EXECUTION
================================================================================
OPTION ONE MORTGAGE CORPORATION,
as Servicer
and
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Master Servicer
and
XXXXXX CAPITAL, A DIVISION OF
XXXXXX BROTHERS HOLDINGS INC.,
as Seller
and
XXXXXX BROTHERS BANK, FSB,
as Seller
-----------------------------
Structured Asset Securities Corporation
Amortizing Residential Collateral Trust
Mortgage Pass-Through Certificates, Series 2001-BC6
SERVICING AGREEMENT
Dated as of October 1, 2001
-----------------------------
================================================================================
Table of Contents
Page
----
ARTICLE I. DEFINITIONS........................................................3
ARTICLE II. SELLER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING
RESPONSIBILITIES.................................................14
Section 2.01 Contract for Servicing; Possession of Servicing Files.....14
Section 2.02 Books and Records.........................................15
ARTICLE III. SERVICING OF THE MORTGAGE LOANS.................................16
Section 3.01 Servicer to Service.......................................16
Section 3.02 Collection of Mortgage Loan Payments......................17
Section 3.03 Establishment of and Deposits to Custodial Accounts.......17
Section 3.04 Permitted Withdrawals From Custodial Accounts.............19
Section 3.05 Establishment of and Deposits to Escrow Account...........21
Section 3.06 Permitted Withdrawals From Escrow Account.................21
Section 3.07 Restoration of Mortgaged Property.........................22
Section 3.08 Fidelity Bond and Errors and Omissions Insurance..........23
Section 3.09 Notification of Adjustments...............................23
Section 3.10 Payment of Taxes, Insurance and Other Charges.............24
Section 3.11 Protection of Accounts....................................24
Section 3.12 Title, Management and Disposition of REO Property.........25
Section 3.13 Real Estate Owned Reports.................................27
Section 3.14 MERS......................................................27
Section 3.15 Waiver of Prepayment Penalties............................27
Section 3.16 Servicing and Administration of the PMI Policies..........28
Section 3.17 Maintenance of Hazard Insurance...........................29
Section 3.18 Realization Upon Defaulted Mortgage Loans.................30
Section 3.19 Enforcement of Due-On-Sale Clauses; Assumption
Agreement.................................................31
ARTICLE IV. PAYMENTS TO MASTER SERVICER......................................32
Section 4.01 Remittances...............................................32
Section 4.02 Statements to Master Servicer.............................32
Section 4.03 Monthly Advances by Servicer..............................33
Section 4.04 Compensating Interest.....................................34
Section 4.05 Credit Reporting..........................................34
ARTICLE V. GENERAL SERVICING PROCEDURES......................................34
Section 5.01 Servicing Compensation; Seller Remittance Amount..........34
Section 5.02 Annual Audit Report.......................................35
Section 5.03 Annual Officer's Certificate..............................35
ARTICLE VI. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.......................36
Section 6.01 Representations, Warranties and Agreements
of the Servicer...........................................36
Section 6.02 Remedies for Breach of Representations and
Warranties of the Servicer................................37
i
Section 6.03 Additional Indemnification by the Servicer; Third
Party Claims..............................................38
Section 6.04 Indemnification with Respect to Certain Taxes
and Loss of REMIC Status..................................39
ARTICLE VII. THE SERVICER....................................................39
Section 7.01 Merger or Consolidation of the Servicer...................39
Section 7.02 Limitation on Liability of the Servicer and Others........40
Section 7.03 Limitation on Resignation and Assignment
by the Servicer...........................................40
Section 7.04 Subservicing Agreements and Successor Subservicer.........41
Section 7.05 Inspection................................................42
ARTICLE VIII. TERMINATION....................................................42
Section 8.01 Termination for Cause.....................................42
Section 8.02 Termination Without Cause.................................44
Section 8.03 Termination for Distressed Mortgage Loans.................45
ARTICLE IX. MISCELLANEOUS PROVISIONS.........................................46
Section 9.01 Successor to the Servicer.................................46
Section 9.02 Costs.....................................................48
Section 9.03 Notices...................................................48
Section 9.04 Severability Clause.......................................49
Section 9.05 No Personal Solicitation..................................50
Section 9.06 Counterparts..............................................50
Section 9.07 Place of Delivery and Governing Law.......................50
Section 9.08 Further Agreements........................................50
Section 9.09 Intention of the Parties..................................51
Section 9.10 Successors and Assigns; Assignment of
Servicing Agreement.......................................51
Section 9.11 Assignment by Xxxxxx Capital..............................51
Section 9.12 Amendment.................................................51
Section 9.13 Waivers...................................................52
Section 9.14 Exhibits..................................................52
Section 9.15 Intended Third Party Beneficiaries........................52
Section 9.16 Confidentiality...........................................52
Section 9.17 General Interpretive Principles...........................53
Section 9.18 Reproduction of Documents.................................53
EXHIBITS & SCHEDULES
EXHIBIT A-1 Schedule of Mortgage Loans (including Prepayment Charge
Schedule)
EXHIBIT A-2 Schedule of Mortgage Loans (including solely those Mortgage
Loans covered by a PMI Policy)
EXHIBIT B Custodial Account Letter Agreement
EXHIBIT C Escrow Account Letter Agreement
EXHIBIT D Master Servicer Data Field Requirements
EXHIBIT E ARC 2001-BC6 Trust Agreement
ii
SERVICING AGREEMENT
THIS SERVICING AGREEMENT (this "Agreement"), entered into as of the 1st
day of October, 2001, by and among XXXXXX CAPITAL, a Division of XXXXXX BROTHERS
HOLDINGS INC., a Delaware corporation ("Xxxxxx Capital"), XXXXXX BROTHERS BANK,
FSB, a federal savings bank (the "Bank") (Xxxxxx Capital and the Bank shall
collectively be referred to as the "Seller"), OPTION ONE MORTGAGE CORPORATION, a
California corporation ("the Servicer"), having its principal executive offices
at 3 Xxx, Xxxxxx, Xxxxxxxxxx 00000, XXXXX FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION, as Master Servicer (the "Master Servicer") and acknowledged by BANK
ONE, NATIONAL ASSOCIATION, as trustee (the "Trustee") under the Trust Agreement
(as defined herein), recites and provides as follows:
RECITAL
WHEREAS, the Servicer and the Bank are parties to a Flow Interim
Servicing Agreement, dated as of May 1, 2000, for Fixed and Adjustable Rate
Mortgage Loans (Group LB-2000) (the "Bank Servicing Agreement");
WHEREAS, the Servicer and Xxxxxx Capital are parties to a Flow Interim
Servicing Agreement, dated as of May 1, 2000, for Fixed and Adjustable Rate
Mortgage Loans (Group LC-2000) (the "Xxxxxx Capital Servicing Agreement") (the
Bank Servicing Agreement and the Xxxxxx Capital Servicing Agreement shall
collectively be referred to herein as the "Servicing Agreement");
WHEREAS, the Bank has conveyed certain mortgage loans currently
serviced under the Bank Servicing Agreement (the "Bank Mortgage Loans") and
Xxxxxx Capital has conveyed certain mortgage loans currently serviced under the
Xxxxxx Capital Servicing Agreement (the "Xxxxxx Capital Mortgage Loans") (as
identified on Exhibit A-1 hereto) (the Bank Mortgage Loans and the Xxxxxx
Capital Mortgage Loans shall hereafter referred to collectively as the "Mortgage
Loans") on a servicing-retained basis to Structured Asset Securities Corporation
(the "Depositor"), which in turn has conveyed the Mortgage Loans to the Trustee
under a trust agreement dated as of October 1, 2001 (the "Trust Agreement"),
among the Trustee, the Depositor, the Master Servicer, and The Murrayhill
Company, as loss mitigation advisor (the "Loss Mitigation Advisor");
WHEREAS, multiple classes of certificates (the "Certificates"),
including the Class P Certificate and the Class X Certificate will be issued on
the Closing Date pursuant to the Trust Agreement, and Xxxxxx Brothers Inc. or a
nominee thereof is expected to be the initial registered holder of the Class P
and Class X Certificates;
WHEREAS, subsequent to the Closing Date Xxxxxx Brothers Inc. intends to
convey all of its rights, title and interest in and to the Class P and the Class
X Certificate and all payments and all other proceeds received thereunder to an
owner trust in which it will hold the sole equity interest, which trust will
issue net interest margin securities ("NIM Securities") through an indenture
trust, such NIM Securities secured, in part, by the payments on such NIM
Certificates (the "NIMS Transaction");
WHEREAS, one or more insurers (collectively, the "NIMS Insurer") will
each issue insurance policies guaranteeing certain payments under the NIM
Securities to be issued pursuant to the indenture in the NIMS Transaction;
WHEREAS, in the event there may be two or more individual insurers it
is intended that the rights extended to the NIMS Insurer pursuant to this
Agreement be allocated among two or more individual insurers that issue
insurance policies in connection with the NIMS Transaction through a NIMS
Insurance Agreement by and among such insurers and the parties hereto;
WHEREAS, each Seller (with respect to its related Mortgage Loans)
desires that the Servicer service the Mortgage Loans pursuant to this Agreement,
and the Servicer has agreed to do so, subject to the rights of each Seller (with
respect to its related Mortgage Loans) and the Master Servicer to terminate the
rights and obligations of the Servicer hereunder without cause, in the case of
each Seller (with respect to its related Mortgage Loans), and with cause, in the
case of the Master Servicer as provided herein;
WHEREAS, the Master Servicer shall be obligated under the Trust
Agreement, among other things, to supervise the servicing of the Mortgage Loans
on behalf of the Trustee, and shall have the right to terminate the rights and
obligations of the Servicer under this Servicing Agreement upon the occurrence
and continuance of an Event of Default as provided herein;
WHEREAS, each Seller (with respect to its related Mortgage Loans) and
the Servicer intend that the Trustee and the NIMS Insurer each be an intended
third party beneficiary of this Agreement, but that the rights of the NIMS
Insurer set forth in this Agreement shall exist only so long as the NIM
Securities issued pursuant to the NIMS Transaction remain outstanding or the
NIMS Insurer is owed amounts in respect of its guarantee of payment on the NIM
Securities;
WHEREAS, each Seller (with respect to its related Mortgage Loans) and
the Servicer acknowledge and agree that each Seller (with respect to its related
Mortgage Loans) will assign all of its rights and delegate all of its
obligations hereunder (exclusive of each Seller's rights and obligations as
owner of the servicing rights relating to its related Mortgage Loans) to the
Trustee, and that each reference herein to the Seller is intended, unless
otherwise specified, to mean each Seller (with respect to its related Mortgage
Loans) or the Trustee, as assignee, whichever is the owner of the related
Mortgage Loans from time to time;
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Master Servicer, each Seller
(with respect to its related Mortgage Loans) and the Servicer hereby agree as
follows:
2
ARTICLE I.
DEFINITIONS
The following terms are defined as follows (except as otherwise agreed
in writing by the parties):
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices that prudent mortgage lending institutions would
employ in servicing their own portfolio of mortgage loans of the same type as
the Mortgage Loans in the jurisdiction where the related Mortgaged Property is
located.
Adjustable Rate Mortgage Loan: A Mortgage Loan under which the Mortgage
Interest Rate is adjusted from time to time in accordance with the terms and
provisions of the related Mortgage Note.
Adverse REMIC Event: As defined in Article X of the Trust Agreement.
Advancing Person: As defined in Section 4.03 hereof.
Agreement: This Servicing Agreement and all amendments hereof and
supplements hereto.
Ancillary Income: All income derived from the Mortgage Loans (other
than the (i) Option One Servicing Fee, (ii) the Seller Remittance Amount or
(iii) Prepayment Charges or Servicer Prepayment Charge Payment Amounts
attributable to the Mortgage Loans), including but not limited to late charges,
any interest paid on funds deposited in the Custodial Account and Escrow Account
(other than interest on escrowed funds required by law to be paid to the
Mortgagor), fees received with respect to checks or bank drafts returned by the
related bank for non-sufficient funds, assumption fees, optional insurance
administrative fees, any Net Prepayment Interest Excess Amount due to Principal
Prepayments in full and all other incidental fees and charges.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the transfer of the Mortgage to the party indicated therein, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering the Mortgage Loans secured by Mortgaged Properties
located in the same jurisdiction, if permitted by law.
Balloon Mortgage Loan: Any Mortgage Loan that by its original terms or
by virtue of any modification provides for an amortization schedule extending
beyond its originally scheduled Maturity Date and which has a final scheduled
payment that is proportionately large in comparison to other scheduled payments.
Balloon Payment: The final scheduled payment in respect of a Balloon
Mortgage Loan.
Bank: As defined in the first RECITAL of the Agreement.
3
Business Day: Any day other than (i) a Saturday or Sunday or (ii) a day
on which banking and savings and loan institutions in the States of California,
New York, Maryland, Pennsylvania and Minnesota are authorized or obligated by
law or executive order to be closed.
Certificates: Any or all of the Certificates issued pursuant to the
Trust Agreement.
Certificate Registrar: The registrar appointed pursuant to Section 3.02
of the Trust Agreement.
Closing Date: October 31, 2001.
Code: The Internal Revenue Code of 1986, as it may be amended from time
to time or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.
Condemnation Proceeds: All awards of settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan documents.
Conventional Loan: A conventional residential first or second lien
fixed or adjustable rate mortgage loan that is neither FHA insured nor VA
guaranteed.
Costs: For any Person, any claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and other costs and expenses of such Person.
Custodial Account: The separate account or accounts created and
maintained by the Servicer pursuant to Section 3.03.
Custodial Agreement: The custodial agreements relating to custody of
the Mortgage Loans between each Custodian and the Trustee, as acknowledged by
the related Servicer, each dated as of October 1, 2001.
Custodians: Each of U.S. Bank Trust National Association and The Chase
Manhattan Bank (formerly known as Chase Bank of Texas, N.A.)
Delinquent: For reporting purposes, a Mortgage Loan is "delinquent"
when any payment contractually due thereon has not been made by the close of
business on the Due Date therefore. Such Mortgage Loan is "30 days Delinquent"
if such payment has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which such
payment was first due, or, if there is not such corresponding day (e.g., as when
a 30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days Delinquent" and the second immediately succeeding month
and "90 days Delinquent" and the third immediately succeeding month.
4
Determination Date: With respect to each Remittance Date, the 15th day
of the month in which such Remittance Date occurs, or, if such 15th day is not a
Business Day, the next succeeding Business Day.
Depositor: Structured Asset Securities Corporation, a Delaware
corporation, or any successor in interest.
Distressed Mortgage Loan: As of any Transfer Date, any Mortgage Loan
that was Delinquent in payment for a period of 90 days or more as of the first
calendar day of the month in which such Transfer Date occurs, without giving
effect to any grace period permitted by the related Mortgage Note or for which
the Servicer has accepted a deed in lieu of foreclosure. No Mortgage Loan shall
be considered delinquent for the purpose of this definition by virtue of the
related Mortgagor having made payment to the prior servicer.
Distribution Date: The 25th day of each month (or if such day is not a
Business Day, the next succeeding Business Day).
Due Date: The day of the calendar month on which the Monthly Payment is
due on a Mortgage Loan, exclusive of any days of grace. With respect to the
Mortgage Loans for which payment from the Mortgagor is due on a day other than
the first day of the calendar month, such Mortgage Loans will be treated as if
the Monthly Payment is due on the first day of the immediately succeeding month.
Due Period: With respect to each Remittance Date, the period commencing
on the second day of the month immediately preceding the month of the Remittance
Date and ending on the first day of the month of the Remittance Date.
Eligible Investments: Any one or more of the obligations and securities
listed below which investment provides for a date of maturity not later than the
Determination Date in each month:
(i) direct obligations of, and obligations fully guaranteed as
to timely payment of principal and interest by, the United States of America or
any agency or instrumentality of the United States of America the obligations of
which are backed by the full faith and credit of the United States of America,
including Federal Housing Administration debentures, but excluding any of such
securities whose terms do not provide for a payment of a fixed dollar amount
upon maturity or call for redemption ("Direct Obligations") and FHLMC senior
debt obligations;
(ii) federal funds, or demand and time deposits in,
certificates of deposits of, or bankers' acceptances issued by, any depository
institution or trust company (including U.S. subsidiaries of foreign
depositories, the Trustee, the Master Servicer or any agent of the Trustee or
the Master Servicer, acting in its respective commercial capacity) incorporated
or organized under the laws of the United States of America or any state thereof
and subject to supervision and examination by federal or state banking
authorities, so long as at the time of investment or the contractual commitment
providing for such investment the commercial paper or other short-term debt
obligations of such depository institution or trust company (or, in the case of
a depository institution or trust company which is the principal subsidiary of a
holding company, the commercial paper or other short-term debt or deposit
obligations of such holding company or deposit institution, as the case may be)
have been rated by each Rating Agency in its highest short-term rating category
or one of its two highest long-term rating categories;
5
(iii) repurchase agreements collateralized by Direct
Obligations or securities guaranteed by GNMA or FHLMC with any registered
broker/dealer subject to Securities Investors' Protection Corporation
jurisdiction or any commercial bank insured by the FDIC, if such broker/dealer
or bank has an uninsured, unsecured and unguaranteed obligation rated by each
Rating Agency in its highest short-term rating category;
(iv) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States of America
or any state thereof which have a credit rating from each Rating Agency, at the
time of investment or the contractual commitment providing for such investment,
at least equal to one of the two highest long-term credit rating categories of
each Rating Agency; provided, however, that securities issued by any particular
corporation will not be Eligible Investments to the extent that investment
therein will cause the then outstanding principal amount of securities issued by
such corporation and held as part of the Custodial Account to exceed 20% of the
aggregate principal amount of all Eligible Investments in the Custodial Account;
provided, further, that such securities will not be Eligible Investments if they
are published as being under review with negative implications from either
Rating Agency;
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date not more than 180 days after the date of issuance thereof) rated
by each Rating Agency in its highest short-term rating category;
(vi) a Qualified GIC (as defined in the Trust Agreement);
(vii) certificates or receipts representing direct ownership
interests in future interest or principal payments on obligations of the United
States of America or its agencies or instrumentalities (which obligations are
backed by the full faith and credit of the United States of America) held by a
custodian in safekeeping on behalf of the holders of such receipts; and
(viii) any other demand, money market, common trust fund or
time deposit or obligation, or interest-bearing or other security or investment,
(A) rated in the highest rating category by each Rating Agency or (B) that is
acceptable to the NIMS Insurer and would not adversely affect the then current
rating by any Rating Agency then rating the Certificates or the NIM Securities.
