EXECUTION COPY
RESIDENTIAL FUNDING CORPORATION,
as Master Servicer
HOME EQUITY LOAN TRUST 2006-HSA5,
as Issuer
and
JPMORGAN CHASE BANK, N.A.
as Indenture Trustee
SERVICING AGREEMENT
Dated as of September 28, 2006
Home Equity Loans
TABLE OF CONTENTS
PAGE
ARTICLE I Definitions...............................................................1
Section 1.01 Definitions...............................................................1
Section 1.02 Other Definitional Provisions.............................................1
Section 1.03 Interest Calculations; Servicing Fee......................................2
ARTICLE II Representations and Warranties............................................2
Section 2.01 Representations and Warranties Regarding the Master Servicer..............2
Section 2.02 Representations and Warranties of the Issuer..............................3
Section 2.03 Enforcement of Representations and Warranties.............................4
ARTICLE III Administration and Servicing of Home Equity Loans.........................5
Section 3.01 The Master Servicer.......................................................5
Section 3.02 Collection of Certain Home Equity Loan Payments..........................10
Section 3.03 Permitted Withdrawals from the Custodial Account.........................13
Section 3.04 Maintenance of Hazard Insurance; Property Protection Expenses............14
Section 3.05 Enforcement of Due-on-Sale Clauses; Assumption and Modification
Agreements; Release or Substitution of Lien..............................15
Section 3.06 Trust Estate; Related Documents..........................................18
Section 3.07 Realization Upon Defaulted Home Equity Loans; Loss Mitigation............18
Section 3.08 Issuer and Indenture Trustee to Cooperate................................21
Section 3.09 Servicing Compensation; Payment of Certain Expenses by Master............22
Section 3.10 Annual Statement as to Compliance........................................22
Section 3.11 Annual Servicing Report..................................................23
Section 3.12 Access to Certain Documentation and Information Regarding the Home
Equity Loans.............................................................23
Section 3.13 Maintenance of Certain Servicing Insurance Policies......................24
Section 3.14 Information Required by the Internal Revenue Service and Reports of
Foreclosures and Abandonments of Mortgaged Property......................24
Section 3.15 Optional Repurchase or Transfer of Home Equity Loans.....................24
Section 3.16 Limited Home Equity Loan Repurchase Right................................26
ARTICLE IV Servicing Certificate....................................................26
Section 4.01 Statements to Securityholders............................................26
Section 4.02 Tax Reporting............................................................29
Section 4.03 Exchange Act Reporting...................................................29
ARTICLE V Payment Account..........................................................30
Section 5.01 Payment Account..........................................................30
ARTICLE VI The Master Servicer......................................................30
Section 6.01 Liability of the Master Servicer.........................................31
Section 6.02 Merger or Consolidation of, or Assumption of the Obligations of,
the Master Servicer......................................................31
Section 6.03 Limitation on Liability of the Master Servicer and Others................31
Section 6.04 Master Servicer Not to Resign............................................32
Section 6.05 Delegation of Duties.....................................................32
Section 6.06 Master Servicer to Pay Indenture Trustee's and Owner Trustee's Fees
and Expenses; Indemnification............................................32
ARTICLE VII Default..................................................................34
Section 7.01 Servicing Default........................................................34
Section 7.02 Indenture Trustee to Act; Appointment of Successor.......................36
Section 7.03 Notification to Securityholders..........................................37
Section 7.04 Servicing Trigger; Removal of Master Servicer............................37
ARTICLE VIII Miscellaneous Provisions.................................................38
Section 8.01 Amendment................................................................38
Section 8.02 GOVERNING LAW............................................................38
Section 8.03 Notices..................................................................39
Section 8.04 Severability of Provisions...............................................39
Section 8.05 Third-Party Beneficiaries................................................39
Section 8.06 Counterparts.............................................................40
Section 8.07 Effect of Headings and Table of Contents.................................40
Section 8.08 Termination Upon Purchase by the Master Servicer or Liquidation of
Home Equity Loans........................................................40
Section 8.09 Certain Matters Affecting the Indenture Trustee..........................41
Section 8.10 Owner Trustee Not Liable for Related Documents...........................41
ARTICLE IX Compliance with Regulation AB............................................41
Section 9.01 Intent of the Parties; Reasonableness....................................41
Section 9.02 Additional Representations and Warranties of the Indenture Trustee.......42
Section 9.03 Information to be provided by the Indenture Trustee......................43
Section 9.04 Report on Assessment of Compliance and Attestation.......................43
Section 9.05 Indemnification; Remedies................................................43
EXHIBITS
Exhibit A Home Equity Loan Schedule..............................................A-1
Exhibit B Limited Power of Attorney..............................................B-1
Exhibit C Form of Request for Release............................................C-1
Exhibit D Form of Lender Certification for Assignment
of Home Equity Loan....................................................D-1
Exhibit E Form 10-K Certificate..................................................E-1
Exhibit F Form of Back-Up Certification to Form 10-K Certificate.................F-1
Exhibit G Servicing Criteria.....................................................G-1
This Servicing Agreement, dated as of September 28, 2006, among
Residential Funding Corporation (the "Master Servicer"), the Home Equity Loan
Trust 2006-HSA5 (the "Issuer"), and JPMorgan Chase Bank, N.A. (the "Indenture
Trustee").
W I T N E S S E T H T H A T:
WHEREAS, pursuant to the terms of the Purchase Agreement,
Residential Funding Corporation (in its capacity as Seller) will sell to the
Depositor the Home Equity Loans together with the Related Documents on the
Closing Date and thereafter all Additional Balances on the Home Equity Loans
created on or after the Cut-off Date (except as set forth herein);
WHEREAS, the Depositor will sell the Home Equity Loans and all of
its rights under the Purchase Agreement to the Issuer, together with the Related
Documents on the Closing Date, and thereafter all Additional Balances on the
Home Equity Loans created on or after the Cut-off Date (except as set forth
herein);
WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer
will issue and transfer to or at the direction of the Depositor, the
Certificates;
WHEREAS, pursuant to the terms of the Indenture, the Issuer will issue and
transfer to or at the direction of the Depositor, the Notes; and
WHEREAS, pursuant to the terms of this Servicing Agreement, the
Master Servicer will service the Home Equity Loans directly or through one or
more Subservicers;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS. For all purposes of this Servicing Agreement, except
as otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the Definitions contained in Appendix A to the Indenture dated
the date hereof (the "Indenture"), between the Issuer and JPMorgan Chase Bank,
N.A., as indenture trustee, which is incorporated by reference herein. All other
capitalized terms used herein shall have the meanings specified herein.
Section 1.02 OTHER DEFINITIONAL PROVISIONS. All terms defined in this Servicing
Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein.
As used in this Servicing Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Servicing Agreement or in any such certificate or other
document, and accounting terms partly defined in this Servicing Agreement or in
any such certificate or other document, to the extent not defined, shall have
the respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Servicing Agreement or in any such certificate or other document are
inconsistent with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Servicing Agreement or in any such
certificate or other document shall control.
The words "hereof," "herein," "hereunder" and words of similar import
when used in this Servicing Agreement shall refer to this Servicing Agreement as
a whole and not to any particular provision of this Servicing Agreement; Section
and Exhibit references contained in this Servicing Agreement are references to
Sections and Exhibits in or to this Servicing Agreement unless otherwise
specified; the term "including" shall mean "including without limitation"; and
the term "proceeds" shall have the meaning ascribed thereto in the UCC.
The definitions contained in this Servicing Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as the feminine and neuter genders of such terms.
Any agreement, instrument or statute defined or referred to herein or in
any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
Section 1.03 INTEREST CALCULATIONS; SERVICING FEE. All calculations of interest
hereunder that are made in respect of the Loan Balance of a Home Equity Loan
shall be made in accordance with the method of calculation set forth in the
related Mortgage Note. All calculations of interest on the Notes shall be made
on the basis of the actual number of days in an Interest Period and a year
assumed to consist of 360 days. The calculation of the Servicing Fee shall be
made on the basis of a 360-day year consisting of twelve 30-day months. All
dollar amounts calculated hereunder shall be rounded to the nearest xxxxx with
one-half of one xxxxx being rounded up.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01 REPRESENTATIONS AND WARRANTIES REGARDING THE MASTER SERVICER. The
Master Servicer represents and warrants to the Issuer and for the benefit of the
Indenture Trustee, as pledgee of the Home Equity Loans and the Credit Enhancer,
as of the Closing Date:
The Master Servicer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
corporate power to own its assets and to transact the business in which it is
currently engaged. The Master Servicer is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
character of the business transacted by it or properties owned or leased by it
requires such qualification and in which the failure to so qualify would have a
material adverse effect on the business, properties, assets, or condition
(financial or other) of the Master Servicer;
The Master Servicer has the power and authority to make, execute,
deliver and perform this Servicing Agreement and all of the transactions
contemplated under this Servicing Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Servicing Agreement. When executed and delivered, this Servicing Agreement will
constitute the legal, valid and binding obligation of the Master Servicer
enforceable in accordance with its terms, except as enforcement of such terms
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and by the availability of equitable
remedies;
The Master Servicer is not required to obtain the consent of any other
Person or any consent, license, approval or authorization from, or registration
or declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Servicing Agreement, except for such consent, license, approval or
authorization, or registration or declaration, as shall have been obtained or
filed, as the case may be;
The execution and delivery of this Servicing Agreement and the
performance of the transactions contemplated hereby by the Master Servicer will
not violate any provision of any existing law or regulation or any order or
decree of any court applicable to the Master Servicer or any provision of the
Certificate of Incorporation or Bylaws of the Master Servicer, or constitute a
material breach of any mortgage, indenture, contract or other agreement to which
the Master Servicer is a party or by which the Master Servicer may be bound;
No litigation or administrative proceeding of or before any court,
tribunal or governmental body is currently pending, or to the knowledge of the
Master Servicer threatened, against the Master Servicer or any of its properties
or with respect to this Servicing Agreement or the Securities which in the
opinion of the Master Servicer has a reasonable likelihood of resulting in a
material adverse effect on the transactions contemplated by this Servicing
Agreement; and
The Master Servicer is a member of MERS in good standing, and will
comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Home Equity Loans that are registered with
MERS.
The foregoing representations and warranties shall survive any
termination of the Master Servicer hereunder.
Section 2.02 REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer hereby
represents and warrants to the Master Servicer and for the benefit of the
Indenture Trustee, as pledgee of the Home Equity Loans, and the Credit Enhancer,
as of the Closing Date:
The Issuer is a statutory trust duly formed and in good standing under
the laws of the State of Delaware and has full power, authority and legal right
to execute and deliver this Servicing Agreement and to perform its obligations
under this Servicing Agreement, and has taken all necessary action to authorize
the execution, delivery and performance by it of this Servicing Agreement; and
The execution and delivery by the Issuer of this Servicing Agreement and
the performance by the Issuer of its obligations under this Servicing Agreement
will not violate any provision of any law or regulation governing the Issuer or
any order, writ, judgment or decree of any court, arbitrator or governmental
authority or agency applicable to the Issuer or any of its assets. Such
execution, delivery and performance will not require the consent or approval of,
the giving of notice to, the filing or registration with, or the taking of any
action, other than such actions that have already been taken, with respect to,
any governmental authority or agency regulating the activities of limited
liability companies. Such execution, delivery, authentication and performance
will not conflict with, or result in a breach or violation of, any mortgage,
deed of trust, lease or other agreement or instrument to which the Issuer is
bound.
Section 2.03 ENFORCEMENT OF REPRESENTATIONS AND WARRANTIES. The Master Servicer,
on behalf of and subject to the direction of the Indenture Trustee, as pledgee
of the Home Equity Loans, or the Issuer or the Credit Enhancer, shall enforce
the representations and warranties of the Seller pursuant to the Purchase
Agreement. Upon the discovery by the Seller, the Depositor, the Master Servicer,
the Indenture Trustee, the Credit Enhancer, the Issuer, or any Custodian of a
breach of any of the representations and warranties made in the Purchase
Agreement, in respect of any Home Equity Loan, which materially and adversely
affects the interests of the Securityholders or the Credit Enhancer in that Home
Equity Loan, the party discovering such breach shall give prompt written notice
to the other parties (any Custodian being so obligated under a Custodial
Agreement). The Master Servicer shall promptly notify the Seller of such breach
and request that, pursuant to the terms of the Purchase Agreement, the Seller
either (i) cure such breach in all material respects within 45 days (with
respect to a breach of the representations and warranties contained in Section
3.1(a) of the Purchase Agreement) or 90 days (with respect to a breach of the
representations and warranties contained in Section 3.1(b) of the Purchase
Agreement) from the date the Seller was notified of such breach or (ii) purchase
such Home Equity Loan from the Issuer at the price, during the time, and in the
manner set forth in Section 3.1(c) of the Purchase Agreement; provided that the
Seller shall, subject to compliance with all the conditions set forth in the
Purchase Agreement, have the option to substitute an Eligible Substitute Loan or
Loans for such Home Equity Loan. If the breach of representation and warranty
that gave rise to the obligation to repurchase or substitute a Home Equity Loan
pursuant to Section 3.1 of the Purchase Agreement was the representation and
warranty set forth in clause (b)(x) of Section 3.1 of the Purchase Agreement,
then the Master Servicer shall request that the Seller pay to the Trust,
concurrently with and in addition to the remedies provided in the preceding
sentence, an amount equal to any liability, penalty or expense (including
reasonable legal fees and expenses) that was actually incurred and paid out of
or on behalf of the Trust, and that directly resulted from such breach, or if
incurred and paid by the Trust thereafter, concurrently with such payment. In
the event that the Seller elects to substitute one or more Eligible Substitute
Loans pursuant to Section 3.1(c) of the Purchase Agreement, the Seller shall
deliver to the Custodian on behalf of the Issuer with respect to such Eligible
Substitute Loans, the original Loan Agreement, the Mortgage, and such other
documents and agreements as are required by the Purchase Agreement. Payments due
with respect to Eligible Substitute Loans in the month of substitution shall not
be transferred to the Issuer and will be retained by the Master Servicer and
remitted by the Master Servicer to the Seller on the next succeeding Payment
Date provided a payment at least equal to the applicable Minimum Monthly Payment
has been received by the Issuer for such month in respect of the Home Equity
Loan to be removed. The Master Servicer shall amend or cause to be amended the
Home Equity Loan Schedule to reflect the removal of such Home Equity Loan and
the substitution of the Eligible Substitute Loans and the Master Servicer shall
promptly deliver the amended Home Equity Loan Schedule to the Owner Trustee and
the Indenture Trustee.
It is understood and agreed that the obligation of the Seller to cure
such breach or purchase or substitute for such Home Equity Loan as to which such
a breach has occurred and is continuing and to make any additional payments
required under the Purchase Agreement in connection with a breach of the
representation and warranty contained in Section 3.1(b)(x) thereof shall
constitute the sole remedy respecting such breach available to the Issuer and
the Indenture Trustee, as pledgee of the Home Equity Loans, against the Seller.
In connection with the purchase of or substitution for any such Home Equity Loan
by the Seller, the Issuer shall assign to the Seller all of its right, title and
interest in respect of the Purchase Agreement applicable to such Home Equity
Loan. Upon receipt of the Repurchase Price, or upon completion of such
substitution, the Master Servicer shall notify the Custodian and the Indenture
Trustee and then the Custodian shall deliver the Mortgage Files to the Master
Servicer, together with all relevant endorsements and assignments prepared by
the Master Servicer which the Indenture Trustee shall execute. If the Master
Servicer is Residential Funding Corporation, then the Indenture Trustee may,
with the consent of the Credit Enhancer, and at the direction of the Credit
Enhancer, shall, give the notification and require the purchase or substitution
provided for in the first preceding paragraph in the event of such a breach of a
representation or warranty made by Residential Funding Corporation in the
Purchase Agreement.
ARTICLE III
ADMINISTRATION AND SERVICING OF HOME EQUITY LOANS
Section 3.01 THE MASTER SERVICER.
(a) The Master Servicer shall service and administer the Home Equity Loans in a
manner generally consistent with the terms of the Program Guide and in a manner
consistent with the terms of this Servicing Agreement, following such procedures
as it would employ in its good faith business judgment and which are normal and
usual in its general mortgage servicing activities, and shall have full power
and authority, acting alone or through a Subservicer, to do any and all things
which it may deem necessary or desirable in connection with such servicing and
administration, it being understood, however, that the Master Servicer shall at
all times remain responsible to the Issuer and the Indenture Trustee, as pledgee
of the Home Equity Loans, and the Credit Enhancer for the performance of its
duties and obligations hereunder in accordance with the terms hereof and the
Program Guide.
Without limiting the generality of the foregoing, the Master Servicer
shall continue, and is hereby authorized and empowered by the Issuer and the
Indenture Trustee, as pledgee of the Home Equity Loans, to execute and deliver,
on behalf of itself, the Issuer, the Indenture Trustee or any of them, any and
all instruments of satisfaction or cancellation, or of partial or full release,
or discharge, or of consent to assumption or modification in connection with a
proposed conveyance, or of assignment of any Mortgage and Mortgage Note in
connection with the repurchase of a Home Equity Loan and all other comparable
instruments, or with respect to the modification or re-recording of a Mortgage
for the purpose of correcting the Mortgage, the subordination of the lien, as
permitted pursuant to this Agreement, of the Mortgage in favor of a public
utility company or government agency or unit with powers of eminent domain, the
taking of a deed in lieu of foreclosure, the commencement, prosecution or
completion of judicial or non-judicial foreclosure, the conveyance of a
Mortgaged Property to the related insurer, the acquisition of any property
acquired by foreclosure or deed in lieu of foreclosure on behalf of the Trust,
the Credit Enhancer and the Noteholders, or the management, marketing and
conveyance of any property acquired by foreclosure or deed in lieu of
foreclosure with respect to the Home Equity Loans and with respect to the
Mortgaged Properties.
