TPW Draft 12/19/96
GMAC MORTGAGE CORPORATION
as Master Servicer,
RESIDENTIAL FUNDING CORPORATION
as Administrator,
1996-RHS4 LLC
as the Limited Liability Company
and
THE CHASE MANHATTAN BANK
as Indenture Trustee
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SERVICING AGREEMENT
Dated as of December 1, 1996
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Revolving Credit Loans
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions
Section 1.01. Definitions................................................ 1
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Section 1.02. Other Definitional Provisions.............................. 2
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Section 1.03. Interest Calculations...................................... 2
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ARTICLE II
Representations and Warranties
Section 2.01. Representations and Warranties Regarding the Master
Servicer................................................... 3
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Section 2.02. Representations and Warranties of the 1996-RHS4 LLC........ 4
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Section 2.03. Enforcement of Representations and Warranties.............. 4
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ARTICLE III
Administration and Servicing
of Revolving Credit Loans
Section 3.01. The Master Servicer........................................ 6
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Section 3.02. Collection of Certain Revolving Credit Loan Payments....... 8
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Section 3.03. Withdrawals from the Custodial Account..................... 10
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Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses................................................... 12
Section 3.05. Modification Agreements.................................... 12
Section 3.06. Trust Estate; Related Documents............................ 13
Section 3.07. Realization Upon Defaulted Revolving Credit Loans.......... 14
Section 3.08. 1996-RHS4 LLC and Indenture Trustee to Cooperate........... 15
Section 3.09. Servicing Compensation; Payment of Certain Expenses by
Master Servicer............................................ 16
Section 3.10. Annual Statement as to Compliance.......................... 16
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Section 3.11. Annual Servicing Report.................................... 17
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Section 3.12. Access to Certain Documentation and Information
Regarding the Revolving Credit Loans....................... 17
Section 3.13. Maintenance of Certain Servicing Insurance Policies........ 17
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Section 3.14. Information Required by the Internal Revenue Service and
Reports of Foreclosures and Abandonments of
Mortgaged Property......................................... 18
Section 3.15. Optional Repurchase of Defaulted Revolving Credit
Loans...................................................... 18
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Page
ARTICLE IV
Servicing Certificate
Section 4.01 Statements to Securityholders.............................. 19
ARTICLE V
Distribution Account and Payment Account
Section 5.01. Distribution Account....................................... 21
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Section 5.02. Payment Account............................................ 21
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ARTICLE VI
The Master Servicer
Section 6.01. Liability of the Master Servicer........................... 22
--------------------------------
Section 6.02. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, the Master Servicer........................ 22
Section 6.03. Limitation on Liability of the Master Servicer and
Others..................................................... 22
Section 6.04. Master Servicer Not to Resign.............................. 23
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Section 6.05. Delegation of Duties....................................... 23
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Section 6.06. Payment of Indenture Trustee's and Owner Trustee's Fees
and Expenses; Indemnification.............................. 24
ARTICLE VII
The Administrator
Section 7.01. Liability of the Administrator............................. 26
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Section 7.02. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, the Administrator.......................... 26
Section 7.03. Limitation on Liability of the Administrator and Others.... 26
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Section 7.04. Administrator Not to Resign................................ 27
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Section 7.05. Initial Payment of Indenture Trustee's and Owner
Trustee's Fees and Expenses................................ 27
Section 7.06. Administrator Undertakings with Respect to the 1996-
RHS4 LLC................................................... 27
ARTICLE VIII
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Page
Default
Section 8.01. Servicing Default........................................ 28
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Section 8.02. Indenture Trustee to Act; Appointment of Successor....... 30
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Section 8.03. Notification to Securityholders.......................... 31
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ARTICLE IX
Miscellaneous Provisions
Section 9.01 Amendment................................................ 32
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SECTION 9.02 GOVERNING LAW............................................ 32
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Section 9.03 Notices.................................................. 32
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Section 9.04 Severability of Provisions............................... 32
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Section 9.05 Third-Party Beneficiaries................................ 33
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Section 9.06 Counterparts............................................. 33
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Section 9.07 Effect of Headings and Table of Contents................. 33
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Section 9.08 Termination Upon Purchase by the Master Servicer or
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Liquidation of All Revolving Credit Loans;
Partial Redemption....................................... 33
Section 9.09 Certain Matters Affecting the Indenture Trustee.......... 34
Section 9.10 Owner Trustee Not Liable for Related Documents........... 34
EXHIBIT A - REVOLVING CREDIT LOAN SCHEDULE.................................A-1
EXHIBIT B - POWER OF ATTORNEY..............................................B-1
EXHIBIT C - FORM OF REQUEST FOR RELEASE....................................D-1
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This Servicing Agreement, dated as of December 1, 1996, among
GMAC Mortgage Corporation, as master servicer (the "Master Servicer"),
Residential Funding Corporation, as administrator (the "Administrator"), the
1996-RHS4 LLC, as the limited liability company (the "1996-RHS4 LLC"), and The
Chase Manhattan Bank, as the indenture trustee (the "Indenture Trustee"),
W I T N E S S E T H T H A T:
WHEREAS, Residential Funding Mortgage Securities II, Inc. (the
"Depositor") will create 1996-RHS4 LLC, a limited liability company under
Delaware law, and will transfer the Revolving Credit Loans and all of its rights
under the Designated Seller's Agreement to the 1996-RHS4 LLC, as a capital
contribution to the 1996-RHS4 LLC;
WHEREAS, pursuant to the terms of the Operating Agreement the Depositor
will establish two classes of "ownership interests" in the 1996-RHS4 LLC: the
Class A Ownership Interest and the Class B Ownership Interest;
WHEREAS, pursuant to the terms of the Trust Agreement, the
Depositor will sell the Class A Ownership Interest to the Issuer in exchange for
the cash proceeds of the Securities;
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,
consisting of the Term Notes and the Variable Funding Notes and secured by the
Class A Ownership Interest;
WHEREAS, pursuant to the terms of the Designated Seller's
Agreement, the 1996-RHS4 LLC will acquire the Revolving Credit Loans and the
Additional Balances;
WHEREAS, pursuant to the terms of this Servicing Agreement,
the Master Servicer will service the Revolving Credit Loans directly or through
one or more Subservicers;
WHEREAS, pursuant to the terms of this Servicing Agreement,
the Administrator will administer the Revolving Credit Loans; and
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
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not otherwise defined herein shall have the meanings assigned to such terms in
the Definitions contained in Appendix A to the Indenture which is incorporated
by reference herein. All other capitalized terms used herein shall have the
meanings specified herein.
Section 1.02. Other Definitional Provisions. (a) All terms defined in this
Servicing Agreement shall have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto unless otherwise defined
therein.