Such investments in this subsection (viii) may include money market mutual funds
or common trust funds, including any fund for which the Trustee, the Master
Servicer or any affiliate thereof serves as an investment advisor,
administrator, shareholder servicing agent, and/or custodian or subcustodian,
notwithstanding that (x) the Trustee, the Master Servicer or any affiliate
thereof charges and collects fees and expenses from such funds for services
rendered, (y) the Trustee, the Master Servicer or any affiliate thereof charges
and collects fees and expenses for services rendered pursuant to this Agreement,
and (z) services performed for such funds and pursuant to this Agreement may
converge at any time; provided, however, that no such instrument shall be an
Eligible Investment if such instrument evidences either (i) a right to receive
only interest payments with respect to the obligations underlying such
instrument, or (ii) both principal and interest payments derived from
obligations underlying such instrument and the principal and interest payments
with respect to such instrument provide a yield to maturity of greater than 120%
of the yield to maturity at par of such underlying obligations.
6
Errors and Omissions Insurance: Errors and Omissions Insurance to be
maintained by the Servicer in accordance with the FHLMC Guide.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 3.05.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
Event of Default: Any of the events which may result in a termination
for cause set forth in Section 8.01.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHA: The Federal Housing Administration, an agency within HUD or any
successor thereto and including the Federal Housing Commissioner and the
Secretary of HUD where appropriate under the FHA Regulation.
FHLMC: The Federal Home Loan Mortgage Corporation, or any successor
thereto.
FHLMC Guide: The FHLMC Single Family Seller/Servicer Guide and all
amendments or additions thereto.
Fidelity Bond: A fidelity bond to be maintained by the Servicer in
accordance with the FHLMC Guide.
Fixed Rate Mortgage Loan: Any Mortgage Loan as to which the Mortgage
Interest Rate set forth in the Mortgage Note is fixed for the term of such
Mortgage Loan.
Final Recovery Determination: With respect to any defaulted Mortgage
Loan or any REO Property (other than any Mortgage Loan or REO Property
repurchased from the Trust), a determination made by the Servicer that all
Insurance Proceeds, Liquidation Proceeds and other payments or recoveries which
the Servicer, in its reasonable good faith judgment, expect to be finally
recoverable in respect thereof have been so recovered.
Fitch: Fitch, Inc., or any successor in interest.
FNMA: The Federal National Mortgage Association, or any successor
thereto.
7
FNMA Guide: The FNMA Single Family Seller/Servicer Guide and all
amendments or additions thereto.
General Servicing Fee: With respect to each Due Period and any Mortgage
Loan, an amount equal to one-twelfth the product of (i) the General Servicing
Fee Rate and (ii) the outstanding principal balance of such Mortgage Loan as of
the related Determination Date. The obligation of the Trustee to pay the General
Servicing Fee is limited to, and the General Servicing Fee is payable solely
from, the interest portion (including recoveries with respect to interest from
Liquidation Proceeds to the extent permitted by Section 3.02 of this Agreement)
of such Monthly Payments collected by the Servicer, or as otherwise provided
under this Agreement.
General Servicing Fee Rate: 0.50% per annum.
GNMA: The Government National Mortgage Association, or any successor
thereto.
Holder or Certificateholder: The registered owner of any Certificate as
recorded on the books of the Certificate Registrar.
HUD: The Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions
thereof with regard to FHA Mortgage Insurance. The term "HUD," for purposes of
this Agreement, is also deemed to include subdivisions thereof such as the FHA
and GNMA.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property,
including, but not limited to, proceeds from any PMI Policy, to the extent any
such proceeds are not to be applied to the restoration and repair of the related
Mortgaged Property or released to the Mortgagor in accordance with the
procedures that the Servicer would follow in servicing mortgage loans for its
own account, subject to the terms and conditions of the related Mortgage Note
and Mortgage.
Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the
related REO Property, if the Mortgaged Property is acquired in satisfaction of
the Mortgage Loan.
Master Servicer: Xxxxx Fargo Bank Minnesota, National Association, or
any successor in interest, or if any successor Master Servicer shall be
appointed as provided in the Trust Agreement, then such successor Master
Servicer.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
MERS Eligible Mortgage Loan: Any Mortgage Loan that has been designated
by the Servicer as recordable in the name of MERS, as nominee.
8
MERS Mortgage Loan: Any Mortgage Loan as to which the related Mortgage,
or an Assignment of Mortgage, has been or will be recorded in the name of MERS,
as nominee for the holder from time to time of the related Mortgage Note.
Monthly Advance: With respect to each Remittance Date and each Mortgage
Loan, an amount equal to the Monthly Payment (with the interest portion of such
Monthly Payment adjusted to the Mortgage Loan Remittance Rate) that was due on
the Mortgage Loan, and that was Delinquent at the close of business on the first
day of the month in which such Remittance Date occurs, but only to the extent
that such amount is expected, in the reasonable judgment of the Servicer, to be
recoverable from collections or other recoveries (including Liquidation Proceeds
and Insurance Proceed) in respect of such Mortgage Loan. To the extent that the
Servicer determines that any such amount is not recoverable from collections or
other recoveries in respect of such Mortgage Loan, such determination shall be
evidenced by a certificate of a Servicing Officer delivered to the Master
Servicer and the NIMS Insurer setting forth such determination and the
procedures and considerations of the Servicer forming the basis of such
determination.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Loan.
Moody's: Xxxxx'x Investors Service, Inc. or any successor in interest.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first or second lien on an unsubordinated estate
in fee simple in real property securing the Mortgage Note.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note net of any Relief Act Reduction.
Mortgage Loan: An individual mortgage loan that is the subject of this
Agreement, each mortgage loan subject to this Agreement being identified on the
Mortgage Loan Schedule attached as Exhibit A-1 hereto, which mortgage loan
includes without limitation the Mortgage Loan documents, the Monthly Payments,
Principal Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds, REO Disposition Proceeds, and all other rights, benefits, proceeds and
obligations arising from or in connection with such mortgage loan.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Master Servicer, which shall be equal to
the Mortgage Interest Rate minus the General Servicing Fee Rate.
Mortgage Loan Schedule: A schedule of the Mortgage Loans, attached
hereto as Exhibit A-1, setting forth information with respect to such Mortgage
Loans as agreed to by each Seller (with respect to its related Mortgage Loans),
the Servicer and the Master Servicer, including, but not limited to (i) any MERS
identification number (if available) with respect to each MERS Mortgage Loan or
MERS Eligible Mortgage Loan, (ii) a data field indicating whether such Mortgage
Loan is insured under a PMI Policy and identifying the related Qualified Insurer
and (iii) a Prepayment Charge Schedule.
9
Mortgage Note: The original, executed note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage.
Mortgaged Property: The real property securing repayment of the debt
evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Net Prepayment Interest Excess Amount: With respect to any Due Period,
the amount, if any, by which the Prepayment Interest Excess Amount exceeds the
Prepayment Interest Shortfall Amount for such Due Period.
Net Sale Proceeds: The proceeds from the sale of REO Property, net of
all expenses and advances incurred by the Servicer in connection with such sale,
including, without limitation, legal fees and expenses, referral fees, brokerage
commissions, conveyance taxes and any other related expense.
NIM Securities: As defined in the fifth RECITAL to this Agreement.
NIMS Insurer: As defined in the sixth RECITAL to this Agreement.
NIMS Transaction: As defined in the fifth RECITAL to this Agreement.
Non-MERS Eligible Mortgage Loan: Any Mortgage Loan other than a MERS
Eligible Mortgage Loan.
Non-MERS Mortgage Loan: Any Mortgage Loan other than a MERS Mortgage
Loan.
Notice Date: The fifteenth calendar day preceding each Transfer Date,
or, if such day is not a Business Day, the immediately preceding Business Day.
Officer's Certificate: A certificate signed by the Chairman of the
Board, the President or a vice president (however denominated), and by the
Treasurer, the Secretary, or one of the assistant treasurers or assistant
secretaries of the Servicer, a Servicing Officer, the Master Servicer, or each
Seller (with respect to its related Mortgage Loans), as applicable.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Servicer, reasonably acceptable to the Trustee, the Master
Servicer, the NIMS Insurer and each Seller (with respect to its related Mortgage
Loans), provided that any Opinion of Counsel relating to qualification of the
Mortgage Loans in a REMIC or compliance with the REMIC Provisions must be an
opinion of counsel acceptable to the Trustee, the Master Servicer, the NIMS
Insurer and each Seller (with respect to its related Mortgage Loans), who (i) is
in fact independent of each Seller (with respect to its related Mortgage Loans)
and the Servicer (ii) does not have any material direct or indirect financial
interest in either Seller (with respect to its related Mortgage Loans) or the
Servicer or any affiliate of any such entity and (iii) is not connected with
either Seller (with respect to its related Mortgage Loans) or Servicer as an
officer, employee, director or person performing similar functions.
10
Option One Servicing Fee: With respect to each Due Period and any
Mortgage Loan, an amount equal to the sum of (a) one-twelfth the product of (i)
the Option One Servicing Fee Rate and (ii) the outstanding principal balance of
such Mortgage Loan as of the related Determination Date. The obligation of the
Trustee to pay the Option One Servicing Fee is limited to, and the Option One
Servicing Fee is payable solely from, the interest portion (including recoveries
with respect to interest from Liquidation Proceeds to the extent permitted by
Section 3.02 of this Agreement) of such Monthly Payments collected by the
Servicer, or as otherwise provided under this Agreement.
Option One Servicing Fee Rate: 0.40% per annum.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
PMI Insurer: Any Qualified Insurer issuing a PMI Policy with respect to
the Mortgage Loans.
PMI Policy: A policy of primary mortgage guaranty insurance issued by a
Qualified Insurer, as required by this Agreement and the Trust Agreement with
respect to certain Mortgage Loans.
Prepayment Charge: With respect to any Mortgage Loan and Remittance
Date, the charges or premiums, as specified in the Prepayment Charge Schedule,
if any, due in connection with a full or partial prepayment of such Mortgage
Loan during the immediately preceding Prepayment Period in accordance with the
terms thereof (but excluding any Servicer Prepayment Charge Payment Amount).
Prepayment Charge Schedule: A data field in the Mortgage Loan Schedule
attached hereto as Exhibit A-1 which sets forth the amount of the Prepayment
Charge and the term during which the Prepayment Charge is imposed with respect
to a Mortgage Loan.
Prepayment Interest Excess Amount: With respect to any Principal
Prepayment in full or in part received on the first day of the month of the
Remittance Date, all amounts received in respect of interest on such Principal
Prepayment.
Prepayment Interest Shortfall Amount: With respect to any Mortgage Loan
that was subject to a Principal Prepayment in full or in part during any Due
Period, which Principal Prepayment was applied to such Mortgage Loan prior to
such Mortgage Loan's Due Date in such Due Period, the amount of interest (net of
the General Servicing Fee or the Option One Servicing Fee for Principal
Prepayments in full, and net of a pro-rated portion of the General Servicing Fee
or the Option One Servicing Fee in the case of Principal Prepayments in part)
that would have accrued on the amount of such Principal Prepayment during the
period commencing on the date as of which such Principal Prepayment was applied
to such Mortgage Loan and ending on the day immediately preceding such Due Date,
inclusive.
Prepayment Period: With respect to each Distribution Date and any full
or partial Principal Prepayments, the period beginning on the second day of the
calendar month immediately preceding the month in which the related Distribution
Date occurs, and ending on the first day of the month in which such Distribution
Date occurs.
11
Prime Rate: The prime rate published from time to time, as published as
the average rate in The Wall Street Journal (Northeast Edition).
Principal Prepayment: Any payment by a Mortgagor of principal (other
than a Balloon Payment) or other recovery of principal on a Mortgage Loan that
is recognized as having been received or recovered in advance of its scheduled
Due Date and applied to reduce the principal balance of the Mortgage Loan in
accordance with the terms of the Mortgage Note.
Purchase Price: With respect to any Mortgage Loan or REO Property to be
purchased by the NIMS Insurer pursuant to Section 8.03(c), an amount equal to
the sum of (i) 100% of the principal balance thereof as of the date of purchase,
(ii) accrued interest on such principal balance at the applicable Mortgage
Interest Rate in effect from time to time to the Due Date as to which interest
was last covered by a payment by the Mortgagor or a Monthly Advance by the
Servicer or Master Servicer and (iii) any unreimbursed Servicing Advances,
Monthly Advances and any unpaid General Servicing Fees allocable to such
Distressed Mortgage Loan.
Qualified Depository: Any of (i) a depository the accounts of which are
insured by the FDIC (to the limits established by such corporation) and the debt
obligations of which are rated P-1 by Moody's (or its equivalent) or better by
each Rating Agency; (ii) the corporate trust department of any bank the debt
obligations of which are rated A-1 by S&P and F-1 by Fitch (or its equivalent)
or better by each Rating Agency; or (iii) the Bank.
Qualified Insurer: A mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by FHLMC and FNMA.
Rating Agency: Each of Fitch, Xxxxx'x and S&P or their successors. If
such agencies or their successors are no longer in existence, "Rating Agencies"
shall be such nationally recognized statistical rating agencies, or other
comparable Person, designated by each Seller (with respect to its related
Mortgage Loans), notice of which designation shall be given to the Trustee, the
NIMS Insurer, the Master Servicer and the Servicer.
Relief Act Reduction: With respect to any Mortgage Loan as to which
there has been a reduction in the amount of the interest collectible thereon as
a result of the application of the Soldiers' and Sailors' Civil Relief Act of
1940, as amended, any amount by which interest collectible on such Mortgage Loan
for the Due Date in the related Due Period is less than the interest accrued
thereon for the applicable one-month period at the Mortgage Interest Rate
without giving effect to such reduction.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
Remittance Date: The 18th day (or if such 18th day is not a Business
Day, the first Business Day immediately following) of any calendar month.
12
REO Disposition: The final sale or other disposition by the Servicer of
any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 3.12.
REO Property: A Mortgaged Property acquired by the Servicer on behalf
of the Trust Fund through foreclosure or by deed in lieu of foreclosure pursuant
to Section 3.12 hereof.
Residual Certificate: The Class R Certificate.
S&P: Standard & Poor's Rating Services, a division of The XxXxxx-Xxxx
Companies, Inc., or any successor in interest.
Seller Remittance Amount: With respect to each Due Period and any
Mortgage Loan, an amount equal to one-twelfth the product of (a) the Seller
Remittance Rate and (b) the outstanding principal balance of the Mortgage Loan
as of the related Determination Date. The obligation of the Servicer to pay the
Seller Remittance Amount with respect to a Mortgage Loan is limited to, and the
Seller Remittance Amount is payable solely from, the interest portion (including
recoveries with respect to interest from Liquidation Proceeds to the extent
permitted by Section 3.02 of this Agreement) of the Monthly Payments collected
by the Servicer with respect to such Mortgage Loan, or as otherwise provided
under this Agreement. The Master Servicer shall have no obligation to monitor or
enforce the obligation of the Servicer to remit payment of the Seller Remittance
Amount to each Seller (with respect to its related Mortgage Loans).
Seller Remittance Rate: With respect to each Mortgage Loan, the
difference between the General Servicing Fee Rate and the Option One Servicing
Fee Rate.
Servicer: Option One Mortgage Corporation or its successor in interest
or assigns or any successor to the Servicer under this Agreement as herein
provided.
Servicer Prepayment Charge Payment Amount: The amount payable by the
Servicer in respect of any waived Prepayment Charges pursuant to Section 3.15
hereof.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses other than Monthly Advances (including reasonable
attorneys' fees and disbursements) incurred in the performance by the Servicer
of its servicing obligations, including, but not limited to, the cost of (a) the
preservation, inspection, restoration and protection of the Mortgaged Property,
(b) any enforcement of administrative or judicial proceedings, including
foreclosures, (c) the management and liquidation of the Mortgaged Property
(including costs incurred in connection with environmental inspections or other
related costs of foreclosure of Mortgaged Property potentially contaminated by
hazardous or toxic substance or wastes in accordance with Section 3.12 hereof)
if the Mortgaged Property is acquired in satisfaction of the Mortgage, (d)
taxes, assessments, water rates, sewer rents and other charges which are or may
become a lien upon the Mortgaged Property, and PMI Policy premiums and fire and
hazard insurance coverage, (e) any losses sustained by the Servicer with respect
to the liquidation of the Mortgaged Property and (f) compliance with the
obligations pursuant to the provisions of the FHLMC Guide.
13
Servicing File: The items pertaining to a particular Mortgage Loan
including, but not limited to, the computer files, data disks, books, records,
data tapes, notes, and all additional documents generated as a result of or
utilized in originating and/or servicing each Mortgage Loan, which are held in
trust for the Trustee by the Servicer.
Servicing Officer: Any officer of the Servicer involved in or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Servicer to the
Master Servicer upon request, as such list may from time to time be amended.
Special Servicer: The person designated by each Seller (with respect to
its related Mortgage Loans) (with the prior consent of the Trustee, the Master
Servicer and the NIMS Insurer) to assume the servicing of Distressed Mortgage
Loans pursuant to Section 8.03 hereof.
Transfer Date: The fourth calendar day of each month, or, if such day
is not a Business Day, the next succeeding Business Day. Each transfer of
servicing on a Transfer Date shall be deemed to be effective immediately
following the close of business on such Transfer Date.
Trust Agreement: As defined in the fourth RECITAL of this Agreement.
Trust Fund: The trust fund established by the Trust Agreement known as
the "Amortizing Residential Collateral Trust, 2001-BC6", the assets of which
consist of the Mortgage Loans and any related assets.
Trustee: Bank One, National Association, or any successor in interest,
or if any successor trustee or co-trustee shall be appointed as provided in the
Trust Agreement, then such successor trustee or such co-trustee, as the case may
be.
