EXECUTION
SERVICING AGREEMENT
THIS SERVICING AGREEMENT (this "Agreement"), entered into as of the
1st day of June, 1999, by and between XXXXXX CAPITAL, A DIVISION OF XXXXXX
BROTHERS HOLDINGS INC., a Delaware corporation ("Xxxxxx Capital"), and OPTION
ONE MORTGAGE CORPORATION, a California corporation ("the Servicer"), recites
and provides as follows:
RECITALS
WHEREAS, Xxxxxx Capital has conveyed certain Mortgage Loans
identified on Schedule I hereto (the "Serviced Mortgage Loans") on a
servicing-retained basis to Structured Asset Securities Corporation ("SASCO"),
which in turn has conveyed the Serviced Mortgage Loans to The First National
Bank of Chicago, as trustee (the "Trustee") under a trust agreement dated as
of June 1, 1999 (the "Trust Agreement"), among the Trustee, Norwest Bank
Minnesota, National Association, as master servicer ("Norwest," and, together
with any successor master servicer appointed pursuant to the provisions of the
Trust Agreement, the "Master Servicer") and SASCO, as depositor.
WHEREAS, multiple classes of Certificates, including the Class X
Certificate, will be issued on the Closing Date pursuant to the Trust
Agreement, and Xxxxxx Brothers Inc. or a nominee thereof (together with any
successor in interest thereto and any permitted assignee or transferee
thereof, the "Directing Holder") is expected to be the initial registered
Holder of the Class X Certificate.
WHEREAS, the Servicer is a party to the Interim Servicing Agreement
dated as of March 1, 1996 between AMRESCO Residential Mortgage Corporation
("AMRESCO") and the Servicer, as amended by the Amendment to Interim Servicing
Agreement dated September 16, 1997 (the "First Amendment"), the Second
Amendment to Interim Servicing Agreement dated October 20, 1997 (the "Second
Amendment"), and the Third Amendment to Interim Servicing Agreement dated
August 31, 1998 (the "Third Amendment", together with the First and Second
Amendments, the "Interim Servicing Agreement");
WHEREAS, pursuant to an Assignment and Assumption Agreement dated as
of October 16, 1998 among Xxxxxx Capital, AMRESCO and the Servicer (the
"Assignment Agreement"), AMRESCO has assigned all of its rights, title and
interest as "Owner" in, to and under the Servicing Agreement to the extent of
the Mortgage Loans (as defined in the Assignment Agreement") to Xxxxxx
Capital;
WHEREAS, Xxxxxx Capital desires that the Servicer service the
Mortgage Loans pursuant to this Agreement, and the Servicer has agreed to do
so, subject to the right of the Directing Holder and of the Master Servicer to
terminate the rights and obligations of the Servicer hereunder at any time and
to the other conditions set forth herein.
WHEREAS, Norwest and any successor Master Servicer shall be
obligated, among other things, to supervise the servicing of the Serviced
Mortgage Loans on behalf of the Trustee, and shall have the right, under
certain circumstances, to terminate the rights and obligations of the Servicer
under this Servicing Agreement.
WHEREAS, Xxxxxx Capital and the Servicer intend that each of the
Master Servicer and the Directing Holder, pursuant to Section 9 hereof is each
an intended third party beneficiary of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Xxxxxx Capital and the Servicer
hereby agree as follows:
AGREEMENT
1. Definitions. Capitalized terms used and not defined in this
Agreement, including Exhibit A hereto and any provisions of the Interim
Servicing Agreement incorporated by reference herein (as modified by the
Assignment Agreement), shall have the meanings ascribed to such terms in the
Trust Agreement.
2. Servicing. The Servicer agrees, with respect to the Serviced
Mortgage Loans, to perform and observe the duties, responsibilities and
obligations that are to be performed and observed under the provisions of the
Interim Servicing Agreement, except as otherwise provided herein and on
Exhibit A hereto, and that the provisions of the Interim Servicing Agreement,
as so modified, are and shall be a part of this Agreement to the same extent
as if set forth herein in full.
