such Monthly Payment collected by the
Company, or as otherwise provided under Section 4.05.
Servicing Fee Rate: 0.50% per annum per Mortgage Loan.
Servicing File: With respect to each Mortgage Loan, the file retained
by the Company consisting of originals of all documents in the Mortgage File
which are not delivered to the Custodian and copies of the Mortgage Loan
Documents listed in the Custodial Agreement the originals of which are delivered
to the Custodian pursuant to Section 2.03.
Servicing Officer: Any officer of the Company 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 Company to the
Purchaser upon request, as such list may from time to time be amended.
Stated Principal Balance: As to each Mortgage Loan, (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 Purchaser with respect to the related
Mortgage Loan representing payments or recoveries of principal or advances in
lieu thereof.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans by the Purchaser to a third party, which sale or transfer is not
a Pass-Through Transfer.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS
Section 2.01 Conveyance of Mortgage Loans; Possession of Mortgage Files;
Maintenance of Servicing Files.
The Company, simultaneously with the execution and delivery of this
Agreement, does hereby sell, transfer, assign, set over and convey to the
Purchaser, without recourse, but subject to the terms of this Agreement, all the
right, title and interest of the Company in and to the Mortgage Loans. Pursuant
to Section 2.03, the Company has delivered the Mortgage Loan Documents to the
Custodian.
The contents of each Mortgage File not delivered to the Custodian are
and shall be held in trust by the Company for the benefit of the Purchaser as
the owner thereof. The Company 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 Custodian. The possession of each
Servicing File by the Company is at the will of the Purchaser for the sole
purpose of servicing the related Mortgage Loan, and such retention and
possession by the Company is in a custodial capacity only. Upon the sale of the
Mortgage Loans the ownership of each Mortgage Note, the related Mortgage and the
related Mortgage File and Servicing File shall vest immediately in the
Purchaser, 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
Company shall vest immediately in the Purchaser and shall be retained and
maintained by the Company, in trust, at the will of the Purchaser and only in
such custodial capacity. The Company shall release its custody of the contents
of any Servicing File only in accordance with written instructions from the
Purchaser, unless such release is required as incidental to the Company's
servicing of the Mortgage Loans or is in connection with a repurchase of any
Mortgage Loan pursuant to Section 3.03 or 6.02. All such costs associated with
the release, transfer and re-delivery of Mortgage Files and Servicing Files
between the parties shall be the responsibility of the party in possession of
such file or files.
Section 2.02 Books and Records; Transfers of Mortgage Loans.
From and after the sale of the Mortgage Loans to the Purchaser 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 Company in trust for the benefit of the Purchaser as owner of
the Mortgage Loans, and the Company 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.
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The sale of each Mortgage Loan shall be reflected on the Company's
balance sheet and other financial statements as a sale of assets by the Company.
The Company shall be responsible for maintaining, and shall maintain, a complete
set of books and records for each Mortgage Loan which shall be marked clearly to
reflect the ownership of each Mortgage Loan by the Purchaser. In particular, the
Company shall maintain in its possession, available for inspection by the
Purchaser, or its designee, and shall deliver to the Purchaser upon demand,
evidence of compliance with all federal, state and local laws, rules and
regulations, and requirements of Xxxxxx Mae or Xxxxxxx Mac, including but not
limited to documentation as to the method used in determining the applicability
of the provisions of the Flood Disaster Protection Act of 1973, as amended, to
the Mortgaged Property, documentation evidencing insurance coverage and
eligibility of any condominium project for approval by Xxxxxx Mae or Xxxxxxx Mac
and periodic inspection reports as required by Section 4.13. To the extent that
original documents are not required for purposes of realization of Liquidation
Proceeds or Insurance Proceeds, documents maintained by the Company 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 Company complies with the requirements of the Xxxxxx Mae Selling and
Servicing Guide, as amended from time to time.
The Company shall maintain with respect to each Mortgage Loan and shall
make available for inspection by any Purchaser or its designee the related
Servicing File during the time the Purchaser retains ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and regulations.
The Company shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the Company
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 Company 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
Purchaser may, subject to the terms of this Agreement, sell and transfer one or
more of the Mortgage Loans, provided, however, that in no event shall there be
more than four Persons at any given time having the status of "Purchaser"
hereunder. The Purchaser also shall advise the Company of the transfer. Upon
receipt of notice of the transfer, the Company shall xxxx its books and records
to reflect the ownership of the Mortgage Loans of such assignee, and shall
release the previous Purchaser from its obligations hereunder with respect to
the Mortgage Loans sold or transferred. If the Company receives notification of
a transfer less than five (5) Business Days before the last calendar day of the
month, the Company's duties to remit and report as required by Section 5 shall
begin with the next Due Period.
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Section 2.03 Custodial Agreement; Delivery of Documents.
The Company has delivered and released to the Custodian those Mortgage
Loan Documents as required by Exhibit B to this Agreement with respect to each
Mortgage Loan.
The Custodian has certified its receipt of all such Mortgage Loan
Documents required to be delivered pursuant to the Custodial Agreement, as
evidenced by the Initial Certification of the Custodian in the form annexed to
the Custodial Agreement. The Company shall be responsible for recording the
initial assignments of mortgage. The Purchaser will be responsible for the fees
and expenses of the Custodian.
The Company shall forward to the Custodian 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 Company shall provide the
Custodian 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 of such document
certified by the appropriate public recording office to be a true and complete
copy of the original within sixty days of its submission for recordation.
In the event the public recording office is delayed in returning any
original document, the Company shall deliver to the Custodian within 240 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 Company will be required to
deliver the document to the Custodian by the date specified in (iv) above. An
extension of the date specified in (iv) above may be requested from the
Purchaser, which consent shall not be unreasonably withheld.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH
Section 3.01 Company Representations and Warranties.
The Company hereby represents and warrants to the Purchaser that, as of
the Closing Date:
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(a) Due Organization and Authority.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of California
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
Company, and in any event the Company 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 Company has the full corporate 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
Company 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
Company; and all requisite corporate action has been taken by
the Company to make this Agreement valid and binding upon the
Company in accordance with its terms;
(b) Ordinary Course of Business.
The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the
Company, who is in the business of selling and servicing
loans, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Company pursuant to
this Agreement 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, the
acquisition of the Mortgage Loans by the Company, the sale of
the Mortgage Loans to the Purchaser 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 of any of the terms, articles of
incorporation or by-laws or any legal restriction or any
agreement or instrument to which the Company 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 Company or its property is subject, or
impair the ability of the Purchaser to realize on the Mortgage
Loans, or impair the value of the Mortgage Loans;
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(d) Ability to Service.
The Company is an approved seller/servicer of conventional
residential mortgage loans for Xxxxxx Xxx or 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 Company 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 Company unable to comply with Xxxxxx Mae
or Xxxxxxx Mac eligibility requirements or which would require
notification to either Xxxxxx Mae or Xxxxxxx Mac;
(e) Reasonable Servicing Fee.
The Company 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 Company, 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 Company 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. The Company is solvent
and the sale of the Mortgage Loans will not cause the Company
to become insolvent. The sale of the Mortgage Loans is not
undertaken to hinder, delay or defraud any of the Company's
creditors;
(g) No Litigation Pending.
There is no action, suit, proceeding or investigation pending
or threatened against the Company 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 Company, or in any
material impairment of the right or ability of the Company to
carry on its business substantially as now conducted, or in
any material liability on the part of the Company, or which
would draw into question the validity of this Agreement or the
Mortgage Loans or of any action taken or to be contemplated
herein or that might prohibit its entering into this
Agreement, or which would be likely to impair materially the
ability of the Company to 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 Company of or compliance by
the Company with this Agreement or the sale of the
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Mortgage Loans as evidenced by the consummation of the
transactions contemplated by this Agreement, or if required,
such approval has been obtained prior to the Closing Date;
(i) Selection Process. The Mortgage Loans were selected from among
the outstanding one- to four-family mortgage loans in the
Company's portfolio at the Closing Date as to which the
representations and warranties set forth in Section 3.02 could
be made and such selection was not made in a manner so as to
affect adversely the interests of the Purchaser;
(j) 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;
(k) Sale Treatment.
The Company has determined that the disposition of the
Mortgage Loans pursuant to this Agreement will be afforded
sale treatment for accounting and tax purposes;
(l) No Material Change.
There has been no material adverse change in the business,
operations, financial condition or assets of the Company since
the date of the Company's most recent financial statements;
and
(m) No Brokers' Fees.
The Company 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 sale of the
Mortgage Loans.
Section 3.02 Representations and Warranties Regarding Individual Mortgage
Loans.
As to each Mortgage Loan, the Company hereby represents and warrants to
the Purchaser that as of the Closing Date:
(a) Mortgage Loans as Described.
The information set forth in the Mortgage Loan Schedule
attached hereto as Exhibit A and the information contained on
the electronic data file delivered to the Purchaser is true
and correct;
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(b) Payments Current.
All payments required to be made up to the Cut-off Date for
the Mortgage Loan under the terms of the Mortgage Note have
been made and credited. No payment under any Mortgage Loan has
been 30 days delinquent more than one time within twelve
months prior to the Closing Date;
(c) No Outstanding Charges.
There are no defaults in complying with the terms of the
Mortgages, and all taxes, governmental assessments, insurance
premiums, leasehold payments, water, sewer and municipal
charges or other similar outstanding charges, which previously
became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such
item which remains unpaid and which has been assessed but is
not yet due and payable. The Company has not advanced funds,
or induced, or solicited directly or indirectly, the payment
of any amount required under the Mortgage Loan, except for
interest accruing from the date of the Mortgage Note or date
of disbursement of the Mortgage Loan proceeds, whichever is
later, to the day which precedes by one month the Due Date of
the first installment of principal and interest;
(d) Original Terms Unmodified.
The terms of the Mortgage Note and Mortgage have not been
impaired, waived, altered or modified in any respect, except
by a written instrument which has been recorded, if necessary,
to protect the interests of the Purchaser and maintain the
lien priority of the Mortgage and which has been delivered to
the Custodian. The substance of any such waiver, alteration or
modification has been approved by the issuer of any related
PMI policy and the title insurer, to the extent required by
the policy, and its terms are reflected on the Mortgage Loan
Schedule. No Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement approved by
the issuer of any related PMI policy and the title insurer, to
the extent required by the policy, and which assumption
agreement is part of the Mortgage Loan File delivered to the
Custodian and the terms of which are reflected in the Mortgage
Loan Schedule;
(e) No Defenses.
The Mortgage Loan is not subject to any right of rescission,
set-off, counterclaim or defense, including without limitation
the defense of usury, nor will the operation of any of the
terms of the Mortgage Note or the Mortgage, or the exercise of
any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable, in whole or in part, or subject to any
right of rescission, set-off, counterclaim or defense,
including without limitation the defense of usury, and no such
right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
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(f) No Satisfaction of Mortgage.
The Mortgage has not been satisfied, canceled, subordinated or
rescinded, in whole or in part, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or
in part, nor has any instrument been executed that would
effect any such release, cancellation, subordination or
rescission;
(g) Validity of Mortgage Documents.
The Mortgage Note and the Mortgage and related documents are
genuine, and each is the legal, valid and binding obligation
of the maker thereof enforceable in accordance with its terms.
All parties to the Mortgage Note and the Mortgage had legal
capacity to enter into the Mortgage Loan and to execute and
deliver the Mortgage Note and the Mortgage, and the Mortgage
Note and the Mortgage have been duly and properly executed by
such parties;
(h) No Fraud.
No error, omission, misrepresentation, negligence, fraud or
similar occurrence with respect to a Mortgage Loan has taken
place on the part of the Company, or the Mortgagor, or to the
best of the Company's knowledge, any appraiser, any builder,
or any developer, or any other party involved in the
origination of the Mortgage Loan or in the application of any
insurance in relation to such Mortgage Loan;
(i) Compliance with Applicable Laws.
Any and all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws applicable to the
Mortgage Loan have been complied with. All inspections,
licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property
and, with respect to the use and occupancy of the same,
including, but not limited to, certificates of occupancy and
fire underwriting certificates, have been made or obtained
from the appropriate authorities;
(j) Location and Type of Mortgaged Property.
The Mortgaged Property is located in the state identified in
the Mortgage Loan Schedule and consists of a contiguous parcel
of real property with a detached single family residence
erected thereon, or a two- to four-family dwelling, or an
individual condominium unit in a condominium project, or an
individual unit in a planned unit development or a townhouse,
provided, however, that any condominium project or planned
unit development shall conform with the applicable Xxxxxx Mae
requirements regarding such dwellings, and no residence
16
or dwelling is a mobile home or a manufactured dwelling that
does not constitute real property. As of the respective
appraisal date for each Mortgaged Property, no portion of the
Mortgaged Property was being used for commercial purposes. If
the Mortgaged Property is a condominium unit or a planned unit
development (other than a de minimus planned unit development)
such condominium or planned unit development project meets
Xxxxxx Xxx eligibility requirements or is located in a
condominium or planned unit development project which has
received Xxxxxx Mae project approval and the representations
and warranties required by Xxxxxx Xxx with respect to such
condominium or planned unit development have been made and
remain true and correct in all respects;
(k) Valid First Lien.