VA: The Veterans Administration, an agency of the United States of
America, or any successor thereto, including the Administration of Veterans
Affairs.
Any capitalized terms used and not defined in this Agreement shall have
the meanings ascribed to such terms in the Trust Agreement.
ARTICLE II.
SELLER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING
RESPONSIBILITIES
Section 2.01 Contract for Servicing; Possession of Servicing Files.
14
Each Seller (with respect to its related Mortgage Loans), by execution
and delivery of this Agreement, does hereby contract with the Servicer, subject
to the terms of this Agreement, for the servicing of the Mortgage Loans. On or
before the Closing Date, each Seller (with respect to its related Mortgage
Loans) shall cause to be delivered the Servicing Files with respect to the
Mortgage Loans listed on the Mortgage Loan Schedule to the Servicer. Each
Servicing File delivered to the Servicer shall be held in trust by the Servicer
for the benefit of the Trustee; provided, however, that the Servicer shall have
no liability for any Servicing Files (or portions thereof) not delivered by each
Seller (with respect to its related Mortgage Loans). The Servicer's possession
of any portion of the Mortgage Loan documents shall be at the will of the
Trustee for the sole purpose of facilitating servicing of the related Mortgage
Loan pursuant to this Agreement, and such retention and possession by the
Servicer shall be in a custodial capacity only. The ownership of each Mortgage
Note, Mortgage, and the contents of the Servicing File shall be vested in the
Trustee and the ownership of all records and documents with respect to the
related Mortgage Loan prepared by or which come into the possession of the
Servicer shall immediately vest in the Trustee and shall be retained and
maintained, in trust, by the Servicer at the will of the Trustee in such
custodial capacity only. The portion of each Servicing File retained by the
Servicer pursuant to this Agreement shall be segregated from the other books and
records of the Servicer and shall be appropriately marked to clearly reflect the
ownership of the related Mortgage Loan by the Trustee. The Servicer shall
release from its custody the contents of any Servicing File retained by it only
in accordance with this Agreement.
Section 2.02 Books and Records.
(a) Subject to Section 3.01(a) hereof, as soon as practicable after the
Closing Date or the date on which a Qualifying Substitute Mortgage Loan is
delivered pursuant to Section 2.05 of the Trust Agreement, as applicable (but in
no event more than 90 days thereafter except to the extent delays are caused by
the applicable recording office), the Servicer, at the expense of each Seller
(with respect to its related Mortgage Loans), shall cause the Mortgage or
Assignment of Mortgage, as applicable, with respect to each MERS Eligible
Mortgage Loan, to be properly recorded in the name of MERS in the public
recording office in the applicable jurisdiction, or shall ascertain that such
have previously been so recorded.
(b) Subject to Section 3.01(a) hereof, an Assignment of Mortgage in
favor of the Trustee shall be recorded as to each Non-MERS Mortgage Loan unless
instructions to the contrary are delivered to the Servicer and the NIMS Insurer,
in writing, by the Trustee. Subject to the preceding sentence, as soon as
practicable after the Closing Date (but in no event more than 90 days thereafter
except to the extent delays are caused by the applicable recording office), the
Servicer, at the expense of each Seller (with respect to its related Mortgage
Loans), shall cause to be properly recorded in each public recording office
where such Non-MERS Eligible Mortgage Loans are recorded each Assignment of
Mortgage.
(c) Additionally, the Servicer shall prepare and execute, at the
direction of the Trustee, any note endorsements relating to any of the Non-MERS
Mortgage Loans.
(d) All rights arising out of the Mortgage Loans shall be vested in the
Trustee, subject to the Servicer's right to service and administer the Mortgage
Loans hereunder in accordance with the terms of this Agreement. All funds
received on or in connection with a Mortgage Loan, other than the General
Servicing Fee and other compensation to which the Servicer is entitled as set
forth herein, including but not limited to in Section 5.01 below, shall be
received and held by the Servicer in trust for the benefit of the Trustee
pursuant to the terms of this Agreement.
15
(e) Any out-of-pocket costs incurred by the Servicer pursuant to this
Section 2.02 and Section 3.01(a), including (i) a management fee of $0.25 per
Mortgage Loan for tracking, maintaining and managing MERS recording of the
Mortgage Loans and (ii) any recording or other fees in connection with the
Servicer's obtaining the necessary powers of attorney (and which are specified
herein to be an expense of each Seller (with respect to its related Mortgage
Loans), shall be reimbursed to the Servicer by each Seller (with respect to its
related Mortgage Loans) within five (5) Business Days of receipt by each Seller
(with respect to its related Mortgage Loans) of an invoice for reimbursement.
The Trust Fund shall not reimburse either Seller (with respect to its related
Mortgage Loans) for any such reimbursement to the Servicer.
ARTICLE III.
SERVICING OF THE MORTGAGE LOANS
Section 3.01 Servicer to Service.
The Servicer, as an independent contractor, shall service and
administer the Mortgage Loans from and after the Closing Date and shall have
full power and authority, acting alone, to do any and all things in connection
with such servicing and administration which the Servicer may deem necessary or
desirable, consistent with the terms of this Agreement and with Accepted
Servicing Practices.
Each Seller (with respect to its related Mortgage Loans) and the
Servicer additionally agree as follows:
(a) The Servicer shall (A) record or cause to be recorded the Mortgage
or the Assignment of Mortgage, as applicable, with respect to all MERS Eligible
Mortgage Loans, in the name of MERS, or shall ascertain that such have
previously been so recorded; (B) prepare or cause to be prepared all Assignments
of Mortgage with respect to all Non-MERS Eligible Mortgage Loans; (C) prepare
for recording or cause to be recorded, subject to Section 2.02(b) hereof, all
Assignments of Mortgage with respect to Non-MERS Mortgage Loans in the name of
the Trust; (D) pay the recording costs pursuant to Section 2.02 hereof; and/or
(E) track such Mortgages and Assignments of Mortgage to ensure they have been
recorded. The Servicer shall be entitled to be paid by each Seller (with respect
to its related Mortgage Loans), on behalf of the Depositor, its out-of-pocket
costs for the preparation and recordation of the Mortgages and Assignments of
Mortgage. After the expenses of such recording costs pursuant to Section 2.02
hereof shall have been paid by the Servicer, the Servicer shall submit to each
Seller (with respect to its related Mortgage Loans) a reasonably detailed
invoice for reimbursement of recording costs it incurred hereunder.
(b) If applicable, the Servicer shall, in accordance with the relevant
provisions of the Xxxxxxxx-Xxxxxxxx National Affordable Housing Act of 1990, as
the same may be amended from time to time, and the regulations provided in
accordance with the Real Estate Settlement Procedures Act, provide notice to the
Mortgagor of each Mortgage Loan of the transfer of the servicing thereto to the
Servicer.
16
(c) The Servicer shall be responsible for the preparation of and costs
associated with notifications to Mortgagors of the assumption of servicing by
the Servicer.
Consistent with the terms of this Agreement and except as provided in
Section 3.15 hereof, the Servicer may waive any late payment charge, assumption
fee or other fee (other than a Prepayment Charge) that may be collected in the
ordinary course of servicing the Mortgage Loans. The Servicer shall not make any
future advances to any Mortgagor under any Mortgage Loan, and (unless the
Mortgagor is in default with respect to the Mortgage Loan or such default is, in
the judgment of the Servicer, reasonably foreseeable) the Servicer shall not
permit any modification of any material term of any Mortgage Loan, including any
modification that would change the Mortgage Interest Rate, defer or forgive the
payment of principal or interest, reduce or increase the outstanding principal
balance (except for actual payments of principal) or change the final maturity
date on such Mortgage Loan. In the event of any such modification which permits
the deferral of interest or principal payments on any Mortgage Loan, the
Servicer shall, on the Business Day immediately preceding the Remittance Date in
any month in which any such principal or interest payment has been deferred,
make a Monthly Advance in accordance with Section 4.03, in an amount equal to
the difference between (a) such month's principal and one month's interest at
the Mortgage Loan Remittance Rate on the unpaid principal balance of such
Mortgage Loan and (b) the amount paid by the Mortgagor. The Servicer shall be
entitled to reimbursement for such advances to the same extent as for all other
advances made pursuant to Section 4.03. Without limiting the generality of the
foregoing, the Servicer shall continue, and is hereby authorized and empowered,
to execute and deliver on behalf of itself and the Trustee, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties. Upon the request of the Servicer, the
Trustee shall execute and deliver to the Servicer, within the later of fifteen
days from the Closing Date or within fifteen days of such Servicer request, any
powers of attorney (one for each county in which any of the Mortgaged Properties
are located) and other documents, furnished to it by the Servicer and reasonably
satisfactory to the Trustee, necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties under this Agreement.
Section 3.02 Collection of Mortgage Loan Payments.
Continuously from the Closing Date until the date each Mortgage Loan
ceases to be subject to this Agreement, the Servicer shall proceed diligently to
collect all payments due under each of the Mortgage Loans when the same shall
become due and payable and shall take special care in ascertaining and
estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Loans and each related Mortgaged Property,
to the end that the installments payable by the Mortgagors will be sufficient to
pay such charges as and when they become due and payable.
Section 3.03 Establishment of and Deposits to Custodial Accounts.
(a) The Servicer shall segregate and hold all funds collected and
received pursuant to the Mortgage Loans separate and apart from any of its own
funds and general assets and shall initially establish and maintain one or more
Custodial Accounts, in the form of time deposit or demand accounts, titled
"Option One Mortgage Corporation in trust for Bank One, National Association, as
trustee for ARC 2001-BC6 Trust." Each Custodial Account shall be established
with a Qualified Depository. Any funds deposited in a Custodial Account may be
invested in Eligible Investments subject to the provisions of Section 3.11
hereof. Funds deposited in a Custodial Account may be drawn on by the Servicer
in accordance with Section 3.04 hereof. The creation of a Custodial Account
shall be evidenced by a letter agreement in the form of Exhibit B. A copy of
such certification or letter agreement shall be furnished to the Trustee, the
Master Servicer, the NIMS Insurer and, upon request, to any subsequent owner of
the Mortgage Loans.
17
(b) The Servicer shall deposit in the Custodial Account on a daily
basis, and retain therein, the following collections received by the Servicer
and payments made by the Servicer after the Closing Date:
(i) all payments on account of principal on the Mortgage
Loans, including all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate;
(iii) all Prepayment Charges or any Servicer Prepayment Charge
Payment Amounts to be paid by the Servicer to the Trust Fund;
(iv) all Liquidation Proceeds;
(v) all Insurance Proceeds (other than any amounts immediately
applied to the restoration or repair of the Mortgaged Property or immediately
released to the Mortgagor);
(vi) all Condemnation Proceeds that are not applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor;
(vii) any Prepayment Interest Shortfall Amount required to be
paid by the Servicer;
(viii) all Monthly Advances made by the Servicer or an
Advancing Person pursuant to Section 4.03;
(ix) any amounts required to be deposited by the Servicer in
connection with the deductible clause in any blanket hazard insurance policy;
(x) any amounts received with respect to or related to any REO
Property or REO Disposition Proceeds;
(xi) any amounts required to be deposited pursuant to Section
3.11 in connection with any losses realized on Eligible Investments with respect
to funds held in a Custodial Account;
18
(xii) any amounts required to be deposited by the Servicer
pursuant to Section 3.16(a) in connection with any unpaid claims that are a
result of a breach by the Servicer or any subservicer of its obligations
hereunder or under a PMI Policy;
(xiii) any amounts received by it under any PMI Policy; and
(xiv) any other amount required hereunder to be deposited by
the Servicer in the Custodial Account.
The foregoing requirements for deposit into the Custodial Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing payments in the nature of (i) late payment charges
and insufficient fund charges, (ii) assumption fees, (iii) other Ancillary
Income and (iv) the Option One Servicing Fee need not be deposited by the
Servicer into the Custodial Account.
Any interest paid on funds deposited in the Custodial Account by the
depository institution shall accrue to the benefit of the Servicer as additional
servicing compensation and the Servicer shall be entitled to retain and withdraw
such interest from the Custodial Account pursuant to Section 3.04 (iv) of this
Agreement. Additionally, any other benefit derived from the Custodial Account
associated with the receipt, disbursement and accumulation of principal,
interest, taxes, hazard insurance, mortgage insurance, etc. shall accrue for the
benefit of the Servicer.
Section 3.04 Permitted Withdrawals From Custodial Account.
The Servicer shall, from time to time, withdraw funds from the
Custodial Account for the following purposes:
(i) to make payments to the Master Servicer in the amounts and
in the manner provided for in Section 4.01;
(ii) to pay the Seller Remittance Amount to each Seller (with
respect to its related Mortgage Loans);
(iii) in the event the Servicer has elected not to retain the
Option One Servicing Fee out of any Mortgagor payments on account of interest or
other recovery of interest with respect to a particular Mortgage Loan (including
late collections of interest on such Mortgage Loan, or interest portions of
Insurance Proceeds, Liquidation Proceeds or Condemnation Proceeds) prior to the
deposit of such Mortgagor payment or recovery in the Custodial Account, to pay
to itself the related Option One Servicing Fee from all such Mortgagor payments
on account of interest or other such recovery for interest with respect to that
Mortgage Loan;
(iv) to pay itself investment earnings on funds deposited in
the Custodial Account;
(v) to clear and terminate the Custodial Account upon the
termination of this Agreement;
19
(vi) to transfer funds to another Qualified Depository in
accordance with Section 3.11 hereof;
(vii) to invest funds in certain Eligible Investments in
accordance with Section 3.11 hereof;
(viii) to reimburse itself to the extent of funds held in the
Custodial Account for Monthly Advances of the Servicer's funds made pursuant to
Section 4.03. The Servicer's right to reimburse itself pursuant to this
subclause (viii) with respect to any Mortgage Loan shall be limited to amounts
received on or in respect of the related Mortgage Loan which represent late
recoveries of payments of principal or interest with respect to which a Monthly
Advance was made, it being understood that in the case of any such reimbursement
the Servicer's right thereto shall be prior to the rights of the Trust Fund;
provided, however, that following the final liquidation of a Mortgage Loan, the
Servicer may reimburse itself for previously unreimbursed Monthly Advances in
excess of Liquidation Proceeds or Insurance Proceeds with respect to such
Mortgage Loan from any funds in the Custodial Account, it being understood, in
the case of any such reimbursement, that the Servicer's right thereto shall be
prior to the rights of the Trust Fund. The Servicer may recover at any time from
amounts on deposit in the Custodial Account the amount of any Monthly Advances
that the Servicer deems nonrecoverable or that remain unreimbursed to the
Servicer from related Liquidation Proceeds after the final liquidation of the
Mortgage Loan. In addition, the Servicer may, at any time, withdraw from the
Custodial Account funds that were not included in the Total Distribution Amount
(as defined in the Trust Agreement) for the preceding Distribution Date to
reimburse itself for Monthly Advances previously made by the Servicer; and
(ix) to reimburse itself for unreimbursed Servicing Advances,
and for any unpaid General Servicing Fees or Option One Servicing Fees, the
Servicer's right to reimburse itself pursuant to this subclause (ix) with
respect to any Mortgage Loan being limited to related Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds, REO Disposition Proceeds and other
amounts received in respect of the related REO Property, and such other amounts
as may be collected by the Servicer from the Mortgagor or otherwise relating to
the Mortgage Loan, it being understood that, in the case of any such
reimbursement, the Servicer's right thereto shall be prior to the rights of the
Trust Fund;
(x) to reimburse the Servicer for expenses incurred by, and
reimbursable to, the Servicer pursuant to Section 6.03, but only to extent such
amounts are determined to be reimbursable by the Trust Fund pursuant to Section
6.03; and
(xi) to reimburse itself for expenses incurred or reimbursable
to the Servicer pursuant to Section 3.12 to the extent not previously reimbursed
under clause (ix) of this Section 3.04;
(xii) to withdraw funds necessary for the operation,
management and maintenance of any REO related property to the extent not
previously reimbursed under clause (ix) of this Section 3.04; and
(xiii) to withdraw any funds deposited to the Custodial
Account in error.
20
Notwithstanding the foregoing clauses (viii) and (ix), no Monthly
Advances or Servicing Advances shall be required to be made by the Servicer if
such Monthly Advance or Servicing Advance would, if made, be, in the Servicer's
reasonable judgment, nonrecoverable. The determination by the Servicer that it
has made a nonrecoverable Monthly Advance or Servicing Advance, or that any
proposed Monthly Advance or Servicing Advance would be a nonrecoverable advance,
shall be evidenced by an Officer's Certificate of the Servicer delivered to the
Master Servicer and the NIMS Insurer.
Section 3.05 Establishment of and Deposits to Escrow Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Escrow Accounts, in the form of time deposit or demand accounts, titled
"Option One Mortgage Corporation in trust for Bank One, National Association, as
Trustee for ARC 2001-BC6 Trust." The Escrow Accounts shall be established with a
Qualified Depository in a manner that shall provide maximum available insurance
thereunder. Funds deposited in the Escrow Account may be drawn on by the
Servicer in accordance with Section 3.06. The creation of any Escrow Account
shall be evidenced by a letter agreement in the form of Exhibit C. A copy of
such certification or letter agreement shall be furnished to the Trustee, the
Master Servicer and the NIMS Insurer and, upon request, to any subsequent owner
of the Mortgage Loans.
The Servicer shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any such items as required
under the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or
Condemnation Proceeds that are to be applied to the restoration or repair of any
Mortgaged Property.
The Servicer shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 3.06. The Servicer shall retain any interest paid on funds deposited in
the Escrow Account by the depository institution, other than interest on
escrowed funds required by law to be paid to the Mortgagor. Additionally, any
other benefit derived from the Escrow Account associated with the receipt,
disbursement and accumulation of principal, interest, taxes, hazard insurance,
mortgage insurance, etc. shall accrue to the Servicer. To the extent required by
law, the Servicer shall pay interest on escrowed funds to the Mortgagor
notwithstanding that the Escrow Account may be non-interest bearing or that
interest paid thereon is insufficient for such purposes.