(b) As used in this 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.
(c) 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; and the term "including" shall mean "including without
limitation".
(d) 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.
(e) 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. All calculations of interest
hereunder that are made in respect of the Loan Balance of a Revolving Credit
Loan shall be made on a daily basis using a 365-day year. All calculations of
interest on the Securities 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.
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ARTICLE II
Representations and Warranties
Section 2.01. Representations and Warranties Regarding the Master
Servicer. The Master Servicer represents and warrants to the 1996-RHS4 LLC and
for the benefit of the Indenture Trustee, as pledgee of the Class A Ownership
Interest, as of the Cut-off Date:
(i) The Master Servicer is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania 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;
(ii) 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;
(iii) 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;
(iv) The execution and delivery of this Servicing
Agreement and the performance of the transactions contemplated hereby
by the Master Servicer will not violate any material 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 Articles 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; and
(v) 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.
The foregoing representations and warranties shall survive any
termination of the Master Servicer hereunder.
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Section 2.02. Representations and Warranties of the 1996-RHS4 LLC. The
1996-RHS4 LLC hereby represents and warrants to the Master Servicer and for the
benefit of the Indenture Trustee, as pledgee of the Class A Ownership Interest,
as of the Cut-off Date:
(i) The 1996-RHS4 LLC is a limited liability company in good standing under
the laws of the State of Delaware;
(ii) The 1996-RHS4 LLC 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
(iii) The execution and delivery by the 1996-RHS4 LLC of
this Servicing Agreement and the performance by the 1996-RHS4 LLC of
its obligations under this Servicing Agreement will not violate any
provision of any law or regulation governing the 1996-RHS4 LLC or any
order, writ, judgment or decree of any court, arbitrator or
governmental authority or agency applicable to the 1996-RHS4 LLC or any
of its assets. Such execution, delivery, authentication and performance
will not require the authorization, consent or approval of, the giving
of notice to, the filing or registration with, or the taking of any
other action 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 1996-RHS4
LLC 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 Class A Ownership Interest, or the Issuer, as Managing Member,
shall enforce the representations and warranties of the Designated Seller
pursuant to the Designated Seller's Agreement. Upon the discovery by the
Designated Seller, the Depositor, the Master Servicer, the Indenture Trustee,
the Credit Enhancer, the 1996-RHS4 LLC, the Issuer, or any Custodian of a breach
of any of the representations and warranties made in the Designated Seller's
Agreement, in respect of any Revolving Credit Loan which materially and
adversely affects the interests of the Securityholders or the Credit Enhancer,
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 Designated Seller of such breach and
request that, pursuant to the terms of the Designated Seller's Agreement, the
Designated 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 Designated Seller's Agreement) or 90 days (with respect
to a breach of the representations and warranties contained in Section 3.1(b) of
the Designated Seller's Agreement) from the date the Designated Seller was
notified of such breach or (ii) purchase such Revolving Credit Loan from the
1996-RHS4 LLC at the price and in the manner set forth in Section 3.1(b) of the
Designated Seller's Agreement; provided that the Designated Seller shall,
subject to the conditions set forth in the Designated Seller's Agreement, have
the option to substitute an Eligible Substitute Loan or Loans for such Revolving
Credit Loan. In the event that the Designated Seller elects to substitute one or
more Eligible Substitute Loans pursuant to Section 3.1(b) of the Designated
Seller's Agreement, the Designated Seller
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shall deliver to the 1996-RHS4 LLC with respect to such Eligible Substitute
Loans, the original Credit Line Agreement, the Mortgage, and such other
documents and agreements as are required by the Designated Seller's Agreement.
Payments due with respect to Eligible Substitute Loans in the month of
substitution shall not be transferred to the 1996-RHS4 LLC and will be retained
by the Master Servicer and remitted by the Master Servicer to the Designated
Seller on the next succeeding Payment Date provided a payment at least equal to
the applicable Minimum Monthly Payment has been received by the 1996-RHS4 LLC
for such month in respect of the Revolving Credit Loan to be removed. The Master
Servicer shall amend or cause to be amended the Revolving Credit Loan Schedule
to reflect the removal of such Revolving Credit Loan and the substitution of the
Eligible Substitute Loans and the Master Servicer shall promptly deliver the
amended Revolving Credit Loan Schedule to the Owner Trustee and Indenture
Trustee.
It is understood and agreed that the obligation of the Designated
Seller to cure such breach or purchase or substitute for such Revolving Credit
Loan as to which such a breach has occurred and is continuing shall constitute
the sole remedy respecting such breach available to the 1996-RHS4 LLC and the
Indenture Trustee, as pledgee of the Class A Ownership Interest, against the
Designated Seller. In connection with the purchase of or substitution for any
such Revolving Credit Loan by the Designated Seller, the 1996-RHS4 LLC shall
assign to the Designated Seller all of its right, title and interest in respect
of the Designated Seller's Agreement applicable to such Revolving Credit Loan.
Upon receipt of the Repurchase Price, or upon completion of such substitution,
the Master Servicer shall notify the Custodian 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.
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ARTICLE III
Administration and Servicing
of Revolving Credit Loans
Section 3.01. The Master Servicer. (a) The Master Servicer shall
service and administer the Revolving Credit 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 and which shall be 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 in connection
with such servicing and administration which it may deem necessary or desirable,
it being understood, however, that the Master Servicer shall at all times remain
responsible to the 1996-RHS4 LLC, the Indenture Trustee, as pledgee of the Class
A Ownership Interest, and 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 1996-RHS4 LLC and the Indenture
Trustee, as pledgee of the Class A Ownership Interest, to execute and deliver,
on behalf of itself, the 1996- RHS4 LLC, the Indenture Trustee or any of them,
any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge and all other comparable instruments with respect to the
Revolving Credit Loans and with respect to the Mortgaged Properties. The 1996-
RHS4 LLC, 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. 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. 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.
If the Mortgage relating to a Revolving Credit Loan did not have a lien
senior to the Revolving Credit 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 Revolving Credit Loan had a lien senior
to the Revolving Credit 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 (i) the resulting Combined Loan-to-Value
Ratio of such Revolving Credit Loan is no higher than the greater of the
Combined Loan-to-Value Ratio prior to such refinancing or 70% (or 80% for those
borrowers with a FICO "credit score" of 720 or greater), (ii) the interest rate
for the loan evidencing the refinanced senior lien is no higher than the
interest rate on the loan evidencing the existing senior lien immediately prior
to the date of such refinancing (meaning, in the case of an adjustable rate
loan, a substantially similar index and a gross margin no higher than that of
the existing senior lien); provided however 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 loan evidencing
the refinanced senior lien may have an interest rate up to 2.0% higher than the
then-current rate of the loan evidencing the existing senior lien and (iii) the
loan evidencing the refinanced senior lien is not subject to negative
amortization.