The Mortgage is a valid, subsisting and enforceable first lien
on the Mortgaged Property, including all buildings on the
Mortgaged Property and all installations and mechanical,
electrical, plumbing, heating and air conditioning systems
located in or annexed to such buildings, and all additions,
alterations and replacements made at any time with respect to
the foregoing. The lien of the Mortgage is subject only to:
(1) the lien of current real property taxes and
assessments not yet due and payable;
(2) covenants, conditions and restrictions, rights of
way, easements and other matters of the public record
as of the date of recording acceptable to mortgage
lending institutions generally and specifically
referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and
(i) referred to or otherwise considered in the
appraisal made for the originator of the Mortgage
Loan and (ii) which do not adversely affect the
Appraised Value of the Mortgaged Property set forth
in such appraisal; and
(3) other matters to which like properties are commonly
subject which do not materially interfere with the
benefits of the security intended to be provided by
the mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with the
Mortgage Loan establishes and creates a valid, subsisting and
enforceable first lien and first priority security interest on
the property described therein and the Company has full right
to sell and assign the same to the Purchaser;
(l) Full Disbursement of Proceeds.
17
The proceeds of the Mortgage Loan have been fully disbursed,
except for escrows established or created due to seasonal
weather conditions, and there is no requirement for future
advances thereunder. All costs, fees and expenses incurred in
making or closing the Mortgage Loan and the recording of the
Mortgage were paid, and the Mortgagor is not entitled to any
refund of any amounts paid or due under the Mortgage Note or
Mortgage;
(m) Consolidation of Future Advances.
Any future advances made prior to the Cut-off Date, have been
consolidated with the outstanding principal amount secured by
the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single
repayment term reflected on the Mortgage Loan Schedule. The
lien of the Mortgage securing the consolidated principal
amount is expressly insured as having first lien priority by a
title insurance policy, an endorsement to the policy insuring
the mortgagee's consolidated interest or by other title
evidence acceptable to Xxxxxx Mae or Xxxxxxx Mac; the
consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan; the Company shall not
make future advances after the Cut-Off Date;
(n) Ownership.
The Company is the sole owner of record and holder of the
Mortgage Loan and the related Mortgage Note and the Mortgage
are not assigned or pledged, and the Company has good and
marketable title thereto and has full right and authority to
transfer and sell the Mortgage Loan to the Purchaser. The
Company is transferring the Mortgage Loan free and clear of
any and all encumbrances, liens, pledges, equities,
participation interests, claims, charges or security interests
of any nature encumbering such Mortgage Loan;
(o) Origination/Doing Business.
The Mortgage Loan was originated by a savings and loan
association, a savings bank, a commercial bank, a credit
union, an insurance company, or similar institution which is
supervised and examined by a federal or state authority or by
a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National
Housing Act. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or
otherwise, are (or, during the period in which they held and
disposed of such interest, were) (1) in compliance with any
and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2)
organized under the laws of such state, or (3) qualified to do
business in such state, or (4) federal savings and loan
associations or national banks having principal offices in
such state, or (5) not doing business in such state;
(p) LTV, PMI Policy.
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No Mortgage Loan has a LTV greater than 95%. The original LTV
of the Mortgage Loan either was not more than 80% or if the
Mortgage Loan was originated prior to July 29, 1999, the
excess over 75% is and will be insured as to payment defaults
by a PMI policy until the LTV of such Mortgage Loan is reduced
to 80%. If a Mortgage Loan was originated on or after July 29,
1999, and the original LTV is 80% or greater, the excess over
78% is and will be insured as to payment defaults by a PMI
Policy until terminated pursuant to the Homeowners Protection
Act of 1998, 12 USC Section 4901, et seq. All provisions of
such PMI policy have been and are being complied with, such
policy is in full force and effect, and all premiums due
thereunder have been paid. The Qualified Insurer has a claims
paying ability acceptable to Xxxxxx Mae or Xxxxxxx Mac. Any
Mortgage Loan subject to a PMI policy obligates the Mortgagor
thereunder to maintain the PMI policy and to pay all premiums
and charges in connection therewith. The Mortgage Interest
Rate for the Mortgage Loan as set forth on the Mortgage Loan
Schedule is net of any such insurance premium;
(q) Title Insurance.
The Mortgage Loan is covered by an ALTA lender's title
insurance policy (or in the case of any Mortgage Loan secured
by a Mortgaged Property located in a jurisdiction where such
policies are generally not available, an opinion of counsel of
the type customarily rendered in such jurisdiction in lieu of
title insurance) or other generally acceptable form of policy
of insurance acceptable to Xxxxxx Xxx or Xxxxxxx Mac, issued
by a title insurer acceptable to Xxxxxx Mae or Xxxxxxx Mac and
qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring the Company, its
successors and assigns, as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage
Loan, subject only to the exceptions contained in clauses (1),
(2) and (3) of Paragraph (k) of this Section 3.02, and against
any loss by reason of the invalidity or unenforceability of
the lien resulting from the provisions of the Mortgage
providing for adjustment to the Mortgage Interest Rate and
Monthly Payment. The Company is the sole insured of such
lender's title insurance policy, and such lender's title
insurance policy is in full force and effect and will be in
force and effect upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under
such lender's title insurance policy, and no prior holder of
the Mortgage, including the Company, has done, by act or
omission, anything which would impair the coverage of such
lender's title insurance policy;
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(r) No Defaults.
There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note
and no event which, with the passage of time or with notice
and the expiration of any grace or cure period, would
constitute a default, breach, violation or event of
acceleration, and neither the Company nor its predecessors
have waived any default, breach, violation or event of
acceleration;
(s) No Mechanics' Liens.
There are no mechanics' or similar liens or claims which have
been filed for work, labor or material (and no rights are
outstanding that under the law could give rise to such liens)
affecting the related Mortgaged Property which are or may be
liens prior to, or equal or coordinate with, the lien of the
related Mortgage which are not insured against by the title
insurance policy referenced in Paragraph (q) above;
(t) Location of Improvements; No Encroachments.
Except as insured against by the title insurance policy
referenced in Paragraph (q) above, all improvements which were
considered in determining the Appraised Value of the Mortgaged
Property lay wholly within the boundaries and building
restriction lines of the Mortgaged Property and no
improvements on adjoining properties encroach upon the
Mortgaged Property. No improvement located on or being part of
the Mortgaged Property is in violation of any applicable
zoning law or regulation;
(u) Payment Terms.
Principal payments on the Mortgage Loan commenced no more than
sixty (60) days after the proceeds of the Mortgage Loan were
disbursed. The Mortgage Loans have an original term to
maturity of not more than 30 years, with interest payable in
arrears on the first day of each month. As to each Mortgage
Loan on each applicable Adjustment Date, the Mortgage Interest
Rate will be adjusted to equal the sum of the Index plus the
applicable Gross Margin, rounded up or down to the nearest
multiple of 0.125% indicated by the Mortgage Note; provided
that the Mortgage Interest Rate will not increase or decrease
by more than the Periodic Interest Rate Cap on any Adjustment
Date, and will in no event exceed the maximum Mortgage
Interest Rate or be lower than the minimum Mortgage Interest
Rate listed on the Mortgage Loan Schedule for such Mortgage
Loan. Each Mortgage Note requires a monthly payment which is
sufficient, during the period prior to the first adjustment to
the Mortgage Interest Rate, to fully amortize the outstanding
principal balance as of the first day of such period over the
then remaining term of such Mortgage Note and to pay interest
at the related Mortgage Interest Rate. As to each Mortgage
Loan, if the related Mortgage Interest Rate
20
changes on an Adjustment Date, the then outstanding principal
balance will be reamortized over the remaining life of such
Mortgage Loan. No Mortgage Loan contains terms or provisions
which would result in negative amortization;
(v) Customary Provisions.
The Mortgage and related Mortgage Note contain customary and
enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for the realization
against the Mortgaged Property of the benefits of the security
provided thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii)
otherwise by judicial foreclosure. There is no homestead or
other exemption available to a Mortgagor which would interfere
with the right to sell the Mortgaged Property at a trustee's
sale or the right to foreclose the Mortgage;
(w) Occupancy of the Mortgaged Property.
As of the date of origination, the Mortgaged Property was
lawfully occupied under applicable law;
(x) No Additional Collateral.
The Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien
of the corresponding Mortgage and the security interest of any
applicable security agreement or chattel mortgage referred to
in (k) above;
(y) Deeds of Trust.
In the event the Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is
named in the Mortgage, and no fees or expenses are or will
become payable by the Mortgagee to the trustee under the deed
of trust, except in connection with a trustee's sale after
default by the Mortgagor;
(z) Acceptable Investment.
The Company has no knowledge of any circumstances or
conditions with respect to the Mortgage Loan, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing
that can reasonably be expected to cause private institutional
investors to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage Loan to become delinquent, or
adversely affect the value or marketability of the Mortgage
Loan;
21
(aa) Transfer of Mortgage Loans.
The Assignment upon the insertion of the name of the assignee
and recording information is in recordable form and is
acceptable for recording under the laws of the jurisdiction in
which the Mortgaged Property is located;
(bb) Mortgaged Property Undamaged.
The Mortgaged Property is undamaged by waste, fire, earthquake
or earth movement, windstorm, flood, tornado or other casualty
so as to affect adversely the value of the Mortgaged Property
as security for the Mortgage Loan or the use for which the
premises were intended;
(cc) Collection Practices; Escrow Deposits.
The origination, collection and servicing practices used with
respect to the Mortgage Loan have been in accordance with
Accepted Servicing Practices, and have been in all material
respects legal and proper. With respect to escrow deposits and
Escrow Payments, all such payments are in the possession of
the Company and there exist no deficiencies in connection
therewith for which customary arrangements for repayment
thereof have not been made. All Escrow Payments have been
collected in full compliance with state and federal law. No
escrow deposits or Escrow Payments or other charges or
payments due the Company have been capitalized under the
Mortgage Note and, except as permitted under (c) and (l)
above, no escrow deposits or Escrow Payments are being held by
the Company for any work on a Mortgaged Property which has not
been completed;
(dd) No Condemnation.
There is no proceeding pending or to the best of the Company's
knowledge threatened for the total or partial condemnation of
the related Mortgaged Property;
(ee) The Appraisal.
The Mortgage Loan Documents contain an appraisal of the
related Mortgaged Property by an appraiser who had no
interest, direct or indirect, in the Mortgaged Property or in
any loan made on the security thereof; and whose compensation
is not affected by the approval or disapproval of the Mortgage
Loan, and the appraisal and the appraiser both satisfy the
applicable requirements of Title XI of the Financial
Institution Reform, Recovery, and Enforcement Act of 1989 and
the regulations promulgated thereunder, all as in effect on
the date the Mortgage Loan was originated;
22
(ff) Insurance.
The Mortgaged Property securing each Mortgage Loan is insured
by an insurer acceptable to Xxxxxx Xxx or Xxxxxxx Mac against
loss by fire and such hazards as are covered under a standard
extended coverage endorsement and such other hazards as are
customary in the area where the Mortgaged Property is located
pursuant to insurance policies conforming to the requirements
of Section 4.10, in an amount which is not less than the
lesser of 100% of the insurable value of the Mortgaged
Property and the outstanding principal balance of the Mortgage
Loan, but in no event less than the minimum amount necessary
to fully compensate for any damage or loss on a replacement
cost basis. If the Mortgaged Property is a condominium unit,
it is included under the coverage afforded by a blanket policy
for the project. If the Mortgaged Property is in an area
identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, a flood
insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration is in
effect with an insurance carrier, acceptable to Xxxxxx Mae and
Xxxxxxx Mac, in an amount representing coverage not less than
the least of (A) the outstanding principal balance of the
Mortgage Loan, (B) the full insurable value and (C) the
maximum amount of insurance which was available under the
Flood Disaster Protection Act of 1973, as amended. All
individual insurance policies contain a standard mortgagee
clause naming the Company and its successors and assigns as
mortgagee, and all premiums thereon have been paid. The
Mortgage obligates the Mortgagor thereunder to maintain a
hazard insurance policy at the Mortgagor's cost and expense,
and on the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to obtain and maintain such insurance at such
Mortgagor's cost and expense, and to seek reimbursement
therefor from the Mortgagor. The hazard insurance policy is
the valid and binding obligation of the insurer, is in full
force and effect, and will be in full force and effect and
inure to the benefit of the Purchaser upon the consummation of
the transactions contemplated by this Agreement. The Company
has not acted or failed to act so as to impair the coverage of
any such insurance policy or the validity, binding effect and
enforceability thereof;
(gg) Soldiers' and Sailors' Civil Relief Act.
The Mortgagor has not notified the Company, and the Company
has no knowledge of any relief requested or allowed to the
Mortgagor under the Soldiers' and Sailors' Civil Relief Act of
1940, as amended;
(hh) Balloon Payments, Graduated Payments or Contingent Interests.
The Mortgage Loan is not a graduated payment mortgage loan and
the Mortgage Loan does not have a shared appreciation or other
contingent interest feature. If a Mortgage Loan has a balloon
payment feature, the Mortgage Note is payable in monthly
payments based on a fifteen or thirty year amortization
schedule and a
23
final monthly payment substantially greater than the preceding
monthly payment which is sufficient to amortize the remaining
principal of the Mortgage Loan;
(ii) No Construction Loans.
No Mortgage Loan was made in connection with (i) the
construction or rehabilitation of a Mortgage Property or (ii)
facilitating the trade-in or exchange of a Mortgaged Property
other than a construction-to-permanent loan which has
converted to a permanent Mortgage Loan;
(jj) Underwriting.