Section 3.06 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the
Servicer only:
21
(i) to effect payments of ground rents, taxes, assessments,
water rates, sewer rents, mortgage insurance premiums, condominium charges, fire
and hazard insurance premiums or other items constituting Escrow Payments for
the related Mortgage;
(ii) to refund to any Mortgagor any funds found to be in
excess of the amounts required under the terms of the related Mortgage Loan;
(iii) as permitted by applicable state law, for transfer to
the Custodial Account and application to reduce the principal balance of the
Mortgage Loan in accordance with the terms of the related Mortgage and Mortgage
Note;
(iv) for application to restore or repair the Mortgaged
Property in accordance with the FHLMC Guide;
(v) to pay to the Servicer, or any Mortgagor to the extent
required by law, any interest paid on the funds deposited in the Escrow Account;
and
(vi) to reimburse itself for any Servicing Advances made with
respect to Escrow Payments for a Mortgage Loan or the related Mortgaged
Properties, but only from amounts received on the related Mortgage Loan which
represent late collections of Escrow Payments thereunder;
(vii) to withdraw any funds deposited into the Escrow Account
in error; and
(viii) to clear and terminate the Escrow Account on the
termination of this Agreement.
The Servicer will be responsible for the administration of the Escrow
Accounts and will be obligated to make Servicing Advances to the Escrow Account
in respect of its obligations under this Section 3.06, reimbursable from the
Escrow Accounts or Custodial Account to the extent not collected from the
related Mortgagor, anything to the contrary notwithstanding, when and as
necessary to avoid the lapse of insurance coverage on the Mortgaged Property, or
which the Servicer knows, or in the exercise of the required standard of care of
the Servicer hereunder should know, is necessary to avoid the loss of the
Mortgaged Property due to a tax sale or the foreclosure as a result of a tax
lien. If any such payment has not been made and the Servicer receives notice of
a tax lien with respect to the Mortgage being imposed, the Servicer will, within
ten (10) Business Days of such notice, advance or cause to be advanced funds
necessary to discharge such lien on the Mortgaged Property.
Section 3.07 Restoration of Mortgaged Property.
The Servicer need not obtain the approval of the Master Servicer prior
to releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to
be applied to the restoration or repair of the Mortgaged Property if such
release is in accordance with Accepted Servicing Practices. At a minimum, with
respect to claims of $5,000 or more, the Servicer shall comply with the
following conditions in connection with any such release of Insurance Proceeds
or Condemnation Proceeds:
22
(i) the Servicer shall receive satisfactory independent
verification of completion of repairs and issuance of any required approvals
with respect thereto;
(ii) the Servicer shall take all steps necessary to preserve
the priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to mechanics' and materialmen's liens.
(iii) the Servicer shall verify that the Mortgage Loan is not
60 or more days delinquent; and
(iv) pending repairs or restoration, the Servicer shall place
the Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
With respect to claims of less than $5,000, the Servicer shall
comply with the following conditions in connection with any such release of
Insurance Proceeds or Condemnation Proceeds:
(v) the related Mortgagor shall provide an affidavit verifying
the completion of repairs and issuance of any required approvals with respect
thereto;
(vi) the Servicer shall verify the total amount of the claim
with the applicable insurance company; and
(vii) pending repairs or restoration, the Servicer shall place
the Insurance Proceeds or Condemnation Proceeds in the Escrow Account. If the
Trustee is named as an additional loss payee, the Servicer is hereby empowered
to endorse any loss draft issued in respect of such a claim in the name of the
Trustee.
Section 3.08 Fidelity Bond and Errors and Omissions Insurance.
The Servicer shall keep in force during the term of this Agreement a
Fidelity Bond and Errors and Omissions Insurance the minimum coverage of which
shall be at least equal to the coverage required by FHLMC in the FHLMC Guide
(unless a waiver of such requirement has been obtained by the Servicer from
FHLMC). Such Fidelity Bond and Errors and Omissions Insurance shall be
maintained with recognized insurers, shall be in such form and amount as would
permit the Servicer to be qualified as a FHLMC servicer, and shall by its terms
not be cancelable without thirty days' prior written notice to the Trustee, the
Master Servicer and the NIMS Insurer. The Servicer shall be deemed to have
complied with this provision if an affiliate of the Servicer has such errors and
omissions and fidelity bond coverage and, by the terms of such insurance policy
or fidelity bond, the coverage afforded thereunder extends to the Servicer. The
Servicer shall furnish to the Trustee, the Master Servicer and the NIMS Insurer
a copy of each such bond and insurance policy upon their request.
23
Section 3.09 Notification of Adjustments.
With respect to each Adjustable Rate Mortgage Loan, the Servicer shall
adjust the Mortgage Interest Rate on the related interest rate adjustment date
and shall adjust the Monthly Payment on the related mortgage payment adjustment
date, if applicable, in compliance with the requirements of applicable law and
the related Mortgage and Mortgage Note. The Servicer shall execute and deliver
any and all necessary notices required under applicable law and the terms of the
related Mortgage Note and Mortgage regarding the Mortgage Interest Rate and
Monthly Payment adjustments. The Servicer shall promptly, upon written request
therefor, deliver to the Master Servicer such notifications and any additional
applicable data regarding such adjustments and the methods used to calculate and
implement such adjustments. Upon the discovery by the Servicer or the receipt of
notice from the Master Servicer that the Servicer has failed to adjust a
Mortgage Interest Rate or Monthly Payment in accordance with the terms of the
related Mortgage Note, the Servicer shall immediately deposit in the Custodial
Account from its own funds the amount of any interest loss or deferral caused
thereby.
Section 3.10 Payment of Taxes, Insurance and Other Charges. With
respect to each Mortgage Loan, the Servicer shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, water rates and other
charges which are or may become a lien upon the Mortgaged Property and the
status of fire and hazard insurance coverage and shall obtain, from time to
time, all bills for the payment of such charges (including renewal premiums) and
shall effect payment thereof prior to the applicable penalty or termination date
and at a time appropriate for securing maximum discounts allowable, employing
for such purpose deposits of the Mortgagor in the Escrow Account which shall
have been estimated and accumulated by the Servicer in amounts sufficient for
such purposes, as allowed under the terms of the Mortgage or applicable
regulations. The Servicer assumes full responsibility for the payment of all
such bills and shall effect payments of all such bills irrespective of the
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such
payments. The Servicer shall employ Accepted Servicing Practices to ensure that
the Mortgaged Property is not subjected to a tax lien as a result of nonpayment
and that such Mortgaged Property is not left uninsured.
Section 3.11 Protection of Accounts.
The Servicer may transfer any Custodial Account or any Escrow Account
to a different Qualified Depository from time to time. The Servicer shall give
notice to the Trustee, the NIMS Insurer and the Master Servicer of the location
of each Custodial Account maintained by it with respect to the Mortgage Loans
when established and prior to any change thereof.
The Servicer shall bear any expenses, losses or damages sustained by
the Trustee or the Master Servicer if the Custodial Account and/or the Escrow
Account are not demand deposit accounts.
Amounts on deposit in the Custodial Account and the Escrow Account may
at the option of the Servicer be invested in Eligible Investments; provided that
in the event that amounts on deposit in the Custodial Account or the Escrow
Account exceed the amount fully insured by the FDIC (the "Insured Amount"), the
Servicer shall be obligated to invest the excess amount over the Insured Amount
in Eligible Investments on the same Business Day as such excess amount becomes
present in the Custodial Account or the Escrow Account. Any such Eligible
Investment shall mature no later than the Business Day immediately preceding the
related Remittance Date. Any such Eligible Investment shall be made in the name
of the Servicer in trust for the benefit of the Trustee. All income on or gain
realized from any such Eligible Investment shall be for the benefit of the
Servicer and may be withdrawn at any time by the Servicer. Any losses incurred
in respect of any such investment shall be deposited in the Custodial Account or
the Escrow Account by the Servicer out of its own funds immediately as realized.
24
Section 3.12 Title, Management and Disposition of REO Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Trustee (or MERS, as applicable), or in the
event the Trustee is not authorized or permitted to hold title to real property
in the state where the REO Property is located, or would be adversely affected
under the "doing business" or tax laws of such state by so holding title, the
deed or certificate of sale shall be taken in the name of such Person or Persons
as shall be consistent with an Opinion of Counsel obtained by the Servicer from
any attorney duly licensed to practice law in the state where the REO Property
is located. The Person or Persons holding such title other than the Trustee
shall acknowledge in writing that such title is being held as nominee for the
Trustee.
The Servicer shall manage, conserve, protect and operate each REO
Property for the Trustee solely for the purpose of its prompt disposition and
sale. The Servicer, either itself or through an agent selected by the Servicer,
shall manage, conserve, protect and operate the REO Property in the same manner
that it manages, conserves, protects and operates other foreclosed property for
its own account, and in the same manner that similar property in the same
locality as the REO Property is managed. The Servicer shall attempt to sell the
same (and may temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the Servicer
deems to be in the best interest of the Trustee.
Notwithstanding anything to the contrary contained in this Section
3.12, in connection with a foreclosure or acceptance of a deed in lieu of
foreclosure, in the event the Servicer has reasonable cause to believe that a
Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
or if the Master Servicer or NIMS Insurer otherwise requests, an environmental
inspection or review of such Mortgaged Property to be conducted by a qualified
inspector shall be arranged by the Servicer. Upon completion of the inspection,
the Servicer shall provide the Master Servicer and NIMS Insurer with a written
report of such environmental inspection. In the event that the environmental
inspection report indicates that the Mortgaged Property is contaminated by
hazardous or toxic substances or wastes, the Servicer shall not proceed with
foreclosure or acceptance of a deed in lieu of foreclosure. In the event that
the environmental inspection report is inconclusive as to the whether or not the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
the Servicer shall not, without the prior approval of both the Master Servicer
and the NIMS Insurer proceed with foreclosure or acceptance of a deed in lieu of
foreclosure. In such instance, the Master Servicer and the NIMS Insurer shall be
deemed to have approved such foreclosure or acceptance of a deed in lieu of
foreclosure unless either notifies the Servicer in writing, within five (5) days
after its receipt of written notice of the proposed foreclosure or deed in lieu
of foreclosure from the Servicer, that it disapproves of the related foreclosure
or acceptance of a deed in lieu of foreclosure. The Servicer shall be reimbursed
for all Servicing Advances made pursuant to this paragraph with respect to the
related Mortgaged Property from the Custodial Account.
25
In the event that the Trust Fund acquires any REO Property in
connection with a default or imminent default on a Mortgage Loan, the Servicer
shall dispose of such REO Property not later than the end of the third taxable
year after the year of its acquisition by the Trust Fund unless the Servicer has
applied for and received a grant of extension from the Internal Revenue Service
(and provide a copy of the same to the NIMS Insurer) to the effect that, under
the REMIC Provisions and any relevant proposed legislation and under applicable
state law, the applicable Trust REMIC may hold REO Property for a longer period
without adversely affecting the REMIC status of such REMIC or causing the
imposition of a federal or state tax upon such REMIC. If the Servicer has
received such an extension (and provide a copy of the same to the NIMS Insurer),
then the Servicer shall continue to attempt to sell the REO Property for its
fair market value for such period longer than three years as such extension
permits (the "Extended Period"). If the Servicer has not received such an
extension and the Servicer is unable to sell the REO Property within the period
ending 3 months before the end of such third taxable year after its acquisition
by the Trust Fund or if the Servicer has received such an extension, and the
Servicer is unable to sell the REO Property within the period ending three
months before the close of the Extended Period, the Servicer shall, before the
end of the three-year period or the Extended Period, as applicable, (i) purchase
such REO Property at a price equal to the REO Property's fair market value, as
acceptable to the NIMS Insurer or (ii) auction the REO Property to the highest
bidder (which may be the Servicer) in an auction reasonably designed to produce
a fair price prior to the expiration of the three-year period or the Extended
Period, as the case may be. The Trustee shall sign any document or take any
other action reasonably requested by the Servicer which would enable the
Servicer, on behalf of the Trust Fund, to request such grant of extension.
Notwithstanding any other provisions of this Agreement, no REO Property
acquired by the Trust Fund shall be rented (or allowed to continue to be rented)
or otherwise used by or on behalf of the Trust Fund in such a manner or pursuant
to any terms that would: (i) cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code; or
(ii) subject any Trust REMIC to the imposition of any federal income taxes on
the income earned from such REO Property, including any taxes imposed by reason
of Sections 860F or 860G(c) of the Code, unless the Servicer has agreed to
indemnify and hold harmless the Trust Fund and the NIMS Insurer with respect to
the imposition of any such taxes.
The Servicer shall also maintain on each REO Property hazard insurance
with extended coverage in an amount which is at least equal to the lesser of (i)
the maximum insurable value of the improvements which are a part of such
property and (ii) the outstanding Principal Balance of the Mortgage Loan at the
time it becomes REO Property, to the extent required and available under the
Flood Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
The disposition of REO Property shall be carried out by the Servicer at
such price, and upon such terms and conditions, as the Servicer deems to be in
the best interests of the Trust Fund. The proceeds of sale of the REO Property
shall be promptly deposited in the Custodial Account. After the expenses of such
disposition shall have been paid, the Servicer shall reimburse itself pursuant
to Section 3.04 hereof for any Servicing Advances it incurred with respect to
such REO Property.
26
The Servicer shall withdraw from the Custodial Account funds necessary
for the proper operation, management and maintenance of the REO Property,
including the cost of maintaining any hazard insurance pursuant to the FHLMC
Guides. The Servicer shall make monthly distributions on each Remittance Date to
the Trustee of the net cash flow from the REO Property (which shall equal the
revenues from such REO Property net of the expenses described in this Section
3.12 and of any reserves reasonably required from time to time to be maintained
to satisfy anticipated liabilities for such expenses).
Section 3.13 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 4.02, the
Servicer shall furnish by electronic transmission to the Master Servicer and the
NIMS Insurer on or before the Remittance Date each month a statement with
respect to any REO Property covering the operation of such REO Property for the
previous month and the Servicer's efforts in connection with the sale of such
REO Property and any rental of such REO Property incidental to the sale thereof
for the previous month. That statement shall be accompanied by such other
information as either the Master Servicer or the NIMS Insurer shall reasonably
request.
Section 3.14 MERS.
(a) The Servicer shall take such actions as are necessary to cause the
Trustee to be clearly identified as the owner of each MERS Mortgage Loan on the
records of MERS for purposes of the system of recording transfers of beneficial
ownership of mortgages maintained by MERS.
(b) The Servicer shall maintain in good standing its membership in
MERS. In addition, the Servicer shall comply with all rules, policies and
procedures of MERS, including the Rules of Membership, as amended, and the MERS
Procedures Manual, as amended.
(c) With respect to all MERS Mortgage Loans serviced hereunder, the
Servicer shall promptly notify MERS as to any transfer of beneficial ownership
or release of any security interest in such Mortgage Loans.
(d) With respect to all MERS Mortgage Loans serviced hereunder, the
Servicer shall notify MERS as to any transfer of servicing pursuant to Section
3.15 or Section 9.01 within 10 Business Days of such transfer of servicing. The
Servicer shall cooperate with the Trustee and any successor servicer to the
extent necessary to ensure that such transfer of servicing is appropriately
reflected on the MERS system.
Section 3.15 Waiver of Prepayment Penalties.
27
Except as provided below, the Servicer or any designee of the Servicer
shall not waive any Prepayment Charge with respect to any Mortgage Loan. If the
Servicer or its designee fails to collect a Prepayment Charge at the time of the
related prepayment of any Mortgage Loan subject to such Prepayment Charge, the
Servicer shall pay to the Trust Fund at such time (by deposit to the Custodial
Account) an amount equal to the amount of the Prepayment Charge not collected;
provided, however, the Servicer shall not have any obligation to pay the amount
of any uncollected Prepayment Charge under this Section 3.15 if the failure to
collect such amount is the result of inaccurate or incomplete information in the
Prepayment Charge Schedule provided by Xxxxxx Capital and which is included as
part of the Mortgage Loan Schedule attached hereto as Exhibit A-1. The
Prepayment Charges listed on the Prepayment Charge Schedule attached hereto as
Exhibit A-1 are a complete, true and accurate and may be relied on by the
Servicer in its calculation of Prepayment Charges. If the Prepayment Charge data
set forth on Exhibit A-1 is incorrect, then the Servicer shall have no liability
for any loss resulting from calculation of Prepayment Charges using the data
provided. Notwithstanding the above, the Servicer or its designee may waive a
Prepayment Charge without paying to the Trust Fund the amount of such Prepayment
Charge only if the related prepayment is not the result of a refinancing by the
Servicer or its designee and such waiver (i) relates to a defaulted Mortgage
Loan or a reasonably foreseeable default, such waiver is standard and customary
in servicing similar mortgage loans to the Mortgage Loans, and such waiver, in
the reasonable judgment of the Servicer, would maximize recovery of total
proceeds from the Mortgage Loan, taking into account the amount of such
Prepayment Charge and the related Mortgage Loan, or (ii) relates to a prepayment
charge the collection of which, in the reasonable judgment of the Servicer,
would be a violation of applicable laws.
Section 3.16 Servicing and Administration of PMI Policies.
(a) The Servicer shall take all such actions on behalf of the Trustee
as are necessary to service, maintain and administer PMI Policies and to perform
and enforce the rights under such Policies for its own account. Except as
expressly set forth herein, the Servicer shall have full authority on behalf of
the Trust to do anything it reasonably deems appropriate or desirable in
connection with the servicing, maintenance and administration of the PMI
Policies. The Servicer shall not take, or permit any subservicer to modify or
assume a Mortgage Loan covered by a PMI Policy or take any other action with
respect to such Mortgage Loan which would result in non-coverage under any PMI
Policy of any loss which, but for the actions of the Servicer or subservicer,
would have been covered thereunder. If a PMI Insurer fails to pay a claim under
a PMI Policy as a result of breach by the Servicer or a sub-servicer of its
obligations hereunder or under a PMI Policy, the Servicer shall be required to
deposit in the Custodial Account on or prior to the next succeeding Remittance
Date an amount equal to such unpaid claim from its own funds without any right
to reimbursement from the Trust Fund. To the extent coverage is available, the
Servicer shall keep or cause to be kept in full force and effect the Insurance
Policies for as long as any Certificates are outstanding. The Servicer shall
cooperate with each PMI Insurer and shall use its best efforts to furnish all
reasonable aid, evidence and information in the possession of the Servicer to
which the Servicer has access with respect to any Mortgage Loan; provided,
however, notwithstanding anything to the contrary contained in a PMI Policy, the
Servicer shall not be required to submit any reports to a PMI Insurer until a
reporting date that is at least 15 days after the Servicer has received
sufficient loan level information from Xxxxxx Capital to appropriately code its
servicing system in accordance with such PMI Insurer's requirements.
