EXECUTION COPY
XXXXXX BROTHERS BANK, FSB
PURCHASER
AND
XXXXX FARGO BANK, N.A.
COMPANY
--------------------------------------------------------------------------------
SELLER'S WARRANTIES AND SERVICING AGREEMENT
DATED AS OF FEBRUARY 1, 2005
--------------------------------------------------------------------------------
ADJUSTABLE RATE MORTGAGE LOANS
WFHM SERIES 2005-W08 AND WFHM SERIES 2005-W10
TABLE OF CONTENTS
ARTICLE I.........................................................................................................1
DEFINITIONS.......................................................................................................1
ARTICLE II.......................................................................................................11
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF CUSTODIAL MORTGAGE FILES; BOOKS AND RECORDS;CUSTODIAL AGREEMENT;
DELIVERY OF DOCUMENTS............................................................................................11
ARTICLE III......................................................................................................14
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH...............................................................14
ARTICLE IV.......................................................................................................32
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS...................................................................32
ARTICLE V........................................................................................................47
PAYMENTS TO PURCHASER............................................................................................47
ARTICLE VI.......................................................................................................48
GENERAL SERVICING PROCEDURES.....................................................................................48
ARTICLE VII......................................................................................................51
COMPANY TO COOPERATE.............................................................................................51
ARTICLE VIII.....................................................................................................52
THE COMPANY......................................................................................................52
ARTICLE IX.......................................................................................................54
i
PASS-THROUGH TRANSFERS...........................................................................................54
ARTICLE X........................................................................................................56
DEFAULT..........................................................................................................56
ARTICLE XI.......................................................................................................57
TERMINATION......................................................................................................57
ARTICLE XII......................................................................................................58
MISCELLANEOUS PROVISIONS.........................................................................................58
EXHIBITS
Exhibit A Mortgage Loan Schedule
(WFHM 2005-W08)
Exhibit A-1 Mortgage Loan Schedule
(WFHM 2005-W10)
Exhibit A-2 Contents of the Data File
Exhibit B Mortgage Loan Documents
Exhibit C Custodial Agreement
Exhibit D Custodial Account Certifications
Exhibit E Escrow Account Certifications
Exhibit F Form of Assignment and Assumption Agreement
Exhibit G Underwriting Guidelines
Exhibit H Form of Company Certification
ii
This is a Seller's Warranties and Servicing Agreement for adjustable
rate residential first lien mortgage loans, dated and effective as of February
1, 2005 and is executed between Xxxxxx Brothers Bank, FSB, as purchaser (the
"Purchaser"), and Xxxxx Fargo Bank, N.A., as seller and servicer (the
"Company").
W I T N E S S E T H
WHEREAS, the Purchaser has agreed to purchase from the Company and the
Company has agreed to sell to the Purchaser certain pools of first lien
adjustable rate mortgage loans (each a "Pool", and collectively, the "Mortgage
Loans") which have an aggregate unpaid scheduled principal balance as of the
close of business on the Cut-off Date, after deduction of payments due on or
before such date, of:
WFHM 2005-W08 $48,432,680.27
WFHM 2005-W10 $130,106,744.32
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of
trust or other security instrument creating a first lien on a residential
dwelling located in the jurisdiction indicated on the Mortgage Loan Schedules,
which are annexed hereto as Exhibits A and A-1; and
WHEREAS, the Purchaser and the Company wish to prescribe the manner of
purchase of the Mortgage Loans and the conveyance, servicing and control of the
Mortgage Loans.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Purchaser and the Company agree as
follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the
content otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.
Adjustment Date: As to each adjustable rate Mortgage Loan, the date on
which the Interest Rate is adjusted in accordance with the terms of the related
Mortgage Note.
Agency/Agencies: Xxxxxx Xxx, Xxxxxxx Mac or GNMA, or any of them as
applicable.
Agency Sale: Any sale or transfer of some or all of the Mortgage Loans
by the Purchaser to an Agency which sale or transfer is not a Pass-Through
Transfer or Whole Loan Transfer.
Agreement: This Seller's Warranties and Servicing Agreement and all
exhibits hereto, amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
Appraised Value: With respect to any Mortgage Loan, the lesser of (i)
the value set forth on the appraisal made in connection with the origination of
the related Mortgage Loan as the value of the related Mortgaged Property, or
(ii) the purchase price paid for the Mortgaged Property; provided, however, that
in the case of a refinanced Mortgage Loan, such value shall be based solely on
the appraisal made in connection with the origination of such Mortgage Loan.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the sale of the Mortgage to the Purchaser or if the related Mortgage has been
recorded in the name of MERS or its designee, such actions as are necessary to
cause the Purchaser to be shown as the owner of the related Mortgage on the
records of MERS for purposes of the system of recording transfers of beneficial
ownership of mortgages maintained by MERS, including assignment of the MIN
Number which will appear either on the Mortgage or the Assignment of Mortgage to
MERS.
Assignment of Mortgage Note and Pledge Agreement: With respect to a
Cooperative Loan, an assignment of the Mortgage Note and Pledge Agreement.
Assignment of Proprietary Lease: With respect to a Cooperative Loan, an
assignment of the Proprietary Lease sufficient under the laws of the
jurisdiction wherein the related Cooperative Apartment is located to effect the
assignment of such Proprietary Lease.
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 where the
parties are located are authorized or obligated by law or executive order to be
closed.
Closing Date: February 16, 2005.
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.
Commitment Letter: Each of those certain letter agreements, dated
January 13, 2005, with respect to WFHM 2005-W08 Pool and January 5, 2005, with
respect to WFHM 2005-W10 Pool, each between the Company and the Purchaser.
2
Company: Xxxxx Fargo Bank, N.A., or its successor in interest or
assigns, or any successor to the Company under this Agreement appointed as
herein provided.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Cooperative: The entity that holds title (fee or an acceptable
leasehold estate) to all of the real property that the related Project
comprises, including the land, separate dwelling units and all common areas.
Cooperative Apartment: The specific dwelling unit relating to a
Cooperative Loan.
Cooperative Lien Search: A search for (a) federal tax liens, mechanics'
liens, lis pendens, judgments of record or otherwise against (i) the
Cooperative, (ii) the seller of the Cooperative Apartment and (iii) the Company,
if the Cooperative Loan is a refinanced Mortgage Loan, (b) filings of financing
statements and (c) the deed of the Project into the Cooperative.
Cooperative Loan: A Mortgage Loan that is secured by Cooperative Shares
and a Proprietary Lease granting exclusive rights to occupy the related
Cooperative Apartment.
Cooperative Shares: The shares of stock issued by a Cooperative, owned
by the Mortgagor, and allocated to a Cooperative Apartment.
Covered Loan: A Mortgage Loan categorized as "Covered" pursuant to the
Standard & Poor's Glossary for File Format for LEVELS(R) Version 5.6, Appendix
E, revised October 18, 2004.
Custodial Account: The separate account or accounts created and
maintained pursuant to Section 4.04.
Custodial Agreement: The agreement governing the retention of the
originals of each Mortgage Note, Assignment of Mortgage and other Mortgage Loan
Documents, if applicable, a form of which is annexed hereto as Exhibit C.
Custodial Mortgage File: With respect to each Mortgage Loan, the file
consisting of the Mortgage Loan Documents listed as items 1 through 4 of Exhibit
B attached hereto, which have been delivered to the Custodian as of the Closing
Date.
Custodian: The custodian under the Custodial Agreement, or its
successor in interest or assigns, or any successor to the Custodian under the
Custodial Agreement as provided therein.
Cut-off Date: February 1, 2005.
3
Data File: The electronic data file prepared by the Company for each
Pool and delivered to the Purchaser including the data fields set forth on
Exhibit A-2 with respect to each Mortgage Loan.
Deleted Mortgage Loan: A Mortgage Loan which is repurchased by the
Company in accordance with the terms of this Agreement and which is, in the case
of a substitution pursuant to Section 3.03, replaced or to be replaced with a
Qualified Substitute Mortgage Loan.
Determination Date: The Business Day immediately preceding the related
Remittance Date.
Due Date: The first day of the month on which the Monthly Payment is
due on a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period commencing
on the second day of the month preceding the month of such Remittance Date and
ending on the first day of the month of such Remittance Date.
Errors and Omissions Insurance Policy: An errors and omissions
insurance policy to be maintained by the Company pursuant to Section 4.12.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 4.06.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other related
document.
Event of Default: Any one of the conditions or circumstances enumerated
in Section 10.01.
Xxxxxx Xxx: The entity formerly known as Federal National Mortgage
Association (FNMA), or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
Fidelity Bond: A fidelity bond to be maintained by the Company pursuant
to Section 4.12.
First Remittance Date: March 18, 2005.
Xxxxxxx Mac: The entity also known as the Federal Home Loan Mortgage
Corporation, (FHLMC), or any successor thereto.
4
Gross Margin: With respect to each adjustable rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note which is added to
the Index in order to determine the related Mortgage Interest Rate, as set forth
in the related Mortgage Loan Schedule.