Each Mortgage Loan was underwritten in accordance with the
underwriting guidelines of the Company; and the Mortgage Note
and Mortgage are on forms acceptable to Xxxxxxx Mac or Xxxxxx
Mae; and
(kk) HOEPA.
No Mortgage Loan is subject to the provisions of the
Homeownership and Equity Protection Act of 1994 or is
considered a "high cost loan" under any other state, county or
municipal laws or ordinances.
Section 3.03 Repurchase.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans to
the Purchaser and the delivery of the Mortgage Loan Documents to the Custodian
and shall inure to the benefit of the Purchaser, notwithstanding any restrictive
or qualified endorsement on any Mortgage Note or Assignment of Mortgage or the
examination or failure to examine any Mortgage File. Upon discovery by either
the Company or the Purchaser of a breach of any of the foregoing representations
and warranties which materially and adversely affects the value of the Mortgage
Loans or the interest of the Purchaser (or which materially and adversely
affects the interests of Purchaser in the related Mortgage Loan in the case of a
representation and warranty relating to a particular Mortgage Loan), the party
discovering such breach shall give prompt written notice to the other.
Within 90 days of the earlier of either discovery by or notice to the
Company of any breach of a representation or warranty which materially and
adversely affects the value of the Mortgage Loans, the Company shall use its
best efforts promptly to cure such breach in all material respects and, if such
breach cannot be cured, the Company shall, at the Purchaser's option, repurchase
such Mortgage Loan at the Repurchase Price. In the event that a breach shall
involve any representation or warranty set forth in Section 3.01, and such
breach cannot be cured within 90 days of the earlier of either discovery by or
notice to the Company of such breach, all of the Mortgage Loans shall, at the
Purchaser's option, be repurchased by the Company at the Repurchase Price.
However, if the breach shall involve a representation or warranty set forth in
Section 3.02 and the Company discovers or receives notice of any such breach
within 120 days of the Closing Date, the Company shall, if the breach cannot be
cured, at the Purchaser's option
24
and provided that the Company has a Qualified Substitute Mortgage Loan, rather
than repurchase the Mortgage Loan as provided above, remove such Mortgage Loan
(a "Deleted Mortgage Loan") and substitute in its place a Qualified Substitute
Mortgage Loan or Loans, provided that any such substitution shall be effected
not later than 120 days after the Closing Date. If the Company has no Qualified
Substitute Mortgage Loan, it shall repurchase the deficient Mortgage Loan within
90 days of the written notice of the breach or the failure to cure, whichever is
later. Any repurchase of a Mortgage Loan or Loans pursuant to the foregoing
provisions of this Section 3.03 shall be accomplished by deposit in the
Custodial Account of the amount of the Repurchase Price for distribution to
Purchaser on the next scheduled Remittance Date, after deducting therefrom any
amount received in respect of such repurchased Mortgage Loan or Loans and being
held in the Custodial Account for future distribution.
At the time of repurchase or substitution, the Purchaser and the
Company shall arrange for the reassignment of the Deleted Mortgage Loan to the
Company and the delivery to the Company of any documents held by the Custodian
relating to the Deleted Mortgage Loan. In the event of a repurchase or
substitution, the Company shall, simultaneously with such reassignment, give
written notice to the Purchaser that such repurchase or substitution has taken
place, amend the Mortgage Loan Schedule to reflect the withdrawal of the Deleted
Mortgage Loan from this Agreement, and, in the case of substitution, identify a
Qualified Substitute Mortgage Loan and amend the Mortgage Loan Schedule to
reflect the addition of such Qualified Substitute Mortgage Loan to this
Agreement. In connection with any such substitution, the Company shall be deemed
to have made as to such Qualified Substitute Mortgage Loan the representations
and warranties set forth in this Agreement except that all such representations
and warranties set forth in this Agreement shall be deemed made as of the date
of such substitution. The Company shall effect such substitution by delivering
to the Custodian for such Qualified Substitute Mortgage Loan the documents
required by Section 2.03, with the Mortgage Note endorsed as required by Section
2.03. No substitution will be made in any calendar month after the Determination
Date for such month. The Company shall deposit in the Custodial Account the
Monthly Payment less the Servicing Fee due on such Qualified Substitute Mortgage
Loan or Loans in the month following the date of such substitution. Monthly
Payments due with respect to Qualified Substitute Mortgage Loans in the month of
substitution shall be retained by the Company. With respect to any Deleted
Mortgage loan, distributions to Purchaser shall include the Monthly Payment due
on any Deleted Mortgage Loan in the month of substitution, and the Company shall
thereafter be entitled to retain all amounts subsequently received by the
Company in respect of such Deleted Mortgage Loan.
For any month in which the Company substitutes a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan, the Company shall determine the
amount (if any) by which the aggregate principal balance of all Qualified
Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all Deleted Mortgage Loans (after
application of scheduled principal payments due in the month of substitution).
The amount of such shortfall, plus any applicable percentage of the premium
paid, shall be distributed by the Company in the month of substitution pursuant
to Section 5.01. Accordingly, on the date of such substitution, the Company
shall deposit from its own funds into the Custodial Account an amount equal to
the amount of such shortfall.
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In addition to such repurchase or substitution obligation, the Company
shall indemnify the Purchaser 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 representations and warranties contained in this Agreement. It is understood
and agreed that the obligations of the Company set forth in this Section 3.03 to
cure, substitute for or repurchase a defective Mortgage Loan and to indemnify
the Purchaser as provided in this Section 3.03 constitute the sole remedies of
the Purchaser respecting a breach of the foregoing representations and
warranties.
Any cause of action against the Company relating to or arising out of
the breach of any representations and warranties made in Sections 3.01 and 3.02
shall accrue as to any Mortgage Loan upon (i) discovery of such breach by the
Purchaser or notice thereof by the Company to the Purchaser, (ii) failures by
the Company to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Company by the Purchaser for compliance with
this Agreement.
Section 3.04 First Payment Default.
The Company shall repurchase at the purchase price set forth in the
Commitment Letter, together with any adjustments as provided therein, any
Mortgage Loan for which the first scheduled Monthly Payment due on such Mortgage
Loan is not made within the calendar month such payment is due.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer.
The Company, 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 third party servicing provider, to do any and all
things in connection with such servicing and administration which the Company
may deem necessary or desirable, consistent with the terms of this Agreement and
with Accepted Servicing Practices. The Servicer shall be responsible for any and
all acts of a third party servicing provider, and the Servicer's utilization of
a third party servicing provider shall in no way relieve the liability of the
Servicer under this Agreement.
Consistent with the terms of this Agreement, the Company 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 Company's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser, provided, however, the Company shall not make any future advances
with respect to a Mortgage Loan. Unless the Mortgagor is in default with respect
to the Mortgage Loan or such default is, in the judgment of the Company,
imminent, the Company
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shall not permit any modification with respect to any Mortgage Loan that would
change the Mortgage Interest Rate, defer or forgive the payment of principal
(except for actual payments of principal) or change the final maturity date on
such Mortgage Loan. The Company shall request written consent from the Purchaser
to permit such a modification and the Purchaser shall provide written consent or
notify the Company of its objection to such modification within three (3)
Business Days of its receipt of the Company's request. In the event of any such
modification which permits the deferral of interest or principal payments on any
Mortgage Loan, the Company shall, on the Business Day immediately preceding the
Remittance Date in any month in which any such principal or interest payment has
been deferred, deposit in the Custodial Account from its own funds, in
accordance with Section 5.03, the difference between (a) such month's principal
and one month's interest at the Mortgage Loan Remittance Rate on the unpaid
principal balance of such Mortgage Loan and (b) the amount paid by the
Mortgagor. The Company shall be entitled to reimbursement for such advances to
the same extent as for all other advances made pursuant to Section 5.03. Without
limiting the generality of the foregoing, the Company shall continue, and is
hereby authorized and empowered, to execute and deliver on behalf of itself and
the Purchaser, 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 Company, the Purchaser shall furnish the Company with any powers
of attorney and other documents necessary or appropriate to enable the Company
to carry out its servicing and administrative duties under this Agreement.
In servicing and administering the Mortgage Loans, the Company shall
employ procedures (including collection procedures) and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account, giving due consideration to Accepted
Servicing Practices where such practices do not conflict with the requirements
of this Agreement, and the Purchaser's reliance on the Company.
Notwithstanding anything to the contrary contained herein, the Company
shall not waive a prepayment penalty or charge except under the following
circumstances: (i) such waiver would, in the reasonable judgment of the Company,
maximize recovery of total proceeds taking into account the value of such
prepayment penalty or charge and the related Mortgage Loan and, if such waiver
is made in connection with a refinancing of the related Mortgage Loan, such
refinancing is related to a default or a reasonably foreseeable default; or (ii)
the Company obtains a written Opinion of Counsel, which may be in-house counsel
for the Company, opining that any prepayment penalty or charge is not legally
enforceable in the circumstances under which the related Principal Prepayment
occurs. In the event the Seller waives any prepayment penalty, other than as set
forth in (i) and (ii) above, the Seller shall deposit the amount of any such
prepayment penalty in the Custodial Account for distribution to the Purchaser on
the next Remittance Date.
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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 Company shall take such action as (1) the Company
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 Company shall determine prudently to be in the best
interest of Purchaser, and (4) is consistent with any related PMI Policy. 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 Company shall commence foreclosure proceedings, the Company shall
notify the Purchaser in writing of the Company's intention to do so, and the
Company shall not commence foreclosure proceedings if the Purchaser objects to
such action within three (3) Business Days of receiving such notice. In the
event the Purchaser objects to such foreclosure action, the Company shall not be
required to make Monthly Advances with respect to such Mortgage Loan, pursuant
to Section 5.03, and the Company's obligation to make such Monthly Advances
shall terminate on the 90th day referred to above. In such connection, the
Company shall from its own funds make all necessary and proper Servicing
Advances, provided, however, that the Company shall not be required to expend
its own funds in connection with any foreclosure or towards the restoration or
preservation of any Mortgaged Property, unless it shall determine (a) that such
preservation, restoration and/or foreclosure will increase the proceeds of
liquidation of the Mortgage Loan to Purchaser 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).
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 Company has reasonable cause to believe that a Mortgaged Property
is contaminated by hazardous or toxic substances or wastes, or if the Purchaser
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
Purchaser, if requested by the Purchaser. Upon completion of the inspection or
review, the Company shall promptly provide the Purchaser with a written report
of the environmental inspection.
After reviewing the environmental inspection report, the Purchaser
shall determine how the Company 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 Purchaser directs the Company to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Company 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
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Company, the Company shall be entitled to be reimbursed from amounts in the
Custodial Account pursuant to Section 4.05 hereof. In the event the Purchaser
directs the Company not to proceed with foreclosure or acceptance of a deed in
lieu of foreclosure, the Company 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 Company 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 Custodial Account.
The Company shall establish one or more Payment Clearing Accounts for
the deposit of all funds collected in connection with the Mortgage Loans. The
Company shall transfer funds deposited into the Payment Clearing Account to the
appropriate Custodial Accounts or Escrow Accounts, as provided in Sections 4.04
and 4.07, within two Business Days.
The Company shall segregate and hold all funds collected and received
in connection with the Mortgage Loans separate and apart from any of its own
funds and general assets and from any other funds or assets collected by or held
by the Company on behalf of third parties, and shall establish and maintain one
or more Custodial Accounts, in the form of time deposit or demand accounts,
titled "Xxxxx Fargo Home Mortgage, Inc., in trust for the Purchaser and/or
subsequent purchasers of Mortgage Loans, and various Mortgagors - P & I." The
Custodial Account shall be established with a Qualified Depository. Upon request
of the Purchaser and within ten (10) days thereof, the Company shall provide the
Purchaser with written confirmation of the existence of such Custodial Account
in the form of the Custodial Account Certification attached as Exhibit E. Any
funds deposited in the Custodial Account shall at all times be insured to the
fullest extent allowed by applicable law. At all times the Purchaser shall be
the sole beneficial owner of all funds in the Custodial Account. The Company's
possession or control of any such funds shall be in the Company's capacity as
collecting agent for the Purchaser. Funds deposited in the Custodial Account may
be drawn on by the Company in accordance with Section 4.05.
The Company shall transfer from the Payment Clearing Account to the
Custodial Account within two (2) Business Days of Company's receipt, and retain
therein, the following collections received by the Company and payments made by
the Company after the Cut-off Date, other than payments of principal and
interest due on or before the Cut-off Date, or received by the Company prior to
the Cut-off Date but allocable to a period subsequent thereto:
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(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
(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 and Section
4.15;
(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;
(vi) any amount required to be deposited in the Custodial Account
pursuant to Section 4.01, 5.03, 6.01 or 6.02;
(vii) any amounts payable in connection with the repurchase of any
Mortgage Loan pursuant to Section 3.03 and all amounts
required to be deposited by the Company in connection with a
shortfall in principal amount of any Qualified Substitute
Mortgage Loan pursuant to Section 3.03;
(viii) with respect to each Principal Prepayment an amount (to be
paid by the Company out of its funds) which, when added to all
amounts allocable to interest received in connection with the
Principal Prepayment, equals one month's interest on the
amount of principal so prepaid at the Mortgage Loan Remittance
Rate;
(ix) any amounts required to be deposited by the Company pursuant
to Section 4.11 in connection with the deductible clause in
any blanket hazard insurance policy; and
(x) any amounts received with respect to or related to any REO
Property and all REO Disposition Proceeds pursuant to Section
4.16.