(b) The Servicer shall deposit into the Custodial Account pursuant to
Section 3.03(xii) hereof all Insurance Proceeds received from the PMI Insurer
under the terms of a PMI Policy.
28
(c) Notwithstanding the provisions of (a) and (b) above, the Servicer
shall not take any action in regard to any PMI Policy inconsistent with the
interests of the Trustee or the Certificateholders or with the rights and
interests of the Trustee or the Certificateholders under this Agreement.
(d) The Trustee shall furnish the Servicer with any powers of attorney
and other documents (within fifteen (15) days upon request from the Servicer) in
form as provided to it necessary or appropriate to enable the Servicer to
service and administer any PMI Policy; provided, however, that the Trustee shall
not be liable for the actions of the Servicer under such powers of attorney.
Section 3.17 Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Mortgage Loan hazard
insurance such that all buildings upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are customary in the area where the Mortgaged Property
is located in an amount which is at least equal to the lesser of (i) the current
principal balance of such Mortgage Loan and (ii) the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such
property on a replacement cost basis, in each case in an amount not less than
the amount as is necessary to avoid the application of any co-insurance clause
contained in the related hazard insurance policy.
Any payments by the Servicer for hazard insurance, other than as set
forth in the last paragraph of this Section 3.17, shall be deemed Servicing
Advances, reimbursable in accordance with Section 3.04(ix), to the extent not
collected from the related Mortgagor. The Servicer will comply in the
performance of this Agreement with all reasonable rules and requirements of each
insurer under any such hazard policies. Any amounts to be collected by the
Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the property or amounts to be released to the Mortgagor
subject to the terms and conditions of the related Mortgage and Mortgage Note)
shall be deposited in the Custodial Account, subject to withdrawal pursuant to
Section 3.04, if received in respect of a Mortgage Loan. Any cost incurred by
the Servicer in maintaining any such insurance shall not, for the purpose of
calculating distributions to Certificateholders, be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit. It is understood and agreed that no earthquake
or other additional insurance is to be required of any Mortgagor 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 Mortgaged Property
or REO Property is at any time in an area identified in the Federal Register by
the Federal Emergency Management Agency as having special flood hazards and
flood insurance has been made available, the Servicer will cause to be
maintained a flood insurance policy in respect thereof. Such flood insurance
shall be in an amount equal to the lesser of (i) the unpaid principal balance of
the related Mortgage Loan 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).
29
In the event that the Servicer shall obtain and maintain a blanket
policy with an insurer having a General Policy Rating of B:III or better in
Best's Key Rating Guide (or such other rating that is comparable to such rating)
insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of this Section 3.17, it being understood and agreed that
such policy may contain a deductible clause, in which case the Servicer shall,
in the event that there shall not have been maintained on the related Mortgaged
Property or REO Property a policy complying with the first two sentences of this
Section 3.17, and there shall have been one or more losses which would have been
covered by such policy, deposit to the Custodial Account from its own funds
without right of reimbursement the amount not otherwise payable under the
blanket policy because of such deductible clause. In connection with its
activities as administrator and servicer of the Mortgage Loans, the Servicer
agrees to prepare and present, on behalf of itself, the Trustee and the
Certificateholders, claims under any such blanket policy in a timely fashion in
accordance with the terms of such policy.
Section 3.18 Realization Upon Defaulted Mortgage Loans.
(a) The Servicer shall, consistent with Accepted Servicing Practices,
foreclose upon or otherwise comparably convert the ownership of properties
securing such of the Mortgage Loans (including selling any such Mortgage Loans
other than converting the ownership of the related properties) as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments. The Servicer shall be responsible for all
costs and expenses incurred by it in any such proceedings; provided, however,
that such costs and expenses will be recoverable as Servicing Advances by the
Servicer as contemplated in Section 3.04. The foregoing is subject to the
provision that, in any case in which Mortgaged Property shall have suffered
damage from an uninsured cause, the Servicer shall not be required to expend its
own funds toward the restoration of such Mortgaged Property unless in its
determination such restoration will increase the proceeds of liquidation of the
related Mortgage Loan after reimbursement to itself for such expenses.
(b) If the Servicer determines that it is in the best economic interest
of the Trust and the Certificateholders to sell a Distressed Mortgage Loan
rather than foreclosing, the Servicer may effect such a sale. The net proceeds
of such sale shall be Liquidation Proceeds.
(c) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds, Liquidation Proceeds or Condemnation Proceeds, in respect of
any Mortgage Loan, will be applied in the following order of priority: first, to
unpaid General Servicing Fees; second, to reimburse the Servicer or any
sub-servicer for any related unreimbursed Servicing Advances and Monthly
Advances pursuant to Section 3.04; third, to accrued and unpaid interest on the
Mortgage Loan, to the date of the Final Recovery Determination, or to the Due
Date prior to the Distribution Date on which such amounts are to be distributed
if not in connection with a Final Recovery Determination; and fourth, as a
recovery of principal of the Mortgage Loan. The portion of the recovery so
allocated to any unpaid Option One Servicing Fee shall be reimbursed to the
Servicer or any Sub-Servicer pursuant to Section 3.04.
30
Section 3.19 Enforcement of Due-On-Sale Clauses; Assumption Agreement.
The Servicer will, to the extent it has knowledge of any conveyance or
prospective conveyance of any Mortgaged Property by any Mortgagor (whether by
absolute conveyance or contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under the
"due-on-sale" clause, if any, applicable thereto; provided, however, that the
Servicer shall not be required to take such action if in its sole business
judgment the Servicer believes it is not in the best interests of the Trust Fund
and shall not exercise any such rights if prohibited by law from doing so. If
the Servicer reasonably believes it is unable under applicable law to enforce
such "due-on-sale" clause, or if any of the other conditions set forth in the
proviso to the preceding sentence apply, the Servicer will enter into an
assumption and modification agreement from or with the person to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon. The Servicer is also
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
person is substituted as the Mortgagor and becomes liable under the Mortgage
Note, provided that no such substitution shall be effective unless such person
satisfies the underwriting criteria of the Servicer and has a credit risk rating
at least equal to that of the original Mortgagor. In connection with any
assumption or substitution, the Servicer shall apply such underwriting standards
and follow such practices and procedures as shall be normal and usual in its
general mortgage servicing activities and as it applies to other mortgage loans
owned solely by it. The Servicer shall not take or enter into any assumption and
modification agreement, however, unless (to the extent practicable in the
circumstances) it shall have received confirmation, in writing, of the continued
effectiveness of any applicable hazard insurance policy. Any fee collected by
the Servicer in respect of an assumption, modification or substitution of
liability agreement shall be retained by the Servicer as additional servicing
compensation. In connection with any such assumption, no material term of the
Mortgage Note (including but not limited to the related Mortgage Interest Rate
and the amount of the Monthly Payment) may be amended or modified, except as
otherwise required pursuant to the terms thereof. The Servicer shall notify the
Trustee and the NIMS Insurer that any such substitution, modification or
assumption agreement has been completed by and to the Trustee, the Custodian the
executed original of such substitution, modification or assumption agreement,
which document shall be added to the related Mortgage File and shall, for all
purposes, be considered a part of such Mortgage File to the same extent as all
other documents and instruments constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatever. For purposes of this Section 3.19, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.
31
ARTICLE IV.
PAYMENTS TO MASTER SERVICER
Section 4.01 Remittances.
On each Remittance Date, no later than 3:00 p.m. New York City time,
the Servicer shall remit on a scheduled/scheduled basis by wire transfer of
immediately available funds to the Master Servicer (a) all amounts deposited in
the Custodial Account as of the close of business on the last day of the related
Due Period (net of charges against or withdrawals from the Custodial Account
pursuant to Section 3.04), plus (b) all Monthly Advances, if any, which the
Servicer or other Advancing Person is obligated to make pursuant to Section
4.03, minus (c) any amounts attributable to Principal Prepayments, Liquidation
Proceeds, Insurance Proceeds, Condemnation Proceeds or REO Disposition Proceeds
received after the applicable Due Period, which amounts shall be remitted on the
following Remittance Date, together with any additional interest required to be
deposited in the Custodial Account in connection with such Principal Prepayment
in accordance with Section 3.03(vii), and minus (d) any amounts attributable to
Monthly Payments collected but due on a Due Date or Due Dates subsequent to the
first day of the month in which such Remittance Date occurs, which amounts shall
be remitted on the Remittance Date next succeeding the Due Date related to such
Monthly Payment.
With respect to any remittance received by the Master Servicer after
the second Business Day following the Business Day on which such payment was
due, the Servicer shall pay to the Master Servicer interest on any such late
payment at an annual rate equal to the Prime Rate, adjusted as of the date of
each change, plus two (2) percentage points, but in no event greater than the
maximum amount permitted by applicable law. Such interest shall be deposited in
the Custodial Account by the Servicer on the date such late payment is made and
shall cover the period commencing with the day following the Remittance Date and
ending with the Business Day on which such payment is made, both inclusive. Such
interest shall be remitted along with the distribution payable on the next
succeeding Remittance Date. The payment by the Servicer of any such interest
shall not be deemed an extension of time for payment or a waiver of any Event of
Default by the Master Servicer or the Trustee.
All remittances required to be made to the Master Servicer shall be
made on a scheduled/scheduled basis to the following wire account or to such
other account as may be specified by the Master Servicer from time to time:
Xxxxx Fargo Bank Minnesota,
National Association
Minneapolis, Minnesota
ABA# 000-00-000
Account Name: Corporate Trust Account Number 0000000000
For further credit to: Custodial Account No. 00000000
Section 4.02 Statements to Master Servicer.
Not later than the 10th calendar day of each month (or if such calendar
day is not a Business Day, the immediately succeeding Business Day), the
Servicer shall furnish to the Master Servicer and the NIMS Insurer (a) a monthly
remittance advice in the format set forth at Exhibit D hereto for the period
ending on the last day of the preceding calendar month and (b) all such
information required pursuant to clause (a) above on a magnetic tape or other
similar media reasonably acceptable to the Master Servicer and the NIMS Insurer.
Such monthly remittance advice shall also be provided by the Servicer to Aurora
Loan Services Inc. on behalf of each Seller (with respect to its related
Mortgage Loans).
32
Such monthly remittance advice shall also be accompanied with a
supplemental report provided to the Master Servicer, the NIMS Insurer and each
Seller which includes on an aggregate basis for the previous Due Period (i) the
amount of claims filed, (ii) the amount of any claim payments made, (iii) the
amount of claims denied or curtailed and (iv) policies cancelled with respect to
those Mortgage Loans covered by any PMI Policy or any other provider of primary
mortgage insurance purchased by the Trust Fund. The Master Servicer will convert
such data into a format acceptable to the Trustee and provide monthly reports to
the Trustee pursuant to the Trust Agreement; provided, however, notwithstanding
anything to the contrary contained in a PMI Policy, the Servicer shall not be
required to submit any supplemental reports including the foregoing data with
respect to a PMI Policy until a reporting date that is at least 15 days after
the Servicer has received sufficient loan level information from each Seller
(with respect to its related Mortgage Loans) to appropriately code its servicing
system in accordance with requirements.
In addition, not more than 60 days after the end of each calendar year,
commencing December 31, 2001, the Servicer shall provide (as such information
becomes reasonably available to the Servicer) to the Master Servicer and the
NIMS Insurer such information concerning the Mortgage Loans and annual
remittances to the Master Servicer therefrom as is necessary for each
Certificateholder to prepare its federal income tax return. Such obligation of
the Servicer shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Servicer to the
Master Servicer and the NIMS Insurer pursuant to any requirements of the Code as
from time to time are in force.
Beginning with calendar year 2002, the Servicer shall provide the
Master Servicer and the NIMS Insurer with such information concerning the
Mortgage Loans as is necessary for the Master Servicer to prepare the Trust
Fund's federal income tax return and for any investor in the Certificates to
prepare any required tax return.
Section 4.03 Monthly Advances by Servicer.
On the Business Day immediately preceding each Remittance Date, the
Servicer shall deposit in the Custodial Account from its own funds or from
amounts held for future distribution, or both, an amount equal to the aggregate
of all Monthly Advances relating to Monthly Payments which were due on the
Mortgage Loans during the applicable Due Period and which were delinquent at the
close of business on the immediately preceding Determination Date. Any amounts
held for future distribution and so used shall be replaced by the Servicer by
deposit in the Custodial Account on or before any future Remittance Date if
funds in the Custodial Account on such Remittance Date shall be less than
remittances to the Master Servicer required to be made on such Remittance Date.
The Servicer shall keep appropriate records of such amounts and will provide
such records to the Master Servicer and the NIMS Insurer upon request. No
provision in this Agreement shall be construed as limiting the Servicer's right
to (i) pass through late collections on the related Mortgage Loans in lieu of
making Monthly Advances (ii) reimburse itself for such Monthly Advances from
late collections on the related Mortgage Loans or (iii) utilize an Advancing
Person (as defined below).
33
The Servicer shall make Monthly Advances through the Distribution Date
immediately preceding the distribution of all Liquidation Proceeds and other
payments or recoveries (including Insurance Proceeds and Condemnation Proceeds)
with respect to the related Mortgage Loans.
The Servicer may enter into a facility with any person which provides
that such person (an "Advancing Person") may fund Monthly Advances required
under this Section 4.03 and/or Servicing Advances, although no such facility
shall reduce or otherwise affect the Servicer's obligation to fund such Monthly
Advances and/or Servicing Advances. Any Monthly Advances and/or Servicing
Advances made by an Advancing Person shall be reimbursed to the Advancing Person
in the same manner as reimbursements would be made to the Servicer under Section
3.04 if such Monthly Advances or Servicing Advance were funded by the Servicer.
Section 4.04 Compensating Interest.
The Servicer shall be required to deposit in the Custodial Account, and
retain therein with respect to each Principal Prepayment, the Prepayment
Interest Shortfall Amount, if any, for the related Due Period. Such deposit
shall be made from the Servicer's own funds, without reimbursement therefore, up
to an amount equal to the lesser of (i) the Prepayment Interest Shortfall Amount
or (ii) the General Servicing Fee. To the extent that the Prepayment Interest
Shortfall Amount exceeds the Option One Servicing Fee, each Seller (with respect
to its related Mortgage Loans) agrees to subordinate the Seller Remittance
Amount to cover such shortfall in any Compensating Interest Payment. The
Servicer shall not be obligated to pay any Prepayment Interest Shortfall Amount
with respect to any Relief Act Reduction or bankruptcy.
Section 4.05 Credit Reporting.
For each Mortgage Loan, in accordance with its current servicing
practices, the Servicer will accurately and fully report its underlying borrower
credit files to each of the following credit repositories or their successors:
Equifax Credit Information Services, Inc., Trans Union, LLC and Experian
Information Solution, Inc., on a monthly basis in a timely manner.
ARTICLE V.
GENERAL SERVICING PROCEDURES
Section 5.01 Servicing Compensation; Seller Remittance Amount.
As consideration for servicing the Mortgage Loans subject to this
Agreement, the Servicer shall retain (a) the Option One Servicing Fee for each
Mortgage Loan remaining subject to this Agreement during any month and (b)
Ancillary Income. The Option One Servicing Fee shall be payable monthly.
34
The obligation of the Trustee to pay the Option One Servicing Fee is
limited as provided in Section 3.04(a)(iii). The aggregate of the Option One
Servicing Fees for any month with respect to the Mortgage Loans shall be reduced
by any Prepayment Interest Shortfall Amount with respect to such month. In
addition, the Seller Remittance Amount shall be used to pay the Prepayment
Interest Shortfall Amount to the extent not covered by the Option One Servicing
Fee. The Servicer shall be entitled to recover any unpaid Option One Servicing
Fee and each Seller (with respect to its related Mortgage Loans) shall be
entitled to recover the Seller Remittance Amount, to the extent not remitted,
out of Insurance Proceeds, Condemnation Proceeds or Liquidation Proceeds to the
extent permitted in Section 3.04 and out of amounts derived from the operation
and sale of an REO Property to the extent permitted by Section 3.12.
Additional servicing compensation in the form of Ancillary Income shall
be retained by the Servicer only to the extent such fees or charges are received
by the Servicer. The Servicer shall also be entitled pursuant to Section 3.04
and Section 3.06 to withdraw from the Custodial Account and Escrow Account,
respectively, as additional servicing compensation, interest or other income
earned on deposits therein, subject to Section 3.11.
The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement thereof except as specifically provided for herein.
Section 5.02 Annual Audit Report.
Not more than ninety days after the end of the Servicer's fiscal year
commencing with the fiscal year ending April 30, 2002, Servicer shall, at its
own expense, cause a firm of independent public accountants (who may also render
other services to Servicer), which is a member of the American Institute of
Certified Public Accountants, to furnish to each Seller (with respect to its
related Mortgage Loans), the NIMS Insurer and the Master Servicer (i) year-end
audited (if available) financial statements of the Servicer and (ii) a statement
to the effect that such firm has examined certain documents and records for the
preceding fiscal year (or during the period from the date of commencement of
such Servicer's duties hereunder until the end of such preceding fiscal year in
the case of the first such certificate) and that, on the basis of such
examination conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers, such firm is of the opinion that
Servicer's overall servicing operations have been conducted in compliance with
the Uniform Single Attestation Program for Mortgage Bankers except for such
exceptions that, in the opinion of such firm, the Uniform Single Attestation
Program for Mortgage Bankers requires it to report, in which case such
exceptions shall be set forth in such statement.
Section 5.03 Annual Officer's Certificate.