High Cost Loan: A Mortgage Loan classified as (a) a "high cost" loan
under the Home Ownership and Equity Protection Act of 1994, (b) a "high cost
home," "threshold," "covered," (excluding New Jersey "Covered Home Loans" as
that term is defined in clause (1) of the definition of that term in the New
Jersey Home Ownership Security Act of 2002), "high risk home," "predatory" or
similar loan under any other applicable state, federal or local law or (c) a
Mortgage Loan categorized as "High Cost" pursuant to the Standard & Poor's
Glossary for File Format for LEVELS(R) Version 5.6, Appendix E, revised October
18, 2004.
Index: With respect to any adjustable rate Mortgage Loan, the index
identified on the related Mortgage Loan Schedule and set forth in the related
Mortgage Note for the purpose of calculating the interest thereon.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Interest Only Mortgage Loan: A Mortgage Loan for which an interest-only
payment feature is allowed during the period prior to the first Adjustment Date.
Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the
related Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
ratio of the original loan amount of the Mortgage Loan at its origination
(unless otherwise indicated) to the Appraised Value of the Mortgaged Property.
LPMI Policy: A PMI Policy for which the Company pays all premiums from
its own funds, without reimbursement.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
MERS Mortgage Loan: Any Mortgage Loan registered with MERS on the MERS
System
MERS System: The system of recording transfers of mortgages
electronically maintained by MERS.
MIN: Mortgage Identification Number used to identify mortgage loans
registered under MERS.
Monthly Advance: The portion of each Monthly Payment that is delinquent
with respect to each Mortgage Loan at the close of business on the Determination
Date required to be advanced by the Company pursuant to Section 5.03 on the
Business Day immediately preceding the Remittance Date of the related month.
5
Monthly Payment: The scheduled monthly payment of principal and
interest, or in the case of an Interest Only Mortgage Loan, payments of interest
on a Mortgage Loan.
Mortgage: The mortgage, deed of trust or other instrument and riders
thereto securing a Mortgage Note, which creates a first lien on an
unsubordinated estate in fee simple in real property securing the Mortgage Note,
or the Pledge Agreement securing the Mortgage Note for a Cooperative Loan.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as described in Section 4.11.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note in accordance with the provisions of the Mortgage Note.
Mortgage Loan: An individual mortgage loan which is the subject of this
Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the related Mortgage Loan Schedule, which Mortgage Loan
includes without limitation the Retained Mortgage File, the Custodial Mortgage
File, the Monthly Payments, Principal Prepayments, Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds, REO Disposition Proceeds and all
other rights, benefits, proceeds and obligations arising from or in connection
with such Mortgage Loan.
Mortgage Loan Documents: With respect to a Mortgage Loan, the documents
listed on Exhibit B attached hereto.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
related Mortgage Interest Rate minus the Servicing Fee Rate.
Mortgage Loan Schedule: For each Pool, a schedule of Mortgage Loans
annexed hereto as Exhibit A and Exhibit A-1, respectively, such schedule setting
forth the following information with respect to each Mortgage Loan: (1) the
Company's Mortgage Loan number; (2) the city state and zip code of the Mortgaged
Property; (3) a code indicating whether the Mortgaged Property is a single
family residence, two-family residence, three-family residence, four-family
residence, planned unit development, Cooperative Apartment or condominium; (4)
the current Mortgage Interest Rate; (5) the current net Mortgage Interest Rate;
(6) the current Monthly Payment; (7) the Gross Margin; (8) the original term to
maturity; (9) the scheduled maturity date; (10) the principal balance of the
Mortgage Loan as of the Cut-off Date after deduction of payments of principal
due on or before the Cut-off Date whether or not collected; (11) the
Loan-to-Value Ratio; (12) the next Adjustment Date; (13) the lifetime Mortgage
Interest Rate cap; (14) whether the Mortgage Loan is convertible or not; (15) a
code indicating the mortgage guaranty insurance company; (16) a code indicating
whether the Mortgage Loan is a Cooperative Loan; (17) code indicating whether
the loan is subject to LPMI; and (18) the Servicing Fee.
6
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage and riders thereto.
Mortgaged Property: The real property securing repayment of the debt
evidenced by a Mortgage Note, or with respect to a Cooperative Loan, the related
Cooperative Apartment.
Mortgagor: The obligor on a Mortgage Note.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or the President or a Vice President or
an Assistant Vice President and certified by the Treasurer or the Secretary or
one of the Assistant Treasurers or Assistant Secretaries of the Company, and
delivered to the Purchaser as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Company, reasonably acceptable to the Purchaser.
Pass-Through Transfer: The sale or transfer of some or all of the
Mortgage Loans by the Purchaser to a trust to be formed as part of a publicly
issued or privately placed mortgage-backed securities transaction.
Periodic Interest Rate Cap: As to each adjustable rate Mortgage Loan,
the maximum increase or decrease in the Mortgage Interest Rate on any Adjustment
Date pursuant to the terms of the Mortgage Note.
Person: Any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof.
Pledge Agreement: With respect to a Cooperative Loan, the specific
agreement creating a first lien on and pledge of the Cooperative Shares and the
appurtenant Proprietary Lease.
Pledge Instruments: With respect to a Cooperative Loan, the Stock
Power, the Assignment of the Proprietary Lease and the Assignment of the
Mortgage Note and Pledge Agreement.
PMI Policy: A policy of primary mortgage guaranty insurance evidenced
by an electronic form and certificate number issued by a Qualified Insurer, as
required by this Agreement with respect to certain Mortgage Loans.
Prime Rate: The prime rate announced to be in effect from time to time,
as published as the average rate in The Wall Street Journal.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date.
7
Principal Prepayment Period: The calendar month preceding the month in
which the related Remittance Date occurs.
Project: With respect to a Cooperative Loan, all real property owned by
the related Cooperative including the land, separate dwelling units and all
common areas.
Proprietary Lease: With respect to a Cooperative Loan, a lease on a
Cooperative Apartment evidencing the possessory interest of the Mortgagor in
such Cooperative Apartment.
Purchaser: Xxxxxx Brothers Bank, FSB, or its successor in interest or
any successor to the Purchaser under this Agreement as herein provided.
Qualified Depository: A deposit account or accounts maintained with a
federal or state chartered depository institution the deposits in which are
insured by the FDIC to the applicable limits and the short-term unsecured debt
obligations of which (or, in the case of a depository institution that is a
subsidiary of a holding company, the short-term unsecured debt obligations of
such holding company) are rated A-1 by Standard & Poor's Ratings Group or
Prime-1 by Xxxxx'x Investors Service, Inc. (or a comparable rating if another
rating agency is specified by the Purchaser by written notice to the Company) at
the time any deposits are held on deposit therein.
Qualified Insurer: A mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by Xxxxxx Xxx or Xxxxxxx Mac.
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Company for a Deleted Mortgage Loan which must, on the date
of such substitution, (i) have an outstanding principal balance, after deduction
of all scheduled payments due in the month of substitution (or in the case of a
substitution of more than one mortgage loan for a Deleted Mortgage Loan, an
aggregate principal balance), not in excess of the Stated Principal Balance of
the Deleted Mortgage Loan; (ii) have a Mortgage Loan Remittance Rate not less
than, and not more than two percent (2%) greater, than the Mortgage Loan
Remittance Rate of the Deleted Mortgage Loan; (iii) have a remaining term to
maturity not greater than and not more than one year less than that of the
Deleted Mortgage Loan; (iv) comply with each representation and warranty set
forth in Sections 3.01 and 3.02; and (v) be of the same type as the Deleted
Mortgage Loan.
Rating Agencies: Any nationally recognized statistical rating agency,
or its successor, including Standard & Poor's Ratings Services, Xxxxx'x
Investors Service, Inc. and Fitch IBCA, Inc.
Recognition Agreement: An agreement whereby a Cooperative and a lender
with respect to a Cooperative Loan (i) acknowledge that such lender may make, or
intends to make, such Cooperative Loan, and (ii) make certain agreements with
respect to such Cooperative Loan.
Reconstitution Date: The date on which any or all of the Mortgage Loans
serviced under this Agreement may be removed from this Agreement and
reconstituted as part of an Agency Sale, Pass-Through Transfer or Whole Loan
Transfer pursuant to Section 9.01 hereof. The Reconstitution Date shall be such
date which the Purchaser shall designate. On such date, the Mortgage Loans
transferred may cease to be covered by this Agreement and the Company's
servicing responsibilities may cease under this Agreement with respect to the
related transferred Mortgage Loans.
8
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to
a REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter 1,
Subtitle A of the Code, and related provisions, regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The 18th day (or if such 18th day is not a Business
Day, the first Business Day immediately following) of any month, beginning with
the First Remittance Date.
REO Disposition: The final sale by the Company of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 4.16.
REO Property: A Mortgaged Property acquired by the Company on behalf of
the Purchaser through foreclosure or by deed in lieu of foreclosure, as
described in Section 4.16.
Repurchase Price: Unless agreed otherwise by the Purchaser and the
Company, a price equal to (i) the Stated Principal Balance of the Mortgage Loan
plus (ii) interest on such Stated Principal Balance at the Mortgage Loan
Remittance Rate from the date on which interest has last been paid and
distributed to the Purchaser through the last day of the month in which such
repurchase takes place, less amounts received or advanced in respect of such
repurchased Mortgage Loan which are being held in the Custodial Account for
distribution in the month of repurchase.