The Issuer, the Indenture Trustee and the Custodian, as applicable,
shall furnish the Master Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Master Servicer to carry out
its servicing and administrative duties hereunder. On the Closing Date, the
Indenture Trustee shall deliver to the Master Servicer a limited power of
attorney substantially in the form of Exhibit B hereto. In connection with
servicing and administering the Home Equity Loans, the Master Servicer and any
Affiliate of the Master Servicer may perform services such as appraisals and
brokerage services that are not customarily provided by servicers of mortgage
loans, and shall be entitled to reasonable compensation therefor in accordance
with Section 3.03. In addition, the Master Servicer may, at its own discretion
and on behalf of the Indenture Trustee, obtain credit information in the form of
a Credit Score from a Credit Repository. The Program Guide and any other
Subservicing Agreement entered into between the Master Servicer and any
Subservicer shall require the Subservicer to accurately and fully report its
borrower credit files to each of the Credit Repositories in a timely manner. The
Master Servicer is further authorized and empowered by the Issuer and the
Indenture Trustee, on behalf of the Noteholders and the Indenture Trustee, in
its own name or in the name of the Subservicer, when the Master Servicer or the
Subservicer, as the case may be, believes it appropriate in its best judgment to
register any Home Equity Loan on the MERS(R) System, or cause the removal from
the registration of any Home Equity Loan on the MERS(R) System, to execute and
deliver, on behalf of the Indenture Trustee and the Noteholders or any of them,
any and all instruments of assignment and other comparable instruments with
respect to such assignment or re-recording of a Mortgage in the name of MERS,
solely as nominee for the Indenture Trustee and its successors and assigns. Any
expenses incurred in connection with the actions described in the preceding
sentence shall be borne by the Master Servicer, with no right of reimbursement.
(b) If the Mortgage relating to a Home Equity Loan did not have a lien senior to
the Home Equity Loan on the related Mortgaged Property as of the Cut-off Date,
then the Master Servicer, in such capacity, may not consent to the placing of a
lien senior to that of the Mortgage on the related Mortgaged Property. If the
Mortgage relating to a Home Equity Loan had a lien senior to the Home Equity
Loan on the related Mortgaged Property as of the Cut-off Date, then the Master
Servicer, in such capacity, may consent to the refinancing of the prior senior
lien, provided that the following requirements are met:
(i) (A) the Mortgagor's debt-to-income ratio resulting from such refinancing is
less than the original debt-to-income ratio as set forth on the Home Equity Loan
Schedule; provided, however, that in no instance shall the resulting Combined
Loan-to-Value Ratio of such Home Equity Loan be higher than that permitted by
the Program Guide; or (B) the resulting Combined Loan-to-Value Ratio of such
Home Equity Loan is no higher than the Combined Loan-to-Value Ratio prior to
such refinancing; provided, however, if such refinanced mortgage loan is a "rate
and term" mortgage loan (meaning, the Mortgagor does not receive any cash from
the refinancing), the Combined Loan-to-Value Ratio may increase to the extent of
either (a) the reasonable closing costs of such refinancing or (b) any decrease
in the value of the related Mortgaged Property, if the Mortgagor is in good
standing as defined by the Program Guide;
(ii) the interest rate, or, in the case of an adjustable rate existing senior
lien, the maximum interest rate, for the loan evidencing the refinanced senior
lien is no more than 2.0% higher than the interest rate or the maximum interest
rate, as the case may be, on the loan evidencing the existing senior lien
immediately prior to the date of such refinancing; provided, however, (a) if the
loan evidencing the existing senior lien prior to the date of refinancing has an
adjustable rate and the loan evidencing the refinanced senior lien has a fixed
rate, then the current interest rate on the loan evidencing the refinanced
senior lien may be up to 2.0% higher than the then-current loan rate of the loan
evidencing the existing senior lien and (b) if the loan evidencing the existing
senior lien prior to the date of refinancing has a fixed rate and the loan
evidencing the refinanced senior lien has an adjustable rate, then the maximum
interest rate on the loan evidencing the refinanced senior lien shall be less
than or equal to (x) the interest rate on the loan evidencing the existing
senior lien prior to the date of refinancing plus (y) 2.0%; and
(iii) the loan evidencing the refinanced senior lien is not subject to negative
amortization.
The Master Servicer may also, without prior approval of the Rating
Agencies or the Credit Enhancer, increase the Credit Limits on the Home Equity
Loans (a "Credit Limit Increase"), provided that (i) a new appraisal is
obtained, (ii) the new Combined Loan-to-Value Ratio of any such Home Equity Loan
after giving effect to such increase is less than or equal to the Combined
Loan-to-Value Ratio of the Home Equity Loan as of the Cut-off Date, (iii) the
Master Servicer receives verbal verification of employment of the related
Mortgagor and (iv) the payment history of the related Mortgagor is within the
underwriting parameters of the Program Guide. In addition, the Master Servicer
may increase the Credit Limits on Home Equity Loans without obtaining new
appraisals provided that clauses (iii) and (iv) of the preceding sentence are
satisfied, the Combined Loan-to-Value Ratio of the Home Equity Loan following
the Credit Limit Increase will be limited to 100% and at no time shall the
aggregate Loan Balance of such Home Equity Loans exceed 5% of the current Pool
Balance; provided, further, however, that for Home Equity Loans with original
Combined Loan-to-Value Ratios in excess of 80%, the Combined Loan-to-Value Ratio
resulting from such Credit Limit Increase must be less than or equal to the
original Combined Loan-to-Value Ratio and at no time shall the aggregate Loan
Balance of such Home Equity Loans exceed 5% of the current Pool Balance.
In connection with servicing the Home Equity Loans, the Master Servicer
may take reasonable actions to encourage or effect the termination of Loan
Agreements that have become dormant.
The relationship of the Master Servicer (and of any successor to the
Master Servicer as servicer under this Servicing Agreement) to the Issuer under
this Servicing Agreement is intended by the parties to be that of an independent
contractor and not that of a joint venturer, partner or agent.
All costs incurred by the Master Servicer or by Subservicers in
effecting the timely payment of taxes and assessments on the properties subject
to the Home Equity Loans shall not, for the purpose of calculating monthly
distributions to Certificateholders, be added to the amount owing under the
related Home Equity Loans, notwithstanding that the terms of such Home Equity
Loan so permit, and such costs shall be recoverable to the extent permitted by
Section 3.03.
(c) The Master Servicer may enter into Subservicing Agreements with Subservicers
for the servicing and administration of certain of the Home Equity Loans. Any
Subservicing Agreement that may be entered into and any other transactions or
services relating to the Home Equity Loans involving a Subservicer in its
capacity as such and not as an originator shall be deemed to be between the
Subservicer and the Master Servicer alone and the Indenture Trustee and
Securityholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Subservicer in
its capacity as such except as set forth in Section 7.02. Each Subservicer of a
Home Equity Loan shall be entitled to receive and retain, as provided in the
related Subservicing Agreement and in Section 3.02, the related Subservicing Fee
from payments of interest received on such Home Equity Loan after payment of all
amounts required to be remitted to the Master Servicer in respect of such Home
Equity Loan. For any Home Equity Loan that is a nonsubserviced Home Equity Loan,
the Master Servicer shall be entitled to receive and retain an amount equal to
the Subservicing Fee from payments of interest. References in this Servicing
Agreement to actions taken or to be taken by the Master Servicer in servicing
the Home Equity Loans include actions taken or to be taken by a Subservicer on
behalf of the Master Servicer and any amount actually received by such
Subservicer in respect of a Home Equity Loan shall be deemed to have been
received by the Master Servicer whether or not actually received by the Master
Servicer. Each Subservicing Agreement will be upon such terms and conditions as
are not inconsistent with this Servicing Agreement and as the Master Servicer
and the Subservicer have agreed. With the approval of the Master Servicer, a
Subservicer may delegate its servicing obligations to third-party servicers, but
such Subservicers will remain obligated under the related Subservicing
Agreements. The Master Servicer and the Subservicer may enter into amendments to
the related Subservicing Agreements; provided, however, that any such amendments
shall not cause the Home Equity Loans to be serviced in a manner that would be
materially inconsistent with the standards set forth in this Servicing
Agreement. The Master Servicer shall be entitled to terminate any Subservicing
Agreement in accordance with the terms and conditions thereof and without any
limitation by virtue of this Servicing Agreement; provided, however, that in the
event of termination of any Subservicing Agreement by the Master Servicer or the
Subservicer, the Master Servicer shall either act as servicer of the related
Home Equity Loan or enter into a Subservicing Agreement with a successor
Subservicer which will be bound by the terms of the related Subservicing
Agreement. If the Master Servicer or any Affiliate of Residential Funding acts
as servicer, it will not assume liability for the representations and warranties
of the Subservicer which it replaces. If the Master Servicer enters into a
Subservicing Agreement with a successor Subservicer, the Master Servicer shall
use reasonable efforts to have the successor Subservicer assume liability for
the representations and warranties made by the terminated Subservicer in respect
of the related Home Equity Loans and, in the event of any such assumption by the
successor Subservicer, the Master Servicer may, in the exercise of its business
judgment, release the terminated Subservicer from liability for such
representations and warranties.
As part of its servicing activities hereunder, the Master Servicer, for
the benefit of the Securityholders and the Credit Enhancer, shall use reasonable
efforts to enforce the obligations of each Subservicer under the related
Subservicing Agreement, to the extent that the non-performance of any such
obligation would have a material adverse effect on a Home Equity Loan. Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Subservicing Agreements and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such
time as the Master Servicer, in its good faith business judgment, would require
were it the owner of the related Home Equity Loans. The Master Servicer shall
pay the costs of such enforcement at its own expense, and shall be reimbursed
therefor only (i) from a general recovery resulting from such enforcement to the
extent, if any, that such recovery exceeds all amounts due in respect of the
related Home Equity Loan or (ii) from a specific recovery of costs, expenses or
attorneys fees against the party against whom such enforcement is directed.
Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer or a Subservicer or reference to actions taken through a Subservicer or
otherwise, the Master Servicer shall remain obligated and liable to the
Indenture Trustee, the Credit Enhancer, the Noteholders and the
Certificateholders for the servicing and administering of the Home Equity Loans
in accordance with the provisions of this Section 3.01 without diminution of
such obligation or liability by virtue of such Subservicing Agreements or
arrangements or by virtue of indemnification from the Subservicer and to the
same extent and under the same terms and conditions as if the Master Servicer
alone were servicing and administering the Home Equity Loans. The Master
Servicer shall be entitled to enter into any agreement with a Subservicer or
Program Seller for indemnification of the Master Servicer and nothing contained
in this Agreement shall be deemed to limit or modify such indemnification.
In the event the Master Servicer shall for any reason no longer be the
master servicer (including by reason of a Servicing Default), the Indenture
Trustee, its designee or the successor servicer for the Indenture Trustee shall
be deemed to have assumed all of the Master Servicer's interest therein and to
have replaced the Master Servicer as a party to the Subservicing Agreement to
the same extent as if the Subservicing Agreement had been assigned to the
assuming party, except that the Master Servicer shall not thereby be relieved of
any liability or obligations under the Subservicing Agreement, nor shall the
Indenture Trustee be responsible for any obligations or liabilities prior to
such replacement. The Indenture Trustee shall not be responsible for any
representations and warranties made by the Master Servicer pursuant to such
Subservicing Agreement.
The Master Servicer shall, upon request of the Indenture Trustee but at
the expense of the Master Servicer, deliver to the assuming party all documents
and records relating to each Subservicing Agreement and the Home Equity Loans
then being serviced and an accounting of amounts collected and held by it and
otherwise use its best efforts to effect the orderly and efficient transfer of
each Subservicing Agreement to the assuming party.
(d) All other documents contained in the Mortgage File and any
original documents relating to the Home Equity Loans not contained in the
Mortgage File or delivered to the Custodian, if any, or the Indenture Trustee
are and shall be held by the Master Servicer (or an Affiliate of the Master
Servicer) in trust as agent for the Indenture Trustee on behalf of the
Noteholders.
Section 3.02 COLLECTION OF CERTAIN HOME EQUITY LOAN PAYMENTS.
(a) The Master Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Home Equity Loans, and shall,
to the extent such procedures shall be consistent with this Servicing Agreement
and generally consistent with the Program Guide, follow such collection
procedures as it would employ in its good faith business judgment and which are
normal and usual in its general mortgage servicing activities. Consistent with
the foregoing, and without limiting the generality of the foregoing, the Master
Servicer may in its discretion waive any late payment charge, penalty interest
or other fees which may be collected in the ordinary course of servicing such
Home Equity Loan. The Master Servicer may also extend the Due Date for payment
due on a Home Equity Loan in accordance with the Program Guide, provided,
however, that the Master Servicer shall first determine that any such waiver or
extension will not impair the coverage of any related insurance policy or
materially adversely affect the lien of the related Mortgage (except as
described below) or the interests of the Securityholders and the Credit
Enhancer. Notwithstanding anything in this Section to the contrary, the Master
Servicer or any Subservicer shall not enforce any prepayment charge to the
extent that such enforcement would violate any applicable law. Consistent with
the terms of this Servicing Agreement and subject to Section 3.01(a) herein, the
Master Servicer may also:
(i) waive, modify or vary any term of any Home Equity Loan (including reduce the
Credit Limit or extend the period during which a Draw may be made by the
Mortgagor pursuant to the Loan Agreement with respect to any Home Equity Loan);
(ii) consent to the postponement of strict compliance with any such term or in
any manner grant indulgence to any Mortgagor;
(iii) arrange with a Mortgagor a schedule for the payment of principal and
interest due and unpaid;
(iv) forgive any portion of the amounts contractually owed under the Home Equity
Loan;
(v) capitalize any past due amounts owed under the Home Equity Loan by adding
amounts in arrearage to the existing Loan Balance of the Home Equity Loan (a
"Capitalization Workout"), provided, however, that the Master Servicer shall not
enter into a Capitalization Workout unless the Combined Loan-to-Value Ratio of
the Home Equity Loan prior to the Capitalization Workout equals or exceeds 80%;
and
(vi) reset the due date for the Home Equity Loan, or any combination of the
foregoing,
if in the Master Servicer's determination such waiver, modification,
postponement or indulgence, arrangement or other action referred to above is not
materially adverse to the interests of the Securityholders or the Credit
Enhancer and is generally consistent with the Master Servicer's policies with
respect to home equity loans similar to Home Equity Loans; provided, however,
that the Master Servicer may not, except in the case of an extension of the
period during which a Draw may be made by the Mortgagor, pursuant to this
Section 3.02, modify or permit any Subservicer to modify any Home Equity Loan,
(including without limitation any modification that would change the Loan Rate,
forgive the payment of any principal or interest (unless in connection with the
liquidation of the related Home Equity Loan), capitalize any arrearage for the
related Home Equity Loan or extend the due date of any payment) unless such Home
Equity Loan is in default or, in the judgment of the Master Servicer, such
default is reasonably foreseeable. Notwithstanding the foregoing, the final
maturity date of any Home Equity Loan will not be extended beyond the Final
Scheduled Payment Date. The general terms of any waiver, modification,
postponement or indulgence with respect to any of the Home Equity Loans will be
included in the Servicing Certificate, and such Home Equity Loans will not be
considered "delinquent" for the purposes of the Basic Documents so long as the
Mortgagor complies with the terms of such waiver, modification, postponement or
indulgence. In addition, if a Home Equity Loan is in default or, in the judgment
of the Master Servicer, such default is reasonably foreseeable, the Master
Servicer may, through modification, convert such Home Equity Loan to a fully
amortizing closed-end loan. Notwithstanding the foregoing, the Master Servicer
in its sole discretion (i) may permit the Mortgagor (or may enter into a
modification agreement which will allow the Mortgagor) to make monthly payments,
with respect to any Billing Cycle during the related Draw Period, in a minimum
amount that will be equal to the related finance charge for such Billing Cycle
and (ii) may reduce the amount of the Credit Limit (to an amount no less than
the then current Loan Balance of such Home Equity Loan) in connection with any
refinancing of a senior lien pursuant to Section 3.01(b) of this Agreement. In
connection with any Curtailment of a Home Equity Loan, the Master Servicer, to
the extent not inconsistent with the terms of the Mortgage Note and local law
and practice, may permit the Home Equity Loan to be reamortized such that the
Minimum Monthly Payment is recalculated as an amount that will fully amortize
the remaining Loan Balance thereof by the Final Scheduled Payment Date based on
the original Loan Rate.
(b) The Master Servicer shall establish a Custodial Account, which shall be an
Eligible Account in which the Master Servicer shall deposit or cause to be
deposited any amounts representing payments and collections in respect of the
Home Equity Loans received by it on or after the Cut-off Date, within one
Business Day following receipt thereof, except as otherwise specifically
provided herein, including the following payments and collections received or
made by it (without duplication):
(i) all payments on account of principal, (including Principal Prepayments
made by Mortgagors on the Home Equity Loans or from any REO Proceeds received in
connection with an REO Property for which an REO Disposition has occurred);
(ii) all payments on account of interest at the Adjusted Mortgage Rate on
the Home Equity Loans, or from any REO Proceeds received in connection with an
REO Property for which an REO Disposition has occurred;
(iii) the aggregate Repurchase Price of the Home Equity Loans purchased by
the Master Servicer pursuant to Section 3.15 or by the Limited Repurchase Price
Holder pursuant to Section 3.16 and amounts received from the Seller pursuant to
Article 3 of the Purchase Agreement in respect of any liability, penalty or
expense that resulted from a breach of the representation and warranty set forth
in Section 3.1(b)(x) of the Purchase Agreement;
(iv) Net Liquidation Proceeds net of any related Foreclosure Profit;
(v) all proceeds of any Home Equity Loans repurchased by the Seller
pursuant to the Purchase Agreement, and all Substitution Adjustment Amounts
required to be deposited in connection with the substitution of an Eligible
Substitute Loan pursuant to the Purchase Agreement;
(vi) Insurance Proceeds, other than Net Liquidation Proceeds, resulting
from any insurance policy maintained on a Mortgaged Property; and
(vii) amounts required to be paid by the Master Servicer pursuant to
Sections 3.04 and 8.08 and any payments or collections received in the nature of
prepayment charges;
provided, however, that with respect to each Collection Period, the Master
Servicer shall be permitted to retain from payments in respect of interest on
the Home Equity Loans, the Master Servicing Fee for such Collection Period. The
foregoing requirements respecting deposits to the Custodial Account are
exclusive, it being understood that, without limiting the generality of the
foregoing, the Master Servicer need not deposit in the Custodial Account amounts
representing Foreclosure Profits, fees (including annual fees), assumption
charges or late charge penalties payable by Mortgagors (such amounts to be
retained as additional servicing compensation in accordance with Section 3.09
hereof), or amounts received by the Master Servicer for the accounts of
Mortgagors for application towards the payment of taxes, insurance premiums,
assessments and similar items. In the event any amount not required to be
deposited in the Custodial Account is so deposited, the Master Servicer may at
any time withdraw such amount from the Custodial Account, any provision herein
to the contrary notwithstanding. The Custodial Account may contain funds that
belong to one or more trusts created for the notes or certificates of other
series and may contain other funds respecting payments on home equity loans or
other mortgage loans belonging to the Master Servicer or serviced or master
serviced by it on behalf of others. Notwithstanding such commingling of funds,
the Master Servicer shall keep records that accurately reflect the funds on
deposit in the Custodial Account that have been identified by it as being
attributable to the Home Equity Loans and shall hold all collections in the
Custodial Account to the extent they represent collections on the Home Equity
Loans for the benefit of the Trust, the Securityholders, the Credit Enhancer and
the Indenture Trustee, as their interests may appear. The Master Servicer shall
retain all Foreclosure Profits as additional servicing compensation.