3. Master Servicing; Termination of Servicer. The Servicer, including
any successor servicer hereunder, shall be subject to the supervision of the
Master Servicer, which Master Servicer shall be obligated to ensure that the
Servicer services the Serviced Mortgage Loans in accordance with the
provisions of this Agreement. The Master Servicer, acting on behalf of the
Trustee pursuant to the Trust Agreement, shall have the same rights as the
"Owner" (as defined in the Interim Servicing Agreement) to enforce the
obligations of the Servicer under the Interim Servicing Agreement. The Master
Servicer shall be entitled to terminate the rights and obligations of the
Servicer under this Agreement upon the failure of the Servicer to perform any
of its obligations under this Agreement, as provided in Sections 6 and 7 of
the Interim Servicing Agreement.
In addition, in the event that Xxxxxx Capital transfers the servicing
rights in respect of the Serviced Mortgage Loans to one or more successor
servicers, the rights and obligations of the Servicer under this Agreement
shall terminate, at the sole option of Xxxxxx Capital, without cause, upon
sixty days written notice to the Servicer, and each successor servicer shall
succeed to the rights and obligations of the Servicer under this Agreement as
of such date. Upon such termination the terminated Servicer shall not be
entitled to the Servicing Fee or any portion thereof, or, except as provided
in Section 7 of the Interim Servicing Agreement, to any other amounts in
respect of the Serviced Mortgage Loans.
Upon prior written notice, the Directing Holder shall have the
exclusive right to terminate the rights and obligations of the Servicer under
this Agreement without cause and without payment of any termination fee in
connection with such termination; provided, that (i) any successor Servicer
shall be appointed in the manner provided below and pursuant to Section 11.14
of the Trust Agreement and (ii) a letter is provided to the Trustee from each
Rating Agency to the effect that such termination and appointment will not
result in the qualification, reduction, or withdrawal of the ratings
applicable to the Certificates.
Notwithstanding anything to the contrary in the Interim Servicing
Agreement, as amended and reconstituted pursuant to this Agreement, the
Directing Holder shall, within 30 days of the receipt by the Servicer of a
copy of any termination notice delivered by the Directing Holder, notify the
Trustee and the Master Servicer in writing of the Directing Holder's nominee
as successor Servicer in accordance with Section 11.14 of the Trust Agreement,
which nominee shall be appointed as Servicer by the Master Servicer unless the
Master Servicer reasonably objects to such nominee within 10 days following
receipt of such notice. If the Master Servicer objects to such nominee, then
the Master Servicer shall, within such 10-day period, appoint a successor
Servicer, which successor shall be reasonably acceptable to the Directing
Holder. In addition to any other requirements or qualifications set forth
herein, any successor Servicer shall be a member in good standing of the MERS
system.
The Servicer agrees that, notwithstanding anything to the contrary in
the Interim Servicing Agreement, Xxxxxx Capital is the sole owner of the
servicing rights relating to the Serviced Mortgaged Loans, and the Servicer
shall have no right to transfer the servicing thereof.
4. No Representations. Neither the Servicer nor the Master Servicer
shall be obligated or required to make any representations and warranties
regarding the Serviced Mortgage Loans in connection with the transactions
contemplated by the Trust Agreement and issuance of the certificates issued
pursuant thereto.
5. Notices. All notices and communications between or among the
parties hereto shall be in writing and shall be deemed received or given when
mailed first-class mail, postage prepaid, addressed to each other party at its
address specified below. Each party may designate to the other parties in
writing, from time to time, other addresses to which notices and
communications hereunder shall be sent.
6. Governing Law. THIS SERVICING AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
NOTWITHSTANDING NEW YORK OR OTHER CHOICE OF LAW RULES TO THE CONTRARY.
7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original, but all of which counterparts shall together constitute but one and
the same instrument.