Retained Mortgage File: With respect to each Mortgage Loan, the file
consisting of the Mortgage Loan Documents listed as items 5 through 9 of Exhibit
B attached hereto.
Securities Act of 1933 or the 1933 Act: The Securities Act of 1933, as
amended.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses other than Monthly Advances (including reasonable
attorney's fees and disbursements) incurred in the performance by the Company of
its servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the management
and liquidation of any REO Property and (d) compliance with the obligations
under Section 4.08 (excluding the Company's obligation to pay the premiums on
LPMI Policies).
9
Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual fee the Purchaser shall pay to the Company, which shall, for a period of
one full month, be equal to one-twelfth of the product of (a) the Servicing Fee
Rate and (b) the outstanding principal balance of such Mortgage Loan. Such fee
shall be payable monthly, computed on the basis of the same principal amount and
period respecting which any related interest payment on a Mortgage Loan is
received. The obligation of the Purchaser to pay the Servicing Fee is limited
to, and the Servicing Fee is payable solely from, the interest portion
(including recoveries with respect to interest from Liquidation Proceeds, to the
extent permitted by Section 4.05) of such Monthly Payment collected by the
Company, or as otherwise provided under Section 4.05.
Servicing Fee Rate: 0.250% per annum per Mortgage Loan.
Servicing File: With respect to each Mortgage Loan, the file consisting
of the Mortgage Loan Documents listed as items 10 through 26 of Exhibit B
attached hereto plus copies of all Mortgage Loan Documents contained in the
Custodial Mortgage File and the Retained Mortgage File, which are retained by
the Company.
Servicing Officer: Any officer of the Company involved in or
responsible for the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Company to the
Purchaser upon request, as such list may from time to time be amended.
Stated Principal Balance: As to each Mortgage Loan and as of any date
of determination, (i) the principal balance of the Mortgage Loan at the Cut-off
Date after giving effect to payments of principal due on or before such date,
whether or not received, minus (ii) all amounts previously distributed to the
Purchaser with respect to the related Mortgage Loan representing payments or
recoveries of principal or advances in lieu thereof.
Stock Certificate: With respect to a Cooperative Loan, a certificate
evidencing ownership of the Cooperative Shares issued by the Cooperative.
Stock Power: With respect to a Cooperative Loan, an assignment of the
Stock Certificate or an assignment of the Cooperative Shares issued by the
Cooperative.
Subsidy Account: An account maintained by the Company specifically to
hold all Subsidy Funds to be applied to individual Subsidy Loans.
Subsidy Funds: With respect to any Subsidy Loans, funds contributed by
the employer of a Mortgagor in order to reduce the payments required from the
Mortgagor for a specified period in specified amounts.
Subsidy Loan: Any Mortgage Loan subject to a temporary interest subsidy
agreement pursuant to which the monthly interest payments made by the related
Mortgagor will be less than the scheduled monthly interest payments on such
Mortgage Loan, with the resulting difference in interest payments being provided
by the employer of the Mortgagor. Each Subsidy Loan will be identified as such
in the related Data File.
10
Time$aver(R) Mortgage Loan: A Mortgage Loan which has been refinanced
pursuant to a Company program that allows a rate/term refinance of an existing
Company serviced loan with minimal documentation.
Underwriting Guidelines: The Company's underwriting guidelines attached
hereto as Exhibit G.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans by the Purchaser to a third party, which sale or transfer is not
a Pass-Through Transfer or Agency Sale.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF CUSTODIAL
MORTGAGE FILES; BOOKS AND RECORDS;CUSTODIAL AGREEMENT;
DELIVERY OF DOCUMENTS
Section 2.01 Conveyance of Mortgage Loans; Possession of Custodial
Mortgage Files; Maintenance of Retained Mortgage File and
Servicing Files.
The Company, simultaneously with the execution and delivery of this
Agreement, does hereby sell, transfer, assign, set over and convey to the
Purchaser, without recourse, but subject to the terms of this Agreement, all the
right, title and interest of the Company in and to the Mortgage Loans. Pursuant
to Section 2.03, the Company has delivered the Custodial Mortgage File to the
Custodian.
The contents of each Retained Mortgage File not delivered to the
Custodian are and shall be held in trust by the Company for the benefit of the
Purchaser as the owner thereof. Additionally and separate to the Retained
Mortgage File, the Company shall maintain a Servicing File, for the sole purpose
of servicing the related Mortgage Loans, consisting of a copy of the contents of
the Custodial Mortgage File and the Retained Mortgage File. The possession of
each Servicing File and Retained Mortgage File held by the Company is at the
will of the Purchaser, and such retention and possession by the Company is in a
custodial capacity only. Upon the sale of the Mortgage Loans the ownership of
each Mortgage Note, the related Mortgage and the related Custodial Mortgage
File, Retained Mortgage File and Servicing File shall vest immediately in the
Purchaser, and the ownership of all records and documents with respect to the
related Mortgage Loan prepared by or which come into the possession of the
Company shall vest immediately in the Purchaser and shall be retained and
maintained by the Company, in trust, at the will of the Purchaser and only in
such custodial capacity. The Company shall release its custody of the contents
of any Retained Mortgage File and Servicing File only in accordance with written
instructions from the Purchaser, unless such release is required as incidental
to the Company's servicing of the Mortgage Loans, in the case of the Servicing
File, or is in connection with a repurchase of any Mortgage Loan pursuant to
Section 3.03 or 6.02. All such costs associated with the release, transfer and
re-delivery to the Company shall be the responsibility of the Purchaser.
11
In addition, in connection with the assignment of any MERS Mortgage
Loan, the Company agrees that it will cause, the MERS(R) System to indicate that
such Mortgage Loans have been assigned by the Company to the Purchaser in
accordance with this Agreement by including (or deleting, in the case of
Mortgage Loans which are repurchased in accordance with this Agreement) in such
computer files the information required by the MERS(R) System to identify the
Purchaser as beneficial owner of such Mortgage Loans.
Section 2.02 Books and Records; Transfers of Mortgage Loans.
From and after the sale of the Mortgage Loans to the Purchaser all
rights arising out of the Mortgage Loans, including, but not limited to, all
funds received on or in connection with the Mortgage Loans, shall be received
and held by the Company in trust for the benefit of the Purchaser as owner of
the Mortgage Loans, and the Company shall retain record title to the related
Mortgages for the sole purpose of facilitating the servicing and the supervision
of the servicing of the Mortgage Loans.
The sale of each Mortgage Loan shall be reflected on the Company's
balance sheet and other financial statements as a sale of assets by the Company.
The Company shall be responsible for maintaining, and shall maintain, a complete
set of books and records for each Mortgage Loan which shall be marked clearly to
reflect the ownership of each Mortgage Loan by the Purchaser. In particular, the
Company shall maintain in its possession, available for inspection by the
Purchaser, or its designee, and shall deliver to the Purchaser upon demand,
evidence of compliance with all federal, state and local laws, rules and
regulations, and requirements of Xxxxxx Xxx or Xxxxxxx Mac, including but not
limited to documentation as to the method used in determining the applicability
of the provisions of the Flood Disaster Protection Act of 1973, as amended, to
the Mortgaged Property, documentation evidencing insurance coverage and
eligibility of any condominium project for approval by Xxxxxx Mae or Xxxxxxx Mac
and records of periodic inspections as required by Section 4.13. To the extent
that original documents are not required for purposes of realization of
Liquidation Proceeds or Insurance Proceeds, documents maintained by the Company
may be in the form of microfilm or microfiche or such other reliable means of
recreating original documents, including but not limited to, optical imagery
techniques so long as the Company complies with the requirements of the Xxxxxx
Mae Selling and Servicing Guide, as amended from time to time.
The Company shall maintain with respect to each Mortgage Loan and shall
make available for inspection by any Purchaser or its designee the related
Retained Mortgage File and Servicing File during the time the Purchaser retains
ownership of a Mortgage Loan and thereafter in accordance with applicable laws
and regulations.
The Company shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the Company
shall note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be
made unless such transfer is in compliance with the terms hereof. For the
purposes of this Agreement, the Company shall be under no obligation to deal
with any person with respect to this Agreement or the Mortgage Loans unless the
books and records show such person as the owner of the Mortgage Loan. The
Purchaser may, subject to the terms of this Agreement, sell and transfer one or
more of the Mortgage Loans. The Purchaser also shall advise the Company of the
transfer. Upon receipt of notice of the transfer, the Company shall xxxx its
books and records to reflect the ownership of the Mortgage Loans of such
assignee, and shall release the previous Purchaser from its obligations
hereunder with respect to the Mortgage Loans sold or transferred. If the Company
receives notification of a transfer less than five (5) Business Days before the
end of the related Due Period, the Company's duties to remit and report to the
new purchaser(s) as required by Section 5 shall begin with the next Due Period.
Such notification must include a final schedule of Mortgage Loans transferred.
12
Section 2.03 Custodial Agreement; Delivery of Documents.
The Company has delivered and released to the Custodian those Mortgage
Loan Documents as required by Exhibit B to this Agreement with respect to each
Mortgage Loan.