The foregoing requirements for deposit in 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,
assumption fees and similar fees and charges, to the extent permitted by
Sections 4.01 and 6.01, need not be deposited by the Company in the Custodial
Account. Each Custodial Account shall be established at a Qualified Depository.
The Company shall give notice to the Purchaser of the location of the Custodial
Account when established and prior to any change thereof.
Section 4.05 Permitted Withdrawals From Custodial Account.
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The Company shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
(i) to make payments to the Purchaser in the amounts and in the
manner provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances of the Company's
funds made pursuant to Section 5.03, the Company's right to
reimburse itself pursuant to this subclause (ii) being limited
to amounts received on the related Mortgage Loan which
represent late payments of principal and/or interest
respecting which any such advance was made, it being
understood that, in the case of any such reimbursement, the
Company's right thereto shall be prior to the rights of
Purchaser, except that, where the Company is required to
repurchase a Mortgage Loan pursuant to Section 3.03 or 6.02,
the Company's right to such reimbursement shall be subsequent
to the payment to the Purchaser of the Repurchase Price
pursuant to such sections and all other amounts required to be
paid to the Purchaser with respect to such Mortgage Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances, and
for any unpaid Servicing Fees, the Company's right to
reimburse itself pursuant to this subclause (iii) 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 Company from the
Mortgagor or otherwise relating to the Mortgage Loan, it being
understood that, in the case of any such reimbursement, the
Company's right thereto shall be prior to the rights of
Purchaser, except that where the Company is required to
repurchase a Mortgage Loan pursuant to Section 3.03 or 6.02,
in which case the Company's right to such reimbursement shall
be subsequent to the payment to the Purchaser of the
Repurchase Price pursuant to such sections and all other
amounts required to be paid to the Purchaser with respect to
such Mortgage Loan;
(iv) to pay itself interest on funds deposited in the Custodial
Account;
(v) to reimburse itself for expenses incurred and reimbursable to
it pursuant to Section 8.01;
(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;
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(viii) to remove funds inadvertently placed in the Custodial Account
by the Company; and
(ix) 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 Company shall withdraw all funds from the Custodial Account
except for those amounts which, pursuant to Section 5.01, the Company is not
obligated to remit on such Remittance Date. The Company may use such withdrawn
funds only for the purposes described in this Section 4.05.
Section 4.06 Establishment of and Deposits to Escrow Account.
The Company shall establish one or more Escrow Accounts for the deposit
of Escrow Payments. Company shall segregate and hold all funds collected and
received in connection with the Mortgage Loans which constitute Escrow Payments
separate and apart from any of its own funds and general assets and from any
other funds or amounts collected or held by the Company on behalf of third
parties titled, "Xxxxx Fargo Home Mortgage, Inc., in trust for the Purchaser
and/or subsequent purchasers 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. Upon
request of the Purchaser and within ten (10) days thereof, the Company shall
provide the Purchaser with written confirmation of the existence of such Escrow
Account in the form of the Escrow Account Certification attached as Exhibit F.
Funds deposited in the Escrow Account may be drawn on by the Company in
accordance with Section 4.07.
The Company shall transfer from the Payment Clearing Account into the
applicable Escrow Account or Accounts within two (2) Business Days of Company'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; and
(ii) all amounts representing Insurance Proceeds or Condemnation
Proceeds which are to be applied to the restoration or repair
of any Mortgaged Property;
The Company 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 Company 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 Company 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.
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Section 4.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the
Company 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 Company for any Servicing Advances made by
the Company 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 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 and application to
reduce the principal balance of the Mortgage Loan in
accordance with the terms of the related Mortgage and Mortgage
Note;
(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 Company, 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 Company; and
(viii) to clear and terminate the Escrow Account on the termination
of this Agreement.
The Company 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 and, to the extent required by
law, the Company shall pay interest on escrowed funds to the Mortgagor
notwithstanding that the Escrow Account is non-interest bearing or that interest
paid thereon is insufficient for such purposes. If Company elects or is required
by law to deposit a Mortgagor's escrow funds into an interest-bearing account,
the Company 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.
33
Section 4.08 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Company 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 premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date, employing for such purpose deposits
of the Mortgagor in the Escrow Account which shall have been estimated and
accumulated by the Company in amounts sufficient for such purposes, as allowed
under the terms of the Mortgage. The Company 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 of the making of the Escrow Payments, and the Company shall make advances
from its own funds to effect such payments.
Section 4.09 Protection of Accounts.
The Company may transfer the Custodial Account or the Escrow Account to
a different Qualified Depository from time to time upon written notice to the
Purchaser not less than ten (10) days prior to the transfer of funds.
Section 4.10 Maintenance of Hazard Insurance.
The Company shall cause to be maintained for each Mortgage Loan hazard
insurance such that all buildings upon the Mortgaged Property are insured by an
insurer acceptable to Xxxxxx Mae 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) the maximum insurable value of the improvements securing such
Mortgage Loan and (ii) the greater of (a) the outstanding principal balance of
the Mortgage Loan and (b) an amount such that the proceeds thereof shall be
sufficient to prevent the Mortgagor or the loss payee from becoming a
co-insurer. 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 Company shall notify the Purchaser 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), a flood insurance policy meeting the
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
34
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 a Mortgage is secured by a unit in a condominium project, the
Company shall verify that the coverage required of the owner's association,
including hazard, flood, liability, and fidelity coverage, is being maintained
in accordance with then current Xxxxxx Mae requirements, and secure from the
owner's association its agreement to notify the Company promptly of any change
in the insurance coverage or of any condemnation or casualty loss that may have
a material effect on the value of the Mortgaged Property as security.
In the event that any Purchaser or the Company 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 Company shall communicate and consult with the
Mortgagor with respect to the need for such insurance and bring to the
Mortgagor's attention the desirability of protection of the Mortgaged Property.
All policies required hereunder shall name the Company as loss payee
and shall be endorsed with standard or union 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 Company shall not interfere with the Mortgagor's freedom of choice
in selecting either his insurance carrier or agent, provided, however, that the
Company shall not accept any such insurance policies from insurance companies
unless such companies are acceptable to Xxxxxx Xxx and Xxxxxxx Mac and are
licensed to do business in the jurisdiction in which the Mortgaged Property is
located. The Company 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.
Pursuant to Section 4.04, any amounts collected by the Company 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 Company'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.
Section 4.11 Maintenance of Mortgage Impairment Insurance.
In the event that the Company shall obtain and maintain a blanket
policy insuring against losses arising from fire and hazards covered under
extended coverage on all of the Mortgage Loans, then, to the extent such policy
provides coverage in an amount equal to the amount required pursuant to Section
4.10 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 Company shall prepare and make any claims on the blanket
policy as deemed necessary by the Company in accordance with prudent servicing
practices. Any amounts collected by the
35
Company 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 a policy
complying with Section 4.10, and there shall have been a loss which would have
been covered by such policy, the Company 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
Company's funds, without reimbursement therefor. Upon request of any Purchaser,
the Company shall cause to be delivered to such Purchaser a certified true copy
of such policy 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 Purchaser.
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions
Insurance.
The Company shall maintain with responsible companies, at its own
expense, a blanket Fidelity Bond and an Errors and Omissions Insurance Policy,
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 ("Company Employees"). Any such Fidelity Bond and
Errors and Omissions Insurance Policy shall be in the form of the Mortgage
Banker's Blanket Bond and shall protect and insure the Company against losses,
including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such Company Employees. Such Fidelity Bond and Errors and
Omissions Insurance Policy also shall protect and insure the Company against
losses in connection with 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 Company 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 at least
equal to the amounts acceptable to Xxxxxx Mae or Xxxxxxx Mac. Upon the request
of any Purchaser, the Company shall cause to be delivered to such Purchaser 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 30 days' prior written notice to the
Purchaser.
Section 4.13 Inspections.
If any Mortgage Loan is more than 60 days delinquent, the Company
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 Company shall keep a
written report of each such inspection.
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Section 4.14 Restoration of Mortgaged Property.
The Company need not obtain the approval of the Purchaser 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. For claims greater than
$15,000, at a minimum the Company shall comply with the following conditions in
connection with any such release of Insurance Proceeds or Condemnation Proceeds:
(i) The Company shall receive satisfactory independent
verification of completion of repairs and issuance of any
required approvals with respect thereto;
(ii) the Company 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 Company shall verify that the Mortgage Loan is not in
default; and
(iv) pending repairs or restoration, the Company shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow
Account.
If the Purchaser is named as an additional loss payee, the Company is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.
Section 4.15 Maintenance of PMI Policy; Claims.
With respect to each Mortgage Loan originated with an LTV in excess of
80%, the Company shall, without any cost to the Purchaser maintain or cause the
Mortgagor to maintain in full force and effect a PMI Policy insuring the portion
over 78% until terminated pursuant to the Homeowners Protection Act of 1998, 12
UCS Section 4901, et seq. In the event that such PMI Policy shall be terminated
other than as required by law, the Company shall obtain from another Qualified
Insurer a comparable replacement policy, with a total coverage equal to the
remaining coverage of such terminated PMI Policy. If the insurer shall cease to
be a Qualified Insurer, the Company shall determine whether recoveries under the
PMI Policy are jeopardized for reasons related to the financial condition of
such insurer, it being understood that the Company shall in no event have any
responsibility or liability for any failure to recover under the PMI Policy for
such reason. If the Company determines that recoveries are so jeopardized, it
shall notify the Purchaser and the Mortgagor, if required, and obtain from
another Qualified Insurer a replacement insurance policy. The Company shall not
take any action which would result in noncoverage under any applicable PMI
Policy of any loss which, but for the actions of the Company 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 Company shall
promptly notify the insurer under the related PMI Policy, if any, of such
assumption or substitution of liability in accordance with the terms of such PMI
Policy and shall take all actions which may be required by such insurer as a
condition to the continuation of coverage
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under such PMI Policy. If such PMI Policy is terminated as a result of such
assumption or substitution of liability, the Company shall obtain a replacement
PMI Policy as provided above.
In connection with its activities as servicer, the Company agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any PMI Policy in a timely fashion in accordance with the terms of
such PMI Policy and, in this regard, to take such action as shall be necessary
to permit recovery under any PMI Policy respecting a defaulted Mortgage Loan.
Pursuant to Section 4.04, any amounts collected by the Company under any PMI
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.
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 Purchaser or its designee, or in the event the
Purchaser 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 Company from any
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 Purchaser shall
acknowledge in writing that such title is being held as nominee for the
Purchaser.
The Company shall manage, conserve, protect and operate each REO
Property for the Purchaser solely for the purpose of its prompt disposition and
sale. The Company, either itself or through an agent selected by the Company,
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, and in the same manner that similar property in the same
locality as the REO Property is managed. The Company 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 Company
deems to be in the best interest of the Purchaser.
The Company 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 (i) a REMIC
election has not been made with respect to the arrangement under which the
Mortgage Loans and the REO Property are held, and (ii) the Company determines,
and gives an appropriate notice to the Purchaser to such effect, that a longer
period is necessary for the orderly liquidation of such REO Property. If a
period longer than one year is permitted under the foregoing sentence and is
necessary to sell any REO Property, (i) the Company shall report monthly to the
Purchaser as to the progress being made in selling such REO Property and (ii)
if, with the written consent of the Purchaser, a purchase money mortgage is
taken in connection with such sale, such purchase money mortgage shall name the
Company as mortgagee, and such purchase money mortgage shall not be held
pursuant to this Agreement, but instead a separate agreement among the Company
and Purchaser shall be entered into with respect to such purchase money
mortgage.
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The Company shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
The disposition of REO Property shall be carried out by the Company at
such price, and upon such terms and conditions, as the Company deems to be in
the best interests of the Purchaser. 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 Company shall
reimburse itself for any related unreimbursed Servicing Advances, unpaid
Servicing Fees and unreimbursed advances made pursuant to Section 5.03. On the
Remittance Date immediately following the Principal Prepayment Period in which
such sale proceeds are received the net cash proceeds of such sale remaining in
the Custodial Account shall be distributed to the Purchaser.
The Company shall withdraw from the Custodial Account funds necessary
for the proper operation management and maintenance of the REO Property,
including the cost of maintaining any hazard insurance pursuant to Section 4.10
and the fees of any managing agent of the Company, or the Company itself. The
REO management fee shall be $1500.00 per REO Property. The Company shall make
monthly distributions on each Remittance Date to the Purchaser of the net cash
flow from the REO Property (which shall equal the revenues from such REO
Property net of the expenses described in this Section 4.16 and of any reserves
reasonably required from time to time to be maintained to satisfy anticipated
liabilities for such expenses).
Section 4.17 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 5.02, the
Company shall furnish to the Purchaser 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 Company'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 as the Purchaser shall reasonably request.
Section 4.18 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed in lieu of foreclosure, the Company
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged
Property.
Following the foreclosure sale or abandonment of any Mortgaged
Property, the Company shall report such foreclosure or abandonment as required
pursuant to Section 6050J of the Code. The Company shall file information
reports with respect to the receipt of mortgage interest received in a trade or
business and information returns relating to cancellation of indebtedness
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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 Notification of Adjustments.
With respect to each Mortgage Loan, the Company 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
Company 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 Company or the
receipt of notice from the Purchaser that the Company has failed to adjust a
Mortgage Interest Rate in accordance with the terms of the related Mortgage
Note, the Company shall immediately deposit in the Custodial Account from its
own funds the amount of any interest loss or deferral caused the Purchaser
thereby.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances.