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In connection with servicing the Revolving Credit 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 1996-RHS4 LLC
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.
(b) The Master Servicer may enter into Subservicing Agreements with
Subservicers for the servicing and administration of certain of the Revolving
Credit Loans. References in this Servicing Agreement to actions taken or to be
taken by the Master Servicer in servicing the Revolving Credit Loans include
actions taken or to be taken by a Subservicer on behalf of the Master Servicer
and any amount received by such Subservicer in respect of a Revolving Credit
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 Revolving Credit
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 Revolving Credit Loan or
enter into a Subservicing Agreement with a successor Subservicer which will be
bound by the terms of the related Subservicing Agreement. The Master Servicer
shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Master Servicer and nothing contained in this Servicing
Agreement shall be deemed to limit or modify such indemnification.
In the event that the rights, duties and obligations of the Master
Servicer are terminated hereunder, any successor to the Master Servicer in its
sole discretion may, to the extent permitted by applicable law, terminate the
existing Subservicing Agreement with any Subservicer in accordance with the
terms of the applicable Subservicing Agreement or assume the terminated Master
Servicer's rights and obligations under such subservicing arrangements which
termination or assumption will not violate the terms of such arrangements.
As part of its servicing activities hereunder, the Master Servicer, for
the benefit of the 1996-RHS4 LLC, 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 Revolving Credit 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,
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would require were it the owner of the related Revolving Credit 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 Revolving Credit Loan or (ii) from a specific
recovery of costs, expenses or attorneys fees against the party against whom
such enforcement is directed.
(c) Prior to the close of business on tenth calendar day of each month
in which the related Payment Date is to occur, the Master Servicer shall furnish
a statement to the Administrator, in writing and/or in a machine readable format
as the Administrator shall reasonably request setting forth all information
reasonably necessary to allow the Administrator to perform the calculations for
the distributions contemplated by Sections 5.01 and 5.02 and to prepare the
report pursuant to Section 4.01.
Section 3.02. Collection of Certain Revolving Credit Loan Payments. (a)
The Master Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Revolving Credit 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 shall be 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 (i) waive any late payment
charge, penalty interest or other fees which may be collected in the ordinary
course of servicing such Revolving Credit Loan and (ii) arrange with a Mortgagor
a schedule for the payment of principal and interest due and unpaid; provided
such arrangement is consistent with the Master Servicer's policies with respect
to home equity revolving credit loans; provided, further, that notwithstanding
such arrangement such Revolving Credit Loans will be included in the information
regarding delinquent Revolving Credit Loans set forth in the Servicing
Certificate. The Master Servicer may also extend the Due Date for payment due on
a Revolving Credit 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 or the interests of the
Securityholder or the Credit Enhancer. Consistent with the terms of this
Servicing Agreement, the Master Servicer may also waive, modify or vary any term
of any Revolving Credit Loan (including reduce the Credit Limit with respect to
any Revolving Credit Loan) or consent to the postponement of strict compliance
with any such term or in any manner grant indulgence to any Mortgagor if in the
Master Servicer's determination such waiver, modification, postponement or
indulgence is not materially adverse to the interests of the Securityholders or
the Credit Enhancer, provided, however, that the Master Servicer may not modify
or permit any Subservicer to modify any Revolving Credit 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 Revolving Credit Loan) or extend the final maturity date of such
Revolving Credit Loan) unless such Revolving Credit Loan is in default or, in
the judgment of the Master Servicer, such default is reasonably foreseeable. In
addition, if a Revolving Credit 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 Revolving Credit Loan to a fully
amortizing closed-end loan. Notwithstanding the foregoing, the Master Servicer
(i) in its sole discretion may permit the Mortgagor (or may enter into a
modification
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8
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 Principal Balance of such Revolving Credit Loan) in connection with any
refinancing of a senior lien pursuant to the second paragraph of Section 3.01(a)
of this Agreement.
(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 Revolving Credit Loans received by it subsequent to the Cut-off Date (other
than in respect of the payments referred to in the following paragraph) within
one Business Day following receipt thereof (or otherwise on or prior to the
Closing Date), including the following payments and collections received or made
by it (without duplication):
(i) all payments of principal of or interest on the
Revolving Credit Loans received by the Master Servicer from the
respective Subservicer, net of any portion of the interest thereof
retained by the Subservicer as subservicing fees;
(ii) the aggregate Repurchase Price of the Revolving Credit Loans purchased
by the Master Servicer pursuant to Section 3.15;
(iii) Net Liquidation Proceeds net of any related Foreclosure Profit;
(iv) all proceeds of any Revolving Credit Loans
repurchased by the Designated Seller pursuant to the Designated
Seller's Agreement, and all Substitution Adjustment Amounts required to
be deposited in connection with the substitution of an Eligible
Substitute Loan pursuant to the Designated Seller's Agreement;
(v) insurance proceeds, other than Net Liquidation Proceeds, resulting from
any insurance policy maintained on a Mortgaged Property; and
(vi) amounts required to be paid by the Master Servicer pursuant to Section
8.08.
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 Revolving Credit 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) or late charge
penalties, payable by Mortgagors, or amounts received by the Master Servicer for
the accounts of Mortgagors for application towards the payment of taxes,
insurance premiums, assessments 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 trust funds created for the notes or
certificates of other
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9
series and may contain other funds respecting payments on revolving credit 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 Revolving Credit Loans and shall hold all collections in the
Custodial Account to the extent they represent collections on the Revolving
Credit Loans for the benefit of the 1996-RHS4 LLC and the Indenture Trustee, as
their interests may appear. The Master Servicer shall retain all Foreclosure
Profits as additional servicing compensation.
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 next preceding the 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 Revolving Credit 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, unless, all such
collections are remitted on a daily basis to the Master Servicer for deposit
into the Custodial Account.
Section 3.03. 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 Revolving Credit Loans for the following purposes:
(i) to deposit in the Distribution Account, on the
Business Day prior to each Payment Date, an amount equal to the
Security Collections required to be distributed on such Payment Date;
(ii) prior to either an Amortization Event or the
Collection Period preceding the end of the Revolving Period, to pay to
the Designated 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 Designated 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;
(iii) 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 Revolving Credit Loans (other than
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10
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
Revolving Credit Loan;
(iv) to pay to itself out of each payment received on
account of interest on a Revolving Credit 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;
(v) 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,
Distribution Account and Payment Account that it is entitled to
withdraw pursuant to Sections 3.02(b) and 5.01;
(vi) 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);
(vii) to pay to itself or the Designated Seller, with
respect to any Revolving Credit Loan or property acquired in respect
thereof that has been purchased or otherwise transferred to the
Designated Seller, the Master Servicer 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;
(viii) to withdraw any other amount deposited in the Custodial Account that
was not required to be deposited therein pursuant to Section 3.02;
(ix) to pay the Administrator, on the Business Day before each Payment
Date, an amount equal to the Administrator Fee for the prior calendar month; and
(x) after the occurrence of an Amortization Event, to pay to the Designated
Seller, the Excluded Amount for each Revolving Credit Loan.