The Custodian has certified its receipt of all such Mortgage Loan
Documents in each Custodial Mortgage File pursuant to the Custodial Agreement,
as evidenced by the Initial Certification of the Custodian in the form annexed
to the Custodial Agreement. The Company shall be responsible for recording the
initial Assignments of Mortgage. The Purchaser will be responsible for the fees
and expenses of the Custodian.
Upon the occurrence of the events described in Section 9.01 and Section
11.02 of this Agreement or in the event the Company fails to allow the Purchaser
access to the Retained Mortgage File as required pursuant to Section 2.04 (each
such occurrence, a "Delivery Event"), the Company shall deliver to the Custodian
or any other party per written instructions from the Purchaser, the additional
documents from its Retained Mortgage File required to be delivered pursuant to
the Custodial Agreement within ten (10) days. All of the provisions of this
Section 2.03 relating to a failure to deliver required documentation, delays in
such delivery and the delivery of defective documentation shall apply equally to
any obligation on the part of the Company to deliver documents which arises
after the Closing Date upon the occurrence of a Delivery Event.
The Company shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with Section 4.01 or 6.01 within one
week of their execution, provided, however, that the Company shall provide the
Custodian with a certified true copy of any such document submitted for
recordation within ten (10) days of its execution, and shall provide the
original of any document submitted for recordation or a copy of such document
certified by the appropriate public recording office to be a true and complete
copy of the original within sixty days of its submission for recordation.
In the event the public recording office is delayed in returning any
original document, which the Company is required to deliver at any time to the
Custodian in accordance with the terms of the Custodial Agreement or which the
Company is required to maintain in the Retained Mortgage File, the Company shall
deliver to the Custodian within 180 days of its submission for recordation, a
copy of such document and an Officer's Certificate, which shall (i) identify the
recorded document; (ii) state that the recorded document has not been delivered
to the Custodian due solely to a delay by the public recording office, (iii)
state the amount of time generally required by the applicable recording office
to record and return a document submitted for recordation, and (iv) specify the
date the applicable recorded document will be delivered to the Custodian. The
Company will be required to deliver the document to the Custodian by the date
specified in (iv) above. An extension of the date specified in (iv) above may be
requested from the Purchaser, which consent shall not be unreasonably withheld.
13
In the event that new, replacement, substitute or additional Stock
Certificates are issued with respect to existing Cooperative Shares, the Company
immediately shall deliver to the Custodian the new Stock Certificates, together
with the related Stock Powers in blank. Such new Stock Certificates shall be
subject to the related Pledge Instruments and shall be subject to all of the
terms, covenants and conditions of this Agreement.
Section 2.04 Examination of Mortgage Loan Documents.
Prior to the Closing Date, the Company shall deliver the Mortgage Loan
Documents included in the Custodial Mortgage File to the Custodian. The
Purchaser or a designee may review such Mortgage Loan Documents to verify that
the documents required to be included in each Custodial Mortgage File are
available. If a Custodial Mortgage File is incomplete or defective or a Mortgage
Loan does not conform to the requirements of this Agreement and such omissions
or defects cannot be cured prior to the Closing Date, the Mortgage Loan shall be
deleted from the related Mortgage Loan Schedule. If deleted, the Mortgage Loan
may be replaced, up to one Business Day prior to the Closing Date, by one or
more substitute Mortgage Loans which satisfy the criteria set forth in of this
Agreement.
The Company shall make the Retained Mortgage File available to the
Purchaser for examination at the Company's offices or such other location as
shall otherwise be agreed upon by the Purchaser and the Company. Such
examination may be made by the Purchaser or by any prospective purchaser of the
Mortgage Loans from the Purchaser, at any time after the Closing Date upon prior
written notice to the Company. The fact that the Purchaser or any prospective
purchaser of the Mortgage Loans has conducted or has failed to conduct any
partial or complete examination of the Retained Mortgage File shall not affect
the Purchaser's (or any of its successor's) rights to demand repurchase,
substitution or other relief as provided under this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH
Section 3.01 Company Representations and Warranties.
The Company hereby represents and warrants to the Purchaser that, as of
the Closing Date:
14
(a) Due Organization and Authority.
The Company is a national banking association duly organized,
validly existing and in good standing under the laws of the
United States and has all licenses necessary to carry on its
business as now being conducted and is licensed, qualified and
in good standing in each state where a Mortgaged Property is
located if the laws of such state require licensing or
qualification in order to conduct business of the type
conducted by the Company, and in any event the Company is in
compliance with the laws of any such state to the extent
necessary to ensure the enforceability of the related Mortgage
Loan and the servicing of such Mortgage Loan in accordance
with the terms of this Agreement; the Company has the full
power and authority to execute and deliver this Agreement and
to perform in accordance herewith; the execution, delivery and
performance of this Agreement (including all instruments of
transfer to be delivered pursuant to this Agreement) by the
Company and the consummation of the transactions contemplated
hereby have been duly and validly authorized; this Agreement
evidences the valid, binding and enforceable obligation of the
Company; and all requisite action has been taken by the
Company to make this Agreement valid and binding upon the
Company in accordance with its terms;
(b) Ordinary Course of Business.
The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the
Company, who is in the business of selling and servicing
loans, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Company pursuant to
this Agreement are not subject to the bulk transfer or any
similar statutory provisions in effect in any applicable
jurisdiction;
(c) No Conflicts.
Neither the execution and delivery of this Agreement, the
acquisition of the Mortgage Loans by the Company, the sale of
the Mortgage Loans to the Purchaser or the transactions
contemplated hereby, nor the fulfillment of or compliance with
the terms and conditions of this Agreement will conflict with
or result in a breach of any of the terms, articles of
incorporation or by-laws or any legal restriction or any
agreement or instrument to which the Company is now a party or
by which it is bound, or constitute a default or result in the
violation of any law, rule, regulation, order, judgment or
decree to which the Company or its property is subject, or
impair the ability of the Purchaser to realize on the Mortgage
Loans, or impair the value of the Mortgage Loans;
15
(d) Ability to Service.
The Company is an approved seller/servicer of conventional
residential mortgage loans for Xxxxxx Xxx or Xxxxxxx Mac, with
the facilities, procedures, and experienced personnel
necessary for the sound servicing of mortgage loans of the
same type as the Mortgage Loans. The Company is in good
standing to sell mortgage loans to and service mortgage loans
for Xxxxxx Mae or Xxxxxxx Mac, and no event has occurred,
including but not limited to a change in insurance coverage,
which would make the Company unable to comply with Xxxxxx Mae
or Xxxxxxx Mac eligibility requirements or which would require
notification to either Xxxxxx Mae or Xxxxxxx Mac;
(e) Reasonable Servicing Fee.
The Company acknowledges and agrees that the Servicing Fee
represents reasonable compensation for performing such
services and that the entire Servicing Fee shall be treated by
the Company, for accounting and tax purposes, as compensation
for the servicing and administration of the Mortgage Loans
pursuant to this Agreement;
(f) Ability to Perform.
The Company does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every
covenant contained in this Agreement. The Company is solvent
and the sale of the Mortgage Loans will not cause the Company
to become insolvent. The sale of the Mortgage Loans is not
undertaken to hinder, delay or defraud any of the Company's
creditors;
(g) No Litigation Pending.
There is no action, suit, proceeding or investigation pending
or threatened against the Company which, either in any one
instance or in the aggregate, may result in any material
adverse change in the business, operations, financial
condition, properties or assets of the Company, or in any
material impairment of the right or ability of the Company to
carry on its business substantially as now conducted, or in
any material liability on the part of the Company, or which
would draw into question the validity of this Agreement or the
Mortgage Loans or of any action taken or to be contemplated
herein, or which would be likely to impair materially the
ability of the Company to perform under the terms of this
Agreement;
(h) No Consent Required.
No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution,
delivery and performance by the Company of or compliance by
the Company with this Agreement or the sale of the Mortgage
Loans as evidenced by the consummation of the transactions
contemplated by this Agreement, or if required, such approval
has been obtained prior to the Closing Date;
16
(i) Selection Process.
The Mortgage Loans were selected from among the outstanding
adjustable rate one- to four-family mortgage loans in the
Company's mortgage banking portfolio at the Closing Date as to
which the representations and warranties set forth in Section
3.02 could be made and such selection was not made in a manner
so as to affect adversely the interests of the Purchaser;
(j) No Untrue Information.
Neither this Agreement nor any statement, report or other
document furnished or to be furnished pursuant to this
Agreement or in connection with the transactions contemplated
hereby contains any untrue statement of fact or omits to state
a fact necessary to make the statements contained therein not
misleading;
(k) Sale Treatment.
The Company has determined that the disposition of the
Mortgage Loans pursuant to this Agreement will be afforded
sale treatment for accounting and tax purposes;
(l) No Material Change.
There has been no material adverse change in the business,
operations, financial condition or assets of the Company since
the date of the Company's most recent financial statements;
(m) No Brokers' Fees.
The Company has not dealt with any broker, investment banker,
agent or other Person that may be entitled to any commission
or compensation in the connection with the sale of the
Mortgage Loans; and
(n) Fair Consideration.
The consideration received by the Company upon the sale of the
Mortgage Loans under this Agreement constitutes fair
consideration and reasonably equivalent value of the Mortgage
Loans.
Section 3.02 Representations and Warranties Regarding Individual Mortgage
Loans.