On each Remittance Date the Company shall remit by wire transfer of
immediately available funds to the Purchaser (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 Company 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.
With respect to any remittance received by the Purchaser after the
second Business Day following the Business Day on which such payment was due,
the Company shall pay to the Purchaser 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 Company on the date such late payment is made and shall cover the
period commencing with the day following such second Business Day and ending
with the Business Day on which such payment is made, both inclusive. Such
interest shall be remitted along with the distribution payable on the next
succeeding Remittance Date. The payment by the Company of any such interest
shall not be deemed an extension of time for payment or a waiver of any Event of
Default by the Company.
Section 5.02 Statements to Purchaser.
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Not later than the Remittance Date, the Company shall furnish to the
Purchaser a monthly remittance advice, with a trial balance report attached
thereto, as to the preceding remittance and the period ending on the last day of
the preceding month.
Section 5.03 Monthly Advances by Company.
On the Business Day immediately preceding each Remittance Date, the
Company shall deposit in the Custodial Account from its own funds or from
amounts held for future distribution an amount equal to all Monthly Payments
(with interest adjusted to 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 Company 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 Purchaser required to be
made on such Remittance Date. The Company's obligation to make such Monthly
Advances as to any Mortgage Loan will continue through the last Monthly Payment
due prior to the payment in full of the Mortgage Loan, or through the earlier
of: (i) the last Remittance Date prior to the Remittance Date for the
distribution of all Liquidation Proceeds and other payments or recoveries
(including Insurance Proceeds and Condemnation Proceeds) with respect to the
Mortgage Loan; and (ii) the Remittance Date prior to the date the Mortgage Loan
is converted to REO Property, provided however, that if requested by a Rating
Agency (hereinafter defined) in connection with a securitization, the Company
shall be obligated to make such advances through the Remittance Date prior to
the date on which cash is received in connection with the liquidation of REO
Property; provided, however, that such obligation shall cease if the Company
determines, in its sole reasonable opinion, that advances with respect to such
Mortgage Loan are non-recoverable by the Company from Liquidation Proceeds,
Insurance Proceeds, Condemnation Proceeds, or otherwise with respect to a
particular Mortgage Loan. In the event that the Company determines that any such
advances are non- recoverable, the Company shall provide the Purchaser with a
certificate signed by two officers of the Company evidencing such determination.
For purposes of this paragraph, "Rating Agency" shall mean Xxxxx'x Investors
Services, Inc., Standard & Poor's Ratings Services, Fitch Ratings, Inc. or any
other nationally recognized statistical credit rating agency.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Transfers of Mortgaged Property.
The Company 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 Company shall, to the
extent it has knowledge of such conveyance, exercise its rights to
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accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause
applicable thereto, provided, however, that the Company 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, if
any.
If the Company reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, the Company 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
Company is unable under applicable law to require that the original Mortgagor
remain liable under the Mortgage Note and the Company 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. If an
assumption fee is collected by the Company for entering into an assumption
agreement the fee will be retained by the Company as additional servicing
compensation. In connection with any such assumption, neither the Mortgage
Interest Rate borne by the related Mortgage Note, the term of the Mortgage Loan,
the outstanding principal amount of the Mortgage Loan nor any other materials
terms shall be changed without Purchaser's consent.
To the extent that any Mortgage Loan is assumable, the Company 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 Loans. If the credit worthiness of the proposed
transferee does not meet such underwriting criteria, the Company diligently
shall, to the extent permitted by the Mortgage or the Mortgage Note and by
applicable law, accelerate the maturity of the Mortgage Loan.
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
Company of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Company shall notify the Purchaser in the
Monthly Remittance Advice as provided in Section 5.02, and may request the
release of any Mortgage Loan Documents.
If the Company satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage or should
the Company otherwise prejudice any rights the Purchaser may have under the
mortgage instruments, upon written demand of the Purchaser, the Company shall
repurchase the related Mortgage Loan at the Repurchase Price by deposit thereof
in the Custodial Account within 2 Business Days of receipt of such demand by the
Purchaser. The Company shall maintain the Fidelity Bond and Errors and Omissions
Insurance Policy as provided for in Section 4.12 insuring the Company against
any loss it may sustain with respect to any Mortgage Loan not satisfied in
accordance with the procedures set forth herein.
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Section 6.03 Servicing Compensation.
As compensation for its services hereunder, the Company 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 same unpaid scheduled principal balance and for the period respecting which
any related interest payment on a Mortgage Loan is computed. The obligation of
the Purchaser to pay the Servicing Fee is limited to, and payable solely from,
the interest portion of such Monthly Payments.
Additional servicing compensation in the form of assumption fees, to
the extent provided in Section 6.01 and late payment charges shall be retained
by the Company to the extent not required to be deposited in the Custodial
Account. The Company 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 Statement as to Compliance.
The Company shall deliver to the Purchaser, on or before May 31, each
year beginning May 31, 2003, an Officer's Certificate, stating that (i) a review
of the activities of the Company during the preceding calendar year and of
performance under this Agreement or similar agreements has been made under such
officer's supervision, and (ii) to the best of such officer's knowledge, based
on such review, the Company has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and the action being taken by the
Company to cure such default.
Section 6.05 Annual Independent Public Accountants' Servicing Report.
On or before May 31, of each year beginning May 31, 2003, 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 substantially 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.
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Section 6.06 Right to Examine Company Records.
The Purchaser, or its designee, shall have the right to examine and
audit any and all of the books, records, or other information of the Company,
whether held by the Company or by another 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, upon
reasonable advance notice. The Purchaser shall pay its own travel expenses
associated with such examination.
Section 6.07 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 Company 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 Section 860 (a) (2) of the
Code and the tax on "contributions" to a REMIC set forth in Section 860(d) of
the Code) unless the Company 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
COMPANY TO COOPERATE
Section 7.01 Provision of Information.
During the term of this Agreement, the Company shall furnish to the
Purchaser 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
Purchaser or any regulatory agency will be provided at the Purchaser's expense.
All such reports, documents or information shall be provided by and in
accordance with all reasonable instructions and directions which the Purchaser
may give.
The Company shall execute and deliver all such instruments and take all
such action as the Purchaser 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 Purchaser may make
available to a prospective Purchaser a Consolidated Statement of Operations of
the Company for the most recently completed two fiscal years for which such a
statement is available, as well as a
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Consolidated Statement of Condition at the end of the last two fiscal years
covered by such Consolidated Statement of Operations. The Company also shall
make available any comparable interim statements to the extent any such
statements have been prepared by or on behalf of the Company (and are available
upon request to members or stockholders of the Company or to the public at
large).
The Company also shall make available to Purchaser or prospective
Purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions respecting recent developments affecting the Company or the
financial statements of the Company, and to permit any prospective Purchaser to
inspect the Company's servicing facilities for the purpose of satisfying such
prospective Purchaser that the Company has the ability to service the Mortgage
Loans as provided in this Agreement.
ARTICLE VIII
THE COMPANY
Section 8.01 Indemnification; Third Party Claims.
The Company shall indemnify the Purchaser 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 Purchaser may sustain in any way related to the failure of
the Company to perform its duties and service the Mortgage Loans in strict
compliance with the terms of this Agreement. The Company immediately shall
notify the Purchaser 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
Purchaser) 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 Purchaser in respect
of such claim. The Company shall follow any written instructions received from
the Purchaser in connection with such claim. The Purchaser promptly shall
reimburse the Company for all amounts advanced by it pursuant to the preceding
sentence except when the claim is in any way related to the Company's
indemnification pursuant to Section 3.03, or the failure of the Company to
service and administer the Mortgage Loans in strict compliance with the terms of
this Agreement.
Section 8.02 Merger or Consolidation of the Company.
The Company shall keep in full effect its existence, rights and
franchises as a corporation, and shall obtain and preserve its qualification to
do business as a foreign corporation 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 Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Company shall be a party,
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or any Person succeeding to the business of the Company, shall be the successor
of the Company 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 which is a Xxxxxx Xxx/Xxxxxxx Mac- approved
company in good standing. Furthermore, in the event the Company transfers or
otherwise disposes of all or substantially all of its assets to an affiliate of
the Company, such affiliate shall satisfy the condition above, and shall also be
fully liable to the Purchaser for all of the Company's obligations and
liabilities hereunder.
Section 8.03 Limitation on Liability of Company and Others.
Neither the Company nor any of the directors, officers, employees or
agents of the Company shall be under any liability to the Purchaser 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 Company 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 Company and any director, officer, employee or agent of the
Company 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 Company 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 Company may, with the
consent of the Purchaser, 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 Company shall be entitled to reimbursement
from the Purchaser of the reasonable legal expenses and costs of such action.
Section 8.04 Limitation on Resignation and Assignment by Company.
The Purchaser has entered into this Agreement with the Company and
subsequent purchasers will purchase the Mortgage Loans in reliance upon the
independent status of the Company, 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
Company shall neither assign this Agreement or the servicing hereunder or
delegate its rights or duties hereunder or any portion hereof or sell or
otherwise dispose of all of its property or assets without the prior written
consent of the Purchaser, which consent shall not be unreasonably withheld.
The Company shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Company and the Purchaser or upon
the determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Company. Any such
determination permitting the resignation of the Company shall be evidenced by an
Opinion of Counsel to such effect delivered to the Purchaser which Opinion of
Counsel shall be in form and substance acceptable to the Purchaser. No such
resignation shall
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become effective until a successor shall have assumed the Company'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 Company either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder 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 Purchaser, then the
Purchaser 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 Company or any third party.
ARTICLE IX
PASS-THROUGH TRANSFER
Section 9.01 Removal of Mortgage Loans from Inclusion Under this Agreement
The Purchaser and the Company agree that with respect to some or all of
the Mortgage Loans, the Purchaser, at its sole option, shall effect up to four
Whole Loan Transfers or Pass- Through Transfers, retaining the Company 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 shall 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 Company shall continue to service such
rejected Mortgage Loan on behalf of the Purchaser in accordance with the terms
and provisions of this Agreement.
The Company shall cooperate with the Purchaser in connection with each
Whole Loan Transfer or Pass-Through Transfer in accordance with this Section 9.
In connection therewith the Company shall:
(a) make all representations and warranties with respect to the
Mortgage Loans as of the Closing Date and with respect to the
Company itself as of the closing date of each Whole Loan
Transfer or Pass-Through Transfer;
(b) negotiate in good faith and execute any seller/servicer
agreements required by the shelf registrant to effectuate the
foregoing provided such agreements create no greater
obligation or cost on the part of the Company than otherwise
set forth in this Agreement;
(c) provide as applicable:
(i) any and all information and appropriate verification
of information which may be reasonably available to
the Company, including the Company's foreclosure and
delinquency experience and the Company's underwriting
47
and origination standards, whether through letters of
its auditors and counsel or otherwise, as the
Purchaser shall request;
(ii) such additional representations, warranties,
covenants, opinions of counsel, letters from
auditors, and certificates of public officials or
officers of the Company as are reasonably believed
necessary by the trustee, any rating agency or the
Purchaser, as the case may be, in connection with
such Whole Loan Transfers or Pass-Through Transfers.
The Purchaser shall pay all third party costs
associated with the preparation of such information.
The Company shall execute any seller/servicer
agreements required within a reasonable period of
time after receipt of such seller/servicer agreements
which time shall be sufficient for the Seller and
Seller's counsel to review such seller/servicer
agreements. Under this Agreement, the Company shall
retain a servicing fee at a rate per annum equal to
no less than 0.50 % per Mortgage Loan; and
(d) indemnify the Purchaser for any material misstatements or
omissions contained in the information provided pursuant to
(c) above, provided that the Purchaser shall also provide
indemnification to the Company, it successors or assigns, with
respect to the accuracy of all other information the Purchaser
may disclose in any securitization offering materials.
In the event the Purchaser has elected to have the Company hold record
title to the Mortgages, prior to the Reconstitution Date the Company shall
prepare an Assignment in blank or to the trustee from the Company acceptable to
the trustee for each Mortgage Loan that is part of the Whole Loan Transfers or
Pass-Through Transfers. The Purchaser shall pay all preparation and recording
costs associated therewith. The Company shall execute each Assignment, track
such Assignments to ensure they have been recorded and deliver them as required
by the trustee upon the Company's receipt thereof. Additionally, the Company
shall prepare and execute, at the direction of the Purchaser, any note
endorsements in connection with any and all seller/servicer agreements.
All Mortgage Loans not sold or transferred pursuant to Whole Loan
Transfers or Pass- Through Transfers shall remain subject to this Agreement and
shall continue to be serviced in accordance with the terms of this Agreement 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 Company:
48
(i) any failure by the Company to remit to the Purchaser any
payment required to be made under the terms of this Agreement
which continues unremedied for a period of two Business Days
after the date upon which written notice of such failure,
requiring the same to be remedied, shall have been given to
the Company by the Purchaser; or
(ii) failure by the Company duly to observe or perform in any
material respect any other of the covenants or agreements on
the part of the Company set forth in this Agreement or in the
Custodial Agreement which continues unremedied for a period of
60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been
given to the Company by the Purchaser or by the Custodian; or
(iii) failure by the Company 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 Company and such decree or order shall
have remained in force undischarged or unstayed for a period
of 60 days; or
(v) the Company shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of
debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Company or of or relating to
all or substantially all of its property; or
(vi) the Company 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 for three Business
Days; or
(vii) the Company ceases to meet the qualifications of a Xxxxxx
Mae/Xxxxxxx Mac servicer; or
(viii) the Company attempts to assign its right to servicing
compensation hereunder or to assign this Agreement or the
servicing responsibilities hereunder or to delegate its duties
hereunder or any portion thereof in violation of Section 8.04.