With respect to Insurance Proceeds, Net Liquidation Proceeds, REO
Proceeds and the proceeds of the purchase of any Home Equity Loan received in
any calendar month, the Master Servicer may elect to treat such amounts to be
deposited in the Custodial Account for distribution in accordance with Section
3.05 of the Indenture for distribution on the Payment Date in the month of
receipt, but is not obligated to do so. If the Master Servicer so elects, such
amounts will be deemed to have been received (and any related Liquidation Loss
Amount shall be deemed to have occurred) on the last day of the month prior to
the receipt thereof.
The Master Servicer may cause the institution maintaining the Custodial
Account to invest any funds in the Custodial Account in Permitted Investments
(including obligations of the Master Servicer or any of its Affiliates, if such
obligations otherwise qualify as Permitted Investments), which shall mature not
later than the Business Day preceding the next Payment Date and shall not be
sold or disposed of prior to its maturity. Except as provided above, all income
and gain realized from any such investment shall inure to the benefit of the
Master Servicer and shall be subject to its withdrawal or order from time to
time. The amount of any losses incurred in respect of the principal amount of
any such investments shall be deposited in the Custodial Account by the Master
Servicer out of its own funds immediately as realized.
(c) The Master Servicer will require each Subservicer to hold all funds
constituting collections on the Home Equity Loans, pending remittance thereof to
the Master Servicer, in one or more accounts meeting the requirements of an
Eligible Account, and invested in Permitted Investments.
Section 3.03 PERMITTED WITHDRAWALS FROM THE CUSTODIAL ACCOUNT. The Master
Servicer shall, from time to time as provided herein, make withdrawals from the
Custodial Account of amounts on deposit therein pursuant to Section 3.02 that
are attributable to the Home Equity Loans for the following purposes:
(a) to deposit in the Payment Account, on the Business Day prior to each Payment
Date, an amount equal to the Interest Collections and Principal Collections
required to be distributed on such Payment Date and any payments or collections
in the nature of prepayment charges received during the related Collection
Period;
(b) prior to either an Amortization Event or the Collection Period during which
the Revolving Period ends, to pay to the Seller, the amount of any Additional
Balances as and when created during the related Collection Period, provided,
that the aggregate amount so paid to the Seller in respect of Additional
Balances at any time during any Collection Period shall not exceed the amount of
Principal Collections theretofore received for such Collection Period;
(c) to the extent deposited to the Custodial Account, to
reimburse itself or the related Subservicer for previously unreimbursed expenses
incurred in maintaining individual insurance policies pursuant to Section 3.04,
or Liquidation Expenses paid pursuant to Section 3.07 or otherwise reimbursable
pursuant to the terms of this Servicing Agreement (to the extent not payable
pursuant to Section 3.09), such withdrawal right being limited to amounts
received on particular Home Equity Loans (other than any Repurchase Price in
respect thereof) which represent late recoveries of the payments for which such
advances were made, or from related Liquidation Proceeds or the proceeds of the
purchase of such Home Equity Loan;
(d) to pay to itself out of each payment received on account of
interest on a Home Equity Loan as contemplated by Section 3.09, an amount equal
to the related Master Servicing Fee (to the extent not retained pursuant to
Section 3.02), and to pay to any Subservicer any Subservicing Fees not
previously withheld by the Subservicer;
(e) to the extent deposited in the Custodial Account to pay to
itself as additional servicing compensation any interest or investment income
earned on funds deposited in the Custodial Account and Payment Account that it
is entitled to withdraw pursuant to Sections 3.02(b) and 5.01;
(f) to the extent deposited in the Custodial Account, to pay to itself as
additional servicing compensation any Foreclosure Profits (to the extent
permitted by law);
(g) to pay to itself, a Subservicer or the Seller, or any other
appropriate person, as the case may be, with respect to any Home Equity Loan or
property acquired in respect thereof that has been purchased or otherwise
transferred to the Seller, the Master Servicer, the Limited Repurchase Right
Holder or other entity, all amounts received thereon and not required to be
distributed to Securityholders as of the date on which the related Purchase
Price or Repurchase Price is determined;
(h) to withdraw any other amount deposited in the Custodial
Account that was not required to be deposited therein pursuant to Section 3.02;
(i) after the occurrence of an Amortization Event, to pay to the
Seller, the Excluded Amount for each Home Equity Loan; and
(j) to reimburse itself for amounts expended by it (a) pursuant
to Section 3.06 in good faith in connection with the restoration of property
damaged by an Uninsured Cause, and (b) in connection with the liquidation of a
Home Equity Loan or disposition of an REO Property to the extent not otherwise
reimbursed pursuant to clause (c) above.
Since, in connection with withdrawals pursuant to clauses (c), (d), (f) and (g),
the Master Servicer's entitlement thereto is limited to collections or other
recoveries on the related Home Equity Loan, the Master Servicer shall keep and
maintain separate accounting, on a Home Equity Loan by Home Equity Loan basis,
for the purpose of justifying any withdrawal from the Custodial Account pursuant
to such clauses. Notwithstanding any other provision of this Servicing
Agreement, the Master Servicer shall be entitled to reimburse itself for any
previously unreimbursed expenses incurred pursuant to Section 3.07 or otherwise
reimbursable pursuant to the terms of this Servicing Agreement that the Master
Servicer determines to be otherwise nonrecoverable (except with respect to any
Home Equity Loan as to which the Repurchase Price has been paid), by withdrawal
from the Custodial Account of amounts on deposit therein attributable to the
Home Equity Loans on any Business Day prior to the Payment Date succeeding the
date of such determination.
Section 3.04 MAINTENANCE OF HAZARD INSURANCE; PROPERTY PROTECTION EXPENSES.
(a) The Master Servicer shall cause to be maintained for each
Home Equity Loan hazard insurance naming the Master Servicer or related
Subservicer as loss payee thereunder providing extended coverage in an amount
which is at least equal to the lesser of (i) the maximum insurable value of the
improvements securing such Home Equity Loan from time to time or (ii) the
combined Loan Balance owing on such Home Equity Loan and any mortgage loan
senior to such Home Equity Loan from time to time; provided, however, that such
coverage may not be less than the minimum amount required to fully compensate
for any loss or damage on a replacement cost basis. The Master Servicer shall
also cause to be maintained on property acquired upon foreclosure, or deed in
lieu of foreclosure, of any Home Equity Loan, fire insurance with extended
coverage in an amount which is at least equal to the amount necessary to avoid
the application of any co-insurance clause contained in the related hazard
insurance policy. Amounts collected by the Master Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
related Mortgaged Property or property thus acquired or amounts released to the
Mortgagor in accordance with the Master Servicer's normal servicing procedures)
shall be deposited in the Custodial Account to the extent called for by Section
3.02. In cases in which any Mortgaged Property is located at any time during the
life of a Home Equity Loan in a federally designated flood area, the hazard
insurance to be maintained for the related Home Equity Loan shall include flood
insurance (to the extent available). All such flood insurance shall be in
amounts equal to the lesser of (i) the amount required to compensate for any
loss or damage to the Mortgaged Property on a replacement cost basis and (ii)
the maximum amount of such insurance available for the related Mortgaged
Property under the national flood insurance program (assuming that the area in
which such Mortgaged Property is located is participating in such program). The
Master Servicer shall be under no obligation to require that any Mortgagor
maintain earthquake or other additional insurance and shall be under no
obligation itself to maintain any such additional insurance on property acquired
in respect of a Home Equity Loan, other than pursuant to such applicable laws
and regulations as shall at any time be in force and as shall require such
additional insurance.
If the Master Servicer shall obtain and maintain a blanket policy
consistent with its general mortgage servicing activities insuring against
hazard losses on all of the Home Equity Loans, it shall conclusively be deemed
to have satisfied its obligations as set forth in the first sentence of this
Section 3.04, it being understood and agreed that such policy may contain a
deductible clause, in which case the Master Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 3.04 and there shall have been
a loss which would have been covered by such policy, deposit in the Custodial
Account the amount not otherwise payable under the blanket policy because of
such deductible clause. Any such deposit by the Master Servicer shall be made on
the last Business Day of the Collection Period in the month in which payments
under any such policy would have been deposited in the Custodial Account. In
connection with its activities as servicer of the Home Equity Loans, the Master
Servicer agrees to present, on behalf of itself, the Issuer and the Indenture
Trustee, claims under any such blanket policy.
Section 3.05 ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION AND MODIFICATION
AGREEMENTS; RELEASE OR SUBSTITUTION OF LIEN. (a)When any Mortgaged Property is
conveyed by the Mortgagor, the Master Servicer or Subservicer, to the extent it
has knowledge of such conveyance, shall enforce any due-on-sale clause contained
in any Mortgage Note or Mortgage, to the extent permitted under applicable law
and governmental regulations, but only to the extent that such enforcement will
not adversely affect or jeopardize coverage under any Required Insurance Policy
or otherwise adversely affect the interests of the Certificateholders or the
Credit Enhancer. Notwithstanding the foregoing:
(i) the Master Servicer shall not be deemed to be in default
under this Section 3.05(a) by reason of any transfer or assumption which
the Master Servicer is restricted by law from preventing; and
(ii) if the Master Servicer determines that it is reasonably
likely that any Mortgagor will bring, or if any Mortgagor does bring,
legal action to declare invalid or otherwise avoid enforcement of a
due-on-sale clause contained in any Mortgage Note or Mortgage, the
Master Servicer shall not be required to enforce the due-on-sale clause
or to contest such action.
(b) Subject to the Master Servicer's duty to enforce any
due-on-sale clause to the extent set forth in Section 3.05(a), the
Master Servicer or the related Subservicer, as the case may be, shall be
entitled to (A) execute assumption agreements, substitution agreements,
and instruments of satisfaction or cancellation or of partial or full
release or discharge, or any other document contemplated by this
Servicing Agreement and other comparable instruments with respect to the
Home Equity Loans and with respect to the Mortgaged Properties subject
to the Mortgages (and the Issuer and the Indenture Trustee each shall
promptly execute any such documents on request of the Master Servicer)
and (B) approve the granting of an easement thereon in favor of another
Person, any alteration or demolition of the related Mortgaged Property
or other similar matters, if it has determined, exercising its good
faith business judgment in the same manner as it would if it were the
owner of the related Home Equity Loan, that the security for, and the
timely and full collectability of, such Home Equity Loan would not be
adversely affected thereby. A partial release pursuant to this Section
3.05 shall be permitted only if the Combined Loan-to-Value Ratio for
such Home Equity Loan after such partial release does not exceed the
Combined Loan-to-Value Ratio for such Home Equity Loan as of the Cut-off
Date. Any fee collected by the Master Servicer or the related
Subservicer for processing such request will be retained by the Master
Servicer or such Subservicer as additional servicing compensation.
(c) The Master Servicer may enter into an agreement with a
Mortgagor to release the lien on the Mortgaged Property relating to a
Home Equity Loan (the "Existing Lien"), if at the time of such agreement
the Home Equity Loan is current in payment of principal and interest,
under any of the following circumstances:
(i) in any case in which, simultaneously with the release of the Existing Lien,
the Mortgagor executes and delivers to the Master Servicer a Mortgage on a
substitute Mortgaged Property, provided that the Combined Loan-to-Value Ratio of
the Home Equity Loan (calculated based on the Appraised Value of the substitute
Mortgaged Property) is not greater than the Combined Loan-to-Value Ratio prior
to releasing the Existing Lien;
(ii) in any case in which, simultaneously with the release of the Existing Lien,
the Mortgagor executes and delivers to the Master Servicer a Mortgage on a
substitute Mortgaged Property, provided that: (A) the Combined Loan-to-Value
Ratio of the Home Equity Loan (calculated based on the Appraised Value of the
substitute Mortgaged Property) is not greater than the lesser of (1) 100% and
(2) 105% of the Combined Loan-to-Value Ratio prior to releasing the Existing
Lien; and (B) the Master Servicer determines that at least two appropriate
compensating factors are present (compensating factors may include, without
limitation, an increase in the Mortgagor's monthly cash flow after debt service,
the Mortgagor's debt-to-income ratio has not increased since origination, or an
increase in the Mortgagor's credit score); or
(iii) in any case in which, at the time of release of the Existing Lien, the
Mortgagor does not provide the Master Servicer with a Mortgage on a substitute
Mortgaged Property (any Home Equity Loan that becomes and remains unsecured in
accordance with this subsection, an "Unsecured Loan"), provided that: (A) the
current Combined Loan-to-Value Ratio is greater than or equal to 85%; (B) the
Master Servicer shall not permit the release of an Existing Lien under this
clause (iii) as to more than 100 Home Equity Loans in any calendar year; (C) at
no time shall the aggregate Loan Balance of Unsecured Loans exceed 2.5% of the
then Pool Balance; (D) the Mortgagor agrees to an automatic debit payment plan;
and (E) the Master Servicer shall provide notice to each Rating Agency that has
requested notice of such releases.
In connection with any Unsecured Loan, the Master Servicer may require
the Mortgagor to enter into an agreement under which: (i) the Loan Rate may be
increased effective until a substitute Mortgage meeting the criteria under (i)
or (ii) above is provided; or (ii) any other provision may be made which the
Master Servicer considers to be appropriate. Thereafter, the Master Servicer
shall determine in its discretion whether to accept any proposed Mortgage on any
substitute Mortgaged Property as security for the Home Equity Loan, and the
Master Servicer may require the Mortgagor to agree to any further conditions
which the Master Servicer considers appropriate in connection with such
substitution, which may include a reduction of the Loan Rate (but not below the
Loan Rate in effect at the Closing Date). Any Home Equity Loan as to which a
Mortgage on a substitute Mortgaged Property is provided in accordance with the
preceding sentence shall no longer be deemed to be an Unsecured Loan.
(d) Subject to any other applicable terms and conditions of this
Agreement, the Master Servicer shall be entitled to approve an assignment in
lieu of satisfaction with respect to any Home Equity Loan, provided the obligee
with respect to such Home Equity Loan following such proposed assignment
provides the Master Servicer with a "Lender Certification for Assignment of Home
Equity Loan" in the form attached hereto as Exhibit D, in form and substance
satisfactory to the Indenture Trustee and Master Servicer, providing the
following: (i) that the Home Equity Loan is secured by Mortgaged Property
located in a jurisdiction in which an assignment in lieu of satisfaction is
required to preserve lien priority, minimize or avoid mortgage recording taxes
or otherwise comply with, or facilitate a refinancing under, the laws of such
jurisdiction; (ii) that the substance of the assignment is, and is intended to
be, a refinancing of such Home Equity Loan and that the form of the transaction
is solely to comply with, or facilitate the transaction under, such local laws;
(iii) that the Home Equity Loan following the proposed assignment will have a
rate of interest at least 0.25 percent below or above the rate of interest on
such Home Equity Loan prior to such proposed assignment; and (iv) that such
assignment is at the request of the borrower under the related Home Equity Loan.
Upon approval of an assignment in lieu of satisfaction with respect to any Home
Equity Loan, the Master Servicer shall receive cash in an amount equal to the
unpaid Loan Balance of and accrued interest on such Home Equity Loan and the
Master Servicer shall treat such amount as a Principal Prepayment in Full with
respect to such Home Equity Loan for all purposes hereof.
Section 3.06 TRUST ESTATE; RELATED DOCUMENTS (a) When required by the provisions
of this Servicing Agreement, the Issuer or the Indenture Trustee shall execute
instruments to release property from the terms of the Trust Agreement, Indenture
or Custodial Agreement, as applicable, or convey the Issuer's or the Indenture
Trustee's interest in the same, in a manner and under circumstances which are
not inconsistent with the provisions of this Servicing Agreement. No party
relying upon an instrument executed by the Issuer or the Indenture Trustee as
provided in this Section 3.06 shall be bound to ascertain the Issuer's or the
Indenture Trustee's authority, inquire into the satisfaction of any conditions
precedent or see to the application of any moneys.
(b) If from time to time the Master Servicer shall deliver to the
Custodian copies of any written assurance, assumption agreement or substitution
agreement or other similar agreement pursuant to Section 3.05, the Custodian
shall check that each of such documents purports to be an original executed copy
(or a copy of the original executed document if the original executed copy has
been submitted for recording and has not yet been returned) and, if so, shall
file such documents, and upon receipt of the original executed copy from the
applicable recording office or receipt of a copy thereof certified by the
applicable recording office shall file such originals or certified copies with
the Related Documents. If any such documents submitted by the Master Servicer do
not meet the above qualifications, such documents shall promptly be returned by
the Custodian to the Master Servicer, with a direction to the Master Servicer to
forward the correct documentation.
(c) Upon receipt of a Request for Release from the Master
Servicer, substantially in the form of Exhibit C to the effect that a Home
Equity Loan has been the subject of a final payment or a prepayment in full and
the related Home Equity Loan has been terminated or that substantially all
Liquidation Proceeds which have been determined by the Master Servicer in its
reasonable judgment to be finally recoverable have been recovered, and upon
deposit to the Custodial Account of such final monthly payment, prepayment in
full together with accrued and unpaid interest to the date of such payment with
respect to such Home Equity Loan or, if applicable, Liquidation Proceeds, the
Custodian shall promptly release the Related Documents to the Master Servicer,
which the Indenture Trustee shall execute, along with such documents as the
Master Servicer or the Mortgagor may request to evidence satisfaction and
discharge of such Home Equity Loan, upon request of the Master Servicer. If from
time to time and as appropriate for the servicing or foreclosure of any Home
Equity Loan, the Master Servicer requests the Custodian to release the Related
Documents and delivers to the Custodian a trust receipt reasonably satisfactory
to the Custodian and signed by a Responsible Officer of the Master Servicer, the
Custodian shall release the Related Documents to the Master Servicer. If such
Home Equity Loans shall be liquidated and the Custodian receives a certificate
from the Master Servicer as provided above, then, upon request of the Master
Servicer, the Custodian shall release the trust receipt to the Master Servicer.