As to each Mortgage Loan, the Company hereby represents and warrants to
the Purchaser that as of the Closing Date:
(a) Mortgage Loans as Described.
17
The information set forth in the Mortgage Loan Schedules
attached hereto as Exhibit A and Exhibit A-1 and the
information contained on the respective electronic Data File
delivered to the Purchaser is true and correct;
(b) Payments Current.
No payment required under any Mortgage Loan will be 30 days or
more delinquent on the Closing Date. No Mortgage Loan will
have been 30 days delinquent more than one time within the
twelve (12) months prior to the Closing Date;
(c) No Outstanding Charges.
There are no defaults in complying with the terms of the
Mortgages, and all taxes, governmental assessments, insurance
premiums, leasehold payments, water, sewer and municipal
charges, which previously became due and owing have been paid,
or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and
which has been assessed but is not yet due and payable. The
Company has not advanced funds, or induced, or solicited
directly or indirectly, the payment of any amount required
under the Mortgage Loan, except for interest accruing from the
date of the Mortgage Note or date of disbursement of the
Mortgage Loan proceeds, whichever is later, to the day which
precedes by one month the Due Date of the first installment of
principal and interest;
(d) Original Terms Unmodified.
The terms of the Mortgage Note and Mortgage have not been
impaired, waived, altered or modified in any respect, except
by a written instrument which has been recorded, if necessary
to protect the interests of the Purchaser and which has been
delivered to the Custodian. The substance of any such waiver,
alteration or modification has been approved by the issuer of
any related PMI Policy and the title insurer, to the extent
required by the policy, and its terms are reflected on the
related Mortgage Loan Schedule. No Mortgagor has been
released, in whole or in part, except in connection with an
assumption agreement approved by the issuer of any related PMI
Policy and the title insurer, to the extent required by the
policy, and which assumption agreement is part of the
Custodial Mortgage File delivered to the Custodian and the
terms of which are reflected in the related Mortgage Loan
Schedule;
(e) No Defenses.
The Mortgage Loan is not subject to any right of rescission,
set-off, counterclaim or defense, including without limitation
the defense of usury, nor will the operation of any of the
terms of the Mortgage Note or the Mortgage, or the exercise of
any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable, in whole or in part, or subject to any
right of rescission, set-off, counterclaim or defense,
including without limitation the defense of usury, and no such
right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
18
(f) No Satisfaction of Mortgage.
Neither the Mortgage nor the Mortgage Note has been satisfied,
canceled, subordinated or rescinded, in whole or in part, and
the Mortgaged Property has not been released from the lien of
the Mortgage, in whole or in part, nor has any instrument been
executed that would effect any such release, cancellation,
subordination or rescission;
(g) Validity of Mortgage Documents.
The Mortgage Note and the Mortgage and related documents are
genuine, and each is the legal, valid and binding obligation
of the maker thereof enforceable in accordance with its terms.
All parties to the Mortgage Note, the Mortgage and any other
related document had legal capacity to enter into the Mortgage
Loan and to execute and deliver the Mortgage Note, the
Mortgage and any other related document, and the Mortgage
Note, the Mortgage and any other related document have been
duly and properly executed by such parties. The Company has
reviewed all of the documents constituting the Retained
Mortgage File and Custodial Mortgage File and has made such
inquiries as it deems necessary to make and confirm the
accuracy of the representations set forth herein;
With respect to each Cooperative Loan, the Mortgage Note, the
Mortgage, the Pledge Agreement, and related documents are
genuine, and each is the legal, valid and binding obligation
of the maker thereof enforceable in accordance with its terms.
All parties to the Mortgage Note, the Mortgage, the Pledge
Agreement, the Proprietary Lease, the Stock Power, Recognition
Agreement and the Assignment of Proprietary Lease had legal
capacity to enter into the Mortgage Loan and to execute and
deliver such documents, and such documents have been duly and
properly executed by such parties;
(h) No Fraud.
All the documents executed in connection with the Mortgage
Loan including, but not limited to, the Mortgage Note and the
Mortgage are free of fraud and any misrepresentation, are
signed by the persons they purport to be signed by, and
witnessed or, as appropriate, notarized by the persons whose
signatures appear as witnesses or notaries, and each such
document constitutes the valid and binding legal obligation of
the signatories and is enforceable in accordance with its
terms;
19
(i) Compliance with Applicable Laws.
Any and all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection,
equal credit opportunity, disclosure, or predatory and abusive
lending laws applicable to the Mortgage Loan have been
complied with, and the Company shall maintain in its
possession, available for the Purchaser's inspection, and
shall deliver to the Purchaser upon demand, evidence of
compliance with all such requirements. The consummation of the
transactions contemplated hereby will not violate any such
laws or regulations. All inspections, licenses and
certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect
to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities;
(j) Location and Type of Mortgaged Property.
The Mortgaged Property is located in the state identified in
the Mortgage Loan Schedule and consists of a contiguous parcel
of real property with a detached single family residence
erected thereon, or a two- to four-family dwelling, or an
individual condominium unit in a condominium project, or an
individual unit in a planned unit development or a townhouse,
provided, however, that any condominium project or planned
unit development shall conform with the applicable
Underwriting Guidelines regarding such dwellings, and no
residence or dwelling is a mobile home. As of the respective
appraisal date for each Mortgaged Property, no portion of the
Mortgaged Property was being used for commercial purposes,
except as allowed under the Underwriting Guidelines. If the
Mortgaged Property is a condominium unit or a planned unit
development (other than a de minimus planned unit development)
such condominium or planned unit development meets the
requirements under the Underwriting Guidelines;
(k) Valid First Lien.
The Mortgage is a valid, subsisting and enforceable first lien
on the Mortgaged Property, including all buildings on the
Mortgaged Property and all installations and mechanical,
electrical, plumbing, heating and air conditioning systems
located in or annexed to such buildings, and all additions,
alterations and replacements made at any time with respect to
the foregoing. The lien of the Mortgage is subject only to:
(1) the lien of current real property taxes and
assessments not yet due and payable;
(2) covenants, conditions and restrictions, rights of
way, easements and other matters of the public record
as of the date of recording acceptable to mortgage
lending institutions generally and specifically
referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and
(i) referred to or otherwise considered in the
appraisal made for the originator of the Mortgage
Loan and (ii) which do not adversely affect the
Appraised Value of the Mortgaged Property set forth
in such appraisal; and
20
(3) other matters to which like properties are commonly
subject which do not materially interfere with the
benefits of the security intended to be provided by
the mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with the
Mortgage Loan establishes and creates a valid, subsisting and
enforceable first lien and first priority security interest on
the property described therein and the Company has full right
to sell and assign the same to the Purchaser;
With respect to each Cooperative Loan, each Pledge Agreement
creates a valid, enforceable and subsisting first security
interest in the Cooperative Shares and Proprietary Lease,
subject only to (i) the lien of the related Cooperative for
unpaid assessments representing the Mortgagor's pro rata share
of the Cooperative's payments for its blanket mortgage,
current and future real property taxes, insurance premiums,
maintenance fees and other assessments to which like
collateral is commonly subject and (ii) other matters to which
like collateral is commonly subject which do not materially
interfere with the benefits of the security intended to be
provided by the Pledge Agreement; provided, however, that the
appurtenant Proprietary Lease may be subordinated or otherwise
subject to the lien of any mortgage on the Project;
(l) Full Disbursement of Proceeds.
The Mortgage Loan has been closed and the proceeds of the
Mortgage Loan have been fully disbursed, except for escrows
established or improvements to the Mortgaged Property not
completed prior to the closing of the related Mortgage Loan,
or created due to seasonal weather conditions, and there is no
requirement for future advances thereunder. All costs, fees
and expenses incurred in making or closing the Mortgage Loan
and the recording of the Mortgage were paid, and the Mortgagor
is not entitled to any refund of any amounts paid or due under
the Mortgage Note or Mortgage;
(m) Consolidation of Future Advances.
Any future advances made prior to the Cut-off Date, have been
consolidated with the outstanding principal amount secured by
the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single
repayment term reflected on the related Mortgage Loan
Schedule. The lien of the Mortgage securing the consolidated
principal amount is expressly insured as having first lien
priority by a title insurance policy, an endorsement to the
policy insuring the mortgagee's consolidated interest or by
other title evidence acceptable to Xxxxxx Mae or Xxxxxxx Mac;
the consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan; the Company shall not
make future advances after the Cut-off Date;
21
(n) Ownership.
The Company is the sole owner of record and holder of the
Mortgage Loan and the related Mortgage Note and the Mortgage
are not assigned or pledged, and the Company has good and
marketable title thereto and has full right and authority to
transfer and sell the Mortgage Loan to the Purchaser. The
Company is transferring the Mortgage Loan free and clear of
any and all encumbrances, liens, pledges, equities,
participation interests, claims, charges or security interests
of any nature encumbering such Mortgage Loan;
(o) Origination/Doing Business.
The Mortgage Loan was originated by a savings and loan
association, a savings bank, a commercial bank, a credit
union, an insurance company, or similar institution which is
supervised and examined by a federal or state authority or by
a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National
Housing Act. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or
otherwise, are (or, during the period in which they held and
disposed of such interest, were) (1) in compliance with any
and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2)
organized under the laws of such state, or (3) qualified to do
business in such state, or (4) federal savings and loan
associations or national banks having principal offices in
such state, or (5) not doing business in such state;
(p) LTV, PMI Policy.