Since, in connection with withdrawals pursuant to clauses (iii), (iv), (vi) and
(vii), the Master Servicer's entitlement thereto is limited to collections or
other recoveries on the related Revolving Credit Loan, the Master Servicer shall
keep and maintain separate accounting, on a Revolving Credit Loan by Revolving
Credit 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 Revolving Credit Loan as to which the Repurchase Price has been
paid), by withdrawal from the Custodial Account of amounts on deposit therein
attributable to the Revolving Credit Loans on any Business Day prior to the
Payment Date succeeding the date of such determination.
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Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses. To the extent permitted under the related Credit Line Agreement and
Mortgage, and to the extent the Master Servicer receives notice that a hazard
insurance policy has been cancelled, the Master Servicer shall cause to be
maintained for each Revolving Credit 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 Revolving Credit Loan from
time to time or (ii) the combined principal balance owing on such Revolving
Credit Loan and any mortgage loan senior to such Revolving Credit 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 use its best efforts to monitor that hazard
insurance is maintained as described in the previous sentence in the same manner
as it would for revolving credit home equity loans in its own portfolio. The
Master Servicer shall also cause to be maintained on property acquired upon
foreclosure, or deed in lieu of foreclosure, of any Revolving Credit 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 Revolving Credit Loan in a federally designated
flood area, to the extent permitted under the related Credit Line Agreement and
Mortgage, and to the extent the Master Servicer receives notice that the related
flood insurance has been cancelled. 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 use its best efforts to monitor such flood insurance as described
in the previous sentence in the same manner as it would for revolving credit
home equity loans in its own portfolio. 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 Revolving Credit 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
Revolving Credit 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 Revolving Credit Loans, the Master Servicer agrees
to present, on
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behalf of itself, the 1996-RHS4 LLC and the Indenture Trustee, claims under any
such blanket policy.
Section 3.05. Modification Agreements. 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 Revolving Credit Loans and with respect to the
Mortgaged Properties subject to the Mortgages (and the 1996-RHS4 LLC 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 Revolving Credit Loan, that the security for, and the timely and
full collectability of, such Revolving Credit 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 Revolving Credit
Loan after such partial release does not exceed the Combined Loan-to-Value Ratio
for such Revolving Credit 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.
Section 3.06. Trust Estate; Related Documents. (a) When required by the
provisions of this Servicing Agreement, the 1996-RHS4 LLC or the Indenture
Trustee shall execute instruments to release property from the terms of the
Operating Agreement, or convey the 1996- RHS4 LLC'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 1996-RHS4 LLC or the Indenture Trustee as
provided in this Section 3.06 shall be bound to ascertain the 1996-RHS4 LLC'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 Revolving Credit
Loan has been the subject of a final payment or a prepayment in full and the
related Revolving Credit Loan has been terminated or that substantially all
Liquidation Proceeds which have been determined by the Master Servicer
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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 Revolving Credit 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 Revolving Credit Loan, upon request of the
Master Servicer. If from time to time and as appropriate for the servicing or
foreclosure of any Revolving Credit 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 Revolving Credit 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 Revolving Credit Loans. With
respect to such of the Revolving Credit Loans as come into and continue in
default, the Master Servicer will decide whether to (i) foreclose upon the
Mortgaged Properties securing such Revolving Credit Loans, (ii) write off the
unpaid principal balance of the Revolving Credit Loans as bad debt, (iii) take a
deed in lieu of foreclosure, (iv) accept a short sale, (v) arrange for a
repayment plan, (vi) agree to a modification in accordance with this Servicing
Agreement, or (vii) take an unsecured note in each case subject to the rights of
any related first lien holder; provided that 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 1996-RHS4
LLC 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.
Notwithstanding any provision of this Servicing Agreement, a Revolving
Credit Loan may be deemed to be finally liquidated if substantially all amounts
expected by the Master Servicer to be received in connection with the related
defaulted Revolving Credit Loan have been received; provided, however, any
subsequent collections with respect to any such Revolving
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Credit Loan shall be deposited to the Custodial Account. For purposes of
determining the amount of any Liquidation Proceeds or Insurance Proceeds, or
other unscheduled collections, 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 Revolving Credit Loan.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Indenture Trustee, who shall hold the same on behalf of
the 1996-RHS4 LLC in accordance with Section 3.13 of the Indenture.
Notwithstanding any such acquisition of title and cancellation of the related
Revolving Credit Loan, such Mortgaged Property shall (except as otherwise
expressly provided herein) be considered to be an outstanding Revolving Credit
Loan held as an asset of the 1996- RHS4 LLC 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 Revolving Credit Loan it shall be assumed that, notwithstanding that
the indebtedness evidenced by the related Credit Line Agreement shall have been
discharged, such Credit Line 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 foreclosure proceedings or the purchase or repurchase
of any Revolving Credit Loan pursuant to the terms of this Servicing Agreement,
as well as any recovery resulting from a collection of Liquidation Proceeds or
Insurance Proceeds, 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; second, to the Master Servicer or the related Subservicer,
all Servicing Fees payable therefrom; third, to the extent of accrued and unpaid
interest on the related Revolving Credit Loan, at the Net Loan Rate to the
Payment Date on which such amounts are to be deposited in the Payment Account;
fourth, as a recovery of principal on the Revolving Credit Loan; and fifth, to
Foreclosure Profits.