In each and every such case, so long as an Event of Default shall not
have been remedied, in addition to whatever rights the Purchaser may have at law
or equity to damages, including injunctive relief and specific performance, the
Purchaser, by notice in writing to the Company,
49
may terminate all the rights and obligations of the Company under this Agreement
and in and to the Mortgage Loans and the proceeds thereof.
Upon receipt by the Company of such written notice, all authority and
power of the Company 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 Purchaser, the Company
shall prepare, execute and deliver to the successor entity designated by the
Purchaser 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 Company's sole
expense. The Company shall cooperate with the Purchaser and such successor in
effecting the termination of the Company'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 Company to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Section 10.02 Waiver of Defaults.
By a written notice, the Purchaser may waive any default by the Company
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.
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 Company and the Purchaser in writing.
Section 11.02 Termination Without Cause.
The Purchaser may terminate, at its sole option, any rights the Company
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 Company by
registered mail as provided in Section 12.05.
The Company shall be entitled to receive, as such liquidated damages,
upon the transfer of the servicing rights, an amount equal to: (i) 2.75% of the
aggregate outstanding principal
50
amount of the Mortgage Loans as of the termination date paid by the Purchaser to
the Company with respect to all of the Mortgage Loans for which a servicing fee
rate of .25% is paid per annum, (ii) 3.25% of the aggregate outstanding
principal amount of the Mortgage Loans as of the termination date paid by the
Purchaser to the Company with respect to all of the Mortgage Loans for which a
servicing fee rate of .375% is paid per annum, and (iii) 3.75% of the aggregate
outstanding principal amount of the Mortgage Loans as of the termination date
paid by the Purchaser to the Company with respect to all of the Mortgage Loans
for which a servicing fee rate of .44% is paid per annum.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Company.
Prior to termination of the Company's responsibilities and duties under
this Agreement pursuant to Sections 8.04, 10.01, 11.01 (ii) or pursuant to
Section 11.02 the Purchaser shall, (i) succeed to and assume all of the
Company's responsibilities, rights, duties and obligations under 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 Company under this Agreement prior to the
termination of Company's responsibilities, duties and liabilities under this
Agreement. In connection with such appointment and assumption, the Purchaser 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
Company's duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned sections, the Company 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 Company 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 Company of the representations and warranties
made pursuant to Sections 3.01 and 3.02 and the remedies available to the
Purchaser under Section 3.03, it being understood and agreed that the provisions
of such Sections 3.01, 3.02, and 3.03 shall be applicable to the Company
notwithstanding any such sale, assignment, resignation or termination of the
Company, or the termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Company and to the Purchaser an instrument accepting such
appointment, wherein the successor shall make the representations and warranties
set forth in Section 3.01, except for subsections (h), (i) and (k) thereof,
whereupon such successor shall become fully vested with all the rights, powers,
duties, responsibilities, obligations and liabilities of the Company, with like
effect as if originally named as a party to this Agreement. Any termination or
resignation of the Company or termination of this Agreement pursuant to Section
8.04, 10.01, 11.01 or 11.02 shall
51
not affect any claims that any Purchaser may have against the Company arising
out of the Company's actions or failure to act prior to any such termination or
resignation.
The Company shall deliver promptly to the successor servicer the funds
in the Custodial Account and Escrow Account and all Mortgage Files and related
documents and statements held by it hereunder and the Company 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 Company.
Upon a successor's acceptance of appointment as such, the Company shall
notify by mail the Purchaser 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 the Company and by
written agreement signed by the Company and the Purchaser.
Section 12.03 Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
Each of the Company and the Purchaser hereby knowingly, voluntarily and
intentionally waives any and all rights it may have to a trial by jury in
respect or any litigation based on, or arising out of, under, or in connection
with, this Agreement, or any other documents and instruments executed in
connection herewith, or any course of conduct, course of dealing, statements
(whether oral or written), or actions of the Company or the Purchaser. This
provision is a material inducement for the Purchaser to enter into this
Agreement.
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 Purchaser.
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:
52
(i) if to the Company:
Xxxxx Fargo Home Mortgage, Inc.
0 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxx MAC X2401-042
With a copy to:
Xxxxx Fargo Home Mortgage, Inc.
0 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000-0000
Attention: General Counsel MAC X2401-06T
or such other address as may hereafter be furnished to the
Purchaser in writing by the Company;
(ii) if to Purchaser:
Xxxxxxx Xxxxx Mortgage Capital, Inc.
World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxx
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.
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
Company shall be rendered as an independent contractor and not as agent for the
Purchaser.
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 the Company and the Purchaser
and their respective successors and assigns.
53
Section 12.09 Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, 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 Company's expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option.
Section 12.10 Assignment by Purchaser.
The Purchaser shall have the right, without the consent of the Company
but subject to the limit set forth in Section 2.02 hereof, 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 Purchaser
hereunder, by executing an Assignment and Assumption Agreement and the assignee
or designee shall accede to the rights and obligations hereunder of the
Purchaser with respect to such Mortgage Loans. All references to the Purchaser
in this Agreement shall be deemed to include its assignee or designee.
Section 12.11 Solicitation of Mortgagor.
The Purchaser, its affiliates, successors or assigns shall not, without
the prior written consent of the Company, take any action to solicit or make
direct contact with the Mortgagor under any Mortgage Loan except to the extent
required by the Company's breach of this Agreement or as required under
applicable law or regulatory authority. It is understood and agreed that
promotions undertaken by the Purchaser which are directed to the general public
at large, including, without limitation, mass mailings based upon commercially
acquired mailing lists, newspaper, radio, television advertisements or from
servicing needs of a Mortgagor who, without solicitation, contacts the
Purchaser, shall not constitute solicitation under this Section. Notwithstanding
any provision of this Agreement to the contrary, in the event the Purchaser, its
affiliates, successors or assigns fails to obtain such written consent, the
Company shall be entitled, in its sole discretion, to terminate its obligations
and duties under this Agreement. Upon transfer of the servicing rights and
obligations under this Agreement to the Purchaser or Purchaser's designee, the
Company shall be entitled to receive as liquidated damages, an amount equal to:
(i) 2.75% of the aggregate outstanding principal amount of the Mortgage Loans as
of the termination date paid by the Purchaser to the Company with respect to all
of the Mortgage Loans for which a servicing fee rate of .25% is paid per annum,
(ii) 3.25% of the aggregate outstanding principal amount of the Mortgage Loans
as of the termination date paid by the Purchaser to the Company with respect to
all of the Mortgage Loans for which a servicing fee rate of .375% is paid per
annum, and (iii) 3.75% of the aggregate outstanding principal amount of the
Mortgage Loans as of the termination date paid by the Purchaser to the Company
with respect to all of the Mortgage Loans for which a servicing fee rate of .44%
or greater is paid per annum.
The Company agrees that, after the Closing Date, it will not take any
action to solicit the refinancing of any Mortgage Loan. It is understood and
agreed that promotions undertaken by
54
the Company or any affiliate of the Company which are directed to the general
public at large, including, without limitation, mass mailings based upon
commercially acquired mailing lists, newspaper, radio, television advertisements
or from servicing the refinancing needs of a Mortgagor who, without
solicitation, contacts the Company in connection with the refinance of such
Mortgage or Mortgage Loan, shall not constitute solicitation under this Section.
Notwithstanding anything to the contrary, this Section shall not prohibit the
Company from soliciting any Mortgagor to provide other services including but
not limited to credit cards, insurance investments and banking related services.
[Intentionally Blank - Next Page Signature Page]
55
IN WITNESS WHEREOF, the Company and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the day and year first above written.
XXXXXXX XXXXX MORTGAGE XXXXX FARGO HOME MORTGAGE
CAPITAL, INC. INC.
PURCHASER COMPANY
By:___________________________ By:__________________________
Name:_________________________ Name:________________________
Title:________________________ Title:_______________________
56
STATE OF )
) ss:
COUNTY OF ___________ )
On the _____ day of _______________, 20___ before me, a Notary Public
in and for said State, personally appeared______________________________ , known
to me to be________________________ of Xxxxx Fargo Home Mortgage, Inc., 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.
_____________________________________
Notary Public
My Commission expires________________
57
STATE OF )
) ss:
COUNTY OF )
On the _____ day of _______________, 20___ 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.
___________________________________
Notary Public
My Commission expires______________
58
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[INTENTIONALLY OMITTED]
EXHIBIT B
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser and any prospective Purchaser, and which shall be retained by the
Company in the Servicing File or delivered to the Custodian pursuant to Sections
2.01 and 2.03 of the Seller's Warranties and the Servicing Agreement to which
this Exhibit is attached (the "Agreement"):
1. The original Mortgage Note bearing all intervening
endorsements, endorsed "Pay to the order of________ without
recourse" and signed in the name of the Company by an
authorized officer (in the event that the Mortgage Loan was
acquired by the Company in a merger, the signature must be in
the following form: "[Company], successor by merger to [name
of predecessor]"; and in the event that the Mortgage Loan was
acquired or originated by the Company while doing business
under another name, the signature must be in the following
form: "[Company], formerly known as [previous name]").
2. The original of any guarantee executed in connection with the
Mortgage Note (if any).
3. The original Mortgage, with evidence of recording thereon or a
certified true and correct copy of the Mortgage sent for
recordation. If in connection with any Mortgage Loan, the
Company cannot deliver or cause to be delivered the original
Mortgage with evidence of recording thereon on or prior to the
Closing Date because of a delay caused by the public recording
office where such Mortgage has been delivered for recordation
or because such Mortgage has been lost or because such public
recording office retains the original recorded Mortgage, the
Company shall deliver or cause to be delivered to the
Custodian, a photocopy of such Mortgage, together with (i) in
the case of a delay caused by the public recording office, an
Officer's Certificate of the Company stating that such
Mortgage has been dispatched to the appropriate public
recording office for recordation and that the original
recorded Mortgage or a copy of such Mortgage certified by such
public recording office to be a true and complete copy of the
original recorded Mortgage will be promptly delivered to the
Custodian upon receipt thereof by the Company; or (ii) in the
case of a Mortgage where a public recording office retains the
original recorded Mortgage or in the case where a Mortgage is
lost after recordation in a public recording office, a copy of
such Mortgage certified by such public recording office or by
the title insurance company that issued the title policy to be
a true and complete copy of the original recorded Mortgage.
4. the originals or certified true copies of any document sent
for recordation of all assumption, modification, consolidation
or extension agreements, with evidence of recording thereon.
5. The original Assignment of Mortgage for each Mortgage Loan, in
form and substance acceptable for recording (except for the
insertion of the name of the assignee and recording
information). The Assignment of Mortgage must be duly recorded
only if recordation is either necessary under applicable law
or commonly required by private institutional mortgage
investors in the area where the Mortgaged Property is located
or on direction of the Purchaser as provided in the Custodial
Agreement. If the Assignment of Mortgage is to be recorded,
the Mortgage shall be assigned to the Purchaser. If the
Assignment of Mortgage is not to be recorded, the Assignment
of Mortgage shall be delivered in blank. If the Mortgage Loan
was acquired by the Company in a merger, the Assignment of
Mortgage must be made by "[Company], successor by merger to
[name of predecessor]." If the Mortgage Loan was acquired or
originated by the Company while doing business under another
name, the Assignment of Mortgage must be by "[Company],
formerly know as [previous name]." Subject to the foregoing
and where permitted under the applicable laws of the
jurisdiction wherein the Mortgaged property is located, such
Assignments of Mortgage may be made by blanket assignments for
Mortgage Loans secured by the Mortgaged Properties located in
the same county.
6. Originals or certified true copies of documents sent for
recordation of all intervening assignments of the Mortgage
with evidence of recording thereon, or if any such intervening
assignment has not been returned from the applicable recording
office or has been lost or if such public recording office
retains the original recorded assignments of mortgage, the
Company shall deliver or cause to be delivered to the
Custodian, a photocopy of such intervening assignment,
together with (i) in the case of a delay caused by the public
recording office, an Officer's Certificate of the Company
stating that such intervening assignment of mortgage has been
dispatched to the appropriate public recording office for
recordation and that such original recorded intervening
assignment of mortgage or a copy of such intervening
assignment of mortgage certified by the appropriate public
recording office or by the title insurance company that issued
the title policy to be a true and complete copy of the
original recorded intervening assignment of mortgage will be
promptly delivered to the Custodian upon receipt thereof by
the Company; or (ii) in the case of an intervening assignment
where a public recording office retains the original recorded
intervening assignment or in the case where an intervening
assignment is lost after recordation in a public recording
office, a copy of such intervening assignment certified by
such public recording office to be a true and complete copy of
the original recorded intervening assignment.
7. The original PMI Policy or certificate of insurance, where
required pursuant to the Agreement.
8. The original mortgagee policy of title insurance or evidence
of title.
9. Any security agreement, chattel mortgage or equivalent
executed in connection with the Mortgage.
With respect to each Mortgage Loan, the Mortgage File shall include each of the
following items to the extent in the possession of the Company or in the
possession of the Company's agent(s):
10. The original hazard insurance policy and, if required by law,
flood insurance policy, in accordance with Section 4.10 of the
Agreement.
11. Residential loan application.
12. Mortgage Loan closing statement.
13. Verification of employment and income, unless originated under
the Company's Limited Documentation program, Xxxxxx Mae
Timesaver Plus.