Section 3.07 REALIZATION UPON DEFAULTED HOME EQUITY LOANS; LOSS MITIGATION. With
respect to such of the Home Equity Loans as come into and continue in default,
the Master Servicer will decide whether to (i) foreclose upon the Mortgaged
Properties securing such Home Equity Loans, (ii) write off the unpaid Loan
Balance of the Home Equity Loans as bad debt, (iii) take a deed in lieu of
foreclosure, (iv) accept a short sale (a payoff of the Home Equity Loan for an
amount less than the total amount contractually owed in order to facilitate a
sale of the Mortgaged Property by the Mortgagor) or permit a short refinancing
(a payoff of the Home Equity Loan for an amount less than the total amount
contractually owed in order to facilitate refinancing transactions by the
Mortgagor not involving a sale of the Mortgaged Property), (v) arrange for a
repayment plan, (vi) agree to a modification in accordance with this Servicing
Agreement, or (vii) take an unsecured note, in connection with a negotiated
release of the lien of the Mortgage in order to facilitate a settlement with the
Mortgagor; in each case subject to the rights of any related first lien holder;
provided that in connection with the foregoing if the Master Servicer has actual
knowledge that any Mortgaged Property is affected by hazardous or toxic wastes
or substances and that the acquisition of such Mortgaged Property would not be
commercially reasonable, then the Master Servicer will not cause the Issuer or
the Indenture Trustee to acquire title to such Mortgaged Property in a
foreclosure or similar proceeding. In connection with such decision, the Master
Servicer shall follow such practices (including, in the case of any default on a
related senior mortgage loan, the advancing of funds to correct such default if
deemed to be appropriate by the Master Servicer) and procedures as it shall deem
necessary or advisable and as shall be normal and usual in its general mortgage
servicing activities and as shall be required or permitted by the Program Guide;
provided that the Master Servicer shall not be liable in any respect hereunder
if the Master Servicer is acting in connection with any such foreclosure or
attempted foreclosure which is not completed or other conversion in a manner
that is consistent with the provisions of this Servicing Agreement. The
foregoing is subject to the proviso that the Master Servicer shall not be
required to expend its own funds in connection with any foreclosure or attempted
foreclosure which is not completed or towards the correction of any default on a
related senior mortgage loan or restoration of any property unless it shall
determine that such expenditure will increase Net Liquidation Proceeds. In the
event of a determination by the Master Servicer that any such expenditure
previously made pursuant to this Section 3.07 will not be reimbursable from Net
Liquidation Proceeds, the Master Servicer shall be entitled to reimbursement of
its funds so expended pursuant to Section 3.03.
In addition, the Master Servicer may pursue any remedies that may
be available in connection with a breach of a representation and warranty with
respect to any such Home Equity Loan in accordance with Section 2.03. However,
the Master Servicer is not required to continue to pursue both foreclosure (or
similar remedies) with respect to the Home Equity Loans and remedies in
connection with a breach of a representation and warranty if the Master Servicer
determines in its reasonable discretion that one such remedy is more likely to
result in a greater recovery as to the Home Equity Loan. Upon the occurrence of
a Cash Liquidation or REO Disposition, following the deposit in the Custodial
Account of all Insurance Proceeds, Liquidation Proceeds and other payments and
recoveries referred to in the definition of "Cash Liquidation" or "REO
Disposition," as applicable, upon receipt by the Indenture Trustee of written
notification of such deposit signed by a Servicing Officer, the Indenture
Trustee or any Custodian, as the case may be, shall release to the Master
Servicer the related Mortgage File and the Indenture Trustee shall execute and
deliver such instruments of transfer or assignment prepared by the Master
Servicer, in each case without recourse, representation or warranty as shall be
necessary to vest in the Master Servicer or its designee, as the case may be,
the related Home Equity Loan, and thereafter such Home Equity Loan shall not be
part of the Trust. Notwithstanding the foregoing or any other provision of this
Agreement, in the Master Servicer's sole discretion with respect to any
defaulted Home Equity Loan or REO Property as to either of the following
provisions, (i) a Cash Liquidation or REO Disposition may be deemed to have
occurred if substantially all amounts expected by the Master Servicer to be
received in connection with the related defaulted Home Equity Loan or REO
Property have been received; provided, however, a Cash Liquidation or REO
Disposition shall be deemed to have occurred with respect to any Home Equity
Loan that is 180 days or more delinquent as of the end of the related Collection
Period; provided further, however, any subsequent collections with respect to
any such Home Equity Loan shall be deposited to the Custodial Account, and (ii)
for purposes of determining the amount of any Liquidation Proceeds, Insurance
Proceeds, REO Proceeds or any other unscheduled collections or the amount of any
Liquidation Loss Amount, the Master Servicer may take into account minimal
amounts of additional receipts expected to be received or any estimated
additional liquidation expenses expected to be incurred in connection with the
related defaulted Home Equity Loan or REO Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure by the Trust or by deed in lieu of foreclosure, the deed or
certificate of sale shall be issued in the name of the Indenture Trustee or a
nominee thereof, who shall hold the same on behalf of the Issuer in accordance
with Section 3.13 of the Indenture. Notwithstanding any such acquisition of
title and cancellation of the related Home Equity Loan, such Mortgaged Property
shall (except as otherwise expressly provided herein) be considered to be an
outstanding Home Equity Loan held as an asset of the Issuer until such time as
such property shall be sold. Consistent with the foregoing for purposes of all
calculations hereunder, so long as such Mortgaged Property shall be considered
to be an outstanding Home Equity Loan it shall be assumed that, notwithstanding
that the indebtedness evidenced by the related Loan Agreement shall have been
discharged, such Loan Agreement in effect at the time of any such acquisition of
title before any adjustment thereto by reason of any bankruptcy or similar
proceeding or any moratorium or similar waiver or grace period will remain in
effect.
Any proceeds from the purchase or repurchase of any Home Equity Loan,
that occur before such Home Equity Loan is deemed liquidated, pursuant to the
terms of this Servicing Agreement (including without limitation Sections 2.03,
3.15 and 3.16) will be applied in the following order of priority: first, to the
Master Servicer or the related Subservicer, all Servicing Fees payable therefrom
to the Payment Date on which such amounts are to be deposited in the Payment
Account; second, as Interest Collections, accrued and unpaid interest on the
related Home Equity Loan, at the Net Loan Rate to the Payment Date on which such
amounts are to be deposited in the Payment Account; and third, as Principal
Collections, as a recovery of principal on the Home Equity Loan.
Liquidation Proceeds with respect to a Liquidated Home Equity Loan will
be applied in the following order of priority: first, to reimburse the Master
Servicer or the related Subservicer in accordance with this Section 3.07 for any
Liquidation Expenses; second, to the Master Servicer or the related Subservicer,
all unpaid Servicing Fees through the date of receipt of the final Liquidation
Proceeds; third, as Principal Collections, as a recovery of principal on the
Home Equity Loan, up to an amount equal to the Loan Balance of the related Home
Equity Loan immediately prior to the date it became a Liquidated Home Equity
Loan; fourth, as Interest Collections, accrued and unpaid interest on the
related Home Equity Loan at the Net Loan Rate through the date of receipt of the
final Liquidation Proceeds; and fifth, to Foreclosure Profits.
Proceeds and other recoveries from a Home Equity Loan after it becomes a
Liquidated Home Equity Loan will be applied in the following order of priority:
first, to reimburse the Master Servicer or the related Subservicer in accordance
with this Section 3.07 for any expenses previously unreimbursed from Liquidation
Proceeds or otherwise; second, to the Master Servicer or the related
Subservicer, all unpaid Servicing Fees payable thereto through the date of
receipt of the proceeds previously unreimbursed from Liquidation Proceeds or
otherwise; third, as Interest Collections, up to an amount equal to the sum of
(a) the Loan Balance of the related Home Equity Loan immediately prior to the
date it became a Liquidated Home Equity Loan, less any Net Liquidation Proceeds
previously received with respect to such Home Equity Loan and applied as a
recovery of principal, and (b) accrued and unpaid interest on the related Home
Equity Loan at the Net Loan Rate through the date of deemed liquidation; and
fourth, to Foreclosure Profits.
In the event of a default on a Home Equity Loan one or more of whose
obligors is a Non-United States Person, in connection with any foreclosure or
acquisition of a deed in lieu of foreclosure (together, "foreclosure") in
respect of such Home Equity Loan, the Master Servicer will cause compliance with
the provisions of Treasury Regulation Section 1.1445-2(d)(3) (or any successor
thereto) necessary to assure that no withholding tax obligation arises with
respect to the proceeds of such foreclosure except to the extent, if any, that
proceeds of such foreclosure are required to be remitted to the obligors on such
Home Equity Loan.
Section 3.08 ISSUER AND INDENTURE TRUSTEE TO COOPERATE. On or before each
Payment Date, the Master Servicer will notify the Indenture Trustee or the
Custodian, with a copy to the Issuer, of the termination of or the payment in
full and the termination of any Home Equity Loan during the preceding Collection
Period. Upon receipt of payment in full, the Master Servicer is authorized to
execute, pursuant to the authorization contained in Section 3.01, if the
assignments of Mortgage have been recorded to the extent required under the
Purchase Agreement, an instrument of satisfaction regarding the related
Mortgage, which instrument of satisfaction shall be recorded by the Master
Servicer if required by applicable law and be delivered to the Person entitled
thereto and cause the removal from the registration of the MERS(R) System of
such Mortgage. It is understood and agreed that any expenses incurred in
connection with such instrument of satisfaction or transfer shall be reimbursed
from amounts deposited in the Custodial Account. From time to time and as
appropriate for the servicing or foreclosure of any Home Equity Loan, the
Indenture Trustee or the Custodian shall, upon request of the Master Servicer
and delivery to the Indenture Trustee or Custodian, with a copy to the Issuer,
of a Request for Release, in the form annexed hereto as Exhibit C, signed by a
Servicing Officer, release or cause to be released the related Mortgage File to
the Master Servicer and the Issuer or Indenture Trustee shall promptly execute
such documents, in the forms provided by the Master Servicer, as shall be
necessary for the prosecution of any such proceedings or the taking of other
servicing actions. Such trust receipt shall obligate the Master Servicer to
return the Mortgage File to the Indenture Trustee or the Custodian (as specified
in such receipt) when the need therefor by the Master Servicer no longer exists
unless the Home Equity Loan shall be liquidated, in which case, upon receipt of
a certificate of a Servicing Officer similar to that hereinabove specified, the
trust receipt shall be released to the Master Servicer.
In order to facilitate the foreclosure of the Mortgage securing any Home
Equity Loan that is in default following recordation of the assignments of
Mortgage in accordance with the provisions of the Purchase Agreement, the
Indenture Trustee or the Issuer shall, if so requested in writing by the Master
Servicer, promptly execute an appropriate assignment in the form provided by the
Master Servicer to assign such Home Equity Loan for the purpose of collection to
the Master Servicer (any such assignment shall unambiguously indicate that the
assignment is for the purpose of collection only), and, upon such assignment,
such assignee for collection will thereupon bring all required actions in its
own name and otherwise enforce the terms of the Home Equity Loan and deposit or
credit the Net Liquidation Proceeds, exclusive of Foreclosure Profits, received
with respect thereto in the Custodial Account. In the event that all delinquent
payments due under any such Home Equity Loan are paid by the Mortgagor and any
other defaults are cured, then the assignee for collection shall promptly
reassign such Home Equity Loan to the Indenture Trustee and return all Related
Documents to the place where the related Mortgage File was being maintained.
In connection with the Issuer's obligation to cooperate as provided in
this Section 3.08 and all other provisions of this Servicing Agreement requiring
the Issuer to authorize or permit any actions to be taken with respect to the
Home Equity Loans, the Indenture Trustee, as pledgee of the Home Equity Loans
and as assignee of record of the Home Equity Loans on behalf of the Issuer
pursuant to Section 3.13 of the Indenture, expressly agrees, on behalf of the
Issuer, to take all such actions on behalf of the Issuer and to promptly execute
and return all instruments reasonably required by the Master Servicer in
connection therewith; provided, that if the Master Servicer shall request a
signature of the Indenture Trustee, on behalf of the Issuer, the Master Servicer
will deliver to the Indenture Trustee an Officer's Certificate stating that such
signature is necessary or appropriate to enable the Master Servicer to carry out
its servicing and administrative duties under this Servicing Agreement.
Section 3.09 SERVICING COMPENSATION; PAYMENT OF CERTAIN EXPENSES BY MASTER
SERVICER. The Master Servicer shall be entitled to receive the Master Servicing
Fee in accordance with Sections 3.02 and 3.03 as compensation for its services
in connection with servicing the Home Equity Loans. Subject to Section 3.07, in
the event that Liquidation Proceeds, Insurance Proceeds and REO Proceeds in
respect of a Cash Liquidation or REO Disposition exceed the unpaid Loan Balance
of such Home Equity Loan plus unpaid interest accrued thereon (including REO
Imputed Interest) at the related Net Loan Rate, the Master Servicer shall be
entitled to retain therefrom and to pay to itself and/or the related
Subservicer, any Foreclosure Profits. Additional servicing compensation in the
form of assumption fees, investment income on amounts in the Custodial Account
or the Certificate Distribution Account or otherwise shall be retained by the
Master Servicer or the Subservicer to the extent provided herein. Moreover,
additional servicing compensation in the form of late payment charges,
investment income on amounts in the Payment Account and other receipts not
required to be deposited in the Custodial Account as specified in Section
3.02(b) shall be retained by the Master Servicer. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder (including payment of all other fees and expenses not expressly stated
hereunder to be for the account of the Securityholders, including, without
limitation, the fees and expenses of the Owner Trustee, Indenture Trustee and
any Custodian) and shall not be entitled to reimbursement therefor.
Section 3.10 ANNUAL STATEMENT AS TO COMPLIANCE. (a) The Master Servicer will
deliver to the Depositor, the Issuer, the Credit Enhancer and the Indenture
Trustee on or before the earlier of (a) March 31 of each year or (b) with
respect to any calendar year during which the Depositor's annual report on Form
10-K is required to be filed in accordance with the Exchange Act and the rules
and regulations of the Commission, the date on which the annual report on Form
10-K is required to be filed in accordance with the Exchange Act and the rules
and regulations of the Commission, a servicer compliance certificate, signed by
an authorized officer of the Master Servicer, as described in Item 1123 of
Regulation AB, to the effect that:
(i) A review of the Master Servicer's activities during the
reporting period and of its performance under this Servicing Agreement has been
made under such officer's supervision.
(ii) To the best of such officer's knowledge, based on such
review, the Master Servicer has fulfilled all of its obligations under this
Servicing Agreement in all material respects throughout the reporting period or,
if there has been a failure to fulfill any such obligation in any material
respect, specifying each such failure known to such officer and the nature and
status thereof.
The Master Servicer shall use commercially reasonable efforts to
obtain from all other parties participating in the servicing function any
additional certifications required under Item 1123 of Regulation AB to the
extent required to be included in a Report on Form 10-K; provided, however, that
a failure to obtain such certifications shall not be a breach of the Master
Servicer's duties hereunder if any such party fails to deliver such a
certification.
(b) The Master Servicer shall deliver to the Issuer and the
Indenture Trustee, with a copy to the Credit Enhancer, promptly after having
obtained knowledge thereof, but in no event later than five Business Days
thereafter, written notice by means of an Officer's Certificate of any event
which with the giving of notice or the lapse of time or both, would become a
Servicing Default.
Section 3.11 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT. On or
before the earlier of (a) March 31 of each year or (b) with respect to any
calendar year during which the Depositor's annual report on Form 10-K is
required to be filed in accordance with the Exchange Act and the rules and
regulations of the Commission, the date on which the annual report is required
to be filed in accordance with the Exchange Act and the rules and regulations of
the Commission, the Master Servicer at its expense shall cause a firm of
independent public accountants, which shall be members of the American Institute
of Certified Public Accountants, to furnish a report to the Depositor and the
Indenture Trustee the attestation required under Item 1122(b) of Regulation AB.
In rendering such statement, such firm may rely, as to matters relating to the
direct servicing of home equity loans by Subservicers, upon comparable
statements for examinations conducted by independent public accountants
substantially in accordance with standards established by the American Institute
of Certified Public Accountants (rendered within one year of such statement)
with respect to such Subservicers.
Section 3.12 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE HOME
EQUITY Loans. The Master Servicer shall provide to the Credit Enhancer, any
Securityholder upon reasonable request (or a regulator for a Securityholder) or
the Indenture Trustee, reasonable access to the documentation regarding the Home
Equity Loans such access being afforded without charge but only upon reasonable
request and during normal business hours at the offices of the Master Servicer.
Nothing in this Section 3.12 shall derogate from the obligation of the Master
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Master Servicer to provide
access as provided in this Section 3.12 as a result of such obligation shall not
constitute a breach of this Section 3.12.
Section 3.13 MAINTENANCE OF CERTAIN SERVICING INSURANCE POLICIES. The Master
Servicer shall during the term of its service as servicer maintain in force (i)
a policy or policies of insurance covering errors and omissions in the
performance of its obligations as master servicer hereunder and (ii) a fidelity
bond in respect of its officers, employees or agents. Each such policy or
policies and bond shall be at least equal to the coverage that would be required
by Xxxxxx Xxx or Xxxxxxx Mac, whichever is greater, for Persons performing
servicing for Home Equity Loans purchased by such entity. Coverage of the Master
Servicer under a policy or bond obtained by an Affiliate of the Master Servicer
and providing the coverage required by this Section 3.13 shall satisfy the
requirements of this Section 3.13.
Section 3.14 INFORMATION REQUIRED BY THE INTERNAL REVENUE SERVICE AND REPORTS OF
FORECLOSURES AND ABANDONMENTS OF MORTGAGED PROPERTY. The Master Servicer shall
prepare and deliver all federal and state information reports with respect to
the Home Equity Loans when and as required by all applicable state and federal
income tax laws. In particular, with respect to the requirement under Section
6050J of the Code to the effect that the Master Servicer or Subservicer shall
make reports of foreclosures and abandonments of any mortgaged property for each
year beginning in 2006, the Master Servicer or Subservicer shall file reports
relating to each instance occurring during the previous calendar year commencing
with the fiscal year 2006 in which the Master Servicer (i) on behalf of the
Issuer, acquires an interest in any Mortgaged Property through foreclosure or
other comparable conversion in full or partial satisfaction of a Home Equity
Loan, or (ii) knows or has reason to know that any Mortgaged Property has been
abandoned. The reports from the Master Servicer or Subservicer shall be in form
and substance sufficient to meet the reporting requirements imposed by Section
6050J and Section 6050H (reports relating to mortgage interest received) of the
Code.