Section 3.08. 1996-RHS4 LLC and Indenture Trustee to Cooperate. On or
before each Payment Date, the Master Servicer will notify the Administrator, and
the Indenture Trustee or the Custodian, with a copy to the 1996-RHS4 LLC, of the
termination of or the payment in full and the termination of any Revolving
Credit 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 if required under the Designated Seller's 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. 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 Revolving
Credit 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 1996-RHS4 LLC, 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 1996-RHS4 LLC or Indenture
Trustee shall promptly execute such documents, in the forms provided by the
Master Servicer, as shall be
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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 Revolving Credit 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
Revolving Credit Loan that is in default following recordation of the
assignments of Mortgage if required by the provisions of the Designated Seller's
Agreement, the Indenture Trustee or the 1996-RHS4 LLC 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 Revolving Credit 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 Revolving Credit 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 Revolving
Credit Loan are paid by the Mortgagor and any other defaults are cured, then the
assignee for collection shall promptly reassign such Revolving Credit 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 1996-RHS4 LLC's obligation to cooperate as
provided in this Section 3.08 and all other provisions of this Servicing
Agreement requiring the 1996-RHS4 LLC to authorize or permit any actions to be
taken with respect to the Revolving Credit Loans, the Indenture Trustee, as
pledgee of the Class A Ownership Interest in the 1996-RHS4 LLC and as assignee
of record of the Revolving Credit Loans on behalf of the 1996-RHS4 LLC pursuant
to Section 3.13 of the Indenture, expressly agrees, on behalf of the 1996-RHS4
LLC, to take all such actions on behalf of the 1996-RHS4 LLC 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 1996- RHS4 LLC, 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 Section 3.03 as compensation for its services
in connection with servicing the Revolving Credit Loans. Moreover, additional
servicing compensation in the form of late payment charges and other receipts
not required to be deposited in the Custodial Account as specified in Section
3.02 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 (except with respect to the initial fees and expenses of the Owner
Trustee and Indenture Trustee, which shall be paid by the Administrator pursuant
to Section 7.05 hereof)) and shall not be entitled to reimbursement therefor.
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Section 3.10. Annual Statement as to Compliance. (a) The Master
Servicer will deliver to the 1996-RHS4 LLC, the Issuer, the Administrator and
the Indenture Trustee, with a copy to the Credit Enhancer, beginning June 30,
1997, and on or before March 31 of each year thereafter, an Officer's
Certificate stating that (i) a review of the activities of the Master Servicer
during the preceding fiscal year and of its performance under servicing
agreements, including this Servicing Agreement has been made under such
officer's supervision and (ii) to the best of such officer's knowledge, based on
such review, the Master Servicer has complied in all material respects with the
minimum servicing standards set forth in the Uniform Single Attestation Program
for Mortgage Bankers and has fulfilled all of its material obligations in all
material respects throughout such year, or, if there has been material
noncompliance with such servicing standards or a default in the fulfillment in
all material respects of any such obligation relating to this Servicing
Agreement, such statement shall include a description of such noncompliance or
specify each such default, as the case may be, known to such officer and the
nature and status thereof.
(b) The Master Servicer shall deliver to the 1996-RHS4 LLC, the Issuer,
the Administrator 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 Servicing Report. Beginning June 30, 1997, and on
or before March 31 of each year thereafter, the Master Servicer at its expense
shall cause a firm of nationally recognized independent public accountants (who
may also render other services to the Master Servicer) to furnish a report to
the 1996-RHS4 LLC, the Issuer, the Administrator, the Indenture Trustee, the
Depositor, the Credit Enhancer and each Rating Agency stating its opinion that,
on the basis of an examination conducted by such firm substantially in
accordance with standards established by the American Institute of Certified
Public Accountants, the assertions made pursuant to Section 3.10 regarding
compliance with the minimum servicing standards set forth in the Uniform Single
Attestation Program for Mortgage Bankers during the preceding calendar year are
fairly stated in all material respects, subject to such exceptions and other
qualifications that, in the opinion of such firm, such accounting standards
require it to report. In rendering such statement, such firm may rely, as to
matters relating to the direct servicing of revolving credit 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 Revolving Credit Loans. Whenever required by statute or regulation, 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 Revolving Credit
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
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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 FNMA or FHLMC, whichever is greater, for Persons performing servicing for
revolving credit loans purchased by such entity.
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 Revolving Credit 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 1997, the Master Servicer or
Subservicer shall file reports relating to each instance occurring during the
previous calendar year in which the Master Servicer (i) on behalf of the
1996-RHS4 LLC, acquires an interest in any Mortgaged Property through
foreclosure or other comparable conversion in full or partial satisfaction of a
Revolving Credit 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 of Defaulted Revolving Credit Loans.
Notwithstanding any provision in Section 3.07 to the contrary, the Master
Servicer, at its option and in its sole discretion, may repurchase any Revolving
Credit Loan delinquent in payment for a period of 60 days or longer for a price
equal to the Repurchase Price.
Section 3.16. Recording of Assignments. If the credit rating of the
Master Servicer is reduced to below "BBB" by Standard & Poor's or below "A3" by
Xxxxx'x, the Master Servicer shall, within 60 days after written notification of
such reduction in credit rating by Standard & Poor's, Xxxxx'x or the Credit
Enhancer, the Master Servicer, at its own expense, shall complete and submit for
recording in the appropriate public office for real property records each of the
assignments of the Mortgage for each Revovling Credit Loan. While such
assignment to be recorded is being recorded, the Custodian shall retain a
photocopy of such assignment. If any assignment is lost or returned unrecorded
to the Custodian because of any defect therein, the Master Servicer is required
to prepare a substitute assignment or cure such defect, as the case may be, and
the Master Servicer shall cause such assignment to be recorded in accordance
with this paragraph.
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ARTICLE IV
Servicing Certificate
Section 4.01Statements to Securityholders. With respect to each Payment
Date, on the Business Day following the related Determination Date the
Administrator shall forward to the Indenture Trustee and the Master Servicer and
the Indenture Trustee pursuant to Section 3.26 of the Indenture shall forward or
cause to be forwarded by mail 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 as to
the Variable Funding Notes, Term Notes and Certificates, to the extent
applicable:
(i) the aggregate amount of (a) Security Interest Collections, (b) Security
Principal Collections and (c) Substitution Adjustment Amounts;
(ii) the amount of such distribution as principal to the
Noteholders of the Variable Funding Notes and the Term Notes and as a
Certificate Distribution Amount to the Certificateholders, the Initial
Certificates and the Variable Funding Certificates applied to reduce
the principal balance thereof;
(iii) the amount of such distribution as interest to the
Securityholders of the Variable Funding Notes and the Term Notes and as
a Certificate Preferred Return to the Certificateholders of the Initial
Certificates and the Variable Funding Certificates separately stating
the portion thereof in respect of overdue accrued interest;
(iv) the Credit Enhancement Draw Amount, if any, for such
Payment Date and the aggregate amount of prior draws thereunder not yet
reimbursed;
(v) the aggregate Loan Balance of the Revolving Credit Loans as of the end
of the preceding Collection Period;
(vi) the number and aggregate Loan Balances of Revolving
Credit 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 preceding Collection Period; provided, however, that such
information will not be provided on the statements relating to the
first Payment Date;
(vii) the Weighted Average Net Loan Rate for the related Collection Period;
(viii) the Special Capital Distribution Amount as the end of the related
Collection Period;
(ix) the aggregate amount of Additional Balances created
during the previous Collection Period conveyed to the 1996-RHS4 LLC;
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(x) the aggregate Liquidation Loss Amounts with respect
to the related Collection Period, the amount of any Liquidation Loss
Distribution Amounts with respect to the Term Notes, Certificates and
Variable Funding Notes, respectively, and the aggregate of the
Liquidation Loss Amounts from all Collection Periods to date expressed
as a percentage of the Cut-off Date Loan Balance;
(xi) the aggregate Excess Loss Amounts with respect to the
related Collection Period and the aggregate of the Excess Loss Amounts
from all Collection Periods to date;
(xii) the aggregate Special Hazard Losses, Fraud Losses,
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;
(xiii) the aggregate Security Balance of each class of
Securities after giving effect to the distribution of principal on such
Payment Date;
(xiv) the respective Security Percentage applicable to each
of the Securities, after application of payments made on such Payment
Date; and
(xv) the Outstanding Reserve Amount, the Special Hazard Amount, the Fraud
Loss Amount and the Bankruptcy Loss Amount immediately following such Payment
Date.