Not more than ninety days after the end of the Servicer's fiscal year
commencing with the fiscal year ending April 30, 2002 the Servicer, at its own
expense, will deliver to each Seller (with respect to its related Mortgage
Loans), the NIMS Insurer and the Master Servicer a Servicing Officer's
certificate stating, as to each signer thereof, that (i) a review of the
activities of the Servicer during such preceding fiscal year and of performance
under this Agreement has been made under such officers' supervision, and (ii) to
the best of such officers' knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement for such year, or, if there
has been a default in the fulfillment of all such obligations, specifying each
such default known to such officers and the nature and status thereof including
the steps being taken by the Servicer to remedy such default.
35
ARTICLE VI.
REPRESENTATIONS, WARRANTIES
AND AGREEMENTS
Section 6.01 Representations, Warranties and Agreements of the
Servicer.
The Servicer, as a condition to the consummation of the transactions
contemplated hereby, hereby makes the following representations and warranties
to each Seller, the Depositor and the Master Servicer as of the Closing Date:
(a) Due Organization and Authority. The Servicer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and has all licenses necessary to carry on its business as now being
conducted and is licensed, qualified and in good standing in each state where a
Mortgaged Property is located if the laws of such state require licensing or
qualification in order to conduct business of the type conducted by the
Servicer, and in any event the Servicer is in compliance with the laws of any
such state to the extent necessary to ensure the enforceability of the terms of
this Agreement; the Servicer has the full power and authority to execute and
deliver this Agreement and to perform in accordance herewith; the execution,
delivery and performance of this Agreement (including all instruments of
transfer to be delivered pursuant to this Agreement) by the Servicer and the
consummation of the transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and enforceable
obligation of the Servicer and all requisite action has been taken by the
Servicer to make this Agreement valid and binding upon the Servicer in
accordance with its terms;
(b) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Servicer;
(c) No Conflicts. Neither the execution and delivery of this Agreement,
the acquisition of the servicing responsibilities by the Servicer or the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a breach
of any of the terms, conditions or provisions of the Servicer's organizational
documents or any legal restriction or any agreement or instrument to which the
Servicer is now a party or by which it is bound, or constitute a default or
result in an acceleration under any of the foregoing, or result in the violation
of any law, rule, regulation, order, judgment or decree to which the Servicer or
its property is subject, or impair the ability of the Servicer to service the
Mortgage Loans, or impair the value of the Mortgage Loans;
(d) Ability to Perform. The Servicer does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
36
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or, to the best of our knowledge, threatened against the
Servicer which, either in any one instance or in the aggregate, may result in
any material adverse change in the business, operations, financial condition,
properties or assets of the Servicer, or in any material impairment of the right
or ability of the Servicer to carry on its business substantially as now
conducted, or in any material liability on the part of the Servicer, or which
would draw into question the validity of this Agreement or of any action taken
or to be taken in connection with the obligations of the Servicer contemplated
herein, or which would be likely to impair materially the ability of the
Servicer to perform under the terms of this Agreement;
(f) No Consent Required. No consent, approval, authorization or order
of any court or governmental agency or body is required for the execution,
delivery and performance by the Servicer of or compliance by the Servicer with
this Agreement;
(g) Ability to Service. The Servicer is an approved seller/servicer of
conventional residential mortgage loans for FNMA and FHLMC, with the facilities,
procedures, and experienced personnel necessary for the sound servicing of
mortgage loans of the same type as the Mortgage Loans. The Servicer is in good
standing to service mortgage loans for FHLMC. The Servicer is a member in good
standing of the MERS system, if applicable;
(h) No Untrue Information. Neither this Agreement nor any statement,
report or other document furnished or to be furnished by the Servicer pursuant
to this Agreement or in connection with the transactions contemplated hereby
contains any untrue material statement of fact or omits to state a material fact
necessary to make the statements contained therein not misleading; and
(i) No Commissions to Third Parties. The Servicer has not dealt with
any broker or agent or anyone else who might be entitled to a fee or commission
in connection with this transaction other than each Seller.
Section 6.02 Remedies for Breach of Representations and Warranties of
the Servicer.
It is understood and agreed that the representations and warranties set
forth in Section 6.01 shall survive the engagement of the Servicer to perform
the servicing responsibilities as of the Closing Date hereunder and the delivery
of the Servicing Files to the Servicer and shall inure to the benefit of each
Seller (with respect to its related Mortgage Loans), the Depositor, the Master
Servicer and the Trustee. Upon discovery by any of the Servicer, the Master
Servicer, the Trustee, the Depositor, the NIMS Insurer or either Seller (with
respect to its related Mortgage Loans) of a breach of any of the foregoing
representations and warranties which materially and adversely affects the
ability of the Servicer to perform its duties and obligations under this
Agreement or otherwise materially and adversely affects the value of the
Mortgage Loans, the Mortgaged Property, the priority of the security interest on
such Mortgaged Property or the interest of either Seller (with respect to its
related Mortgage Loans), the Depositor, the Master Servicer, the NIMS Insurer or
the Trustee, the party discovering such breach shall give prompt written notice
to the others.
37
Within 60 days of the earlier of either discovery by or notice to the
Servicer of a breach of a representation or warranty set forth in Section 6.01
which materially and adversely affects the ability of the Servicer to perform
its duties and obligations under this Agreement or otherwise materially and
adversely affects the value of the Mortgage Loans, the Mortgaged Property or the
priority of the security interest on such Mortgaged Property, the Servicer shall
use its best efforts promptly to cure such breach in all material respects and,
if such breach cannot be cured, the Servicer shall, at the option of the Trustee
or the NIMS Insurer, assign the Servicer's rights and obligations under this
Agreement (or respecting the affected Mortgage Loans) to a successor servicer
selected by the Trustee with the prior consent and approval of the Master
Servicer and the NIMS Insurer. Such assignment shall be made in accordance with
Section 9.01 and 9.02.
In addition, the Servicer shall indemnify each Seller (with respect to
its related Mortgage Loans), the Master Servicer, the NIMS Insurer, the
Depositor and the Trustee and hold each of them harmless against any Costs
resulting from any claim, demand, defense or assertion based on or grounded
upon, or resulting from, a breach of the Servicer's representations and
warranties contained in this Agreement. It is understood and agreed that the
remedies set forth in this Section 6.02 constitute the sole remedies of each
Seller (with respect to its related Mortgage Loans), the Master Servicer, the
Depositor, the NIMS Insurer and the Trustee hereunder respecting a breach of the
foregoing representations and warranties.
Any cause of action against the Servicer relating to or arising out of
the breach of any representations and warranties made in Section 6.01 shall
accrue upon (i) discovery of such breach by the Servicer or notice thereof by
either Seller (with respect to its related Mortgage Loans), the Master Servicer,
the NIMS Insurer, the Depositor or the Trustee to the Servicer, (ii) failure by
the Servicer to cure such breach within the applicable cure period, and (iii)
demand upon the Servicer by either Seller (with respect to its related Mortgage
Loans), the Depositor, the Master Servicer, the NIMS Insurer or the Trustee for
compliance with this Agreement.
Section 6.03 Additional Indemnification by the Servicer; Third Party
Claims.
The Servicer shall indemnify each Seller (with respect to its related
Mortgage Loans), the Depositor, the Trustee, the Master Servicer, the NIMS
Insurer and the Trust Fund and hold them harmless against any and all Costs that
any such indemnified party may sustain in any way related to (i) the failure of
the Servicer to perform its duties and service the Mortgage Loans in material
compliance with the terms of this Agreement or (ii) the failure of the Servicer
to cause any event to occur which would have occurred if the Servicer were
applying Accepted Servicing Practices under this Agreement. The Servicer shall
immediately notify each Seller (with respect to its related Mortgage Loans), the
Depositor, the Master Servicer, the Trustee, the NIMS Insurer or any other
relevant party if a claim is made by a third party with respect to this
Agreement or the Mortgage Loans, assume (with the prior written consent of the
indemnified party) the defense of any such claim and pay all expenses in
connection therewith, including counsel fees, promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or any
indemnified party in respect of such claim and follow any written instructions
received from such indemnified party in connection with such claim. The Servicer
shall be promptly reimbursed from the Trust Fund for all amounts advanced by it
pursuant to the preceding sentence except when the claim is in any way related
to the Servicer's indemnification pursuant to Section 6.02, or the failure of
the Servicer to service and administer the Mortgage Loans in material compliance
with the terms of this Agreement. In the event a dispute arises between an
indemnified party and the Servicer with respect to any of the rights and
obligations of the parties pursuant to this Agreement, and such dispute is
adjudicated in a court of law, by an arbitration panel or any other judicial
process, then the losing party shall indemnify and reimburse the winning party
for all attorneys' fees and other costs and expenses related to the adjudication
of said dispute.
38
Section 6.04 Indemnification with Respect to Certain Taxes and Loss of
REMIC Status.
In the event that any REMIC fails to qualify as a REMIC, loses its
status as a REMIC, or incurs federal, state or local taxes as a result of a
prohibited transaction or prohibited contribution under the REMIC Provisions due
to the negligent performance by the Servicer of its duties and obligations set
forth herein, the Servicer shall indemnify the Holder of the related Residual
Certificate, the NIMS Insurer, the Master Servicer and the Trust Fund against
any and all losses, claims, damages, liabilities or expenses ("Losses")
resulting from such negligence; provided, however, that the Servicer shall not
be liable for any such Losses attributable to the action or inaction of the
Trustee, the Depositor, the Master Servicer or the Holder of such Residual
Certificate, as applicable, nor for any such Losses resulting from
misinformation provided by the Holder of such Residual Certificate on which the
Servicer has relied. The foregoing shall not be deemed to limit or restrict the
rights and remedies of the Holder of such Residual Certificate, the NIMS Insurer
or the Trust Fund now or hereafter existing at law or in equity or otherwise.
Notwithstanding the foregoing, however, in no event shall the Servicer have any
liability (1) for any action or omission that is taken in accordance with and in
compliance with the express terms of, or which is expressly permitted by the
terms of, this Agreement, (2) for any Losses other than arising out of a
negligent performance by the Servicer of its duties and obligations set forth
herein, and (3) for any special or consequential damages to Certificateholders
(in addition to payment of principal and interest on the Certificates).
ARTICLE VII.
THE SERVICER
Section 7.01 Merger or Consolidation of the Servicer.
The Servicer shall keep in full effect its existence, rights and
franchises as a corporation, and shall obtain and preserve its qualification to
do business as a foreign entity in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement.
Any Person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall, with the prior written consent of the Trustee, the Master
Servicer and the NIMS Insurer, be the successor of the Servicer hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor or surviving Person shall be an
institution (i) having a net worth of not less than $15,000,000, and (ii) which
is acceptable to the NIMS Insurer and is a FHLMC-approved servicer in good
standing.
39
Section 7.02 Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors, officers, employees or
agents of the Servicer shall be under any liability to either Seller (with
respect to its related Mortgage Loans), the Master Servicer, the NIMS Insurer,
the Depositor or the Trustee hereunder for any action taken or for refraining
from the taking of any action in good faith pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect the
Servicer or any such person against any breach of warranties or representations
made herein, or failure to perform its obligations in strict compliance with any
standard of care set forth in this Agreement, or any liability which would
otherwise be imposed by reason of any breach of the terms and conditions of this
Agreement. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement and which in its opinion may involve it
in any expense or liability; provided, however, that the Servicer may, with the
consent of the NIMS Insurer, the Trustee and the Master Servicer, undertake any
such action which it deems necessary or desirable in respect of this Agreement
and the rights and duties of the parties hereto. In such event, the Servicer
shall be entitled to reimbursement from the Trust Fund for the reasonable legal
expenses and costs of such action.
Section 7.03 Limitation on Resignation and Assignment by the Servicer.
Each Seller (with respect to its related Mortgage Loans) has entered
into this Agreement with the Servicer in reliance upon the independent status of
the Servicer, and the representations as to the adequacy of its servicing
facilities, plant, personnel, records and procedures, its integrity, reputation
and financial standing, and the continuance thereof. Therefore, the Servicer
shall neither assign its rights under this Agreement or the servicing hereunder
nor delegate its duties hereunder or any portion thereof, or sell or otherwise
dispose of all or substantially all of its property or assets without, in each
case, the prior written consent of each Seller (with respect to its related
Mortgage Loans), the Master Servicer, the NIMS Insurer and the Trustee, which
consent, in the case of an assignment of rights or delegation of duties, shall
be granted or withheld in the discretion of each Seller (with respect to its
related Mortgage Loans), the Master Servicer, the NIMS Insurer and the Trustee,
and which consent, in the case of a sale or disposition of all or substantially
all of the property or assets of the Servicer, shall not be unreasonably
withheld; provided, that in each case, there must be delivered to each Seller
(with respect to its related Mortgage Loans), the Master Servicer, the NIMS
Insurer and the Trustee a letter from each Rating Agency to the effect that such
transfer of servicing or sale or disposition of assets will not result in a
qualification, withdrawal or downgrade of the then-current rating of any of the
Certificates or of the NIM Securities to be issued in the NIMS Transaction.
Notwithstanding the foregoing, the Servicer, without the consent of each Seller
(with respect to its related Mortgage Loans), the Master Servicer, the NIMS
Insurer and the Trustee, may retain third-party contractors to perform certain
servicing and loan administration functions, including without limitation,
hazard insurance administration, tax payment and administration, flood
certification and administration, collection services and similar functions;
provided, however, that the retention of such contractors by Servicer shall not
limit the obligation of the Servicer to service the Mortgage Loans pursuant to
the terms and conditions of this Agreement.
40
The Servicer shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of each Seller (with respect to its
related Mortgage Loans), the Master Servicer, the NIMS Insurer and the Trustee
or upon the determination that its duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Servicer. Any
such determination permitting the resignation of the Servicer shall be evidenced
by an Opinion of Counsel to such effect delivered to the Seller, the Master
Servicer, the NIMS Insurer and the Trustee which Opinion of Counsel shall be in
form and substance acceptable to the Seller, the Master Servicer, the NIMS
Insurer and the Trustee. No such resignation shall become effective until a
successor acceptable to the NIMS Insurer shall have assumed the Servicer's
responsibilities and obligations hereunder in the manner provided in Section
9.01.
Without in any way limiting the generality of this Section 7.03, in the
event that the Servicer either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof or sell or otherwise dispose of all or substantially all of its property
or assets, without the prior written consent of each Seller (with respect to its
related Mortgage Loans), the Master Servicer, the NIMS Insurer and the Trustee,
then such parties shall have the right to terminate this Agreement upon notice
given as set forth in Section 8.01, without any payment of any penalty or
damages and without any liability whatsoever to the Servicer or any third party.
Section 7.04 Subservicing Agreements and Successor Subservicer.
(a) The Servicer may enter into subservicing agreements for any
servicing and administration of the Mortgage Loans with any institution which
(i) is an approved Xxxxxx Xxx or Xxxxxxx Mac Seller/Servicer as indicated in
writing, (ii) which represents and warrants that it is in compliance with the
laws of each state as necessary to enable it to perform its obligations under
such subservicing agreement and (iii) which is acceptable to the NIMS Insurer.
For this purpose, subservicing shall not be deemed to include the use of a tax
service, or services for reconveyance, insurance or brokering REO Property. The
Servicer shall give prior written notice to the Master Servicer, the NIMS
Insurer and the Trustee of the appointment of any subservicer and shall furnish
to the Master Servicer and the NIMS Insurer a copy of such subservicing
agreement. For purposes of this Agreement, the Servicer shall be deemed to have
received payments on Mortgage Loans immediately upon receipt by any subservicer
of such payments. Any such subservicing agreement shall be acceptable to the
NIMS Insurer and be consistent with and not violate the provisions of this
Agreement. Each subservicing agreement shall provide that a successor servicer
shall have the option to terminate such agreement without payment of any fees if
the predecessor Servicer is terminated or resigns.
(b) The Servicer, with the prior written consent of the NIMS Insurer,
may terminate any subservicing agreement to which it is a party in accordance
with the terms and conditions of such subservicing agreement and either itself
directly service the related Mortgage Loans or enter into a subservicing
agreement with a successor subservicer that qualifies under Section 7.04(a).
41
(c) Notwithstanding any subservicing agreement or the provisions of
this Agreement relating to agreements or arrangements between the Servicer and a
subservicer or reference to actions taken through a subservicer or otherwise,
the Servicer shall remain obligated and primarily liable to the Trustee, the
Master Servicer, the NIMS Insurer and the Certificateholders for the servicing
and administering of the Mortgage Loans in accordance with the provisions hereof
without diminution of such obligation or liability by virtue of such
subservicing agreements or arrangements or by virtue of indemnification from the
subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Mortgage Loans. The
Servicer shall be entitled to enter into any agreement with a subservicer for
indemnification of the Servicer by such subservicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
Section 7.05 Inspection.
The Servicer shall offer the Trustee, the Master Servicer and the NIMS
Insurer, upon reasonable advance notice, during normal business hours, access to
all records maintained by the Servicer in respect of its rights and obligations
hereunder and access to officers of the Servicer responsible for such
obligations. Upon request, the Servicer shall furnish to the Trustee, the Master
Servicer and the NIMS Insurer its most recent publicly available financial
statements and such other information relating to its capacity to perform its
obligations under this Agreement.
ARTICLE VIII.
TERMINATION
Section 8.01 Termination for Cause.
This Agreement shall be terminable at the option of the Trustee, the
Master Servicer or the NIMS Insurer if any of the following events of default
exist on the part of the Servicer:
(i) any failure by the Servicer to remit to the Master
Servicer any payment required to be made under the terms of this Agreement which
continues unremedied for a period of one Business Day after the date upon which
written notice of such failure, requiring the same to be remedied, shall have
been received by the Servicer from the Master Servicer or the NIMS Insurer; or
(ii) failure by the Servicer duly to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Servicer set forth in this Agreement which continues unremedied for a period of
15 days; or
(iii) failure by the Servicer to maintain its license to do
business or service residential mortgage loans in any jurisdiction, if required
by such jurisdiction, where the Mortgaged Property is located; or
42
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, including bankruptcy,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Servicer and such decree or order shall have remained in force undischarged or
unstayed for a period of 60 days; or
(v) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
the Servicer or of or relating to all or substantially all of its property; or
(vi) the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of any
applicable insolvency, bankruptcy or reorganization statute, make an assignment
for the benefit of its creditors, voluntarily suspend payment of its obligations
or cease its normal business operations for three Business Days; or
(vii) the Servicer ceases to meet the qualifications of a FNMA
or FHLMC seller/servicer; or
(viii) the Servicer attempts to assign the servicing of the
Mortgage Loans or its right to servicing compensation hereunder or the Servicer
attempts to sell or otherwise dispose of all or substantially all of its
property or assets or to assign this Agreement or the servicing responsibilities
hereunder or to delegate its duties hereunder or any portion thereof, in each
case without complying fully with the provisions of Section 7.03.