Section 3.15 OPTIONAL REPURCHASE OR TRANSFER OF HOME EQUITY LOANS.
(a) Notwithstanding any provision in Section 3.07 to the
contrary, the Master Servicer, at its option and in its sole discretion, may
repurchase any Home Equity Loan that is delinquent in payment for a period of 90
days or longer for a price equal to the Repurchase Price; provided that such
Home Equity Loan is 90 days or more delinquent at the time of repurchase. If at
any time the Master Servicer makes a payment to the Payment Account covering the
amount of the Repurchase Price for such a Home Equity Loan, and the Master
Servicer provides to the Indenture Trustee a certification signed by a Servicing
Officer stating that the amount of such payment has been deposited in the
Payment Account, then the Indenture Trustee shall execute the assignment of such
Home Equity Loan at the request of the Master Servicer without recourse,
representation or warranty to the Master Servicer which shall succeed to all the
Indenture Trustee's right, title and interest in and to such Loan, and all
security and documents relative thereto. Such assignment shall be an assignment
outright and not for security. The Master Servicer will thereupon own such Home
Equity Loan, and all such security and documents, free of any further obligation
to the Indenture Trustee or the Securityholders with respect thereto.
(b) Subject to the conditions set forth below, the Master
Servicer, upon receipt of written notice and direction from the Issuer, shall
cause the retransfer of Home Equity Loans from the Indenture Trustee to the
Issuer as of the close of business on a Payment Date (the "Transfer Date"). On
the fifth Business Day (the "Transfer Notice Date") prior to the Transfer Date
designated in such notice, the Master Servicer shall give the Indenture Trustee,
the Rating Agencies and the Credit Enhancer a notice of the proposed retransfer
that contains a list of the Home Equity Loans to be retransferred. Such
retransfers of Home Equity Loans shall be permitted upon satisfaction of the
following conditions:
(i) No Amortization Event has occurred or will result from such retransfer;
(ii) On the Transfer Date, the Overcollateralization Amount (after giving effect
to the removal from the Trust of the Home Equity Loans proposed to be
transferred) will equal or exceed the Required Overcollateralization Amount;
(iii) On or before the Transfer Date, the Master Servicer shall have delivered
to the Indenture Trustee and the Custodian a revised Home Equity Loan Schedule
showing that the Home Equity Loans are no longer owned by the Trust;
(iv) The Master Servicer shall represent and warrant that the Home Equity Loans
to be removed from the Trust were selected at random and the Master Servicer
shall have received the consent of the Credit Enhancer as to the selection of
the particular Home Equity Loans to be removed; and
(v) The Master Servicer shall have delivered to the Indenture Trustee and the
Credit Enhancer an officer's certificate certifying that the items set forth in
subparagraphs (i) through (iv), inclusive, have been performed or are true and
correct, as the case may be. The Indenture Trustee may conclusively rely on such
officer's certificate, shall have no duty to make inquiries with regard to the
matters set forth therein and shall incur no liability in so relying.
The Master Servicer shall not be permitted to effect the retransfer of
any Home Equity Loan except under the conditions specified above. Upon receiving
the requisite notice and direction from the Issuer, the Master Servicer shall
perform in a timely manner those acts required of it, as specified above. Upon
satisfaction of the above conditions, on the Transfer Date the Indenture Trustee
shall deliver, or cause to be delivered, to the Issuer a written itemization of
each Home Equity Loan being transferred, together with the Mortgage File for
each such Home Equity Loan, and the Indenture Trustee shall execute and deliver
to the Issuer or its designee such other documents prepared by the Master
Servicer as shall be reasonably necessary to transfer such Home Equity Loans to
the Certificateholders. Any such transfer of the Trust's right, title and
interest in and to the Home Equity Loans shall be without recourse,
representation or warranty by or of the Indenture Trustee or the Trust to the
Issuer or its designee.
Section 3.16 LIMITED HOME EQUITY LOAN REPURCHASE RIGHT. The Limited Repurchase
Right Holder will have the irrevocable option at any time to purchase any of the
Home Equity Loans at the Repurchase Price, up to a maximum of five Home Equity
Loans. In the event that this option is exercised as to any five Home Equity
Loans in the aggregate, this option will thereupon terminate. If at any time the
Limited Repurchase Right Holder makes a payment to the Custodial Account
covering the amount of the Repurchase Price for such a Home Equity Loan, and the
Limited Repurchase Right Holder provides to the Indenture Trustee a
certification signed by a Servicing Officer stating that the amount of such
payment has been deposited in the Custodial Account, then the Indenture Trustee
shall execute the assignment of such Home Equity Loan at the request of the
Limited Repurchase Right Holder without recourse to the Limited Repurchase Right
Holder which shall succeed to all the Indenture Trustee's right, title and
interest in and to such Home Equity Loan, and all security and documents
relative thereto. Such assignment shall be an assignment outright and not for
security. The Limited Repurchase Right Holder will thereupon own such Mortgage,
and all such security and documents, free of any further obligation to the
Indenture Trustee with respect thereto.
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01 STATEMENTS TO SECURITYHOLDERS. (a) With respect to each Payment
Date, on the Business Day following the related Determination Date, the Master
Servicer shall forward to the Indenture Trustee and the Indenture Trustee
pursuant to Section 3.26 of the Indenture shall forward or cause to be forwarded
by mail or otherwise make available electronically at xxx.xxxxxxxx.xxx/xxx to
each Certificateholder, Noteholder, the Credit Enhancer, the Depositor, the
Owner Trustee, the Certificate Paying Agent and each Rating Agency, a statement
setting forth the following information (the "Servicing Certificate") as to the
Notes and Certificates, to the extent applicable:
(i) the applicable Record Date, Determination Date and Payment Date;
(ii) the aggregate amount of payments received with respect to the Home Equity
Loans, including prepayment amounts;
(iii) the Servicing Fee and Subservicing Fee payable to the Master Servicer and
the Subservicer;
(iv) the amount of any other fees or expenses paid, and the identity of the
party receiving such fees or expenses;
(v) the aggregate amount of (a) Interest Collections, (b) Principal Collections
and (c) Substitution Adjustment Amounts for such Collection Period;
(vi) the amount paid as principal to the Noteholders of each Class of Notes;
(vii) the amount paid as interest to the Noteholders of each Class of Notes,
separately stating the portion thereof in respect of Prepayment Interest
Shortfalls, Relief Act Shortfalls or Net WAC Cap Shortfalls, if any;
(viii) the aggregate Interest Distribution Amount remaining unpaid, if any, for
each Class of Notes, after giving effect to the payments made on such Payment
Date;
(ix) [Reserved];
(x) the amount of any draw on the Policy for such Payment Date, the amount paid
to the Credit Enhancer in reimbursement for prior draws and the aggregate amount
of prior draws under the Policy not yet reimbursed;
(xi) the amount of such distribution as principal and interest to the
Certificateholders of the Certificates, separately stating the portion thereof
which resulted in a reduction of the Certificate Loan Balance thereof;
(xii) the aggregate Loan Balance of the Home Equity Loans as of the end of the
preceding Collection Period;
(xiii) the aggregate amount of Additional Balances on the Home Equity Loans
created during the previous Collection Period conveyed to the Issuer;
(xiv) the number and aggregate Loan Balances of Home Equity Loans (a) as to
which the Minimum Monthly Payment is Delinquent for 30-59 days, 60-89 days and
90 or more days, respectively, (b) that are foreclosed and (c) that have become
REO, in each case as of the end of the related Collection Period; provided,
however, that such information will not be provided on the statements relating
to the first Payment Date;
(xv) the Note Rate and the Net WAC Rate for the related Collection Period;
(xvi) the aggregate Liquidation Loss Amounts with respect to the related
Collection Period, the amount of any Liquidation Loss Distribution Amounts with
respect to the Notes, and the aggregate of the Liquidation Loss Amounts from all
Collection Periods to date expressed as dollars and as a percentage of the
aggregate Cut-off Date Loan Balance;
(xvii) the aggregate Bankruptcy Losses and losses caused by or resulting from an
Extraordinary Event with respect to the related Collection Period and the
aggregate of each of such losses from all Collection Periods to date;
(xviii) the Security Balance of each Class of Notes and the Certificate
Principal Balance of the Certificates after giving effect to the distribution of
principal on such Payment Date;
(xix) the aggregate Servicing Fees for the related Collection Period and the
aggregate amount of Draws for the related Collection Period;
(xx) the number and amount of any increases in the Credit Limits of the Home
Equity Loans during the related Collection Period;
(xxi) the Overcollateralization Amount, the Undercollateralization Amount and
the Required Overcollateralization Amount immediately following such Payment
Date; and
(xxii) any material modifications, extensions or waivers to the terms of the
Home Equity Loans during the Collection Period or that have cumulatively become
material over time;
(xxiii) any material breaches of Home Equity Loan representations or warranties
or covenants in the Purchase Agreement;
(xxiv) the number and principal amount of release agreements pursuant to Section
3.05(c) entered into during the calendar year and since the Closing Date, stated
separately, for the Home Equity Loans and, the aggregate outstanding principal
amount of such release agreements expressed as a percentage of the Pool Balance
with information provided separately with respect to all Unsecured Loans and (2)
the number and principal amount of Capitalization Workouts pursuant to Section
3.02(a)(v) entered into during the calendar year and since the Closing Date and
the aggregate outstanding amount of the Capitalization Workouts expressed as a
percentage of the Pool Balance; and
(xxv) the calculation of any Servicing Trigger or Trigger Event.
In the case of information furnished pursuant to clauses (ii) and (iii)
above, the amounts shall be expressed as an aggregate dollar amount per Variable
Funding Note, Term Note or Certificate, as applicable, with a $1,000
denomination.
If an Amortization Event or Servicing Default shall occur, on the
Business Day following the related Determination Date, the Master Servicer shall
forward to the Indenture Trustee, a statement of such effect, including the
nature of such Amortization Event or Servicing Default. The Indenture Trustee
shall deliver or cause to be delivered by mail to the Credit Enhancer notice of
such Amortization Event or Servicing Default, including, the nature thereof.
Such statement may be included in, or separate from, the regular statement to
Securityholders.
In addition, the Master Servicer shall forward to the Indenture Trustee
any other information reasonably requested by the Indenture Trustee necessary to
make distributions pursuant to Section 3.05 of the Indenture. Prior to the close
of business on the Business Day next succeeding each Determination Date, the
Master Servicer shall furnish a written statement to the Certificate Paying
Agent and the Indenture Trustee setting forth the aggregate amounts required to
be withdrawn from the Custodial Account and deposited into the Payment Account
on the Business Day preceding the related Payment Date pursuant to Section 3.03.
The determination by the Master Servicer of such amounts shall be presumptively
deemed to be correct for all purposes hereunder and the Owner Trustee and
Indenture Trustee shall be protected in relying upon the same without any
independent check or verification. In addition, upon the Issuer's written
request, the Master Servicer shall promptly furnish information reasonably
requested by the Issuer that is reasonably available to the Master Servicer to
enable the Issuer to perform its federal and state income tax reporting
obligations.
Section 4.02 TAX REPORTING. So long as Residential Funding Corporation or any
Affiliate thereof owns 100% of the Certificates, then no separate federal and
state income tax returns and information returns or reports will be filed with
respect to the Issuer, and the Issuer will be treated as an entity wholly owned
by Residential Funding Corporation or an affiliate thereof.
Section 4.03 EXCHANGE ACT REPORTING.
(a) The Master Servicer shall, on behalf of the Depositor and in respect
of the Trust Estate, sign and cause to be filed with the Commission any periodic
reports required to be filed under the provisions of the Exchange Act, and the
rules and regulations of the Commission thereunder including, without
limitation, reports on Form 10-K, Form 10-D and Form 8-K. In connection with the
preparation and filing of such periodic reports, the Indenture Trustee shall
timely provide to the Master Servicer (I) a list of Securityholders as shown on
the Certificate Register and the Note Register as of the end of each calendar
year, (II) copies of all pleadings, other legal process and any other documents
relating to any claims, charges or complaints involving the Indenture Trustee,
as trustee hereunder, or the Trust Estate that are received by the Indenture
Trustee, (III) notice of all matters that, to the actual knowledge of a
Responsible Officer of the Indenture Trustee, have been submitted to a vote of
the Securityholders, other than those matters that have been submitted to a vote
of the Securityholders at the request of the Depositor or the Master Servicer,
and (IV) notice of any failure of the Indenture Trustee to make any distribution
to the Securityholders as required pursuant to this Agreement. Neither the
Master Servicer nor the Indenture Trustee shall have any liability with respect
to the Master Servicer's failure to properly prepare or file such periodic
reports resulting from or relating to the Master Servicer's inability or failure
to obtain any information not resulting from the Master Servicer's own
negligence or willful misconduct
(b) Any Form 10-K filed with the Commission in connection with this
Section 4.03 shall include:
(i) A certification, signed by the senior officer in charge of the servicing
functions of the Master Servicer, in the form attached as Exhibit E hereto or
such other form as may be required or permitted by the Commission (the "Form
10-K Certification"), in compliance with Rules 13a-14 and 15d-14 under the
Exchange Act and any additional directives of the Commission.
(ii) A report regarding its assessment of compliance during the preceding
calendar year with all applicable servicing criteria set forth in relevant
Commission regulations with respect to mortgage-backed securities transactions
taken as a whole involving the Master Servicer that are backed by the same types
of assets as those backing the certificates, as well as similar reports on
assessment of compliance received from other parties participating in the
servicing function as required by relevant Commission regulations, as described
in Item 1122(a) of Regulation AB. The Master Servicer shall obtain from all
other parties participating in the servicing function any required
certifications.
(iii) With respect to each assessment report described immediately above, a
report by a registered public accounting firm that attests to, and reports on,
the assessment made by the asserting party, as set forth in relevant Commission
regulations, as described in Regulation 1122(b) of Regulation AB and Section
3.11.
(iv) The servicer compliance certificate required to be delivered pursuant
Section 3.10.
(c) In connection with the Form 10-K Certification, the Indenture
Trustee shall provide the Master Servicer with a back-up certification
substantially in the form attached hereto as Exhibit F.
(d) This Section 4.03 may be amended in accordance with this Servicing
Agreement without the consent of the Securityholders.
(e) The Indenture Trustee shall make available on the Indenture
Trustee's internet website each of the reports filed with the Commission by or
on behalf of the Depositor under the Exchange Act, as soon as reasonably
practicable upon delivery of such reports to the Indenture Trustee.
ARTICLE V
PAYMENT ACCOUNT
Section 5.01 PAYMENT ACCOUNT. The Indenture Trustee shall establish and maintain
a Payment Account titled "JPMorgan Chase Bank, N.A., as Indenture Trustee, for
the benefit of the Securityholders, the Certificate Paying Agent and the Credit
Enhancer pursuant to the Indenture, dated as of September 28, 2006, between Home
Equity Loan Trust 2006-HSA5 and JPMorgan Chase Bank, N.A." The Payment Account
shall be an Eligible Account. On each Payment Date, amounts on deposit in the
Payment Account will be distributed by the Indenture Trustee in accordance with
Section 3.05 of the Indenture. The Indenture Trustee shall, upon written request
from the Master Servicer, invest or cause the institution maintaining the
Payment Account to invest the funds in the Payment Account in Permitted
Investments designated in the name of the Indenture Trustee, which shall mature
not later than the Business Day next preceding the Payment Date next following
the date of such investment (except that (i) any investment in the institution
with which the Payment Account is maintained or any investment in a fund for
which the institution acts as a custodian, may mature on such Payment Date and
(ii) any other investment may mature on such Payment Date if the Indenture
Trustee shall advance funds on such Payment Date to the Payment Account in the
amount payable on such investment on such Payment Date, pending receipt thereof
to the extent necessary to make distributions on the Securities) and shall not
be sold or disposed of prior to maturity. All income and gain realized from any
such investment shall be for the benefit of the Master Servicer and shall be
subject to its withdrawal or order from time to time. The amount of any losses
incurred in respect of any such investments shall be deposited in the Payment
Account by the Master Servicer out of its own funds immediately as realized.
ARTICLE VI
THE MASTER SERVICER
Section 6.01 LIABILITY OF THE MASTER SERVICER. The Master Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
imposed upon and undertaken by the Master Servicer herein.
Section 6.02 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF,
THE MASTER SERVICER. Any corporation into which the Master Servicer may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Master
Servicer shall be a party, or any corporation succeeding to the business of the
Master Servicer, shall be the successor of the Master Servicer, hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
The Master Servicer may assign its rights and delegate its duties and
obligations under this Servicing Agreement; provided, that the Person accepting
such assignment or delegation shall be a Person which is qualified to service
Home Equity Loans, is reasonably satisfactory to the Indenture Trustee (as
pledgee of the Home Equity Loans), the Issuer and the Credit Enhancer, is
willing to service the Home Equity Loans and executes and delivers to the
Indenture Trustee and the Issuer an agreement, in form and substance reasonably
satisfactory to the Credit Enhancer, the Indenture Trustee and the Issuer, which
contains an assumption by such Person of the due and punctual performance and
observance of each covenant and condition to be performed or observed by the
Master Servicer under this Servicing Agreement; provided, further, that each
Rating Agency's rating of the Securities in effect immediately prior to such
assignment and delegation will not be qualified, reduced, or withdrawn as a
result of such assignment and delegation (as evidenced by a letter to such
effect from each Rating Agency), if determined without regard to the Policy; and
provided, further, that the Owner Trustee receives an Opinion of Counsel to the
effect that such assignment or delegation shall not cause the Trust to be
treated as a corporation for federal or state income tax purposes.
Notwithstanding anything to the contrary set forth herein, any Person
into which the Master Servicer may be merged or converted or with which it may
be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Master Servicer shall be a party, or any Person
succeeding to the business of the Master Servicer, shall be the successor of the
Master Servicer, hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
The conversion of Residential Funding Corporation's organizational
structure from a Delaware corporation to a limited liability company shall not
require the consent of any party or notice to any party and shall not in any way
affect the rights or obligations of Residential Funding Corporation hereunder.