Except as indicated on the related Mortgage Loan Schedule, no
Mortgage Loan has an LTV greater than 95%. If the original LTV
of the Mortgage Loan was greater than 80%, the excess over 78%
is and will be insured as to payment defaults by either a
lender-paid or borrower-paid PMI Policy until terminated
pursuant to the Homeowners Protection Act of 1998, 12 USC
ss.4901, et seq. All provisions of such PMI Policy have been
and are being complied with, such policy is in full force and
effect, and all premiums due thereunder have been paid. The
Qualified Insurer has a claims paying ability acceptable to
Xxxxxx Mae or Xxxxxxx Mac. Any Mortgage Loan subject to a PMI
Policy obligates the Mortgagor thereunder to maintain the PMI
Policy and to pay all premiums and charges in connection
therewith. The Mortgage Interest Rate for the Mortgage Loan as
set forth on the related Mortgage Loan Schedule is net of any
such insurance premium;
22
(q) Title Insurance.
The Mortgage Loan is covered by an ALTA lender's title
insurance policy (or in the case of any Mortgage Loan secured
by a Mortgaged Property located in a jurisdiction where such
policies are not available, an opinion of counsel of the type
customarily rendered in such jurisdiction in lieu of title
insurance) or other generally acceptable form of policy of
insurance acceptable to Xxxxxx Xxx or Xxxxxxx Mac, issued by a
title insurer acceptable to Xxxxxx Mae or Xxxxxxx Mac and
qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring the Company, its
successors and assigns, as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage
Loan, subject only to the exceptions contained in clauses (1),
(2) and (3) of Paragraph (k) of this Section 3.02, and against
any loss by reason of the invalidity or unenforceability of
the lien resulting from the provisions of the Mortgage
providing for adjustment to the Mortgage Interest Rate and
Monthly Payment. The Company is the sole insured of such
lender's title insurance policy, and such lender's title
insurance policy is in full force and effect and will be in
force and effect upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under
such lender's title insurance policy, and no prior holder of
the Mortgage, including the Company, has done, by act or
omission, anything which would impair the coverage of such
lender's title insurance policy;
(r) No Defaults.
There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note
and no event which, with the passage of time or with notice
and the expiration of any grace or cure period, would
constitute a default, breach, violation or event of
acceleration, and neither the Company nor its predecessors
have waived any default, breach, violation or event of
acceleration;
(s) No Mechanics' Liens.
There are no mechanics' or similar liens or claims which have
been filed for work, labor or material (and no rights are
outstanding that under the law could give rise to such liens)
affecting the related Mortgaged Property which are or may be
liens prior to, or equal or coordinate with, the lien of the
related Mortgage which are not insured against by the title
insurance policy referenced in Paragraph (q) above;
(t) Location of Improvements; No Encroachments.
Except as insured against by the title insurance policy
referenced in Paragraph (q) above, all improvements which were
considered in determining the Appraised Value of the Mortgaged
Property lay wholly within the boundaries and building
restriction lines of the Mortgaged Property and no
improvements on adjoining properties encroach upon the
Mortgaged Property. No improvement located on or being part of
the Mortgaged Property is in violation of any applicable
zoning law or regulation;
23
(u) Payment Terms.
The Mortgage Loans have an original term to maturity of not
more than 30 years, with interest payable in arrears on the
first day of each month. As to each Mortgage Loan on each
applicable Adjustment Date, the Mortgage Interest Rate will be
adjusted to equal the sum of the Index plus the applicable
Gross Margin, rounded up or down to the nearest multiple of
0.125% indicated by the Mortgage Note; provided that the
Mortgage Interest Rate will not increase or decrease by more
than 2.00% on any Adjustment Date, and will in no event exceed
the maximum Mortgage Interest Rate or be lower than the
minimum Mortgage Interest Rate listed on the related Mortgage
Loan Schedule for such Mortgage Loan. As to each Mortgage Loan
that is not an Interest Only Mortgage Loan, each Mortgage Note
requires a monthly payment which is sufficient, during the
period prior to the first adjustment to the Mortgage Interest
Rate, to fully amortize the outstanding principal balance as
of the first day of such period over the then remaining term
of such Mortgage Note and to pay interest at the related
Mortgage Interest Rate. As to each Mortgage Loan, if the
related Mortgage Interest Rate changes on an Adjustment Date
or, with respect to an Interest Only Mortgage Loan, on an
Adjustment Date following the related interest only period,
the then outstanding principal balance will be reamortized
over the remaining life of such Mortgage Loan. No Mortgage
Loan contains terms or provisions which would result in
negative amortization;
(v) Customary Provisions.
The Mortgage and related Mortgage Note contain customary and
enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for the realization
against the Mortgaged Property of the benefits of the security
provided thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii)
otherwise by judicial foreclosure and upon the exercise of
such rights and remedies under the law, the holder of the
Mortgage and Mortgage Note will be able to deliver good and
merchantable title to the Mortgaged Property. There is no
homestead or other exemption available to a Mortgagor which
would interfere with the right to sell the Mortgaged Property
at a trustee's sale or the right to foreclose the Mortgage;
(w) Occupancy of the Mortgaged Property.
As of the date of origination, the Mortgaged Property was
lawfully occupied under all applicable laws;
24
(x) No Additional Collateral.
The Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien
of the corresponding Mortgage and the security interest of any
applicable security agreement or chattel mortgage referred to
in sub clause (k) above;
(y) Deeds of Trust.
In the event the Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is
named in the Mortgage, and no fees or expenses are or will
become payable by the Mortgagee to the trustee under the deed
of trust, except in connection with a trustee's sale after
default by the Mortgagor;
(z) Acceptable Investment.
The Company has no knowledge of any circumstances or
conditions with respect to the Mortgage Loan, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing
that can reasonably be expected to cause private institutional
investors to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage Loan to become delinquent, or
adversely affect the value or marketability of the Mortgage
Loan;
(aa) Transfer of Mortgage Loans.
If the Mortgage Loan is not a MERS Mortgage Loan, the
Assignment of Mortgage upon the insertion of the name of the
assignee and recording information is in recordable form and
is acceptable for recording under the laws of the jurisdiction
in which the Mortgaged Property is located;
(bb) Mortgaged Property Undamaged.
The Mortgaged Property is undamaged by water, fire, earthquake
or earth movement, windstorm, flood, tornado or other casualty
so as to affect adversely the value of the Mortgaged Property
as security for the Mortgage Loan or the use for which the
premises were intended;
(cc) Collection Practices; Escrow Deposits.
The origination and collection practices used with respect to
the Mortgage Loan have been in accordance with Accepted
Servicing Practices, and have been in all material respects
legal and proper. With respect to escrow deposits and Escrow
Payments, all such payments are in the possession of the
Company and there exist no deficiencies in connection
therewith for which customary arrangements for repayment
thereof have not been made. All Escrow Payments have been
collected in full compliance with state and federal law. No
escrow deposits or Escrow Payments or other charges or
payments due the Company have been capitalized under the
Mortgage Note;
25
(dd) No Condemnation.
There is no proceeding pending or to the best of the Company's
knowledge threatened for the total or partial condemnation of
the related Mortgaged Property;
(ee) The Appraisal.
The Mortgage Loan Documents contain an appraisal of the
related Mortgaged Property. As to each Time$aver(R) Mortgage
Loan, the appraisal may be from the original of the existing
Company-serviced loan, which was refinanced via such
Time$aver(R) Mortgage Loan. The appraisal was conducted by an
appraiser who is licensed in the state where the Mortgaged
Property is located, and who had no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the
security thereof; and whose compensation is not affected by
the approval or disapproval of the Mortgage Loan, and the
appraisal and the appraiser both satisfy the applicable
requirements of Title XI of the Financial Institution Reform,
Recovery, and Enforcement Act of 1989 and the regulations
promulgated thereunder, all as in effect on the date the
Mortgage Loan was originated;
(ff) Insurance.
The Mortgaged Property securing each Mortgage Loan is insured
by an insurer acceptable to Xxxxxx Xxx or Xxxxxxx Mac against
loss by fire and such hazards as are covered under a standard
extended coverage endorsement and such other hazards as are
customary in the area where the Mortgaged Property is located
pursuant to insurance policies conforming to the requirements
of Section 4.10, in an amount which is not less than the
lesser of 100% of the insurable value of the Mortgaged
Property and the outstanding principal balance of the Mortgage
Loan, but in no event less than the minimum amount necessary
to fully compensate for any damage or loss on a replacement
cost basis. If the Mortgaged Property is a condominium unit,
it is included under the coverage afforded by a blanket policy
for the project. If the improvements on the Mortgaged Property
are in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy meeting the requirements of
the current guidelines of the Federal Insurance Administration
is in effect with a generally acceptable insurance carrier, in
an amount representing coverage not less than the least of (A)
the outstanding principal balance of the Mortgage Loan, (B)
the full insurable value and (C) the maximum amount of
insurance which was available under the Flood Disaster
Protection Act of 1973, as amended. All individual insurance
policies contain a standard mortgagee clause naming the
Company and its successors and assigns as mortgagee, and all
premiums thereon have been paid. The Mortgage obligates the
Mortgagor thereunder to maintain a hazard insurance policy at
the Mortgagor's cost and expense, and on the Mortgagor's
failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at such Mortgagor's cost
and expense, and to seek reimbursement therefor from the
Mortgagor. The hazard insurance policy is the valid and
binding obligation of the insurer, is in full force and
effect, and will be in full force and effect and inure to the
benefit of the Purchaser upon the consummation of the
transactions contemplated by this Agreement. The Company has
not acted or failed to act so as to impair the coverage of any
such insurance policy or the validity, binding effect and
enforceability thereof;
26
(gg) Servicemembers' Civil Relief Act.