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.
In addition, the Administrator 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
Administrator shall furnish a written statement to the Certificate Paying Agent,
the Master Servicer 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 Administrator of such amounts
shall, in the absence of obvious error, 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 1996-RHS4 LLC's written request, the
Administrator shall promptly furnish information reasonably requested by the
1996-RHS4 LLC that is reasonably available to the Administrator to enable the
1996-RHS4 LLC to perform its federal and state income tax reporting obligations.
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ARTICLE V
Distribution Account and Payment Account
Section 5.01. Distribution Account. The Master Servicer shall establish
and maintain a Distribution Account titled "1996-RHS4 LLC". The Distribution
Account shall be an Eligible Account. On the Business Day prior to each Payment
Date, (i) amounts deposited into the Distribution Account pursuant to Section
3.03(i) hereof will be distributed by the Master Servicer in accordance with
Section 9.5 of the Operating Agreement, and (ii) the portion of such amounts
then distributable with respect to the Class A Ownership Interest in accordance
with Section 9.5 of the Operating Agreement shall be deposited into the Payment
Account. The Master Servicer shall invest or cause the institution maintaining
the Distribution Account to invest the funds in the Distribution Account in
Permitted Investments designated in the name of the Master Servicer, 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 Distribution Account is maintained may mature on such
Payment Date and (ii) any other investment may mature on such Payment Date if
the Master Servicer 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 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 any such investments shall be
deposited in the Distribution Account by the Master Servicer out of its own
funds immediately as realized.
Section 5.02. Payment Account. The Indenture Trustee shall establish
and maintain a Payment Account titled "The Chase Manhattan Bank, as Indenture
Trustee, for the benefit of the Securityholders, the Certificate Paying Agent
and the Credit Enhancer pursuant to the Indenture, dated as of December 1, 1996,
between Home Equity Loan Trust 1996-RHS4 and The Chase Manhattan Bank". 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 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.
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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
revolving credit loans, is reasonably satisfactory to the Indenture Trustee (as
pledgee of the Class A Ownership Interest), the 1996-RHS4 LLC and the Credit
Enhancer, is willing to service the Revolving Credit Loans and executes and
delivers to the Indenture Trustee and the 1996-RHS4 LLC an agreement, in form
and substance reasonably satisfactory to the Credit Enhancer, the Indenture
Trustee and the 1996-RHS4 LLC, 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 Credit Enhancement Instrument.
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
1996-RHS4 LLC, the Issuer, the Owner Trustee, the Administrator, 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
1996-RHS4 LLC 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
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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 Revolving Credit 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 1996-RHS4 LLC, 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
1996-RHS4 LLC and the Indenture Trustee in writing and such proposed successor
servicer is reasonably acceptable to the 1996-RHS4 LLC, the Indenture Trustee
and the Credit Enhancer; (b) each Rating Agency shall have delivered a letter to
the 1996-RHS4 LLC, 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 Credit Enhancement Instrument; and (c) such
proposed successor servicer is reasonably acceptable to the Credit Enhancer, as
evidenced by a letter to the 1996-RHS4 LLC 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 Class A Ownership Interest, shall have assumed the
Master Servicer's responsibilities and obligations hereunder or the Indenture
Trustee, as pledgee of the Class A Ownership Interest, shall have designated a
successor servicer in accordance with Section 8.02. 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
[NY01:240828.4] 16069-00382 12/20/96 12:15am
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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. Payment of Indenture Trustee's and Owner Trustee's Fees
and Expenses; Indemnification. (a) After the Closing Date, 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 except any such expense,
disbursement or advance as may arise from its negligence, wilful misfeasance or
bad faith.
(b) The Master Servicer and the Administrator agree 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 Issuer against any claim in connection
with the exercise or performance of any of its powers or duties under any Basic
Document (with respect to the Administrator such indemnification shall be
strictly limited to the extent such loss, liability or expense is incurred in
connection with calculations performed or information provided by the
Administrator solely in respect to the Distribution Account and the Payment
Account), 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 or the Administrator, as the case may be, 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
1996-RHS4 LLC, the Indenture Trustee or Owner Trustee, as the case may
be, shall cooperate and consult fully with the Master Servicer or the
Administrator, as the case may be, in preparing such defense; and
(iii) notwithstanding anything in this Servicing
Agreement to the contrary, the Master Servicer or the Administrator, as
the case may be, 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 or the
Administrator, as the case may be.
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No termination of this Servicing Agreement shall affect the obligations created
by this Section 6.06 of the Master Servicer or the Administrator, as the case
may be, 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 or the Administrator, as the case may be, in this Section
6.06(b) shall not pertain to 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.
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ARTICLE VII
The Administrator
Section 7.01. Liability of the Administrator. The Administrator shall
be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Administrator herein.
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Administrator. Any corporation into which the Administrator
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
Administrator shall be a party, or any corporation succeeding to the business of
the Administrator, shall be the successor of the Administrator, 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.
Section 7.03. Limitation on Liability of the Administrator and Others.
Neither the Administrator nor any of the directors or officers or employees or
agents of the Administrator shall be under any liability to the 1996-RHS4 LLC,
the Issuer, the Owner Trustee, the Master Servicer, 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 Administrator 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 Administrator and any director or officer or employee or agent of
the Administrator 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 Administrator and any director or officer or employee or agent of
the Administrator shall be indemnified by the 1996-RHS4 LLC and held harmless
against any loss, liability or expense incurred in connection with any legal
action relating to this Servicing Agreement or the Securities, 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
Administrator 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
Revolving Credit Loans in accordance with this Servicing Agreement, and which in
its opinion may involve it in any expense or liability; provided, however, that
the Administrator 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 1996-RHS4 LLC, and the Administrator shall be entitled to be
reimbursed therefor. The Administrator's right to indemnity or reimbursement
pursuant to this Section 7.03 shall survive any resignation or termination of
the Administrator pursuant to Section 7.04 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).