Section 6.03 LIMITATION ON LIABILITY OF THE MASTER SERVICER AND OTHERS. Neither
the Master Servicer nor any of the directors or officers or employees or agents
of the Master Servicer shall be under any liability to the Issuer, the Owner
Trustee, the Indenture Trustee or the Securityholders for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Servicing Agreement, provided, however, that this provision shall not protect
the Master Servicer or any such Person against any liability which would
otherwise be imposed by reason of its willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder or by reason of its
reckless disregard of its obligations and duties hereunder. The Master Servicer
and any director or officer or employee or agent of the Master Servicer may rely
in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Master
Servicer and any director or officer or employee or agent of the Master Servicer
shall be indemnified by the Issuer and held harmless against any loss, liability
or expense incurred in connection with any legal action relating to this
Servicing Agreement or the Securities, including any amount paid to the Owner
Trustee or the Indenture Trustee pursuant to Section 6.06(b), other than any
loss, liability or expense incurred by reason of its willful misfeasance, bad
faith or gross negligence in the performance of its duties hereunder or by
reason of its reckless disregard of its obligations and duties hereunder. The
Master Servicer shall not be under any obligation to appear in, prosecute or
defend any legal action which is not incidental to its duties to service the
Home Equity Loans in accordance with this Servicing Agreement, and which in its
opinion may involve it in any expense or liability; provided, however, that the
Master Servicer may in its sole discretion undertake any such action which it
may deem necessary or desirable in respect of this Servicing Agreement, and the
rights and duties of the parties hereto and the interests of the
Securityholders. In such event, the reasonable legal expenses and costs of such
action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Issuer, and the Master Servicer shall be entitled to be
reimbursed therefor. The Master Servicer's right to indemnity or reimbursement
pursuant to this Section 6.03 shall survive any resignation or termination of
the Master Servicer pursuant to Section 6.04 or 7.01 with respect to any losses,
expenses, costs or liabilities arising prior to such resignation or termination
(or arising from events that occurred prior to such resignation or termination).
Section 6.04 MASTER SERVICER NOT TO RESIGN. Subject to the provisions of Section
6.02, the Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that the performance of its
obligations or duties hereunder are no longer permissible under applicable law
or are in material conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Master Servicer so causing such a conflict being of a type and
nature carried on by the Master Servicer or its subsidiaries or Affiliates at
the date of this Servicing Agreement or (ii) upon satisfaction of the following
conditions: (a) the Master Servicer has proposed a successor servicer to the
Issuer and the Indenture Trustee in writing and such proposed successor servicer
is reasonably acceptable to the Issuer, the Indenture Trustee and the Credit
Enhancer; (b) each Rating Agency shall have delivered a letter to the Issuer,
the Credit Enhancer and the Indenture Trustee prior to the appointment of the
successor servicer stating that the proposed appointment of such successor
servicer as Master Servicer hereunder will not result in the reduction or
withdrawal of the then current rating of the Securities, if determined without
regard to the Policy; and (c) such proposed successor servicer is reasonably
acceptable to the Credit Enhancer, as evidenced by a letter to the Issuer and
the Indenture Trustee; provided, however, that no such resignation by the Master
Servicer shall become effective until such successor servicer or, in the case of
(i) above, the Indenture Trustee, as pledgee of the Home Equity Loans, shall
have assumed the Master Servicer's responsibilities and obligations hereunder or
the Indenture Trustee, as pledgee of the Home Equity Loans, shall have
designated a successor servicer in accordance with Section 7.02. Any such
resignation shall not relieve the Master Servicer of responsibility for any of
the obligations specified in Sections 7.01 and 7.02 as obligations that survive
the resignation or termination of the Master Servicer. Any such determination
permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Indenture Trustee and the
Credit Enhancer.
Section 6.05 DELEGATION OF DUTIES. In the ordinary course of business, the
Master Servicer at any time may delegate any of its duties hereunder to any
Person, including any of its Affiliates, who agrees to conduct such duties in
accordance with standards comparable to those with which the Master Servicer
complies pursuant to Section 3.01. Such delegation shall not relieve the Master
Servicer of its liabilities and responsibilities with respect to such duties and
shall not constitute a resignation within the meaning of Section 6.04.
Section 6.06 MASTER SERVICER TO PAY INDENTURE TRUSTEE'S AND OWNER TRUSTEE'S FEES
AND EXPENSES; INDEMNIFICATION. (a) The Master Servicer covenants and agrees to
pay to the Owner Trustee, the Indenture Trustee and any co-trustee of the
Indenture Trustee or the Owner Trustee from time to time, and the Owner Trustee,
the Indenture Trustee and any such co-trustee shall be entitled to, reasonable
compensation (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) for all services rendered by
each of them in the execution of the trusts created under the Trust Agreement
and the Indenture and in the exercise and performance of any of the powers and
duties under the Trust Agreement or the Indenture, as the case may be, of the
Owner Trustee, the Indenture Trustee and any co-trustee, and the Master Servicer
will pay or reimburse the Indenture Trustee and any co-trustee upon request for
all reasonable expenses, disbursements and advances incurred or made by the
Indenture Trustee or any co-trustee in accordance with any of the provisions of
this Servicing Agreement or the Indenture except any such expense, disbursement
or advance as may arise from its negligence, willful misfeasance or bad faith.
(b) The Master Servicer agrees to indemnify the Indenture Trustee
and the Owner Trustee for, and to hold the Indenture Trustee and the Owner
Trustee, as the case may be, harmless against, any loss, liability or expense
incurred without negligence, bad faith or willful misconduct on the part of the
Indenture Trustee or the Owner Trustee, as the case may be, arising out of, or
in connection with, the acceptance and administration of the Issuer and the
assets thereof, including the costs and expenses (including reasonable legal
fees and expenses) of defending the Indenture Trustee or the Owner Trustee, as
the case may be, against any claim in connection with the exercise or
performance of any of its powers or duties under any Basic Document, provided
that:
(i) with respect to any such claim, the Indenture Trustee or Owner Trustee, as
the case may be, shall have given the Master Servicer written notice thereof
promptly after the Indenture Trustee or Owner Trustee, as the case may be, shall
have actual knowledge thereof;
(ii) while maintaining control over its own defense, the Issuer, the Indenture
Trustee or Owner Trustee, as the case may be, shall cooperate and consult fully
with the Master Servicer in preparing such defense; and
(iii) notwithstanding anything in this Servicing Agreement to the contrary, the
Master Servicer shall not be liable for settlement of any claim by the Indenture
Trustee or the Owner Trustee, as the case may be, entered into without the prior
consent of the Master Servicer.
No termination of this Servicing Agreement shall affect the obligations
created by this Section 6.06 of the Master Servicer to indemnify the Indenture
Trustee and the Owner Trustee under the conditions and to the extent set forth
herein.
Notwithstanding the foregoing, the indemnification provided by the
Master Servicer in this Section 6.06(b) shall not be available (a) for any loss,
liability or expense of the Indenture Trustee or the Owner Trustee, including
the costs and expenses of defending itself against any claim, incurred in
connection with any actions taken by the Indenture Trustee or the Owner Trustee
at the direction of the Noteholders or Certificateholders, as the case may be,
pursuant to the terms of this Servicing Agreement or (b) where indemnification
by the Indenture Trustee is required pursuant to Section 9.05(a).
ARTICLE VII
DEFAULT
Section 7.01 SERVICING DEFAULT. If any one of the following events ("Servicing
Default") shall occur and be continuing:
(a) Any failure by the Master Servicer to deposit in the
Custodial Account or Payment Account any deposit required to be made under the
terms of this Servicing Agreement which continues unremedied for a period of
five Business Days after the date upon which written notice of such failure
shall have been given to the Master Servicer by the Issuer or the Indenture
Trustee, or to the Master Servicer, the Issuer and the Indenture Trustee by the
Credit Enhancer; or
(b) Failure on the part of the Master Servicer duly to observe or
perform in any material respect any other covenants or agreements of the Master
Servicer set forth in the Securities or in this Servicing Agreement, which
failure, in each case, materially and adversely affects the interests of
Securityholders or the Credit Enhancer and which continues unremedied for a
period of 45 days after the date on which written notice of such failure,
requiring the same to be remedied, and stating that such notice is a "Notice of
Default" hereunder, shall have been given to the Master Servicer by the Issuer
or the Indenture Trustee, or to the Master Servicer, the Issuer and the
Indenture Trustee by the Credit Enhancer; or
(c) The entry against the Master Servicer of a decree or order by
a court or agency or supervisory authority having jurisdiction in the premises
for the appointment of a trustee, conservator, receiver or liquidator in any
insolvency, conservatorship, receivership, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding up or
liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or
(d) The Master Servicer shall voluntarily go into liquidation,
consent to the appointment of a conservator, receiver, liquidator or similar
person in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Master Servicer or of
or relating to all or substantially all of its property, or a decree or order of
a court, agency or supervisory authority having jurisdiction in the premises for
the appointment of a conservator, receiver, liquidator or similar person in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Master Servicer and such decree or order shall
have remained in force undischarged, unbonded or unstayed for a period of 60
days; or the Master Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations,
then, and in every such case, so long as a Servicing Default shall not have been
remedied by the Master Servicer, either the Issuer or the Indenture Trustee,
with the consent of the Credit Enhancer, or the Credit Enhancer, by notice then
given in writing to the Master Servicer (and to the Issuer and the Indenture
Trustee if given by the Credit Enhancer) may terminate all of the rights and
obligations of the Master Servicer as servicer under this Servicing Agreement
other than its right to receive servicing compensation and expenses for
servicing the Home Equity Loans hereunder during any period prior to the date of
such termination and the Issuer or the Indenture Trustee, with the consent of
the Credit Enhancer, or the Credit Enhancer may exercise any and all other
remedies available at law or equity. Any such notice to the Master Servicer
shall also be given to each Rating Agency, the Credit Enhancer and the Issuer.
On or after the receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer under this Servicing Agreement,
whether with respect to the Securities or the Home Equity Loans or otherwise,
shall pass to and be vested in the Indenture Trustee as pledgee of the Home
Equity Loans, as successor Master Servicer pursuant to and under this Section
7.01; and, without limitation, the Indenture Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of each Home Equity Loan and related documents, or otherwise. The
Master Servicer agrees to cooperate with the Indenture Trustee in effecting the
termination of the responsibilities and rights of the Master Servicer hereunder,
including, without limitation, the transfer to the Indenture Trustee for the
administration by it of all cash amounts relating to the Home Equity Loans that
shall at the time be held by the Master Servicer and to be deposited by it in
the Custodial Account, or that have been deposited by the Master Servicer in the
Custodial Account or thereafter received by the Master Servicer with respect to
the Home Equity Loans. All reasonable costs and expenses (including, but not
limited to, attorneys' fees) incurred in connection with amending this Servicing
Agreement to reflect such succession as Master Servicer pursuant to this Section
7.01 shall be paid by the predecessor Master Servicer (or if the predecessor
Master Servicer is the Indenture Trustee, the initial Master Servicer) upon
presentation of reasonable documentation of such costs and expenses.
Notwithstanding any termination of the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to receive, out of any late
collection of a payment on a Home Equity Loan which was due prior to the notice
terminating the Master Servicer's rights and obligations hereunder and received
after such notice, that portion to which the Master Servicer would have been
entitled pursuant to Sections 3.03 and 3.09 as well as its Master Servicing Fee
in respect thereof, and any other amounts payable to the Master Servicer
hereunder the entitlement to which arose prior to the termination of its
activities hereunder.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 7.01(a) or under Section 7.01(b) after the applicable grace
periods specified in such Sections, shall not constitute a Servicing Default if
such delay or failure could not be prevented by the exercise of reasonable
diligence by the Master Servicer and such delay or failure was caused by an act
of God or the public enemy, acts of declared or undeclared war, public disorder,
rebellion or sabotage, epidemics, landslides, lightning, fire, hurricanes,
earthquakes, floods or similar causes. The preceding sentence shall not relieve
the Master Servicer from using reasonable efforts to perform its respective
obligations in a timely manner in accordance with the terms of this Servicing
Agreement and the Master Servicer shall provide the Indenture Trustee, the
Credit Enhancer and the Securityholders with notice of such failure or delay by
it, together with a description of its efforts to so perform its obligations.
The Master Servicer shall immediately notify the Indenture Trustee, the Credit
Enhancer and the Owner Trustee in writing of any Servicing Default.
Section 7.02 INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Master Servicer receives a notice of termination
pursuant to Section 7.01 or sends a notice pursuant to Section 6.04, the
Indenture Trustee as pledgee of the Home Equity Loans shall be the successor in
all respects to the Master Servicer in its capacity as servicer under this
Servicing Agreement and the transactions set forth or provided for herein and
shall be subject to all the responsibilities, duties and liabilities relating
thereto placed on the Master Servicer by the terms and provisions hereof.
Nothing in this Servicing Agreement or in the Trust Agreement shall be construed
to permit or require the Indenture Trustee as successor Master Servicer to (i)
succeed to the responsibilities, duties and liabilities of the initial Master
Servicer in its capacity as Seller under the Purchase Agreement, (ii) be
responsible or accountable for any act or omission of the Master Servicer prior
to the issuance of a notice of termination hereunder, (iii) require or obligate
the Indenture Trustee, in its capacity as successor Master Servicer, to
purchase, repurchase or substitute any Home Equity Loan, (iv) fund any
Additional Balances with respect to any Home Equity Loan, (v) fund any losses on
any Permitted Investment directed by any other Master Servicer, or (vi) be
responsible for the representations and warranties of the Master Servicer. As
compensation therefor, the Indenture Trustee as successor Master Servicer shall
be entitled to such compensation as the Master Servicer would have been entitled
to hereunder if no such notice of termination had been given. Notwithstanding
the above, (i) if the Indenture Trustee is unwilling to act as successor Master
Servicer, or (ii) if the Indenture Trustee is legally unable so to act, the
Indenture Trustee as pledgee of the Home Equity Loans may (in the situation
described in clause (i)) or shall (in the situation described in clause (ii))
appoint or petition a court of competent jurisdiction to appoint any established
housing and home finance institution, bank or other mortgage loan or home equity
loan servicer having a net worth of not less than $10,000,000 as the successor
to the Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder;
provided, that any such successor Master Servicer shall be acceptable to the
Credit Enhancer, as evidenced by the Credit Enhancer's prior written consent
which consent shall not be unreasonably withheld and provided further, that the
appointment of any such successor Master Servicer will not result in the
qualification, reduction or withdrawal of the ratings assigned to the Securities
by the Rating Agencies, if determined without regard to the Policy. Pending
appointment of a successor to the Master Servicer here under, unless the
Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the successor shall be entitled to receive
compensation out of payments on Home Equity Loans in an amount equal to the
compensation which the Master Servicer would otherwise have received pursuant to
Section 3.09 (or such lesser compensation as the Indenture Trustee and such
successor shall agree). The appointment of a successor Master Servicer shall not
affect any liability of the predecessor Master Servicer which may have arisen
under this Servicing Agreement prior to its termination as Master Servicer
(including, without limitation, the obligation to purchase Home Equity Loans
pursuant to Section 3.01, to pay any deductible under an insurance policy
pursuant to Section 3.04 or to indemnify the Indenture Trustee pursuant to
Section 6.06), nor shall any successor Master Servicer be liable for any acts or
omissions of the predecessor Master Servicer or for any breach by such Master
Servicer of any of its representations or warranties contained herein or in any
related document or agreement. The Indenture Trustee and such successor shall
take such action, consistent with this Servicing Agreement, as shall be
necessary to effectuate any such succession.
(b) Any successor, including the Indenture Trustee, to the Master
Servicer as servicer shall during the term of its service as servicer (i)
continue to service and administer the Home Equity Loans for the benefit of the
Securityholders, (ii) maintain in force a policy or policies of insurance
covering errors and omissions in the performance of its obligations as Master
Servicer hereunder and a fidelity bond in respect of its officers, employees and
agents to the same extent as the Master Servicer is so required pursuant to
Section 3.13 and (iii) be bound by the terms of the Insurance Agreement.
(c) Any successor Master Servicer, including the Indenture
Trustee, shall not be deemed in default or to have breached its duties hereunder
if the predecessor Master Servicer shall fail to deliver any required deposit to
the Custodial Account or otherwise cooperate with any required servicing
transfer or succession hereunder.
(d) In connection with the termination or resignation of the
Master Servicer hereunder, either (i) the successor Master Servicer, including
the Indenture Trustee if the Indenture Trustee is acting as successor Master
Servicer, shall represent and warrant that it is a member of MERS in good
standing and shall agree to comply in all material respects with the rules and
procedures of MERS in connection with the servicing of the Home Equity Loans
that are registered with MERS, in which case the predecessor Master Servicer
shall cooperate with the successor Master Servicer in causing MERS to revise its
records to reflect the transfer of servicing to the successor Master Servicer as
necessary under MERS' rules and regulations, or (ii) the predecessor Master
Servicer shall cooperate with the successor Master Servicer in causing MERS to
execute and deliver an assignment of Mortgage in recordable form to transfer the
Mortgage from MERS to the Indenture Trustee and to execute and deliver such
other notices, documents and other instruments as may be necessary or desirable
to effect a transfer of such Home Equity Loan or servicing of such Home Equity
Loan on the MERS(R) System to the successor Master Servicer. The predecessor
Master Servicer shall file or cause to be filed any such assignment in the
appropriate recording office. The predecessor Master Servicer shall bear any and
all fees of MERS, costs of preparing any assignments of Mortgage, and fees and
costs of filing any assignments of Mortgage that may be required under this
subsection (d). The successor Master Servicer shall cause such assignment to be
delivered to the Indenture Trustee or the Custodian promptly upon receipt of the
original with evidence of recording thereon or a copy certified by the public
recording office in which such assignment was recorded.
Section 7.03 NOTIFICATION TO SECURITYHOLDERS. Upon any termination of or
appointment of a successor to the Master Servicer pursuant to this Article VII
or Section 6.04, the Indenture Trustee shall give prompt written notice thereof
to the Securityholders, the Credit Enhancer, the Issuer and each Rating Agency.
Section 7.04 SERVICING TRIGGER; REMOVAL OF MASTER SERVICER .
(a) Upon determination by the Credit Enhancer or the Master Servicer
that a Servicing Trigger has occurred, such party shall give written notice of
such Servicing Trigger to the Master Servicer or Credit Enhancer, as applicable,
the Depositor, the Indenture Trustee and to each Rating Agency.
(b) At any time after such determination and while a Servicing Trigger
is continuing, the Credit Enhancer may direct the Indenture Trustee in writing
to remove the Master Servicer if the Credit Enhancer makes a determination that
the manner of master servicing was a factor contributing to the size of the
delinquencies or losses incurred in the Trust Estate.