8. Notices and Remittances to the Master Servicer. All notices
required to be delivered to the Owner or the Master Servicer under this
Agreement shall be delivered to the Master Servicer at the following address:
Norwest Bank Minnesota, National Association
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Master Servicing Department, SASCO 1999-BC2
All remittances required to be made to the Master Servicer under this
Agreement shall be made to the following wire account:
Norwest Bank Minnesota, National Association
Minneapolis, Minnesota
ABA#: 000-000-000
Account Name: Corporate Trust Clearing
For further credit to: #13539600, SASCO 1999-BC2
9. Intended Third Party Beneficiaries. Notwithstanding any provision
herein to the contrary, the parties to this Agreement agree that is
appropriate, in furtherance of the intent of such parties as set forth herein,
that the Master Servicer and the Directing Holder 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 Master Servicer and the Directing Holder as if they were
parties to this Agreement, and the Master Servicer and the Directing Holder
shall have the same rights and remedies to enforce the provisions of this
Agreement as if they were parties to this Agreement. Notwithstanding the
foregoing, all rights and obligations of the Master Servicer hereunder (other
than the right to indemnification) shall terminate upon termination of the
Trust Agreement and of the Trust Fund pursuant to Article VII of the Trust
Agreement.
10. Errors and Omissions Insurance. The Servicer shall keep in force
during the term of this Agreement a fidelity bond and a policy or policies of
insurance covering errors and omissions in the performance of the Servicer's
obligations under this Agreement. Such fidelity bond and policy or policies
shall be maintained with recognized insurers and shall be in such form and
amount as would permit the Servicer to be qualified as a FNMA or FHLMC
seller-servicer. 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 Master Servicer a copy of each such bond and insurance
policy if (i) the Master Servicer so requests and (ii) the Servicer is not an
affiliate of Xxxxxx Brothers Inc. at the time of such request.
11. Reports. In addition to any new recipients as set forth herein,
the Servicer shall continue to deliver to Xxxxxx Capital or its designee any
reports required to be delivered to Xxxxxx Capital or its designee by the
Servicer pursuant to the Interim Servicing Agreement.
Executed as of the day and year first above written.
XXXXXX CAPITAL, A DIVISION OF
XXXXXX BROTHERS HOLDINGS INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: Authorized Signatory
OPTION ONE MORTGAGE CORPORATION
By: /s/ Xxxxxxx X. X'Xxxxx
------------------------------
Name: Xxxxxxx X. X'Xxxxx
Title: Senior Vice President
EXHIBIT A
Modifications to the Interim Servicing Agreement
1. The Third Amendment is deleted in its entirety.
2. The definition of "Collection Account" in Section 1 is hereby amended
by deleting the words "AMRESCO Residential Mortgage Corporation,
Adjustable Rate Loans" and replacing them with the following:
"Norwest Bank Minnesota, National Association, as Master Servicer for
SASCO 1999-BC2."
3. The following definition is hereby added to Section 1:
"Custodial Agreement: Any custodial agreement relating to
custody of the Serviced Mortgage Loans substantially in the form
attached as an exhibit to the Trust Agreement dated as of June 1,
1999, among The First National Bank of Chicago, as trustee, Norwest
Bank Minnesota, National Association, as master servicer and SASCO."
4. The following definition is hereby added to Section 1:
"Due Period: With respect to each Remittance Date, the
period commencing on the second day of the month preceding the
Remittance Date and ending on the first day of the month of the
Remittance Date."
5. The definition of "Eligible Account" in Section 1 is hereby deleted and
replaced by the following: "
Any of (i) a depository the accounts of which are insured by
the FDIC and the debt obligations of which are rated AA or better by
DCR and S&P; (ii) the corporate trust department of any bank the debt
obligations of which are rated at least A-1 or its equivalent by each
of DCR and S&P; or (iii) the Servicer, unless the Master Servicer is
notified by either DCR or S&P that the designation of the Servicer as
an Eligible Account will result in a qualification, withdrawal or
downgrade of the then-current rating of any of the Certificates."
6. The definition of "Escrow Account" in Section 1 is hereby amended by
deleting the words "AMRESCO Residential Mortgage Corporation and
various Mortgagors" and replacing them with the following: "Norwest
Bank Minnesota, National Association, as Master Servicer for SASCO
1999-BC2."