The Mortgagor has not notified the Company, and the Company
has no knowledge of any relief requested or allowed to the
Mortgagor under the Servicemembers' Civil Relief Act, as
amended;
(hh) No Balloon Payments, Graduated Payments or Contingent
Interests.
The Mortgage Loan is not a graduated payment mortgage loan and
the Mortgage Loan does not have a shared appreciation or other
contingent interest feature. No Mortgage Loan has a balloon
payment feature;
(ii) No Construction Loans.
No Mortgage Loan was made in connection with (i) the
construction or rehabilitation of a Mortgage Property or (ii)
facilitating the trade-in or exchange of a Mortgaged Property
other than a construction-to-permanent loan which has
converted to a permanent Mortgage Loan;
(jj) Underwriting.
Each Mortgage Loan was underwritten in accordance with the
Underwriting Guidelines; and the Mortgage Note and Mortgage
are on forms acceptable to Xxxxxxx Mac or Xxxxxx Mae;
(kk) Bankruptcy.
No Mortgagor was a debtor in any state or federal bankruptcy
or insolvency proceeding as of the date the Mortgage loan was
closed;
(ll) Leasehold Estates.
With respect to Mortgage Loans that are secured by a leasehold
estate, the lease is valid, in full force and effect and
conforms to the Underwriting Guidelines;
27
(mm) The Mortgagor.
The Mortgagor is one or more natural persons and/or trustees
for an Illinois land trust or a trustee under a "living trust"
and such "living trust" is in compliance with Xxxxxx Xxx or
Xxxxxxx Mac guidelines;
(nn) Delivery of Custodial Mortgage Files.
The Mortgage Note and any other documents required to be
delivered by the Company under this Agreement for the Mortgage
Loans have been delivered to the Custodian. The Company is in
possession of a complete, true and accurate Retained Mortgage
File in compliance with Exhibit B, except for such documents
the originals of which have been sent for recordation;
(oo) Servicing.
From and after the dated of origination, each Mortgage Loan
has been serviced in accordance with the terms of all federal,
state and local laws and regulations, the terms of the
Mortgage Note and Accepted Servicing Practices in all
respects.
(pp) Due on Sale.
The Mortgage or Mortgage Note contains an enforceable
provision for the acceleration of the payment of the unpaid
principal balance of the Mortgage Loan in the event that the
Mortgaged Property is sold or transferred without the prior
written consent of the Mortgagee thereunder;
(qq) No Violation of Environmental Laws.
There is no pending action or proceeding directly involving
any Mortgaged Property of which the Company is aware in which
compliance with any environmental law, rule or regulation is
an issue; and to the best of the Company's knowledge, nothing
further remains to be done to satisfy in full all requirements
of each such law, rule or regulation constituting a
prerequisite to use, value and enjoyment of said property; and
(rr) Single Premium Credit Life Insurance.
None of the proceeds of the Mortgage Loan were used to finance
single-premium credit life insurance policies.
28
(ss) Anti-Money Laundering Laws.
The Company has complied with all applicable anti-money
laundering laws and regulations, (the "Anti-Money Laundering
Laws"), and has established an anti-money laundering
compliance program as required by the Anti-Money Laundering
Laws.
(tt) No High Cost Loans.
No Mortgage Loan is a High Cost Loan or Covered Loan;
(uu) Contents of the Retained Mortgage File
The Retained Mortgage File contains the documents listed as
items 5 through 9 of Exhibit B attached hereto.
(vv) Fair Credit Reporting Act.
The Company, in its capacity as servicer for each Mortgage
Loan, has fully furnished, in accordance with the Fair Credit
Reporting Act and its implementing regulations, accurate and
complete information (e.g., favorable and unfavorable) on its
borrower credit files to Equifax, Experian and Trans Union
Credit Information Company (three of the credit repositories),
on a monthly basis.
(ww) Cooperative Loans.
With respect to each Cooperative Loan:
(i) The Cooperative Shares are held by a person as a
tenant-stockholder in a Cooperative. Each original
UCC financing statement, continuation statement or
other governmental filing or recordation necessary to
create or preserve the perfection and priority of the
first lien and security interest in the Cooperative
Loan and Proprietary Lease has been timely and
properly made. Any security agreement, chattel
mortgage or equivalent document related to the
Cooperative Loan and delivered to Purchaser or its
designee establishes in Purchaser a valid and
subsisting perfected first lien on and security
interest in the Mortgaged Property described therein,
and Purchaser has full right to sell and assign the
same. The Proprietary Lease term expires no less than
five years after the Mortgage Loan term or such other
term acceptable to Xxxxxx Xxx or Xxxxxxx Mac;
(ii) A Cooperative Lien Search has been made by a company
competent to make the same which company is
acceptable to Xxxxxx Mae or Xxxxxxx Mac and qualified
to do business in the jurisdiction where the
Cooperative is located;
29
(iii) (a) The term of the related Proprietary Lease is not
less than the terms of the Cooperative Loan; (b)
there is no provision in any Proprietary Lease which
requires the Mortgagor to offer for sale the
Cooperative Shares owned by such Mortgagor first to
the Cooperative; (c) there is no prohibition in any
Proprietary Lease against pledging the Cooperative
Shares or assigning the Proprietary Lease; (d) the
Cooperative has been created and exists in full
compliance with the requirements for residential
cooperatives in the jurisdiction in which the Project
is located and qualifies as a cooperative housing
corporation under Section 210 of the Code; (e) the
Recognition Agreement is on a form published by
Aztech Document Services, Inc. or includes similar
provisions; and (f) the Cooperative has good and
marketable title to the Project, and owns the Project
either in fee simple or under a leasehold that
complies with the requirements of the Xxxxxx Xxx or
Xxxxxxx Mac guidelines; such title is free and clear
of any adverse liens or encumbrances, except the lien
of any blanket mortgage;
(iv) The Company has the right under the terms of the
Mortgage Note, Pledge Agreement and Recognition
Agreement to pay any maintenance charges or
assessments owed by the Mortgagor;
(v) Each Stock Power (i) has all signatures guaranteed or
(ii) if all signatures are not guaranteed, then such
Cooperative Shares will be transferred by the stock
transfer agent of the Cooperative if the Company
undertakes to convert the ownership of the collateral
securing the related Cooperative Loan.
(xx) No Arbitration Provision.
No Mortgagor with respect to any Mortgage Loan originated on
or after August 1, 2004, agreed to submit to arbitration to
resolve any dispute arising out of or relating in any way to
the mortgage loan transaction.
Section 3.03 Repurchase.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans to
the Purchaser and the delivery of the applicable Mortgage Loan Documents to the
Custodian and shall inure to the benefit of the Purchaser, notwithstanding any
restrictive or qualified endorsement on any Mortgage Note or Assignment of
Mortgage or the examination or failure to examine any Custodial Mortgage File or
Retained Mortgage File. Upon discovery by either the Company or the Purchaser of
a breach of any of the foregoing representations and warranties which materially
and adversely affects the value of the Mortgage Loans or the interest of the
Purchaser (or which materially and adversely affects the interests of Purchaser
in the related Mortgage Loan in the case of a representation and warranty
relating to a particular Mortgage Loan), the party discovering such breach shall
give prompt written notice to the other.
30
Within 90 days of the earlier of either discovery by or notice to the
Company of any breach of a representation or warranty which materially and
adversely affects the value of the Mortgage Loans, the Company shall use its
best efforts promptly to cure such breach in all material respects (although, in
connection with such a breach of Section 3.02 (vv), the cure period shall be
fifteen (15) days) and, if such breach cannot be cured, the Company shall, at
the Purchaser's option, repurchase such Mortgage Loan at the Repurchase Price.
In the event that a breach shall involve any representation or warranty set
forth in Section 3.01, and such breach cannot be cured within 90 days of the
earlier of either discovery by or notice to the Company of such breach, all of
the Mortgage Loans shall, at the Purchaser's option, be repurchased by the
Company at the Repurchase Price. However, if the breach shall involve a
representation or warranty set forth in Section 3.02 and the Company discovers
or receives notice of any such breach within 120 days of the Closing Date, the
Company shall, if the breach cannot be cured, at the Purchaser's option and
provided that the Company has a Qualified Substitute Mortgage Loan, rather than
repurchase the Mortgage Loan as provided above, remove such Mortgage Loan (a
"Deleted Mortgage Loan") and substitute in its place a Qualified Substitute
Mortgage Loan or Loans, provided that any such substitution shall be effected
not later than 120 days after the Closing Date. If the Company has no Qualified
Substitute Mortgage Loan, it shall repurchase the deficient Mortgage Loan within
90 days of the written notice of the breach or the failure to cure, whichever is
later. Any repurchase of a Mortgage Loan or Loans pursuant to the foregoing
provisions of this Section 3.03 shall be accomplished by deposit in the
Custodial Account of the amount of the Repurchase Price for distribution to
Purchaser on the next scheduled Remittance Date, after deducting therefrom any
amount received in respect of such repurchased Mortgage Loan or Loans and being
held in the Custodial Account for future distribution.