(c) Upon receipt of directions to remove the Master Servicer pursuant to
the preceding clause (b), the Indenture Trustee shall notify the Master Servicer
that it has been terminated and the Master Servicer shall be terminated in the
same manner as specified in Sections 7.01 and 7.02.
(d) After notice of occurrence of a Servicing Trigger has been given and
while a Servicing Trigger is continuing, until and unless the Master Servicer
has been removed as provided in clause (b), the Master Servicer covenants and
agrees to act as the Master Servicer for a term from the occurrence of the
Servicing Trigger to the end of the calendar quarter in which such Servicing
Trigger occurs, which term may at the Credit Enhancer's discretion be extended
by written notice to the Indenture Trustee and the Master Servicer for
successive terms of three (3) calendar months each, until the termination of the
Trust Estate. The Master Servicer will, upon the receipt of each such notice of
extension (a "Master Servicer Extension Notice") become bound for the duration
of the term covered by such Master Servicer Extension Notice to continue as
Master Servicer subject to and in accordance with this Servicing Agreement. If,
as of the fifteenth (15th) day prior to the last day of any term as the Master
Servicer, the Indenture Trustee shall not have received any Master Servicer
Extension Notice from the Credit Enhancer, the Indenture Trustee shall, within
five (5) days thereafter, give written notice of such nonreceipt to the Credit
Enhancer and the Master Servicer. If any such term expires without a Master
Servicer Extension Notice then the Indenture Trustee shall act as successor
Master Servicer as provided in Section 7.02.
(e) No provision of this Section 7.04 shall have the effect of limiting
the rights of the Depositor, the Indenture Trustee, the Noteholders or the
Credit Enhancer under Section 7.01.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01 AMENDMENT. This Servicing Agreement may be amended from time to
time by the parties hereto, provided that any amendment be accompanied by a
letter from the Rating Agencies that the amendment will not result in the
downgrading or withdrawal of the rating then assigned to the Securities, if
determined without regard to the Policy, and provided further, that the Credit
Enhancer and the Indenture Trustee shall consent thereto.
Section 8.02 GOVERNING LAW. THIS SERVICING AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 8.03 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 certified mail, return receipt requested, to (a) in the case of
the Master Servicer, 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000-0000,
Attention: Director - Bond Administration, (b) in the case of the Depositor,
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx 00000,
Attention: President, (c) in the case of the Credit Enhancer, MBIA Insurance
Corporation, 000 Xxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000, Attention: IPM-SF, Re:
Home Equity Loan Trust 2006-HSA5, (d) in the case of Standard & Poor's, 00 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Residential Mortgage Surveillance
Group, (e) in the case of Moody's, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: ABS Monitoring Department, (f) in the case of the Owner Trustee,
Wilmington Trust Company, Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention: Corporate Trust Administration, (g)
in the case of the Issuer, to Home Equity Loan Trust 2006-HSA5, c/o Owner
Trustee, Wilmington Trust Company, Xxxxxx Square North, 0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention: Corporate Trust
Administration, (h) in the case of the Indenture Trustee, JPMorgan Chase Bank,
N.A., 000 Xxxxxx, 0xx Xxxxx, Xxxxxxx, Xxxxx 00000, Attention: Worldwide
Securities Services/ Structured Finance Services--2006-HSA5 and (i) in the case
of the Underwriters, to Xxxxxxx, Sachs & Co., 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: General Counsel, and to Residential Funding
Securities, LLC, 0000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx
00000-0000, Attention: Director of Compliance; or, as to each party, at such
other address as shall be designated by such party in a written notice to each
other party. Any notice required or permitted to be mailed to a Securityholder
shall be given by first class mail, postage prepaid, at the address of such
Securityholder as shown in the Register. Any notice so mailed within the time
prescribed in this Servicing Agreement shall be conclusively presumed to have
been duly given, whether or not the Securityholder receives such notice. Any
notice or other document required to be delivered or mailed by the Indenture
Trustee to any Rating Agency shall be given on a reasonable efforts basis and
only as a matter of courtesy and accommodation and the Indenture Trustee shall
have no liability for failure to delivery such notice or document to any Rating
Agency.
Section 8.04 SEVERABILITY OF PROVISIONS. If any one or more of the covenants,
agreements, provisions or terms of this Servicing Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Servicing Agreement and shall in no way affect the
validity or enforceability of the other provisions of this Servicing Agreement
or of the Securities or the rights of the Securityholders thereof.
Section 8.05 THIRD-PARTY BENEFICIARIES. This Servicing Agreement will inure to
the benefit of and be binding upon the parties hereto, the Securityholders, the
Credit Enhancer, the Depositor, the Owner Trustee and their respective
successors and permitted assigns. Except as otherwise provided in this Servicing
Agreement, no other Person will have any right or obligation hereunder. The
Credit Enhancer is a third-party beneficiary of this Servicing Agreement.
Section 8.06 COUNTERPARTS. This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
Section 8.07 EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section
headings herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.
Section 8.08 TERMINATION UPON PURCHASE BY THE MASTER SERVICER OR LIQUIDATION OF
HOME EQUITY LOANS. (a) The respective obligations and responsibilities of the
Master Servicer, the Issuer and the Indenture Trustee created hereby shall
terminate upon the last action required to be taken by the Issuer pursuant to
the Trust Agreement and by the Indenture Trustee pursuant to the Indenture
following the earlier of:
(i) the date on or before which the Indenture or Trust Agreement is terminated;
or
(ii) the purchase by the Master Servicer of all Home Equity Loans and all
property acquired in respect of any Home Equity Loan remaining in the Trust
(other than the Policy).
(b) The right of the Master Servicer to purchase the Home Equity
Loans is conditioned upon the Pool Balance as of such date (after application of
payments received during the related Collection Period) being equal to or less
than ten percent of the aggregate of the Cut-off Date Loan Balances of the Home
Equity Loans; provided, however, that no such purchase will be permitted if it
would result in a draw under the Policy or would result in any amounts owing to
the Credit Enhancer remaining unreimbursed, unless, in either case, the Credit
Enhancer consents in writing to the purchase. The purchase by the Master
Servicer of the Home Equity Loans and all property acquired (including REO
Property) in respect of such Home Equity Loans shall be at a price equal to 100%
of the unpaid Loan Balance of each Home Equity Loan, plus accrued and unpaid
interest on each such Home Equity Loan, at the applicable Net Loan Rate, plus
the Policy premium rate, up to the first day of the month in which such amounts
are to be distributed to Securityholders, or in the case of REO Property, the
fair market value of the REO Property, plus any amounts due and owing to the
Credit Enhancer under the Insurance Agreement in respect of the Policy or the
Notes (any unpaid Master Servicing Fee shall be deemed paid at such time). The
purchase price paid by the Master Servicer for the Home Equity Loans shall also
include any amounts owed to the Trust by the Seller pursuant to the penultimate
sentence of the second paragraph of Section 3.1(c) of the Purchase Agreement,
that remain unpaid on the date of such purchase. If such right is exercised by
the Master Servicer, the Master Servicer shall deposit the amount calculated
pursuant to this Section 8.08(b) with the Indenture Trustee for deposit in the
Payment Account and, upon the receipt of such deposit, the Indenture Trustee or
Custodian shall release to the Master Servicer, the files pertaining to the Home
Equity Loans being purchased.
(c) In addition to the foregoing, on any Payment Date on which
the Pool Balance (after application of payment received during the related
Collection Period) is equal to or less than ten percent of the aggregate of the
Cut-off Date Loan Balances of the Home Equity Loans, the Master Servicer shall
have the right, at its option, to purchase the Notes in whole, but not in part,
at a price equal to the outstanding Security Balance of the Notes plus the sum
of Interest Distribution Amount thereon for the related Interest Period and any
previously unpaid Interest Distribution Amount, plus any amounts due to the
Credit Enhancer under the Insurance Agreement in respect of the Policy or the
Notes. If the Master Servicer exercises this right to purchase the outstanding
Notes, the Master Servicer will promptly purchase the Home Equity Loans pursuant
to this Section 8.08.
(d) The Master Servicer, at its expense, shall prepare and
deliver to the Indenture Trustee for execution, at the time the Home Equity
Loans are to be released to the Master Servicer, appropriate documents assigning
each such Home Equity Loan from the Indenture Trustee or the Issuer to the
Master Servicer or the appropriate party.
Section 8.09 CERTAIN MATTERS AFFECTING THE INDENTURE TRUSTEE. For all purposes
of this Servicing Agreement, in the performance of any of its duties or in the
exercise of any of its powers hereunder, the Indenture Trustee shall be subject
to and entitled to the benefits of Article VI of the Indenture.
Section 8.10 OWNER TRUSTEE NOT LIABLE FOR RELATED DOCUMENTS. The recitals
contained herein shall be taken as the statements of the Depositor, and the
Owner Trustee assumes no responsibility for the correctness thereof. The Owner
Trustee makes no representations as to the validity or sufficiency of this
Servicing Agreement, of any Basic Document or of the Certificates (other than
the signatures of the Owner Trustee on the Certificates) or the Notes, or of any
Related Documents. The Owner Trustee shall at no time have any responsibility or
liability with respect to the sufficiency of the Owner Trust Estate or its
ability to generate the payments to be distributed to Certificateholders under
the Trust Agreement or the Noteholders under the Indenture, including, the
compliance by the Depositor or the Seller with any warranty or representation
made under any Basic Document or in any related document or the accuracy of any
such warranty or representation, or any action of the Certificate Paying Agent,
the Certificate Registrar or the Indenture Trustee taken in the name of the
Owner Trustee.
ARTICLE IX
COMPLIANCE WITH REGULATION AB
Section 9.01 INTENT OF THE PARTIES; REASONABLENESS.
The Depositor, the Indenture Trustee and the Master Servicer acknowledge
and agree that the purpose of this Article IX is to facilitate compliance by the
Depositor with the provisions of Regulation AB and related rules and regulations
of the Commission. The Depositor shall not exercise its right to request
delivery of information or other performance under these provisions other than
in good faith, or for purposes other than compliance with the Securities Act,
the Exchange Act and the rules and regulations of the Commission under the
Securities Act and the Exchange Act. Each of the Master Servicer and the
Indenture Trustee acknowledges that interpretations of the requirements of
Regulation AB may change over time, whether due to interpretive guidance
provided by the Commission or its staff, consensus among participants in the
mortgage-backed securities markets, advice of counsel, or otherwise, and agrees
to comply with reasonable requests made by the Depositor in good faith for
delivery of information under these provisions on the basis of evolving
interpretations of Regulation AB. Each of the Master Servicer and the Indenture
Trustee shall cooperate reasonably with the Depositor to deliver to the
Depositor (including any of its assignees or designees), any and all disclosure,
statements, reports, certifications, records and any other information necessary
in the reasonable, good faith determination of the Depositor to permit the
Depositor to comply with the provisions of Regulation AB.
Section 9.02 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE INDENTURE TRUSTEE.
(a) The Indenture Trustee shall be deemed to represent and warrant to
the Depositor as of the date hereof and on each date on which information is
provided to the Depositor under Sections 9.01, 9.02(b) or 9.03 that, except as
disclosed in writing to the Depositor prior to such date: (i) it is not aware
and has not received notice that any default, early amortization or other
performance triggering event has occurred as to any other Securitization
Transaction due to any default of the Indenture Trustee; (ii) there are no
aspects of its financial condition that could have a material adverse effect on
the performance by it of its trustee obligations under this Servicing Agreement
or any other Securitization Transaction as to which it is the trustee; (iii)
there are no material legal or governmental proceedings pending (or known to be
contemplated) against it that would be material to Noteholders; (iv) there are
no relationships or transactions (as described in Item 1119(b) of Regulation AB)
relating to the Indenture Trustee with respect to the Depositor or any sponsor,
issuing entity, servicer, trustee, originator, significant obligor, enhancement
or support provider or other material transaction party (as each of such terms
are used in Regulation AB) relating to the Securitization Transaction
contemplated by the Servicing Agreement, as identified by the Depositor to the
Indenture Trustee in writing as of the Closing Date (each, a "Transaction
Party") that are outside the ordinary course of business or on terms other than
would be obtained in an arm's length transaction with an unrelated third party,
apart from the Securitization Transaction, and that are material to the
investors' understanding of the Term Notes; and (v) the Indenture Trustee is not
an affiliate (as contemplated by Item 1119(a) of Regulation AB) of any
Transaction Party. The Depositor shall notify the Indenture Trustee of any
change in the identity of a Transaction Party after the Closing Date.
(b) If so requested by the Depositor on any date following the Closing
Date, the Indenture Trustee shall, within five Business Days following such
request, confirm in writing the accuracy of the representations and warranties
set forth in paragraph (a) of this Section or, if any such representation and
warranty is not accurate as of the date of such confirmation, provide the
pertinent facts, in writing, to the Depositor. Any such request from the
Depositor shall not be given more than once each calendar quarter, unless the
Depositor shall have a reasonable basis for questioning the accuracy of any of
the representations and warranties.
Section 9.03 INFORMATION TO BE PROVIDED BY THE INDENTURE TRUSTEE.
For so long as the Term Notes are outstanding, for the purpose of
satisfying the Depositor's reporting obligation under the Exchange Act with
respect to any class of Term Notes, the Indenture Trustee shall provide to the
Depositor a written description of (a) any litigation or governmental
proceedings pending against the Indenture Trustee as of the last day of each
calendar month that would be material to Noteholders, and (b) any affiliations
or relationships (as described in Item 1119 of Regulation AB) that develop
following the Closing Date between the Indenture Trustee and any Transaction
Party of the type described in Section 9.02(a)(iv) or 9.02(a)(v) as of the last
day of each calendar year. Any descriptions required with respect to legal
proceedings, as well as updates to previously provided descriptions, under this
Section 9.03 shall be given no later than five Business Days prior to the
Determination Date following the month in which the relevant event occurs, and
any notices and descriptions required with respect to affiliations, as well as
updates to previously provided descriptions, under this Section 9.03 shall be
given no later than January 31 of the calendar year following the year in which
the relevant event occurs. As of the related Payment Date with respect to each
Report on Form 10-D with respect to the Term Notes filed by or on behalf of the
Depositor, and as of March 15 preceding the date each Report on Form 10-K with
respect to the Term Notes is filed, the Indenture Trustee shall be deemed to
represent and warrant that any information previously provided by the Indenture
Trustee under this Article IX is materially correct and does not have any
material omissions unless the Indenture Trustee has provided an update to such
information. The Depositor will allow the Indenture Trustee to review any
disclosure relating to material litigation against the Indenture Trustee prior
to filing such disclosure with the Commission to the extent the Depositor
changes the information provided by the Indenture Trustee.
Section 9.04 REPORT ON ASSESSMENT OF COMPLIANCE AND ATTESTATION.
On or before March 15 of each calendar year, the Indenture Trustee
shall:
(a) deliver to the Depositor a report (in form and substance reasonably
satisfactory to the Depositor) regarding the Indenture Trustee's assessment of
compliance with the applicable Servicing Criteria during the immediately
preceding calendar year, as required under Rules 13a-18 and 15d-18 of the
Exchange Act and Item 1122 of Regulation AB. Such report shall be signed by an
authorized officer of the Indenture Trustee, and shall address each of the
Servicing Criteria specified on Exhibit G hereto; and
(b) deliver to the Depositor a report of a registered public accounting
firm satisfying the requirements of Rule 2-01 of Regulation S-X under the
Securities Act and the Exchange Act that attests to, and reports on, the
assessment of compliance made by the Indenture Trustee and delivered pursuant to
the preceding paragraph. Such attestation shall be in accordance with Rules
1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the
Exchange Act.
Section 9.05 INDEMNIFICATION; REMEDIES.
(a) The Indenture Trustee shall indemnify the Depositor, each affiliate
of the Depositor, the Master Servicer and each affiliate of the Master Servicer,
and the respective present and former directors, officers, employees and agents
of each of the foregoing, and shall hold each of them harmless from and against
any losses, damages, penalties, fines, forfeitures, legal fees and expenses and
related costs, judgments, and any other costs, fees and expenses that any of
them may sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or
alleged to be contained in any information, report, certification, accountants'
attestation or other material provided under this Article IX by or on behalf of
the Indenture Trustee (collectively, the "Indenture Trustee Information"), or
(B) the omission or alleged omission to state in the Indenture Trustee
Information a material fact required to be stated in the Indenture Trustee
Information or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; or
(ii) any failure by the Indenture Trustee to deliver any
information, report, certification, or other material when and as required under
this Article IX, other than a failure by the Indenture Trustee to deliver an
accountants' attestation.
(b) In the case of any failure of performance described in clause (ii)
of Section 9.05(a), as well as a failure to deliver an accountants' attestation,
the Indenture Trustee shall (i) promptly reimburse the Depositor for all costs
reasonably incurred by the Depositor in order to obtain the information, report,
certification, accountants' attestation or other material not delivered by the
Indenture Trustee as required and (ii) cooperate with the Depositor to mitigate
any damages that may result from such failure.
(c) The Depositor and the Master Servicer shall indemnify the Indenture
Trustee, each affiliate of the Indenture Trustee and the respective present and
former directors, officers, employees and agents of the Indenture Trustee, and
shall hold each of them harmless from and against any losses, damages,
penalties, fines, forfeitures, legal fees and expenses and related costs,
judgments, and any other costs, fees and expenses that any of them may sustain
arising out of or based upon (i) any untrue statement of a material fact
contained or alleged to be contained in any information provided under this
Servicing Agreement by or on behalf of the Depositor or Master Servicer for
inclusion in any report filed with Commission under the Exchange Act
(collectively, the "RFC Information"), or (ii) the omission or alleged omission
to state in the RFC Information a material fact required to be stated in the RFC
Information or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(d) Notwithstanding any provision in this Section 9.05 to the contrary,
the parties agree that none of the Indenture Trustee, the Depositor or the
Master Servicer shall be liable to the other for any consequential or punitive
damages whatsoever, whether in contract, tort (including negligence and strict
liability), or any other legal or equitable principle; provided, however, that
such limitation shall not be applicable with respect to third party claims made
against a party.
IN WITNESS WHEREOF, the Master Servicer, the Indenture Trustee and the
Issuer have caused this Servicing Agreement to be duly executed by their
respective officers or representatives all as of the day and year first above
written.
RESIDENTIAL FUNDING CORPORATION,
as Master Servicer
By: /s/ Xxxxxx Xxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxx
Title: Associate
HOME EQUITY LOAN TRUST 2006-HSA5
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Vice President
JPMORGAN CHASE BANK, N.A.,
as Indenture Trustee
By: /s/ Xxxxxx Xxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxx
Title: Assistant Vice President
Acknowledged and Agreed solely with respect to Article IX:
RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.