7. The following definition is hereby added to Section 1:
"Nonrecoverable Servicing Advance: Any Servicing Advance
previously made or proposed to be made in respect of a Loan or REO
Property which, in the good faith business judgment of the Servicer,
will not or, in the case of a proposed Servicing Advance, would not
be ultimately recoverable from Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds or any proceeds received in connection
with an REO Disposition related to such Loan or REO Property. The
determination by the Servicer that it has made a Nonrecoverable
Servicing Advance or that any proposed advance would constitute a
Nonrecoverable Advance shall be evidenced by an Officer's Certificate
of the Servicer delivered to the Owner stating with specificity why
the Servicer deems the advance to be nonrecoverable."
8. The following definition is hereby added to Section 1:
"Prepayment Period: With respect to the first Remittance
Date, the period beginning on the Cut-off Date and ending on June 1,
1999. With respect to each subsequent Remittance Date, the period
beginning on the second day of the month immediately preceding the
month in which such Remittance Date occurs and ending on the first
day of the month in which such Remittance Date occurs."
9. The definition of "Remittance Date" in Section 1 is hereby deleted
and replaced with the following:
"The eighteenth (18th) day of each calendar month or, if
such eighteenth (18th) day is not a Business Day, the first Business
Day immediately following such eighteenth (18th) day."
10. The second paragraph of Section 4.01 is hereby deleted and replaced
with the following paragraph:
"Consistent with the terms of this Agreement, the Servicer
may waive any late payment charge, assumption fee or other fee that
may be collected in the ordinary course of servicing the Mortgage
Loans. The Servicer shall not make any future advances to any obligor
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 4.21, in
an amount equal to the difference between (a) such month's principal
and one month's interest at the 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 4.21. 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 Master
Servicer, 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
Master Servicer shall execute and deliver to the Servicer any powers
of attorney and other documents, furnished to it by the Servicer and
reasonably satisfactory to the Master Servicer, necessary or
appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement.
Notwithstanding anything to the contrary in this Agreement,
the Servicer shall not waive any premium or penalty in connection
with a prepayment of principal of any Mortgage Loan, and shall not
consent to the modification of any Mortgage Note to the extent that
such modification relates to payment of a prepayment premium or
penalty."
11. The first sentence of Section 4.04 is amended by deleting the words
"time deposit, demand accounts or other".
12. Section 4.04 is further amended by replacing the semi-colon at the
end of clause (i) of the second paragraph with: "including all
Principal Prepayments;".
13. Section 4.04 is further amended by deleting the words "in full"
in clause (xi) of the second paragraph.
14. Section 4.04 is further amended by deleting the word "and" at the end
of clause (x) of the second paragraph, replacing the period at the
end of clause (xi) with "; and", and adding the following immediately
after clause (xi):
"(xii) any principal prepayment penalties received in
connection with the Mortgage Loans."
15. Section 4.05 is amended by adding the words "and Monthly Advances"
after the words "Servicing Advances" in clause (iii).
16. Section 4.05 of the Agreement is hereby amended by deleting the word
"and" at the end of clause (vii), replacing the period at the end of
clause (viii) with a semi-colon and adding the following:
"(ix) to reimburse the Servicer for any Nonrecoverable
Servicing Advance with respect to the final liquidation of a Loan or
REO Property, but only to the extent that any Insurance Proceeds,
Condemnation Proceeds, Liquidation Proceeds or any proceeds received
in connection with an REO Disposition related to such Loan or REO
Property are insufficient to reimburse the Servicer for such
advance;"
17. The first sentence of Section 4.06 is amended by deleting the words
"time deposit, demand accounts or other".
18. The following sentence is hereby added to the end of the first
paragraph of Section 4.08:
"Notwithstanding the foregoing, however, or anything else to
the contrary which may be contained in this Agreement, no Servicing
Advance shall be required to be made hereunder by the Servicer if
such Servicing Advance would, if made, constitute a Nonrecoverable
Servicing Advance; the determination by the Servicer that it has made
a Nonrecoverable Servicing Advance or that any proposed Servicing
Advance, if made, would constitute a Nonrecoverable Servicing
Advance, shall be evidenced by an Officer's Certificate of the
Servicer delivered to the Owner."