In each and every such case, so long as an event of default shall not
have been remedied within the applicable cure period, in addition to whatever
rights the Trustee, the Master Servicer or the NIMS Insurer may have at law or
equity to damages, including injunctive relief and specific performance, the
Trustee, the Master Servicer or the NIMS Insurer, by notice in writing to the
Servicer, and with the consent of the other parties, may terminate all the
rights and obligations of the Servicer under this Agreement and in and to the
servicing contract established hereby and the proceeds thereof.
Upon receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in a successor servicer
appointed by the Trustee or the Master Servicer, as the case may be, with the
consent of the other party and the NIMS Insurer. Upon written request from the
Master Servicer, the Servicer shall prepare, execute and deliver to the
successor servicer, the Trustee or the NIMS Insurer any and all documents and
other instruments, place in such successor's possession all Servicing Files, and
do or cause to be done all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, including but not limited to
the transfer and endorsement or assignment of the Mortgage Loans and related
documents, at the Servicer's sole expense. The Servicer shall cooperate with the
Master Servicer, the NIMS Insurer and such successor in effecting the
termination of the Servicer's responsibilities and rights hereunder, including
without limitation, the transfer to such successor for administration by it of
all cash amounts which shall at the time be credited by the Servicer to the
Custodial Account or Escrow Account or thereafter received with respect to the
Mortgage Loans.
43
By a written notice, the Trustee or the Master Servicer, with the
consent of the other party and the NIMS Insurer, or the NIMS Insurer may waive
any default by the Servicer in the performance of its obligations hereunder and
its consequences. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.
Section 8.02 Termination Without Cause.
(a) This Agreement shall terminate upon: (i) the later of (a) the
distribution of the final payment or liquidation proceeds on the last Mortgage
Loan to the Master Servicer or Trust Fund, and (b) the disposition of all REO
Property acquired upon foreclosure of the last Mortgage Loan and the remittance
of all funds due hereunder or (ii) mutual consent of the Servicer and the Master
Servicer in writing, provided such termination is also acceptable to the Rating
Agencies and the NIMS Insurer. In addition, with the prior written consent of
the Master Servicer and the NIMS Insurer, each Seller (with respect to its
related Mortgage Loans) may terminate this Agreement with respect to all of the
Mortgage Loans (other than those seven (7) Mortgage Loans listed on Schedule
A-1), without cause, provided, that each Seller (with respect to its related
Mortgage Loans) gives the Servicer 30 days' notice. Any such notice of
termination shall be in writing and delivered to the Servicer, the Master
Servicer and the NIMS Insurer by registered mail to the address set forth in
Section 9.03. Each Seller (with respect to its related Mortgage Loans) and the
Servicer shall comply with the termination procedures set forth in Section 9.01
hereof. In the case of Mortgage Loans which have been serviced by the Servicer
under the Bank Servicing Agreements less than six months prior to the date of
termination without cause under this Section 8.02, the termination fee to be
paid by each Seller (with respect to its related Mortgage Loans) from its own
funds without reimbursement for a termination of servicing without cause
pursuant to this Section 8.02 shall be equal to $15.00 per Mortgage Loan,
payable no later than five Business Days following the date of such termination.
All unreimbursed Option One Servicing Fees, Servicing Advances and Monthly
Advances still owing the Servicer shall be paid by each Seller (with respect to
its related Mortgage Loans) or successor servicer from its own funds within 5
Business Days of the date of such termination without right of reimbursement
from the Trust Fund. In connection with any termination pursuant to clause (ii)
of the first sentence of this Section 8.02(a), all unreimbursed Option One
Servicing Fees, Servicing Advances and Monthly Advances still owing the Servicer
shall be paid at the time of such termination by the Trust Fund.
Upon a termination of the Servicer for cause pursuant to Section 8.01,
all unreimbursed Option One Servicing Fees, Servicing Advances and Monthly
Advances still owing the Servicer shall be paid by the Trust Fund as such
amounts are received from the related Mortgage Loans. In connection with any
termination pursuant to the second sentence of this Section 8.02(a), each Seller
(with respect to its related Mortgage Loans) or successor servicer will be
responsible for reimbursing the Servicer for all unreimbursed out-of-pocket
Servicing Advances, Monthly Advances and Option One Servicing Fees and other
reasonable and necessary out-of-pocket costs associated with any transfer of
servicing at the time of such transfer of servicing. Any invoices received by
the Servicer after termination will be forwarded to each Seller (with respect to
its related Mortgage Loans), which such Seller or successor servicer shall pay
within five (5) Business Days upon receipt from the Servicer.
44
(b) In the event that the Servicer decides to terminate its obligations
under this Agreement as set forth in clause (ii) of Section 8.02(a), the
Servicer agrees that it will continue to service the Mortgage Loans beyond the
prescribed termination date until such time as the Trustee, using reasonable
commercial efforts, is able to appoint a successor servicer acceptable to the
NIMS Insurer and the Master Servicer and otherwise meeting the characteristics
of Sections 7.01 and 9.01.
Section 8.03 Termination for Distressed Mortgage Loans.
(a) Subject to the requirements set forth in this Section 8.03, each
Seller (with respect to its related Mortgage Loans) may terminate this Agreement
with the prior consent of the Trustee, the NIMS Insurer and the Master Servicer,
with respect to the servicing of those Mortgage Loans that are determined to be
Distressed Mortgage Loans as of the Notice Date and servicing of such Mortgage
Loans shall be transferred to the Special Servicer. The appointment of a Special
Servicer by each Seller (with respect to its related Mortgage Loans) and the
execution of a special servicing agreement between each Seller (with respect to
its related Mortgage Loans) and the Special Servicer shall be subject to the
consent of the Trustee, the Master Servicer and the NIMS Insurer and the receipt
of confirmation from the Rating Agencies that the transfer of servicing to the
Special Servicer shall not result in a reduction of any rating previously given
by such Rating Agency to any Certificate or the NIMS Securities to be issued in
the NIMS Transaction. Any monthly fee paid to the Special Servicer in connection
with any Mortgage Loan serviced by such Special Servicer shall not exceed
one-twelfth of the product of (a) 0.50% and (b) the outstanding principal
balance of such Mortgage Loan. All unreimbursed Option One Servicing Fees,
Servicing Advances and Monthly Advances owing to the Servicer relating to such
Distressed Mortgage Loans shall be reimbursed and paid to the Servicer upon such
transfer to the Special Servicer.
(b) All reasonable costs and expenses incurred in connection with a
transfer of servicing to the Special Servicer including, without limitation, the
costs and expenses of the Trustee or any other Person in appointing a Special
Servicer, or of transferring the Servicing Files and the other necessary data to
the Special Servicer, shall be paid by each Seller (with respect to its related
Mortgage Loans) from its own funds without reimbursement. Each Seller (with
respect to its related Mortgage Loans) shall be responsible for the delivery of
all required Transfer Notices and will send a copy of the Transfer Notice to the
Trustee.
(c) Notwithstanding the foregoing provisions of this Section 8.03, the
NIMS Insurer may, at its option, withhold their consent to the transfer of a
Distressed Mortgage Loan to a Special Servicer and elect to purchase such
Distressed Mortgage Loan at a price equal to its Purchase Price. Prior to such
purchase, the Servicer shall be required to continue to make Monthly Advances
with respect to such Distressed Mortgage Loan pursuant to Section 4.03. Any such
purchase of a Distressed Mortgage Loan shall be accomplished by remittance to
the Master Servicer for deposit in the Collection Account established pursuant
to Section 4.01 of the Trust Agreement of the amount of the Purchase Price. The
Servicers on behalf of the Trustee shall immediately effectuate the conveyance
of such Distressed Mortgage Loan to the NIMS Insurer to the extent necessary,
including the prompt delivery of all Servicing Files and other related
documentation to the NIMS Insurer.
45
ARTICLE IX.
MISCELLANEOUS PROVISIONS
Section 9.01 Successor to the Servicer.
Simultaneously with the termination of the Servicer's responsibilities
and duties under this Agreement (a) pursuant to Sections 6.02, 7.03, 8.01 or
8.02(a)(ii), the Master Servicer shall (i) within 90 days of the Servicer's
receipt of notice of such termination, succeed to and assume all of the
Servicer's responsibilities, rights, duties and obligations under this Agreement
(except that the Master Servicer shall immediately assume all of the obligations
of the Servicer to make Monthly Advances), or (ii) appoint a successor having
the characteristics set forth in clauses (i) and (ii) of Section 7.01 and which
shall succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Servicer under this Agreement simultaneously with the
termination of the Servicer's responsibilities, duties and liabilities under
this Agreement; or (b) as a result of termination of the Servicer without cause
by either Seller (with respect to its related Mortgage Loans) pursuant to
Section 8.02 hereof, each Seller (with respect to its related Mortgage Loans)
shall appoint a successor having the characteristics set forth in clauses (i)
and (ii) of Section 7.01 and which shall succeed to all rights and assume all of
the responsibilities, duties and liabilities of the Servicer under this
Agreement simultaneously with the termination of the Servicer's
responsibilities, duties and liabilities under this Agreement. Any successor to
the Servicer shall be subject to the approval of the Master Servicer, the NIMS
Insurer and the Trustee and, to the extent required by the Trust Agreement,
shall be a member in good standing of the MERS system (if any of the Mortgage
Loans are MERS Eligible Mortgage Loans, unless such Mortgage Loans are withdrawn
from MERS and Assignments of Mortgage are recorded in favor of the Trustee at
the expense of the successor servicer). The final approval of a successor
servicer shall be conditioned upon the receipt by the Trustee, the Master
Servicer, the NIMS Insurer and each Seller (with respect to its related Mortgage
Loans) of a letter from each Rating Agency to the effect that such transfer of
servicing will not result in a qualification, withdrawal or downgrade of the
then-current rating of any of the Certificates or the NIMS Securities to be
issued in the NIMS Transaction. In connection with such appointment and
assumption, the Master Servicer or either Seller (with respect to its related
Mortgage Loans), as applicable, may make such arrangements for the compensation
of such successor out of payments on Mortgage Loans as it and such successor
shall agree, provided, however, that no such compensation shall be in excess of
the General Servicing Fee permitted under this Agreement. In the event that the
Servicer's duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned sections, the Servicer shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with the
same degree of diligence and prudence which it is obligated to exercise under
this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor. The resignation or
removal of the Servicer pursuant to the aforementioned sections shall not become
effective until a successor servicer shall be appointed pursuant to this Section
9.01, or until the Master Servicer succeeds to and assumes all of the Servicer's
responsibilities, rights, duties and obligations pursuant to this Section 9.01,
and shall in no event relieve the Servicer of the representations and warranties
made pursuant to Section 6.01 and the remedies available to the Trustee, the
Master Servicer, the NIMS Insurer and each Seller (with respect to its related
Mortgage Loans) under Section 6.02 and 6.03, it being understood and agreed that
the provisions of such Sections 6.01, 6.02 and 6.03 shall be applicable not only
to such successor servicer but also to the Servicer notwithstanding any such
resignation or termination of the Servicer, or the termination of this
Agreement. Notwithstanding the foregoing, the Master Servicer, in its capacity
as successor servicer, shall not be responsible for the lack of information
and/or documents that it cannot obtain through reasonable efforts.
46
Within a reasonable period of time, but in no event longer than 30 days
after the appointment of a successor entity, the Servicer shall prepare, execute
and deliver to the successor entity any and all documents and other instruments,
place in such successor's possession all Servicing Files, and do or cause to be
done all other acts or things necessary or appropriate to effect the purposes of
such notice of termination, including but not limited to the transfer and
endorsement of the Mortgage Notes and related documents, and the preparation and
recordation of Assignments of Mortgage. The Servicer shall cooperate with the
Master Servicer, the NIMS Insurer or each Seller (with respect to its related
Mortgage Loans), as applicable, and such successor in effecting the termination
of the Servicer's responsibilities and rights hereunder and the transfer of
servicing responsibilities to the successor servicer, including without
limitation, the transfer to such successor for administration by it of all cash
amounts which shall at the time be credited by the Servicer to the Custodial
Account or Escrow Account or thereafter received with respect to the Mortgage
Loans.
Any successor servicer appointed as provided herein shall execute,
acknowledge and deliver to the Trustee, the Servicer, the Master Servicer, the
NIMS Insurer and each Seller (with respect to its related Mortgage Loans) an
instrument (i) accepting such appointment, wherein the successor shall make the
representations and warranties set forth in Section 6.01 (including a
representation that the successor servicer is a member of MERS, unless none of
the Mortgage Loans are MERS Mortgage Loans or MERS Eligible Mortgage Loans or
any such Mortgage Loans have been withdrawn from MERS and Assignments of
Mortgage are recorded in favor of the Trustee) and provide for the same remedies
set forth in Section 6.02 and Section 6.03 herein (ii) an assumption of the due
and punctual performance and observance of each covenant and condition to be
performed and observed by the Servicer under this Agreement, whereupon such
successor servicer shall become fully vested with all the rights, powers,
duties, responsibilities, obligations and liabilities of the Servicer, with like
effect as if originally named as a party to this Agreement. Any termination or
resignation of the Servicer or termination of this Agreement pursuant to
Sections 6.02, 7.03, 8.01 or 8.02 shall not affect any claims that each Seller
(with respect to its related Mortgage Loans), the Depositor, the Master
Servicer, the NIMS Insurer or the Trustee may have against the Servicer arising
out of the Servicer's actions or failure to act prior to any such termination or
resignation. In addition, in the event any successor servicer is appointed
pursuant to Section 8.03 of this Agreement, such successor servicer must satisfy
the conditions relating to the transfer of servicing set forth in the Trust
Agreement.
47
The Servicer shall deliver promptly to the successor servicer the funds
in the Custodial Account and Escrow Account and all Mortgage Loan documents and
related documents and statements held by it hereunder and the Servicer shall
account for all funds and shall execute and deliver such instruments and do such
other things as may reasonably be required to more fully and definitively vest
in the successor all such rights, powers, duties, responsibilities, obligations
and liabilities of the Servicer.
Upon a successor's acceptance of appointment as such, the Servicer
shall notify the Trustee, the Master Servicer, the NIMS Insurer, each Seller
(with respect to its related Mortgage Loans) and the Depositor of such
appointment in accordance with the procedures set forth in Section 9.03.
Section 9.02 Costs.
Each Seller (with respect to its related Mortgage Loans) shall pay any
legal fees and expenses of its attorneys. Costs and expenses incurred in
connection with the transfer of the servicing responsibilities pursuant to
Section 9.01 or pursuant to any other provision of this Agreement, including
fees for delivering Servicing Files, shall be paid by each Seller (with respect
to its related Mortgage Loans). Subject to Sections 2.02 and 3.01(a), each
Seller (with respect to its related Mortgage Loans) shall pay the costs
associated with the preparation, delivery and recording of Assignments of
Mortgages.
Section 9.03 Notices.
All demands, notices, consents, reports, directions, instructions,
statements and other communications hereunder shall be in writing and shall be
deemed to have been duly given if sent by facsimile or mailed by overnight
courier, addressed as follows (or such other address as may hereafter be
furnished to the other parties by like notice):
(i) if to either Seller:
Xxxxxx Capital, A Division of
Xxxxxx Brothers Holdings Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Manager, Contract Finance
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxxxx Brothers Bank, FSB
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Contract Finance - Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
48
(ii) if to the Servicer:
Option One Mortgage Corporation
3 Ada
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxxx,
Servicing Contract and New Business Administrator
Servicing Contracts and New Business Department
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(iii) if to the Master Servicer:
Xxxxx Fargo Bank Minnesota,
National Association
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Group
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(iv) if to the Trustee:
Bank One, National Association
Xxx Xxxx Xxx Xxxxx
Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx
00000-0000
Attention: Global Trust Services
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(v) if to the NIMS Insurer, as provided in the Trust
Agreement.
Any such communication hereunder shall be deemed to have been received
on the date delivered to or received at the premises of the addressee.
Section 9.04 Severability Clause.
Any part, provision, representation or warranty of this Agreement which
is prohibited or which is held to be void or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation or warranty of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction,
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good-faith, to develop a structure the economic
effect of which is as close as possible to the economic effect of this Agreement
without regard to such invalidity.
49
Section 9.05 No Personal Solicitation.
From and after the related Closing Date, the Servicer hereby agrees
that it will not take any action or permit or cause any action to be taken by
any of its agents or affiliates, or by any independent contractors or
independent mortgage brokerage companies on the Servicer's behalf, to
personally, by telephone or mail, solicit the Mortgagor under any Mortgage Loan
for the purpose of refinancing such Mortgage Loan; provided, that the Servicer
may solicit any Mortgagor for whom the Servicer has received a request for
verification of mortgage status, a request for demand for payoff, a mortgagor
initiated written or verbal communication indicating a desire to prepay the
related Mortgage Loan, or the mortgagor initiates a title search, provided
further, it is understood and agreed that promotions undertaken by the Servicer
or any of its affiliates which (i) concern optional insurance products or other
additional projects or (ii) are directed to the general public at large,
including without limitation, mass mailings based on commercially acquired
mailing lists, newspaper, radio and television advertisements shall not
constitute solicitation under this Section 9.05 nor is the Servicer prohibited
from responding to unsolicited requests or inquiries made by a Mortgagor or an
agent of a Mortgagor.
Section 9.06 Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
Section 9.07 Place of Delivery and Governing Law.