By: /s/ Xxxxxxxxxxx Xxxxxxxx
Name: Xxxxxxxxxxx Xxxxxxxx
Title: Vice President
EXHIBIT A
HOME EQUITY LOAN SCHEDULE
EXHIBIT B
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PREMISES:
That JPMorgan Chase Bank, N.A., as Indenture Trustee (the "Indenture
Trustee"), under the Indenture (the "Indenture") between Home Equity Loan Trust
2006-HSA5 and the Indenture Trustee, a national banking association organized
and existing under the laws of the State of New York, and having its principal
office located at 4 New York Plaza, in the City of New York in the State of New
York, hath made, constituted and appointed, and does by these presents make,
constitute and appoint Residential Funding Corporation, a corporation organized
and existing under the laws of the State of Delaware, its true and lawful
Attorney-in-Fact, with full power and authority to sign, execute, acknowledge,
deliver, file for record, and record any instrument on its behalf and to perform
such other act or acts as may be customarily and reasonably necessary and
appropriate to effectuate the following enumerated transactions in respect of
any of the mortgages or deeds of trust (the "Mortgages" and the "Deeds of
Trust", respectively) creating a trust or second lien or an estate in fee simple
interest in real property securing a Home Equity Loan and promissory notes
secured thereby (the "Mortgage Notes") for which the undersigned is acting as
Indenture Trustee for various Securityholders (whether the undersigned is named
therein as mortgagee or beneficiary or has become mortgagee by virtue of
Endorsement of the Mortgage Note secured by any such Mortgage or Deed of Trust)
and MBIA Insurance Corporation, as credit enhancer, and for which Residential
Funding Corporation is acting as master servicer pursuant to a Servicing
Agreement, dated as of September 28, 2006 (the "Servicing Agreement").
This appointment shall apply only to transactions which the Indenture
Trustee is authorized to enter into under the Indenture, but in no event shall
apply to any transactions other than the following enumerated transactions only:
1. The modification or re-recording of a Mortgage or Deed of Trust, where said
modification or re-recording is for the purpose of correcting the Mortgage or
Deed of Trust to conform same to the original intent of the parties thereto or
to correct title errors discovered after such title insurance was issued and
said modification or re-recording, in either instance, does not adversely affect
the lien of the Mortgage or Deed of Trust as insured.
2. The subordination of the lien of a Mortgage or Deed of Trust to an easement
in favor of a public utility company or a government agency or unit with powers
of eminent domain; this section shall include, without limitation, the execution
of partial satisfactions/releases, partial reconveyances or the execution of
requests to trustees to accomplish same.
3. With respect to a Mortgage or Deed of Trust, the foreclosure, the taking of a
deed in lieu of foreclosure, or the completion of judicial or non-judicial
foreclosure or termination, cancellation or rescission of any such foreclosure,
including, without limitation, any and all of the following acts:
a. The substitution of trustee(s) serving under a Deed of Trust, in
accordance with state law and the Deed of Trust;
b. Statements of breach or non-performance;
c. Notices of default;
d. Cancellations/rescissions of notices of default and/or notices of
sale;
e. The taking of a deed in lieu of foreclosure; and
f. Such other documents and actions as may be necessary under the terms
of the Mortgage, Deed of Trust or state law to expeditiously complete
said transactions.
4. The conveyance of the properties to the mortgage insurer, or the closing of
the title to the property to be acquired as real estate owned, or conveyance of
title to real estate owned.
5. The completion of loan assumption agreements.
6. The full satisfaction/release of a Mortgage or Deed of Trust or full
reconveyance upon payment and discharge of all sums secured thereby, including,
without limitation, cancellation of the related Mortgage Note.
7. The assignment of any Mortgage or Deed of Trust and the related Mortgage
Note, in connection with the repurchase of the Home Equity Loan secured and
evidenced thereby pursuant to the requirements of a Residential Funding
Corporation Seller Contract, including, with limitation, by reason of conversion
of an adjustable rate mortgage loan from a variable rate to a fixed rate.
8. The full assignment of a Mortgage or Deed of Trust upon payment and discharge
of all sums secured thereby in conjunction with the refinancing thereof,
including, without limitation, the endorsement of the related Mortgage Note.
9. The modification or re-recording of a Mortgage or Deed of Trust, where said
modification or re-recording is for the purpose of any modification pursuant to
Section 3.01 of the Servicing Agreement.
10. The subordination of the lien of a Mortgage or Deed of Trust, where said
subordination is in connection with any modification pursuant to Section 3.01 of
the Servicing Agreement, and the execution of partial satisfactions/releases in
connection with such same Section 3.01.
The undersigned gives said Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney as fully as the undersigned might or could do, and hereby does
ratify and confirm to all that said Attorney-in-Fact shall lawfully do or cause
to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of Attorney; and may be satisfied that this
Limited Power of Attorney shall continue in full force and effect has not been
revoked unless an instrument of revocation has been made in writing by the
undersigned.
JPMORGAN CHASE BANK, N.A., not in its individual
capacity, but solely as Indenture Trustee under
the Indenture
By:
--------------------------------------
Name:
Title:
STATE OF )
SS.
COUNTY OF )
On this day of , 2006, before me the undersigned, Notary Public of said
State, personally appeared personally known to me to be duly authorized officers
of JPMorgan Chase Bank, N.A. that executed the within instrument and personally
known to me to be the persons who executed the within instrument on behalf of
JPMorgan Chase Bank, N.A. therein named, and acknowledged to me such JPMorgan
Chase Bank, N.A. executed the within instrument pursuant to its by-laws.
__________________________________
WITNESS my hand and official seal.
Notary Public in and for the
State of __________________________
After recording, please mail to:
Attn:_____________________________
EXHIBIT C
FORM OF REQUEST FOR RELEASE
DATE:
TO:
Re: REQUEST FOR RELEASE OF DOCUMENTS
In connection with your administration of the Home Equity Loans, we request the
release of the Mortgage File described below.
Servicing Agreement Dated:
Series #:
Account #:
Pool #:
Loan #:
Borrower Name(s):
Reason for Document Request: (circle one) Home Equity Loan Prepaid in Full
Home Equity Loan Repurchased
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Servicing Agreement."
Residential Funding Corporation
Authorized Signature
TO CUSTODIAN/INDENTURE TRUSTEE: Please acknowledge this request, and check off
documents being enclosed with a copy of this form. You should retain this form
for your files in accordance with the terms of the Servicing Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or
Deed of Trust
[ ] Title Insurance Policy
[ ] Other:
Name
Title
Date
EXHIBIT D
FORM OF LENDER CERTIFICATION FOR ASSIGNMENT OF
HOME EQUITY LOAN
, 20
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Residential Funding Mortgage Securities II, Inc.
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
JPMorgan Chase Bank, N.A.
000 Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Residential Funding Corporation Series 2006-HSA5
Re: Home Equity Loan Pass-Through Certificates,
Series 2006-HSA5, Assignment of Home Equity Loan
Ladies and Gentlemen:
This letter is delivered to you in connection with the assignment
by __________ (the "Indenture Trustee") to (the "Lender") of (the "Home Equity
Loan") pursuant to Section 3.05 of the Servicing Agreement (the "Servicing
Agreement"), dated as of September 28, 2006 among Home Equity Loan Trust
2006-HSA5, as issuer, Residential Funding Corporation, as master servicer, and
the Indenture Trustee. All terms used herein and not otherwise defined shall
have the meanings set forth in the Servicing Agreement. The Lender hereby
certifies, represents and warrants to, and covenants with, the Master Servicer
and the Indenture Trustee that:
(i) the Home Equity Loan is secured by Mortgaged Property located
in a jurisdiction in which an assignment in lieu of satisfaction is required to
preserve lien priority, minimize or avoid mortgage recording taxes or otherwise
comply with, or facilitate a refinancing under, the laws of such jurisdiction;
(ii) the substance of the assignment is, and is intended to be, a
refinancing of such Home Equity Loan and the form of the transaction is solely
to comply with, or facilitate the transaction under, such local laws;
(iii) the Home Equity Loan following the proposed assignment will
be modified to have a rate of interest at least 0.25 percent below or above the
rate of interest on such Home Equity Loan prior to such proposed assignment; and
(iv) such assignment is at the request of the borrower under the
related Home Equity Loan.
Very truly yours,
________________________________
(Lender)
By:
-------------------------------
Name:
Title:
EXHIBIT E
FORM OF FORM 10-K CERTIFICATE
I, [identify the certifying individual], certify that:
1. I have reviewed this report on Form 10-K and all reports on Form 10-D
required to be filed in respect of the period covered by this report on Form
10-K of the trust (the Exchange Act periodic reports) pursuant to the Servicing
Agreement dated September 28, 2006 (the "Agreement") among Residential Funding
Corporation (the "Master Servicer"), Home Equity Loan Trust 2006-HSA5 (the
"Issuer") and JPMorgan Chase Bank, N.A. (the "Indenture Trustee") and
acknowledged and agreed to by Residential Funding Mortgage Securities II, Inc.
2. Based on my knowledge, Exchange Act periodic reports, taken as a whole, do
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, all of the distribution, servicing and other
information required to be provided under Form 10-D for the period covered by
this report is included in the Exchange Act periodic reports;
4. I am responsible for reviewing the activities performed by the Master
Servicer and based on my knowledge and the compliance review conducted in
preparing the servicer compliance statement required in this report under Item
1123 of Regulation AB and except as disclosed in the Exchange Act periodic
reports, the Master Servicer has fulfilled its obligations under the Agreement;
and
5. All of the reports on assessment of compliance with servicing criteria for
asset-backed securities and their related attestation reports on assessment of
compliance with servicing criteria for asset-backed securities required to be
included in this report in accordance with Item 1122 of Regulation AB and
Exchange Act Rules 13a-18 and 15d-18 have been included as an exhibit to this
report, except as otherwise disclosed in this report. Any material instances of
noncompliance described in such reports have been disclosed in this report on
Form 10-K.
In giving the certifications above, I have reasonably relied on the
information provided to me by the following unaffiliated parties: [the Indenture
Trustee].
Date:____________
_________________________________*
[Signature]
Name:
Title:
* - to be signed by the senior
officer in charge of the
servicing functions of the
Master Servicer
EXHIBIT F
[FORM OF BACK-UP CERTIFICATION TO FORM 10-K CERTIFICATE]
The undersigned, a Responsible Officer of [__________] (the "Indenture
Trustee") certifies that:
(a) The Indenture Trustee has performed all of the duties specifically
required to be performed by it pursuant to the provisions of the Servicing
Agreement dated as of September 28, 2006 (the "Agreement") by and among
Residential Funding Corporation, as Master Servicer, Home Equity Loan Trust
2006-HSA5, as Issuer and the Indenture Trustee in accordance with the
standards set forth therein.
(b) Based on my knowledge, the list of Securityholders as shown on the
Certificate Register and the Note Register as of the end of each calendar
year that is provided by the Indenture Trustee pursuant to the Agreement is
accurate as of the last day of the 20[__] calendar year.
Capitalized terms used and not defined herein shall have the
meanings given such terms in the Agreement.
IN WITNESS WHEREOF, I have duly executed this certificate as of _________,
20__.]
Name:
-----------------------------
Title:
----------------------------
EXHIBIT G
SERVICING CRITERIA
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by the Indenture Trustee
shall address, at a minimum, the criteria identified as below as "Applicable
Servicing Criteria":
-------------------------------------------------------------------------- ------------------
APPLICABLE
SERVICING
SERVICING CRITERIA CRITERIA
-------------------------------------------------------------------------- ------------------
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REFERENCE CRITERIA
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GENERAL SERVICING CONSIDERATIONS
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1122(d)(1)(i) Policies and procedures are instituted to monitor any
performance or other triggers and events of default in
accordance with the transaction agreements.
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1122(d)(1)(ii) If any material servicing activities are outsourced to third
parties, policies and procedures are instituted to monitor the
third party's performance and compliance with such servicing
activities.
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1122(d)(1)(iii) Any requirements in the transaction agreements to maintain a
back-up servicer for the pool assets are maintained.
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1122(d)(1)(iv) A fidelity bond and errors and omissions policy is in effect
on the party participating in the servicing function
throughout the reporting period in the amount of coverage
required by and otherwise in accordance with the terms of the
transaction agreements.
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CASH COLLECTION AND ADMINISTRATION
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1122(d)(2)(i) Payments on pool assets are deposited into the |X| (as to
appropriate custodial bank accounts and related bank clearing
accounts no more than two business days following receipt, or
such other number of days accounts held by specified in the
transaction agreements. Trustee)
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1122(d)(2)(ii) Disbursements made via wire transfer on behalf of an |X| (as
to obligor or to an investor are made only by authorized
investors only) personnel.
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1122(d)(2)(iii) Advances of funds or guarantees regarding collections, cash
flows or distributions, and any interest or other fees charged
for such advances, are made, reviewed and approved as
specified in the transaction agreements.
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The related accounts for the transaction, such as cash
reserve accounts or accounts established as a form of |X| (as to
overcollateralization, are separately maintained accounts held by
(e.g., with respect to commingling of cash) as set Trustee)
1122(d)(2)(iv) forth in the transaction agreements.
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1122(d)(2)(v) Each custodial account is maintained at a federally insured
depository institution as set forth in the transaction
agreements. For purposes of this criterion, "federally insured
depository institution" with respect to a foreign financial
institution means a foreign financial institution that meets
the requirements of Rule 13k-1(b)(1) of the Securities
Exchange Act.
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1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent unauthorized
access.
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1122(d)(2)(vii) Reconciliations are prepared on a monthly basis for all
asset-backed securities related bank accounts, including
custodial accounts and related bank clearing accounts. These
reconciliations are (A) mathematically accurate; (B) prepared
within 30 calendar days after the bank statement cutoff date,
or such other number of days specified in the transaction
agreements; (C) reviewed and approved by someone other than
the person who prepared the reconciliation; and (D) contain
explanations for reconciling items. These reconciling items
are resolved within 90 calendar days of their original
identification, or such other number of days specified in the
transaction agreements.
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INVESTOR REMITTANCES AND REPORTING
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1122(d)(3)(i) Reports to investors, including those to be filed with the
Commission, are maintained in accordance with the transaction
agreements and applicable Commission requirements.
Specifically, such reports (A) are prepared in accordance with
timeframes and other terms set forth in the transaction
agreements; (B) provide information calculated in accordance
with the terms specified in the transaction agreements; (C)
are filed with the Commission as required by its rules and
regulations; and (D) agree with investors' or the trustee's
records as to the total unpaid principal balance and number of
pool assets serviced by the servicer.
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1122(d)(3)(ii) Amounts due to investors are allocated and remitted in |X|
accordance with timeframes, distribution priority and
other terms set forth in the transaction agreements.
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Disbursements made to an investor are posted within two
business days to the servicer's investor records, or such
other number of days specified in the |X|
1122(d)(3)(iii) transaction agreements.
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Amounts remitted to investors per the investor reports
agree with cancelled checks, or other form of payment, |X|
1122(d)(3)(iv) or custodial bank statements.
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POOL ASSET ADMINISTRATION
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1122(d)(4)(i) Collateral or security on pool assets is maintained as
required by the transaction agreements or related asset pool
documents.
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Pool assets and related documents are safeguarded as
1122(d)(4)(ii) required by the transaction agreements
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1122(d)(4)(iii) Any additions, removals or substitutions to the asset pool are
made, reviewed and approved in accordance with any conditions
or requirements in the transaction agreements.
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1122(d)(4)(iv) Payments on pool assets, including any payoffs, made in
accordance with the related pool asset documents are posted to
the servicer's obligor records maintained no more than two
business days after receipt, or such other number of days
specified in the transaction agreements, and allocated to
principal, interest or other items (e.g., escrow) in
accordance with the related pool asset documents.
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1122(d)(4)(v) The servicer's records regarding the pool assets agree with
the servicer's records with respect to an obligor's unpaid
principal balance.
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1122(d)(4)(vi) Changes with respect to the terms or status of an obligor's
pool asset (e.g., loan modifications or re-agings) are made,
reviewed and approved by authorized personnel in accordance
with the transaction agreements and related pool asset
documents.
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1122(d)(4)(vii) Loss mitigation or recovery actions (e.g., forbearance plans,
modifications and deeds in lieu of foreclosure, foreclosures
and repossessions, as applicable) are initiated, conducted and
concluded in accordance with the timeframes or other
requirements established by the transaction agreements.
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1122(d)(4)(viii) Records documenting collection efforts are maintained during
the period a pool asset is delinquent in accordance with the
transaction agreements. Such records are maintained on at
least a monthly basis, or such other period specified in the
transaction agreements, and describe the entity's activities
in monitoring delinquent pool assets including, for example,
phone calls, letters and payment rescheduling plans in cases
where delinquency is deemed temporary (e.g., illness or
unemployment).
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1122(d)(4)(ix) Adjustments to interest rates or rates of return for pool
assets with variable rates are computed based on the related
pool asset documents.
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1122(d)(4)(x) Regarding any funds held in trust for an obligor (such as
escrow accounts): (A) such funds are analyzed, in accordance
with the obligor's pool asset documents, on at least an annual
basis, or such other period specified in the transaction
agreements; (B) interest on such funds is paid, or credited,
to obligors in accordance with applicable pool asset documents
and state laws; and (C) such funds are returned to the obligor
within 30 calendar days of full repayment of the related pool
asset, or such other number of days specified in the
transaction agreements.
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1122(d)(4)(xi) Payments made on behalf of an obligor (such as tax or
insurance payments) are made on or before the related penalty
or expiration dates, as indicated on the appropriate bills or
notices for such payments, provided that such support has been
received by the servicer at least 30 calendar days prior to
these dates, or such other number of days specified in the
transaction agreements.
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1122(d)(4)(xii) Any late payment penalties in connection with any payment to
be made on behalf of an obligor are paid from the servicer's
funds and not charged to the obligor, unless the late payment
was due to the obligor's error or omission.
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----------------- -------------------------------------------------------- ------------------
Disbursements made on behalf of an obligor are posted within
two business days to the obligor's records maintained by the
servicer, or such other number of
1122(d)(4)(xiii) days specified in the transaction agreements.
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1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible accounts are
recognized and recorded in accordance with the transaction
agreements.
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Any external enhancement or other support, identified in Item
1114(a)(1) through (3) or Item 1115 of Regulation AB, is
maintained as set forth in the |X|
1122(d)(4)(xv) transaction agreements.
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