14. Verification of acceptable evidence of source and amount of
down payment.
15. Credit report on the Mortgagor.
16. Residential appraisal report.
17. Photograph of the Mortgaged Property.
18. Survey of the Mortgage property, if required by the title
company or applicable law.
19. Copy of each instrument necessary to complete identification
of any exception set forth in the exception schedule in the
title policy, i.e. map or plat, restrictions, easements, sewer
agreements, home association declarations, etc.
20. All required disclosure statements.
21. If available, termite report, structural engineer's report,
water potability and septic certification.
22. Sales contract, if applicable.
23. Evidence of payment of taxes and insurance premiums, insurance
claim files, correspondence, current and historical
computerized data files, and all other processing,
underwriting and closing papers and records which are
customarily contained in a mortgage loan file and which are
required to document the Mortgage Loan or to service the
Mortgage Loan.
24. Amortization schedule, if available.
25. Payment history for any Mortgage Loan that has been closed for
more than 90 days.
26. Original power of attorney. if applicable.
In the event an Officer's Certificate of the Company is delivered to
the Custodian because of a delay caused by the public recording office in
returning any recorded document, the Company shall deliver to the Custodian,
within 240 days of the Closing Date, 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 caused 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 Company shall be required to deliver to the
Custodian the applicable recorded document by the date specified in (iv) above.
An extension of the date specified in (iv) above may be requested form the
Purchaser, which consent shall not be unreasonably withheld.
EXHIBIT C
CUSTODIAL AGREEMENT
[INTENTIONALLY OMITTED]
EXHIBIT E
CUSTODIAL ACCOUNT CERTIFICATION
___________________,20_____
Xxxxx Fargo Home Mortgage, Inc. hereby certifies that it has
established the account described below as a Custodial Account pursuant to
Section 4.04 of the Seller's Warranties and Servicing Agreement, dated as of ,
__________________20, ____,.
Title of Account: Xxxxx Fargo Home Mortgage, Inc. in trust for the
Purchaser and/or subsequent purchasers of Mortgage
Loans, and various Mortgagors - P&I
Address of office or branch
of the Company at which
Account is maintained: _______________________________
_______________________________
_______________________________
_______________________________
XXXXX FARGO HOME MORTGAGE, INC.
Company
By:____________________________
Name:__________________________
Title:_________________________
EXHIBIT F
ESCROW ACCOUNT CERTIFICATION
_____________, 20______
Xxxxx Fargo Home Mortgage, Inc. hereby certifies that it has
established the account described below as an Escrow Account pursuant to Section
4.06 of the Seller's Warranties and Servicing Agreement, dated as of
__________________, 20____________,.
Title of Account: Xxxxx Fargo Home Mortgage, Inc. in trust for the
Purchaser and/or subsequent purchasers of Mortgage
Loans, and various Mortgagors - T & I
Address of office or branch
of the Company at which
Account is maintained: _______________________________
_______________________________
_______________________________
_______________________________
XXXXX FARGO HOME MORTGAGE, INC.
Company
By:____________________________
Name:__________________________
Title:_________________________
ASSIGNMENT AND ASSUMPTION
_____________, 20______
ASSIGNMENT AND ASSUMPTION, dated ___________________, 20__ between
_________________, a _________________ corporation having an office at
_________________ ("Assignor") and _________________, having an office at
_________________ ("Assignee"):
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 Purchaser, in, to and under
that certain Seller's Warranties and Servicing Agreement, (the "Seller's
Warranties and Servicing Agreement"), dated as of _________________, by and
between _________________ (the "Purchaser"), and _________________ (the
"Company"), and the Mortgage Loans delivered thereunder by the Company to the
Assignor, and that certain Custodial Agreement, (the "Custodial Agreement"),
dated as of _________________, by and among the Company, the Purchaser 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
Company with respect to the Seller's Warranties and 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 Seller's
Warranties and Servicing Agreement, the Custodial Agreement or the Mortgage
Loans, including without limitation the transfer of the servicing obligations
under the Seller's Warranties and 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
Seller's Warranties and 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 Company pursuant to Section 12.10 of the Seller's Warranties
and Servicing Agreement that:
a. The Assignee agrees to be bound, as Purchaser, by all
of the terms, covenants and conditions of the Seller's Warranties and 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 Company 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 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
Company;
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 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 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 Seller's Warranties and
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 Seller's
Warranties and Servicing Agreement is:
_____________________________
_____________________________
_____________________________
Attention: _____________
[Signatures Follow]
3
IN WITNESS WHEREOF, the parties have caused this Assignment and
Assumption 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.:
_______________________ __________________________
4
MORTGAGE LOAN PURCHASE AGREEMENT
This is a Purchase Agreement (the "Agreement"), dated as of August 1,
2002 by and between Xxxxxxx Xxxxx Mortgage Capital, Inc., having an xxxxxx xx
Xxxxx Xxxxxxxxx Xxxxxx, xxx Xxxx, XX 00000 (the "Purchaser") and Xxxxx Fargo
Home Mortgage, Inc., having an xxxxxx xx 0 Xxxx Xxxxxx, Xxx Xxxxxx, Xxxx
00000-0000 (the "Seller").
W I T N E S S E T H
WHEREAS, the Seller agrees to sell, and the Purchaser agrees to
purchase, certain conventional residential mortgage loans (the "Mortgage Loans")
on a servicing retained basis as described herein:
WHEREAS, the Mortgage Loans shall be delivered as whole loans; and
WHEREAS, the parties intend hereby to set forth the terms and
conditions upon which the proposed transactions will be effected.
NOW THEREFORE, in consideration of the promises and the mutual
agreements set forth herein, the parties hereto agree as follows:
SECTION 1. All capitalized terms not otherwise defined herein have the
respective meanings set forth in the Seller's Warranties and Servicing
Agreement, dated as of the date herewith (the "Seller's Warranties and Servicing
Agreement"). The following terms are defined as follows (except as otherwise
agreed by the parties):
Cut-off Date: August 1, 2002
Closing Date: August 28, 2002
First Remittance Date: September 18, 2002
Servicing Fee Rate: 0.50%
SECTION 2. Agreement to Purchase. The Seller agrees to sell, and the
Purchaser agrees to purchase, Mortgage Loans having an aggregate principal
balance on the Cut-off Date in an amount as set forth in the Commitment Letter,
dated as of July 15, 2002 (the "Commitment Letter"), or in such other amount as
agreed by the Purchaser and the Seller as evidenced by the actual aggregate
principal balance of the Mortgage Loans accepted by the Purchaser on the Closing
Date. The Mortgage Loans will be delivered pursuant to a Seller's Warranties and
Servicing Agreement, between the Purchaser and the Seller.
SECTION 3. Mortgage Schedules. The Seller has provided the Purchaser
with certain information constituting a listing of the Mortgage Loans to be
purchased under this Agreement (the "Mortgage Loan Schedule") substantially in
the form attached hereto as Exhibit 1. The
Mortgage Loan Schedule shall conform to the definition of "Mortgage Loan
Schedule" under the Seller's Warranties and Servicing Agreement.
SECTION 4. Purchase Price. The purchase price for the Mortgage Loans
(the "Purchase Price") shall be the percentage of par as stated in the
Commitment Letter, multiplied by the aggregate principal balance, as of the
Cut-off Date, of the Mortgage Loans listed on the related Mortgage Loan
Schedule, after application of scheduled payments of principal due on or before
the Cut-off Date whether or not collected. The Purchase Price may be adjusted as
stated in the Commitment Letter.
In addition to the Purchase Price as described above, the Purchaser
shall pay to the Seller, at closing, accrued interest on the initial principal
amount of the Mortgage Loans at the weighted average Mortgage Loan Remittance
Rate from the Cut-off Date through the day prior to the Closing Date, inclusive.
The Purchaser shall be entitled to (1) all scheduled principal due
after the Cut-off Date, (2) all other recoveries of principal collected after
the Cut-off Date (provided, however, that all scheduled payments of principal
due on or before the Cut-off Date and collected by the Seller after the Cut-off
Date shall belong to the Seller), and (3) all payments of interest on the
Mortgage Loans at the Mortgage Loan Remittance Rate (minus that portion of any
such payment which is allocable to the period prior to the Cut-off Date). The
principal balance of each Mortgage Loan as of the Cut-off Date is determined
after application of payments of principal due on or before the Cut-off Date
whether or not collected. Therefore, payments of scheduled principal and
interest prepaid for a Due Date beyond the Cut-off Date shall not be applied to
the principal balance as of the Cut-off Date. Such prepaid amounts (minus
interest at the Servicing Fee Rate) shall be the property of the Purchaser. The
Seller shall deposit any such prepaid amounts into the Custodial Account, which
account is established for the benefit of the Purchaser for subsequent
remittance by the Seller to the Purchaser.
SECTION 5. Examination of Mortgage Files. Prior to the Closing Date,
the Seller shall (a) deliver to the Purchaser in escrow, for examination, the
Mortgage File for each Mortgage Loan, including a copy of the Assignment of
Mortgage, pertaining to each Mortgage Loan, or (b) make the Mortgage Files
available to the Purchaser for examination at the Seller's offices or such other
location as shall otherwise be agreed upon by the Purchaser and the Seller. Such
examination may be made by the Purchaser, or by any prospective purchaser of the
Mortgage Loans from the Purchaser, at any time before or after the Closing Date
upon prior reasonable notice to the Seller. The fact that the Purchaser or any
prospective purchaser of the Mortgage Loans has conducted or has failed to
conduct any partial or complete examination of the Mortgage Files shall not
affect the Purchaser's (or any of its successor's) rights to demand repurchase,
substitution or other relief or remedy as provided under the related Seller's
Warranties and Servicing Agreement.
SECTION 6. Representations, Warranties and Agreements of Seller. The
Seller agrees and acknowledges that it shall, as a condition to the consummation
of the transactions contemplated hereby, make the representations and warranties
specified in Section 3.01 and 3.02 of the Seller's Warranties and Servicing
Agreement, as of the Closing Date. The meaning of the
2
term "Agreement" as used in Sections 3.01 and 3.02 of the Seller's Warranties
and Servicing Agreement shall include this Agreement. The Seller, without
conceding that the Mortgage Loans are securities, hereby makes the following
additional representations, warranties and agreements which shall be deemed to
have been made as of the Closing Date:
a) neither the Seller nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of any
Mortgage Loans, any interest in any Mortgage Loans or any other similar
security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of any Mortgage Loans, any interest in any
Mortgage Loans or any other similar security from, or otherwise
approached or negotiated with respect to any Mortgage Loans, any
interest in any 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 "1933 Act") or which would render the
disposition of any Mortgage Loans a violation of Section 5 of the 1933
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
b) the Seller has not dealt with any broker or agent or anyone
else who might be entitled to a fee or commission in connection with
this transaction other than the Purchaser.
SECTION 7. Representation, Warranties and Agreement of Purchaser.
The Purchaser, without conceding that the Mortgage Loans are securities, hereby
makes the following representations, warranties and agreements, which shall
have been deemed to have been made as of the Closing Date.
a) the Purchaser understands that the Mortgage Loans have not
been registered under the 1933 Act or the securities laws of any state;
b) the Purchaser is acquiring the Mortgage Loans for its own
account only and not for any other person;
c) the Purchaser 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;
d) the Purchaser has been furnished with all information
regarding the Mortgage Loans which it has requested from the Seller or
the Company; and
e) neither the Purchaser nor anyone acting on its behalf offered,
transferred, pledged, sold or otherwise disposed of any Mortgage Loan,
any interest in any Mortgage Loan or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of any Mortgage Loan, any interest in any Mortgage Loan or
any other similar security from, or otherwise approached or negotiated
with respect to any
3
Mortgage Loan, any interest in any Mortgage Loan 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 1933 Act or which would render the disposition
of any Mortgage Loan a violation of Section 5 of the 1933 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.
SECTION 8. Closing. The closing for the purchase and sale of the
Mortgage Loans, shall take place on the Closing Date. At the Purchaser's
option, the Closing shall be either: by telephone, confirmed by letter or wire
as the parties shall agree; or conducted in person, at such place as the
parties shall agree.
The closing shall be subject to each of the following conditions:
a) all of the representations and warranties of the Seller under
this Agreement and under the Seller's Warranties and Servicing
Agreement shall be true and correct as of the Closing Date and no event
shall have occurred which, with notice or the passage of time, would
constitute a default under this Agreement or an Event of Default under
the related Seller's Warranties and Servicing Agreement;
b) the Purchaser shall have received, or the Purchaser's
attorneys shall have received in escrow, all Closing Documents as
specified in Section 9 of this Agreement, in such forms as are agreed
upon and acceptable to the Purchaser, duly executed by all signatories
other than the Purchaser as required pursuant to the respective terms
thereof;
c) the Seller shall have delivered and released to the Custodian
under the Seller's Warranties and Servicing Agreement all documents
required pursuant to the related Custodial Agreement; and
d) all other terms and conditions of this Agreement and the
Seller's Warranties and Servicing Agreement shall have been complied
with.
Subject to the foregoing conditions, the Purchaser shall pay to the
Seller on the Closing Date the Purchase Price, plus accrued interest pursuant to
Section 4 of this Agreement, by wire transfer of immediately available funds to
the account designated by the Seller.