19. All references in Section 4.13 to the disposition of REO Properties
within a two year period are hereby deleted and replaced with a three
year period.
20. The first paragraph of Section 4.14 is hereby amended by adding the
following before the period at the end of such paragraph:
"On each Remittance Date the Servicer shall remit by wire
transfer of immediately available funds to the Master Servicer (a)
all amounts deposited in the Collection Account as of the close of
business on the last day of the related Due Period (net of charges
against or withdrawals from the Collection Account pursuant to
Section 4.05), plus (b) all Monthly Advances, if any, which the
Servicer is obligated to distribute pursuant to Section 4.21, minus
(c) any amounts attributable to Principal Prepayments, Liquidation
Proceeds, Insurance Proceeds, Condemnation Proceeds or REO
Disposition Proceeds received after the applicable Prepayment Period,
which amounts shall be remitted on the following Remittance Date,
together with any additional interest required to be deposited in the
Collection Account in connection with such Principal Prepayment in
accordance with Section 4.21, and minus (d) any amounts attributable
to Monthly Payments collected but due on a Due Date or dates
subsequent to the first day of the month in which such Remittance
Date occurs, which amounts shall be remitted on the Remittance Date
next succeeding the Due Period for such amounts."
21. The first sentence of the second paragraph of Section 4.14 is hereby
amended by replacing the words "within two Business Days" with "as
described in the preceding paragraph."
22. Section 4.15 is hereby amended by deleting the words "Remittance
Date" in the second sentence of such Section, and substituting the
following: "tenth Business Day of each month"
23. Section 4.22 is hereby amended by deleting the words "prepayment
charges" in the second sentence of such Section, and adding the
following immediately after the words "or otherwise" in such
sentence: ", but not including any premium or penalty associated with
a prepayment of principal of a Mortgage Loan,"
24. Section 4.25 is hereby amended by adding the words "(i) year-end
audited financial statements of the Servicer and (ii)" in the first
sentence of such Section after the words "to furnish" in such
sentence.
25. Section 4 is hereby amended to add the following:
"Section 4.27 No Personal Solicitation. From and
after the 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 on the Servicer's behalf, to
personally, by telephone or mail, solicit the borrower or
obligor under any Mortgage Loan for the purpose of
refinancing a Mortgage Loan, without the prior written
consent of the Owner. It is understood and agreed that all
rights and benefits relating to the solicitation of any
Mortgagors and the attendant rights, title and interest in
and to the list of such Mortgagors and data relating to
their Mortgages (including insurance renewal dates) shall be
transferred to the Owner pursuant hereto on the Closing Date
and the Servicer shall take no action to undermine these
rights and benefits. Notwithstanding the foregoing, it is
understood and agreed that promotions for (a) optional
insurance products or (b) promotions undertaken by the
Company or any affiliate of the Company which are directed
to the general public at large, including, without
limitation, mass mailing based on commercially acquired
mailing lists, newspaper, radio and television
advertisements shall not constitute solicitation under this
Section 4.27. In addition, it is understood and agreed that:
(i) upon the receipt of a verification of mortgage; (ii) a
request for demand for payoff or (iii) a Mortgagor initiated
written or verbal communication indicating a desire to
prepay the related Mortgage Loan, contact from the Servicer
shall not constitute solicitation under this Section 4.27.
26. The following Section 22 is hereby added at the end of the Interim
Servicing Agreement:
"SECTION 22. MISCELLANEOUS
Neither the Master Servicer nor any successor servicer
(including the Owner and the Master Servicer) shall be liable for any
acts or omissions of the Servicer or any predecessor servicer. In
particular, neither the Master Servicer nor any successor servicer
(including the Owner and the Master Servicer) shall be liable for any
servicing errors or interruptions resulting from any failure of the
Servicer to maintain computer and other information systems that are
year-2000 compliant."