This Agreement shall be deemed in effect when a fully executed
counterpart thereof is received by each Seller (with respect to its related
Mortgage Loans) in the State of New York and shall be deemed to have been made
in the State of New York. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, NOTWITHSTANDING NEW YORK OR OTHER CHOICE OF LAW
RULES TO THE CONTRARY.
Section 9.08 Further Agreements.
Each Seller (with respect to its related Mortgage Loans) and the
Servicer each agree to execute and deliver to the other such reasonable and
appropriate additional documents, instruments or agreements as may be necessary
or appropriate to effectuate the purposes of this Agreement.
50
Section 9.09 Intention of the Parties.
It is the intention of the parties that each Seller (with respect to
its related Mortgage Loans) is conveying, and the Servicer is receiving, only a
contract for servicing the Mortgage Loans. Accordingly, the parties hereby
acknowledge that the Trust Fund remains the sole and absolute owner of the
Mortgage Loans and all rights (other than the servicing rights) related thereto.
Section 9.10 Successors and Assigns; Assignment of Servicing Agreement.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Servicer, each Seller (with respect to its related Mortgage
Loans), the Trustee, the NIMS Insurer and the Master Servicer and their
respective successors and assigns. This Agreement shall not be assigned, pledged
or hypothecated by the Servicer to a third party except in accordance with
Section 7.03 and shall not be assigned, pledged or hypothecated by either Seller
(with respect to its related Mortgage Loans) without the consent of the NIMS
Insurer except as and to the extent provided in Section 9.11.
Section 9.11 Assignment by Seller.
Each Seller (with respect to its related Mortgage Loans) shall have the
right, upon notice to but without the consent of the Servicer, to assign, in
whole or in part (but exclusive of such Seller's rights and obligations as owner
of the servicing rights relating to the Mortgage Loans), its interest under this
Agreement to the Depositor, which in turn shall assign such rights to the
Trustee, and the Trustee then shall succeed to all rights of each Seller (with
respect to its related Mortgage Loans) under this Agreement. All references to
either Seller (with respect to its related Mortgage Loans) in this Agreement
shall be deemed to include its assignee or designee and any subsequent assignee
or designee, specifically including the Trustee.
Section 9.12 Amendment.
This Agreement may be amended from time to time by the Servicer and
each Seller (with respect to its related Mortgage Loans), with (i) the prior
written consent of the Trustee and the NIMS Insurer and (ii) the written
agreement signed by the Master Servicer, each Seller (with respect to its
related Mortgage Loans) and the Servicer; provided that the party requesting
such amendment shall, at its own expense, provide the Trustee, the NIMS Insurer,
the Master Servicer and each Seller (with respect to its related Mortgage Loans)
with an Opinion of Counsel that such amendment is permitted under the terms of
this Agreement, the Servicer has complied with all applicable requirements of
this Agreement, and such amendment will not materially adversely affect the
interest of the Certificateholders in the Mortgage Loans or the NIM Securities
to be issued in the NIMS Transaction.
Any such amendment shall be deemed not to adversely affect in any
material respect any of the interest of the Certificateholders in the Mortgage
Loans or the NIM Securities to be issued in the NIMS Transaction if the Trustee
receives written confirmation from each Rating Agency that such amendment will
not cause such Rating Agency to reduce, qualify or withdraw the then current
rating assigned to the Certificates and the NIM Securities (and any Opinion of
Counsel requested by the Trustee, the NIMS Insurer, the Master Servicer and each
Seller (with respect to its related Mortgage Loans) in connection with any such
amendment may rely expressly on such confirmation as the basis therefor).
51
Section 9.13 Waivers.
No term or provision of this Agreement may be waived or modified unless
such waiver or modification is in writing, signed by the party against whom such
waiver or modification is sought to be enforced and is consented to by the NIMS
Insurer.
Section 9.14 Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
Section 9.15 Intended Third Party Beneficiaries.
Notwithstanding any provision herein to the contrary, the parties to
this Agreement agree that it is appropriate, in furtherance of the intent of
such parties as set forth herein, that the Trustee and the NIMS Insurer receive
the benefit of the provisions of this Agreement as intended third party
beneficiaries of this Agreement to the extent of such provisions. The Servicer
shall have the same obligations to the Trustee and the NIMS Insurer as if they
were parties to this Agreement, and the Trustee and the NIMS Insurer shall have
the same rights and remedies to enforce the provisions of this Agreement as if
they were parties to this Agreement. The Servicer shall only take direction from
the Master Servicer (if direction by the Master Servicer is required under this
Agreement) unless otherwise directed by this Agreement or the Loss Mitigation
Advisory Agreement. Notwithstanding the foregoing, all rights and obligations of
the Trustee and the Master Servicer hereunder (other than the right to
indemnification) shall terminate upon the termination of the Trust Fund pursuant
to the Trust Agreement and all rights of the NIMS Insurer set forth in this
Agreement (other than the right of indemnification) shall exist only so long as
the NIM Securities issued pursuant to the NIMS Transaction remain outstanding or
the NIMS Insurer is owed amounts in respect of its guarantee of payment on such
NIMS Securities.
Section 9.16 Confidentiality.
The Trustee and the Master Servicer hereby agree to hold and treat all
Confidential Information (as defined below) in confidence and in accordance with
this Section 9.16. Such Confidential Information will not, without the prior
written consent of the Servicer, be disclosed or used by the Trustee or the
Master Servicer or by its subsidiaries, affiliates, directors, officers,
employees, agents or controlling persons (collectively, the "Information
Recipients") other than for the purpose of taking permitted action under this
Agreement or for the purposes specified in the Trust Agreement or this
Agreement. Disclosure that is not in violation of the Right to Financial Privacy
Act of 1978, as amended, the Xxxxx-Xxxxx-Xxxxxx Act of 1999 (the "G-L-B Act") or
other applicable law by the Trustee or the Master Servicer of any Confidential
Information at the request of its outside auditors or governmental regulatory
authorities in connection with an examination of the Trustee or the Master
Servicer by any such authority or for the purposes specified in the Trust
Agreement or this Agreement shall not constitute a breach of its obligations
under this Section 9.19, and shall not require the prior consent of the
Servicer.
52
As used herein, "Confidential Information" means non-public personal
information (as defined in the G-L-B Act and its enabling regulations issued by
the Federal Trade Commission) regarding borrowers. Confidential Information
shall not include information which (i) is or becomes generally available to the
public other than as a result of disclosure by the Trustee or the Master
Servicer or any of its Information Recipients; (ii) was available to the Trustee
or the Master Servicer on a non-confidential basis from a person or entity other
than the Servicer prior to its disclosure to the Trustee; (iii) is required to
be disclosed by a governmental authority or related governmental agencies or as
otherwise required by law; (iv) becomes available to the Trustee or the Master
Servicer on a non-confidential basis from a person or entity other than the
Servicer who, to the best knowledge of the Trustee or the Master Servicer, is
not otherwise bound by a confidentiality agreement with the Servicer, and is not
otherwise prohibited from transmitting the information to the Trustee or the
Master Servicer, or (v) is released pursuant to the Trust Agreement or this
Agreement.
Section 9.17 General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean by reason of
enumeration.
Section 9.18 Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
53
IN WITNESS WHEREOF, the Servicer, the Bank and each Seller (with
respect to its related Mortgage Loans) have caused their names to be signed
hereto by their respective officers thereunto duly authorized as of the date
first above written.
XXXXXX BROTHERS BANK, FSB,
as Seller
By: /s/ Xxxx Xxxxxx
---------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
XXXXXX BROTHERS HOLDINGS INC.,
as Seller
By: /s/ Xxxxxxx Xxxxxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Authorized Signatory
OPTION ONE MORTGAGE CORPORATION,
as Servicer
By: /s/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
Title: Assistant Secretary
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Master Servicer
By: /s/ Xxx Xxxxx
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
Acknowledged by:
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
EXHIBIT A-1
Schedule of Mortgage Loans
(including Prepayment Charge Schedule)
EXHIBIT A-2
Schedule of Mortgage Loans
(Isolating those Mortgage Loans covered
by a PMI Policy)
EXHIBIT B
CUSTODIAL ACCOUNT LETTER AGREEMENT
_______ __, 20__
To: ___________________________
___________________________
___________________________
(the "Depository")
As Servicer under the Servicing Agreement, dated as of October 1, 2001
(the "Agreement"), we hereby authorize and request you to establish an account
as a Custodial Account pursuant to Section 3.03 of the Agreement, to be
designated as "Option One Mortgage Corporation in trust for Bank One, National
Association, as Trustee for the Amortizing Residential Collateral Trust,
2001-BC6." All deposits in the account shall be subject to withdrawal therefrom
by order signed by the Servicer. This letter is submitted to you in duplicate.
Please execute and return one original to us.
OPTION ONE MORTGAGE CORPORATION
By:
----------------------------
Name:
Title:
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number __________, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above.
----------------------------
Depository
By:
------------------------
Name:
Title:
Date:
EXHIBIT C
ESCROW ACCOUNT LETTER AGREEMENT
_______ __, 20__
To: ___________________________
___________________________
___________________________
(the "Depository")
As Servicer under the Servicing Agreement, dated as of October 1, 2001
(the "Agreement"), we hereby authorize and request you to establish an account,
as an Escrow Account pursuant to Section 3.05 of the Agreement, to be designated
as "Option One Mortgage Corporation in trust for Bank One, National Association,
as Trustee for the Amortizing Residential Collateral Trust, Series 2001-BC6
Trust." All deposits in the account shall be subject to withdrawal therefrom by
order signed by the Servicer. This letter is submitted to you in duplicate.
Please execute and return one original to us.
OPTION ONE MORTGAGE CORPORATION
By:
----------------------------
Name:
Title:
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number __________, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above.
----------------------------
Depository
By:
------------------------
Name:
Title:
Date:
EXHIBIT D
Wells Fargo Bank Master Servicing Default Reporting
DATA FIELD REQUIREMENTS
Data must be submitted to Xxxxx Fargo Bank in an Excel spreadsheet format with
fixed field names and data type. The Excel spreadsheet should be used as a
template consistently every month when submitting data.
Table: Delinquency
Name Type Character Size
---- ---- --------------
Servicer Loan # Number (Double) 10
Investor Loan # Number (Double) 10
Servicer Investor # Text 3
Borrower Name Text 20
Xxxxxxx Xxxx 00
Xxxxx Xxxx 0
Xxx Xxxx 10
Due Date Date/Time 8
Xxxxx Fargo Action Code Text 2
FC Approval Date Date/Time 8
File Referred to Attorney Date/Time 8
NOD Date/Time 8
Complaint Filed Date/Time 8
Sale Published Date/Time 8
Target Sale Date Date/Time 8
Actual Sale Date Date/Time 8
Loss Mit Approval Date Date/Time 8
Loss Mit Type Text 5
Loss Mit Code Number 2
Loss Mit Estimated Completion Date Date/Time 8
Loss Mit Actual Completion Date Date/Time 8
Loss Mit Broken Plan Date Date/Time 8
BK Chapter Text 6
BK Filed Date Date/Time 8
Post Petition Due Date/Time 8
Motion for Relief Date/Time 8
Lift of Stay Date/Time 8
Reason For Delinquency Text 10
Occupant Code Text 10
Eviction Start Date Date/Time 8
Eviction Completed Date Date/Time 8
List Price Currency 8
List Date Date/Time 8
Accepted Offer Price Currency 8
Accepted Offer Date Date/Time 8
C-1
Estimated REO Closing Date Date/Time 8
Actual REO Sale Date Date/Time 8
Servicer Comments Text 200
Modification Exp. Date Date/Time 8
FNMA Del. Status Code Text 2
FNMA Del. Reason Code Text 2
BK Discharge/Dismissal Date Date/Time 8
Property Damage Date Date/Time 8
Property Repair Amount Currency 8
BK Hearing Date Date/Time 8
POC Date Date/Time 8
POC Amount Currency 8
BK Case Number Text 30 Maximum
F/C Sale Amount Currency 8
Redemption Exp. Date Date/Time 8
Property Value Date Date/Time 8
Current Property Value Currency 8
Repaired Property Value Currency 8
BPO Y/N Text 1
Current LTV Currency 8
Property Condition Code Text 2
Property Inspection Date Date/Time 8
MI Cancellation Date Date/Time 8
MI Claim Filed Date Date/Time 8
MI Claim Amount Currency 8
MI Claim Reject Date Date/Time 8
MI Claim Resubmit Date Date/Time 8
MI Claim Paid Date Date/Time 8
MI Claim Amount Paid Currency 8
Pool Claim Filed Date Date/Time 8
Pool Claim Amount Currency 8
Pool Claim Reject Date Date/Time 8
Pool Claim Paid Date Date/Time 8
Pool Claim Amount Paid Currency 8
Pool Claim Resubmit Date Date/Time 8
FHA Part A Claim Filed Date Date/Time 8
FHA Part A Claim Amount Currency 8
FHA Part A Claim Paid Date Date/Time 8
FHA Part A Claim Paid Amount Currency 8
FHA Part B Claim Filed Date Date/Time 8
FHA Part B Claim Amount Currency 8
FHA Part B Paid Date Date/Time 8
FHA Part B Claim Paid Amount Currency 8
V A Claim Filed Date Date/Time 8
V A Claim Paid Date Date/Time 8
V A Claim Paid Amount Currency 8
C-2
The Action Code Field should show the applicable numeric code to indicate that a
special action is being taken. The Action Codes are the following:
12-Relief Provisions (i.e. Sailors & Soldiers Relief Act)
15-Bankruptcy/Litigation
20-Loss Mitigation-Workout 30-Referred for Foreclosure
00-Xxxxxx 00-Xxxxxxxxxx
00-XXX-Xxxx for Sale
71- Third Party Sale/Condemnation
72-REO-Pending Conveyance-Pool Insurance claim filed
Xxxxx Fargo Bank will accept alternative Action Codes to those above, provided
that the Codes are consistent with industry standards. If Action Codes other
than those above are used, the Servicer must supply Xxxxx Fargo Bank with a
description of each of the Action Codes prior to sending the file.
Description of Action Codes:
Action Code 12- To report a Mortgage Loan for which the Borrower has been
granted relief for curing a delinquency.
Action Code 15 - To report a borrower filing bankruptcy and for all active
bankruptcies.
Action Code 20 - To report that the Borrower has agreed to some form of loss
mitigation/workout. Examples of these include Short Sale, Deed-in-Lieu of
Foreclosure, Formal Forbearance Agreements, Modifications, etc.
Action Code 30 - To report a loan that has been referred to attorney for
foreclosure.
Action Code 60 - To report that a Mortgage Loan has been paid in full either at,
or prior to, maturity.
Action Code 65- To report that the Servicer is repurchasing the Mortgage Loan.
Action Code 70 -To report that a Mortgage Loan has been foreclosed or a
deed-in-lieu of foreclosure has been accepted, and the Servicer, on behalf of
the owner of the Mortgage Loan, has acquired the property and may dispose of it.
Action Code 71 -To report that a Mortgage Loan has been foreclosed and a third
party acquired the property, or a total condemnation of the property has
occurred.
Action Code 72 -To report that a Mortgage Loan has been foreclosed, or a
deed-in-lieu has been accepted, and the property may be conveyed to the mortgage
insurer and the pool insurance claim has been filed. Also to be used for
completed HUDNA foreclosures where the property is pending conveyance to HUDNA.
The Loss Mit Type field should show the approved Loss Mitigation arrangement.
The following are acceptable:
o ASU M - Approved Assumption
o BAP - Borrower Assistance Program
o CO - Charge Off
o DIL - Deed-in-Lieu
o FFA - Formal Forbearance Agreement
o MOD - Loan Modification
o PRE - Pre-Sale
o SS - Short Sale
o MISC- Anything else approved by the PMI or Pool Insurer
Xxxxx Fargo Bank will accept alternative Loss Mitigation Types to those above,
provided that they are consistent with industry standards. If Loss Mitigation
Types other than those above are used, the Servicer must supply Xxxxx Fargo Bank
with a description of each of the Loss Mitigation Types prior to sending the
file.
The Occupant Code field should show the current status of the property. The
acceptable codes are:
o Mortgagor
o Tenant
o Unknown
o Vacant
The RFD field should show the Reason for Default. The acceptable codes below
are; or we can accept FNMA Delinquency Reason Codes.
Delinquency Code Delinquency Description
AB Abandonment of property
AA Arm Adjustment Problem
BK Bankruptcy
06 Borrower Complaint
BOC Borrower Out of Country
BU Business Failure
CL Casualty Loss
JC Change in Job
CD Chronic Delinquent
CSP Chronic Slow Pay
CI Commission Income
DIF Death in Family
08 Deceased
00 Defective Loan
DT Delinquent Property Tax
FIRE Disability
DS Disregard
Dl Divorce
DD Domestic Difficulties
EA Earthquake
ENV Environmental
ECO Excessive Credit Obligation
FA Family Death
FE Family Emergency
FI Family Illness
FD Financial Difficulty
05 Foreclosure or Borrower moved or skipped
FFP Formal Forbearance Plan
FR Fraud
G Garnishment
HU Hurricane
IT Illegal Transfer
B1 Illness of Borrower
IP Inability to Sell Property
IC Incarcerated
IN Income Reduction
LIT Involved in Litigation
IRS IRS Xxxx
XX Judgment
LB Language Barrier
LM Legal Matter
LS Legal Separation
MA Marital Difficulties
ME Medical
03 Medical/Illness in Family
MD Mortgagor Death
ND Natural Disaster
NC No Contact with borrower
NSF Non Sufficient Funds
09 Other
01 Over Obligated
OV Overextended
PAD Payment Dispute
PP Payment Plan Established
POP Payoff Pending
PE Pending Sale
PS Previous Servicer Problem
PB Promise to Pay Broken
PR Property Damage
PD Property Devaluation
REFI Refinance Pending
RELO Relocation (Job Related)
JRP Relocation (Personal)l
RE Rental
10 REO
SI Seasonal Income
SE Self Employed
SP Servicing Problems
SR Slow Receivables
02 Unemployed/Reduced Income
UE Unemployment
UK Unknown
UTP Unwilling to Pay
EXHIBIT E
ARC 2001-BC6 TRUST AGREEMENT