SECTION 9. Closing Documents. With respect to the Mortgage Loans,
the Closing Documents shall consist of fully executed originals of the
following documents:
1. the Seller's Warranties and Servicing Agreement, dated as of
the Cut-off Date, in two counterparts;
2. this Agreement in two counterparts;
4
3. the Custodial Agreement, dated as of the Cut-off Date, in
three counterparts, in the form attached as an exhibit to the
Seller's Warranties and Servicing Agreement;
4. the Mortgage Loan Schedule, one copy to be attached to each
counterpart of the Seller's Warranties and Servicing
Agreement, to each counterpart of this Agreement, and to each
counterpart of the Custodial Agreement, as the Mortgage Loan
Schedule thereto;
5. a Receipt and Certification, as required under the Custodial
Agreement; and
6. an Opinion of Counsel of the Seller, in the form of Exhibit 2
hereto;
SECTION 10. Costs. The Purchaser shall pay any commissions due its
salesmen, the legal fees and expenses of its attorneys and the costs and
expenses associated with the Custodian. The Seller shall be responsible for
reasonable costs and expenses associated with any preparation and recording of
the initial Assignments of Mortgage. All other costs and expenses incurred in
connection with the transfer and delivery of the Mortgage Loans, including fees
for title policy endorsements and continuations and the Seller's attorney fees,
shall be paid by the Seller.
SECTION 11. Servicing The Mortgage Loans shall be serviced by the
Seller in accordance with the terms of the applicable Seller's Warranties and
Servicing Agreement. The Seller shall be entitled to servicing fees calculated
as provided therein, at the Servicing Fee Rate shown on the first page of this
Agreement unless otherwise agreed by the parties.
SECTION 12. Financial Statements. The Seller understands that in
connection with the Purchaser's marketing of the Mortgage Loans, the Purchaser
shall make available to prospective purchasers a Consolidated Statement of
Operations of the Seller for the most recently completed two fiscal years
respecting 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 Purchaser shall also make available
any comparable interim statements to the extent any such statements have been
prepared by the Seller in a format intended or otherwise suitable for the public
at large. The Seller, if it has not already done so, agrees to furnish promptly
to the Purchaser copies of the statements specified above. The Seller shall also
make available information on its servicing performance with respect to loans in
its own portfolio and loans serviced for others (if any), including loss and
delinquency ratios.
The Seller also agrees to allow access to a knowledgeable (as shall be
determined by the Seller) financial or accounting officer for the purpose of
answering questions asked by any prospective purchaser regarding recent
developments affecting the Seller or the financial statements of the Seller.
SECTION 13. Mandatory Delivery. The sale and delivery on the Closing
Date of the Mortgage Loans described on the Mortgage Loan Schedule is mandatory,
it being specifically understood and agreed that each Mortgage Loan is unique
and identifiable on the date hereof and that an award of money damages would be
insufficient to compensate the Purchaser for the
5
losses and damages incurred by the Purchaser (including damages to prospective
purchasers of the Mortgage Loans) in the event of the Seller's failure to
deliver the Mortgage Loans on or before the Closing Date. All rights and
remedies of the Purchaser under this Agreement are distinct from, and cumulative
with, any other rights or remedies under this Agreement or afforded by law or
equity and all such rights and remedies may be exercised concurrently,
independently or successively.
SECTION 14. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed, by registered or certified mail, return receipt requested, or, if by
other means, when received by the other party at the address shown on the first
page hereof, or such other address as may hereafter be furnished to the other
party by like notice. Any such demand, notice of communication hereunder shall
be deemed to have been received on the date delivered to or received at the
premises of the addressee (as evidenced, in the case of registered or certified
mail, by the date noted on the return receipt).
SECTION 15. Severability Clause. Any part, provision, representation
or warranty of this Agreement which is prohibited or which is held to be void
or unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any
part, provision, representation or warranty of this Agreement which is
prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall be ineffective, as to such jurisdiction, to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which
prohibits or renders void or unenforceable any provision hereof. 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 as close as possible to the economic
effect of this Agreement without regard to such invalidity.
SECTION 16. Counterparts. This Agreement may be executed
simultaneously in any number of counterparts. Each counterpart shall be deemed
to be an original, and all such counterparts shall constitute one and the same
instrument.
SECTION 17. Place of Delivery and Governing Law. This Agreement shall
be deemed in effect when a fully executed counterpart thereof is received by the
Purchaser in the State of New York and shall be deemed to have been made in in
the State of New York. The Agreement shall be construed in accordance with the
laws of the State of New York 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.
Each of the Seller and the Purchaser hereby knowingly, voluntarily and
intentionally waives any and all rights it may have to a trial by jury in
respect of any litigation based on, or arising out of, under, or in connection
with, this Agreement, or any other documents and instruments executed in
connection herewith, or any course of conduct, course of dealing,
6
statements (whether oral or written), or actions of the Seller or the Purchaser.
This provision is a material inducement for the Purchaser to enter into this
Agreement.
SECTION 18. Further Agreements. The Purchaser and the Seller 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.
Without limiting the generality of the foregoing, the Seller shall
reasonably cooperate with the Purchaser in connection with the initial resales
of the Mortgage Loans by the Purchaser. In that connection, the Seller shall
provide to the Purchaser: (i) any and all information and appropriate
verification of information, whether through letters of its auditors and counsel
or otherwise, as the Purchaser shall reasonably request, and (ii) such
additional representations, warranties, covenants, opinions of counsel, letters
from auditors and certificates of public officials or officers of the Seller as
are reasonably believed necessary by the Purchaser in connection with such
resales. The requirement of the Seller pursuant to (ii) above shall terminate on
the Closing Date. Prior to incurring any out-of-pocket expenses pursuant to this
paragraph, the Seller shall notify the Purchaser in writing of the estimated
amount of such expense. The Purchaser shall reimburse the Seller for any such
expense following its receipt of appropriate details thereof.
SECTION 19. Intention of the Parties. It is the intention of the
parties that the Purchaser is purchasing, and the Seller is selling, an
undivided 100% ownership interest in the Mortgage Loans and not a debt
instrument of the Seller or another security. Accordingly, the parties hereto
each intend to treat the transaction for Federal income tax purposes as a sale
by the Seller, and a purchase by the Purchaser, of the Mortgage Loans. The
Purchaser shall have the right to review the Mortgage Loans and the related
Mortgage Loan Files to determine the characteristics of the Mortgage Loans which
shall affect the Federal income tax consequences of owning the Mortgage Loans
and the Seller shall cooperate with all reasonable requests made by the
Purchaser in the course of such review.
SECTION 20. Successors and Assigns; Assignment of Purchase Agreement.
This Agreement shall bind and inure to the benefit and be enforceable by the
Seller and the Purchaser and the respective successors and assigns of the Seller
and the Purchaser. This Agreement shall not be assigned, pledged or hypothecated
by the Seller to a third party without the consent of the Purchaser.
SECTION 21. Waivers; Other Agreements. 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 modification is
sought to be enforced.
SECTION 22. Exhibits. The exhibits to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
SECTION 23. General Interpretive Principles. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
7
a) 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;
b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles;
c) 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;
d) 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;
e) 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
f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
SECTION 24. 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.
[Signatures Follow]
8
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the date first above written.
XXXXXXX XXXXX MORTGAGE
CAPITAL, INC.
(Purchaser)
By:______________________
Name:____________________
Title:___________________
XXXXX FARGO HOME MORTGAGE,
INC.
(Seller)
By:______________________
Name:____________________
Title:___________________
9
EXHIBIT 1
MORTGAGE LOAN SCHEDULE
EXHIBIT 2
FORM OF OPINION OF COUNSEL
@
@
@
@
Re: Xxxxx Fargo Home Mortgage, Inc.
Mortgage Loan Series @
Dear Sir/Madam:
I am @ of Xxxxx Fargo Home Mortgage, Inc. and have acted as counsel to Xxxxx
Fargo Home Mortgage, Inc. (the "Company"), with respect to certain matters in
connection with the sale by the Company of the mortgage loans designated as
Mortgage Loan Series @ (the "Mortgage Loans") pursuant to that certain Seller's
Warranties and Servicing Agreement and Mortgage Loan Purchase Agreement by and
between the Company and @ (the "Purchaser"), dated as of @, 20__, (the
"Agreements"), which sale is in the form of whole Mortgage Loans. Capitalized
terms not otherwise defined herein have the meanings set forth in the Seller's
Warranties and Servicing Agreement.
I have examined the following documents:
1. the Seller's Warranties and Servicing Agreement;
2. the Mortgage Loan Purchase Agreement;
3. the Custodial Agreement;
4. the form of endorsement of the Mortgage Notes; and
5. such other documents, records and papers as I have deemed necessary
and relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied upon the
representations and warranties of the Company contained in the Agreements. I
have assumed the authenticity of all documents submitted to me as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents.
Based upon the foregoing, it is my opinion that;
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the state of California.
2. The Company has the power to engage in the transactions contemplated by
the Agreements, the Custodial Agreement and all requisite power,
authority and legal right to execute and deliver the Agreements, the
Custodial Agreement and the Mortgage Loans, and to perform and observe
the terms and conditions of such instruments.
3. Each person who, as an officer or attorney-in-fact of the Company,
signed (a) the Agreements, each dated as of @, 20__, by and between the
Company and the Purchaser, and (b) any other document delivered prior
hereto or on the date hereof in connection with the sale and servicing
of the Mortgage Loans in accordance with the Agreements and the person
was, at the respective times of such signing and delivery, and is, as
of the date hereof, duly elected or appointed, qualified and acting and
as such officer or attorney-in-fact, and the signatures of such persons
appearing on such documents are their genuine signatures.
4. Each of the Agreements, the Custodial Agreement, and the Mortgage
Loans, has been duly authorized, executed and delivered by the Company
and is a legal, valid and binding agreement enforceable in accordance
with its terms, subject to bankruptcy laws and other similar laws of
general application affecting rights of creditors and subject to the
application of the rules of equity, including those respecting the
availability of specific performance, none of which will materially
interfere with the realization of the benefits provided thereunder or
with the Purchaser's ownership of the Mortgage Loans.
5. The Company has been duly authorized to allow any of its officers to
execute any and all documents by original signature in order to
complete the transactions contemplated by the Agreements and the
Custodial Agreement, and by original or facsimile signature in order to
execute the endorsements to the Mortgage Notes and the assignments of
the Mortgages, and the original or facsimile signature of the officer
at the Company executing the endorsements to the Mortgage Notes and the
assignments of the Mortgages represents the legal and valid signature
of said officer of the Company.
6. Either (i) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Company of or compliance by the Company with the
Agreements, the Custodial Agreement or the sale and delivery of the
Mortgage Loans or the consummation of the transactions contemplated by
the Agreements, and the Custodial Agreement; or (ii) any required
consent, approval, authorization or order has been obtained by the
Company.
7. Neither the consummation of the transactions contemplated by, nor the
fulfillment of the terms of the Agreements and the Custodial Agreement,
will conflict with or results in or will result in a breach of or
constitutes or will constitute a default under the charter or by- laws
of the Company, the terms of any indenture or other agreement or
instrument to which the Company is a party or by which it is bound or
to which it is subject, or violates any statute or order, rule,
regulations, writ, injunction or decree of any court, governmental
authority or regulatory body to which the Company is subject or by
which it is bound.
8. There is no action, suit, proceeding or investigation pending or, to
the best of my knowledge, threatened against the Company which, in my
opinion, 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 Company or in any material
impairment of the right or ability of the Company to carry on its
business substantially as now conducted or in any material liability on
the part of the Company or which would draw into question the validity
of the Agreements, and the Custodial Agreement, or of any action taken
or to be taken in connection with the transactions contemplated
thereby, or which would be likely to impair materially the ability of
the Company to perform under the terms of the Agreements and the
Custodial Agreement.
9. For purposes of the foregoing, I have not regarded any legal or
governmental actions, investigations or proceedings to be "threatened"
unless the potential litigant or governmental authority has manifested
to the legal department of the Company or an employee of the Company
responsible for the receipt of process a present intention to initiate
such proceedings; nor have I regarded any legal or governmental
actions, investigations or proceedings as including those that are
conducted by state or federal authorities in connection with their
routine regulatory activities. The sale of each Mortgage Note and
Mortgage as and in the manner contemplated by the Agreements is
sufficient fully to transfer all right, title and interest of the
Company thereto as noteholder and mortgagee, apart from the rights to
service the Mortgage Loans pursuant to the Agreements.
10. The form of endorsement that is to be used with respect to the Mortgage
Loans is legally valid and sufficient to duly endorse the Mortgage
Notes to the Purchaser. Upon the completion of the endorsement of the
Mortgage Notes and the completion of the assignments of the Mortgages,
and the recording thereof, the endorsement of the Mortgage Notes, the
delivery to the Custodian of the completed assignments of the
Mortgages, and the delivery of the original endorsed Mortgage Notes to
the Custodian would be sufficient to permit the entity to which such
Mortgage Note is initially endorsed at the Purchaser's direction, and
to whom such assignment of Mortgages is initially assigned at the
Purchaser's direction, to avail itself of all protection available
under applicable law against the claims of any present or future
creditors of the Company, and would be sufficient to prevent any other
sale, transfer, assignment, pledge or hypothecation of the Mortgages
and the Mortgage Notes by the Company from being enforceable.
This opinion is given to you for your sole benefit, and no other person or
entity is entitled to rely hereon except that the purchaser or purchasers to
which you initially and directly resell the Mortgage Loans may rely on this
opinion as if it were addressed to them as of its date.
Sincerely,
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