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Section 7.04. Administrator Not to Resign. Subject to the provisions of
Section 7.02, the Administrator 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 Administrator so causing such a conflict being of a type and
nature carried on by the Administrator or its subsidiaries or Affiliates at the
date of this Servicing Agreement or (ii) upon satisfaction of the following
conditions: (a) the Administrator has proposed a successor administrator to the
1996-RHS4 LLC and the Indenture Trustee in writing and such proposed successor
administrator is reasonably acceptable to the 1996-RHS4 LLC, the Indenture
Trustee and the Credit Enhancer; (b) each Rating Agency shall have delivered a
letter to the 1996-RHS4 LLC, the Credit Enhancer and the Indenture Trustee prior
to the appointment of the successor administrator stating that the proposed
appointment of such successor administrator as Administrator hereunder will not
result in the reduction or withdrawal of the then current rating of the
Securities, if determined without regard to the Credit Enhancement Instrument;
and (c) such proposed successor administrator is reasonably acceptable to the
Credit Enhancer, as evidenced by a letter to the 1996-RHS4 LLC and the Indenture
Trustee.
Section 7.06. Administrator Undertakings with Respect to the 1996-RHS4
LLC. The Administrator hereby undertakes to (i) prepare all income tax returns
of the 1996-RHS4 LLC in all jurisdictions where in its judgment such filings are
required or where it is directed by the 1996-RHS4 LLC to file such income tax
returns, (ii) deliver such returns to the Tax Matters Partner of the 1996-RHS4
LLC not less than one week prior to their due date in order for the Tax Matters
Partner to sign and timely file such income tax returns and (iii) prepare and
deliver to each Member of the 1996-RHS4 LLC, within ninety (90) days after the
expiration of each Fiscal Year of the 1996-RHS4 LLC all information returns
required by the Code and information with respect to the 1996-RHS4 LLC necessary
for the preparation of the Members' federal income tax returns. In addition, the
Administrator hereby undertakes to perform all of the enumerated duties of the
Company and the Managing Member, including maintaining the records of the
1996-RHS4 LLC, included in Article IV of the Operating Agreement.
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ARTICLE VIII
Default
Section 8.01. Servicing Default. If any one of the following events
("Servicing Default") shall occur and be continuing:
(i) 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 1996-RHS4 LLC, the Issuer or the Indenture Trustee or
to the Master Servicer, the 1996-RHS4 LLC, the Issuer and the Indenture
Trustee by the Credit Enhancer; or
(ii) 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
1996-RHS4 LLC, the Issuer or the Indenture Trustee or to the Master
Servicer, the 1996-RHS4 LLC, the Issuer and the Indenture Trustee by
the Credit Enhancer; or
(iii) 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,
conserva-torship, 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
(iv) 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 or 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
1996-RHS4 LLC
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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 1996-RHS4 LLC, 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 Revolving Credit Loans
hereunder during any period prior to the date of such termination and
the 1996-RHS4 LLC 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, the 1996-RHS4 LLC 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 Revolving Credit Loans or otherwise,
shall pass to and be vested in the Indenture Trustee as pledgee of the
Class A Ownership Interest, pursuant to and under this Section 8.01;
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 Revolving
Credit 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 Revolving Credit 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
Revolving Credit 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 8.01 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 Revolving Credit 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 8.01(i) or under Section 8.01(ii) 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
[NY01:240828.4] 16069-00382 12/20/96 12:15am
29
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 8.02. Indenture Trustee to Act; Appointment of Successor. (a)
On and after the time the Master Servicer receives a notice of termination
pursuant to Section 8.01 or sends a notice pursuant to Section 6.04, the
Indenture Trustee as pledgee of the Class A Ownership Interest 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 to (i) succeed to the
responsibilities, duties and liabilities of the initial Master Servicer in its
capacity as Designated Seller under the Designated Seller's 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 Revolving Credit Loan, (iv) fund any
Additional Balances with respect to any Revolving Credit 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 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 Class A Ownership Interest 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 Credit Enhancement
Instrument. Pending appointment of a successor to the Master Servicer hereunder,
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 Revolving Credit 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
[NY01:240828.4] 16069-00382 12/20/96 12:15am
30
obligation to purchase Revolving Credit 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 Revolving Credit 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.
Section 8.03. Notification to Securityholders. Upon any termination of
or appointment of a successor to the Master Servicer pursuant to this Article
VIII or Section 6.04, the Indenture Trustee shall give prompt written notice
thereof to the Securityholders, the Credit Enhancer, the 1996-RHS4 LLC, the
Issuer, the Administrator and each Rating Agency.
[NY01:240828.4] 16069-00382 12/20/96 12:15am
31
ARTICLE IX
Miscellaneous Provisions
Section 9.01 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 Credit Enhancement Instrument and the consent
of the Credit Enhancer and the Indenture Trustee.
SECTION 9.02 GOVERNING LAW. THIS SERVICING AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 9.03 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, 000 Xxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxx 00000,
Attention: Xxxxxxx Xxxxx, (b) in the case of the Administrator, 0000 Xxxxxxxxxx
Xxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: Managing
Director - Mortgage Finance, (c) in the case of the Credit Enhancer, AMBAC
Indemnity Corporation, Xxx Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, (d) in the case of Xxxxx'x, Home Mortgage Loan Monitoring Group, 4th
Floor, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, (e) in the case of Standard &
Poor's, 00 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Residential Mortgage Surveillance Group, (f) in the case of the Owner Trustee,
Wilmington Trust Company, Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000-0000, and (g) in the case of the Issuer, to Home
Equity Loan Trust 1996-RHS4, c/o Owner Trustee, Wilmington Trust Company, Xxxxxx
Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000, and (h)
in the case of the Indenture Trustee, The Chase Manhattan Bank, 000 Xxxx 00xx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX, 00000, Attention: Global Trust Services, 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 9.04 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.
[NY01:240828.4] 16069-00382 12/20/96 12:15am
32
Section 9.05 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 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.
Section 9.06 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 9.07 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 9.08 Termination Upon Purchase by the Master Servicer or
Liquidation of All Revolving Credit Loans; Partial Redemption. (a) The
respective obligations and responsibilities of the Master Servicer, the
1996-RHS4 LLC 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 from the 1996-RHS4 LLC of
all Revolving Credit Loans and all property acquired in respect of any
Revolving Credit Loan at a price equal to 100% of the unpaid Loan
Balance of each Revolving Credit Loan, plus accrued and unpaid interest
thereon at the Weighted Average Net Loan Rate up to the day preceding
the Payment Date on which such amounts are to be distributed to
Securityholders, plus any amounts due and owing to the Credit Enhancer
under the Insurance Agreement (any unpaid Master Servicing Fee shall be
deemed paid at such time).
The right of the Master Servicer to purchase the assets of the 1996-RHS4 LLC
pursuant to clause (ii) above is conditioned upon the Pool Balance as of such
date being less than ten percent of the aggregate of the Cut-off Date Loan
Balances of the Revolving Credit Loans. If such right is exercised by the Master
Servicer, the Master Servicer shall deposit the amount calculated pursuant to
clause (ii) above with the Indenture Trustee pursuant to Section 4.10 of the
Indenture and, upon the receipt of such deposit, the Indenture Trustee or
Custodian shall release to the Master Servicer, the files pertaining to the
Revolving Credit Loans being purchased.
(b) Subject to the provisions of clause (c) below, the Master Servicer
has the right to purchase a portion of the assets of the 1996-RHS4 LLC upon the
Pool Balance as of such date being less than ten percent of the aggregate of the
Cut-off Date Loan Balances of the Revolving Credit Loans at a price equal to the
greater of (a) 100% of the unpaid Loan Balance of each Revolving Credit Loan so
purchased, plus accrued and unpaid interest thereon at the Weighted Average Net
Loan Rate up to the day preceding the Payment Date on which such amounts are to
be distributed to Securityholders, plus any amounts due and owing to the Credit
Enhancer under the Insurance Agreement (any unpaid Master Servicing Fee shall be
deemed paid at such
[NY01:240828.4] 16069-00382 12/20/96 12:15am
33
time) and (b) the fair market value of the Revolving Credit Loans as determined
by two bids from competitive participants in the adjustable home equity loan
market. If such right is exercised by the Master Servicer, the Master Servicer
shall deposit the amount calculated above with the Indenture Trustee pursuant to
Section 5.02 of the Indenture and, upon the receipt of such deposit, the
Indenture Trustee or Custodian shall release to the Master Servicer, the files
pertaining to the Revolving Credit Loans being purchased.
(c) With respect to any purchase of a portion of the Revolving Credit
Loans by the Master Servicer pursuant to subsection (b) above, the following
conditions must be satisfied: (i) the Master Servicer shall have delivered to
the Indenture Trustee and the Credit Enhancer a loan schedule containing a list
of all Revolving Credit Loans remaining in the 1996-RHS4 LLC after such removal;
(ii) the Master Servicer shall represent and warrant that no selection
procedures adverse to the interests of the Securityholders or the Credit
Enhancer were used by the Master Servicer in selecting such Revolving Credit
Loans; and (iii) each Rating Agency shall have notified the Master Servicer that
such retransfer would not result in a reduction or withdrawal of the ratings of
the Securities, if determined without regard to the Credit Enhancement
Instrument. In lieu of a cash payment, if an Amortization Event had previously
occurred, all or a portion of such purchase price by the Master Servicer may be
in the form of Additional Balances on other Revolving Credit Loans not
previously conveyed to the 1996-RHS4 LLC.
(d) The Master Servicer, at its expense, shall prepare and deliver to
the Indenture Trustee for execution, at the time the Revolving Credit Loans are
to be released to the Master Servicer, appropriate documents assigning each such
Revolving Credit Loan from the Indenture Trustee or the 1996-RHS4 LLC to the
Master Servicer or the appropriate party.
Section 9.09 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 9.10 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 Designated 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.
[NY01:240828.4] 16069-00382 12/20/96 12:15am
34
IN WITNESS WHEREOF, the Master Servicer and the 1996-RHS4 LLC 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.
GMAC MORTGAGE CORPORATION,
as Master Servicer
By:
Name:
Title: Director
RESIDENTIAL FUNDING CORPORATION,
as Administrator
By:
Name:
Title:
1996-RHS4 LLC,
as the Limited Liability Company
By: Home Equity Loan Trust 1996-RHS4, as
Managing Member
By: Wilmington Trust Company, not in
its individual capacity but solely as
Owner Trustee
By:
Name:
Title:Vice President
THE CHASE MANHATTAN BANK, as Indenture
Trustee
By:
Name:
Title:Vice President
[NY01:240828.4] 16069-00382 12/20/96 12:15am
EXHIBIT A
REVOLVING CREDIT LOAN SCHEDULE
TO BE PROVIDED UPON REQUEST
[NY01:240828.4] 16069-00382 12/20/96 12:15am
EXHIBIT B
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PREMISES:
That The Chase Manhattan Bank, as Indenture Trustee (the "Indenture Trustee"),
under the Indenture among Home Equity Loan Trust 1996-RHS4 and the Indenture
Trustee, a national banking association organized and existing under the laws of
the United States of America, and having its principal office located at
____________________________________ in the City of ___________, State of
_______, hath made, constituted and appointed, and does by these presents make,
constitute and appoint GMAC Mortgage Corporation, a corporation organized and
existing under the laws of the Commonwealth of Pennsylvania, 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 Revolving Credit 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 for which GMAC Mortgage Corporation is acting as master servicer and
Residential Funding Corporation as administrator pursuant to a Servicing
Agreement, dated as of December 1, 1996 (the "Servicing Agreement").
This appointment shall apply to 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;
[NY01:240828.4] 16069-00382 12/20/96 12:15am
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 Revolving
Credit Loan secured and evidenced thereby.
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
[NY01:240828.4] 16069-00382 12/20/96 12:15am
continue in full force and effect has not been revoked unless an instrument of
revocation has been made in writing by the undersigned.
THE CHASE MANHATTAN BANK
as Indenture Trustee
Name: Name:
Title: Title:
[NY01:240828.4] 16069-00382 12/20/96 12:15am
STATE OF )
SS.
COUNTY OF )
On this ____ day of December, 1996, before me the undersigned, Notary
Public of said State, personally appeared _______________________________
personally known to me to be duly authorized officers of The Chase Manhattan
Bank that executed the within instrument and personally known to me to be the
persons who executed the within instrument on behalf of The Chase Manhattan Bank
therein named, and acknowledged to me such The Chase Manhattan Bank executed the
within instrument pursuant to its by-laws.
WITNESS my hand
and official seal.
Notary Public in and for the
State of
[NY01:240828.4] 16069-00382 12/20/96 12:15am
EXHIBIT C
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with your administration of the Class A Ownership Interest, 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) Revolving Credit Loan
Prepaid in Full
Mortgage 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."
-------------------------------------
GMAC Mortgage 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
[NY01:240828.4] 16069-00382 12/20/96 12:15am