At the time of repurchase or substitution, the Purchaser and the
Company shall arrange for the reassignment of the Deleted Mortgage Loan to the
Company and the delivery to the Company of any documents held by the Custodian
relating to the Deleted Mortgage Loan. If the Company repurchases a Mortgage
Loan that is a MERS Mortgage Loan, the Company shall cause MERS to designate on
the MERS(R) System to remove the Purchaser as the beneficial holder with respect
to such Mortgage Loan. In the event of a repurchase or substitution, the Company
shall, simultaneously with such reassignment, give written notice to the
Purchaser that such repurchase or substitution has taken place, amend the
related Mortgage Loan Schedule to reflect the withdrawal of the Deleted Mortgage
Loan from this Agreement, and, in the case of substitution, identify a Qualified
Substitute Mortgage Loan and amend the related Mortgage Loan Schedule to reflect
the addition of such Qualified Substitute Mortgage Loan to this Agreement. In
connection with any such substitution, the Company shall be deemed to have made
as to such Qualified Substitute Mortgage Loan the representations and warranties
set forth in this Agreement except that all such representations and warranties
set forth in this Agreement shall be deemed made as of the date of such
substitution. The Company shall effect such substitution by delivering to the
Custodian for such Qualified Substitute Mortgage Loan the documents required by
Section 2.03, with the Mortgage Note endorsed as required by Section 2.03. No
substitution will be made in any calendar month after the Determination Date for
such month. The Company shall deposit in the Custodial Account the Monthly
Payment less the Servicing Fee due on such Qualified Substitute Mortgage Loan or
Loans in the month following the date of such substitution. Monthly Payments due
with respect to Qualified Substitute Mortgage Loans in the month of substitution
shall be retained by the Company. With respect to any Deleted Mortgage loan,
distributions to Purchaser shall include the Monthly Payment due on any Deleted
Mortgage Loan in the month of substitution, and the Company shall thereafter be
entitled to retain all amounts subsequently received by the Company in respect
of such Deleted Mortgage Loan.
31
For any month in which the Company substitutes a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan, the Company shall determine the
amount (if any) by which the aggregate principal balance of all Qualified
Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all Deleted Mortgage Loans (after
application of scheduled principal payments due in the month of substitution).
The amount of such shortfall shall be distributed by the Company in the month of
substitution pursuant to Section 5.01. Accordingly, on the date of such
substitution, the Company shall deposit from its own funds into the Custodial
Account an amount equal to the amount of such shortfall.
In addition to such repurchase or substitution obligation, the Company
shall indemnify the Purchaser and hold it harmless against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and other costs and expenses resulting from any claim, demand,
defense or assertion based on or grounded upon, or resulting from, a breach of
the Company representations and warranties contained in this Agreement. It is
understood and agreed that the obligations of the Company set forth in this
Section 3.03 to cure, substitute for or repurchase a defective Mortgage Loan and
to indemnify the Purchaser as provided in this Section 3.03 constitute the sole
remedies of the Purchaser respecting a breach of the foregoing representations
and warranties.
Any cause of action against the Company relating to or arising out of
the breach of any representations and warranties made in Sections 3.01 and 3.02
shall accrue as to any Mortgage Loan upon (i) discovery of such breach by the
Purchaser or notice thereof by the Company to the Purchaser, (ii) failures by
the Company to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Company by the Purchaser for compliance with
this Agreement.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer.
The Company, as an independent contractor, shall service and administer
the Mortgage Loans and shall have full power and authority, acting alone or
through the utilization of a third party servicing provider, to do any and all
things in connection with such servicing and administration which the Company
may deem necessary or desirable, consistent with the terms of this Agreement and
with Accepted Servicing Practices. The Company shall be responsible for any and
all acts of a third party servicing provider, and the Company's utilization of a
third party servicing provider shall in no way relieve the liability of the
Company under this Agreement.
32
Consistent with the terms of this Agreement, the Company may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in the Company's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser, provided, however, the Company shall not make any future advances
with respect to a Mortgage Loan. The Company shall not permit any modification
with respect to any Mortgage Loan that would change the Mortgage Interest Rate,
defer or forgive the payment of principal (except for actual payments of
principal) or change the final maturity date on such Mortgage Loan, unless the
Mortgagor is in default with respect to the Mortgage Loan or such default is, in
the judgment of the Company, imminent. In the event that no default exists or is
imminent, the Company shall request written consent from the Purchaser to permit
such a modification and he Purchaser shall provide written consent or notify the
Company of its objection to such modification within five (5) Business Days of
its receipt of the Company's request. In the event of any such modification
which permits the deferral of interest or principal payments on any Mortgage
Loan, the Company shall, on the Business Day immediately preceding the
Remittance Date in any month in which any such principal or interest payment has
been deferred, deposit in the Custodial Account from its own funds, in
accordance with Section 5.03, the difference between (a) such month's principal
and one month's interest at the Mortgage Loan Remittance Rate on the unpaid
principal balance of such Mortgage Loan and (b) the amount paid by the
Mortgagor. The Company shall be entitled to reimbursement for such advances to
the same extent as for all other advances made pursuant to Section 5.03. Without
limiting the generality of the foregoing, the Company shall continue, and is
hereby authorized and empowered, to execute and deliver on behalf of itself and
the Purchaser, all instruments of satisfaction or cancellation, or of partial or
full release, discharge and all other comparable instruments, with respect to
the Mortgage Loans and with respect to the Mortgaged Properties. If reasonably
required by the Company, the Purchaser shall furnish the Company with any powers
of attorney and other documents necessary or appropriate to enable the Company
to carry out its servicing and administrative duties under this Agreement.
In servicing and administering the Mortgage Loans, the Company shall
employ procedures (including collection procedures) and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account, giving due consideration to Accepted
Servicing Practices where such practices do not conflict with the requirements
of this Agreement, and the Purchaser's reliance on the Company.
The Company shall cause to be maintained for each Cooperative Loan a
copy of the financing statements and shall file and such financing statements
and continuation statements as necessary, in accordance with the Uniform
Commercial Code applicable in the jurisdiction in which the related Cooperative
Apartment is located, to perfect and protect the security interest and lien of
the Purchaser.
The Company is authorized and empowered by the Purchaser, in its own
name, when the Company believes it appropriate in its reasonable judgment to
register any Mortgage Loan on the MERS(R) System, or cause the removal from the
registration of any Mortgage Loan on the MERS(R) System, to execute and deliver,
on behalf of the Purchaser, any and all instruments of assignment and other
comparable instruments with respect to such assignment or re-recording of a
Mortgage in the name of MERS, solely as nominee for the Purchaser and its
successors and assigns.
33
Section 4.02 Liquidation of Mortgage Loans.
In the event that any payment due under any Mortgage Loan and not
postponed pursuant to Section 4.01 is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Company shall take such action as (1) the Company
would take under similar circumstances with respect to a similar mortgage loan
held for its own account for investment, (2) shall be consistent with Accepted
Servicing Practices, (3) the Company shall determine prudently to be in the best
interest of Purchaser, and (4) is consistent with any related PMI Policy. In the
event that any payment due under any Mortgage Loan is not postponed pursuant to
Section 4.01 and remains delinquent for a period of 90 days or any other default
continues for a period of 90 days beyond the expiration of any grace or cure
period, the Company shall commence foreclosure proceedings, the Company shall
notify the Purchaser in writing of the Company's intention to do so, and the
Company shall not commence foreclosure proceedings if the Purchaser objects to
such action within five (5) Business Days of receiving such notice. In the event
the Purchaser objects to such foreclosure action, the Company shall not be
required to make Monthly Advances with respect to such Mortgage Loan, pursuant
to Section 5.03, and the Company's obligation to make such Monthly Advances
shall terminate on the 90th day referred to above. In such connection, the
Company shall from its own funds make all necessary and proper Servicing
Advances, provided, however, that the Company shall not be required to expend
its own funds in connection with any foreclosure or towards the restoration or
preservation of any Mortgaged Property, unless it shall determine (a) that such
preservation, restoration and/or foreclosure will increase the proceeds of
liquidation of the Mortgage Loan to Purchaser after reimbursement to itself for
such expenses and (b) that such expenses will be recoverable by it either
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Custodial Account pursuant to Section 4.05) or
through Insurance Proceeds (respecting which it shall have similar priority).
Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure, in
the event the Company has reasonable cause to believe that a Mortgaged Property
is contaminated by hazardous or toxic substances or wastes, or if the Purchaser
otherwise requests an environmental inspection or review of such Mortgaged
Property, such an inspection or review is to be conducted by a qualified
inspector. The cost for such inspection or review shall be borne by the
Purchaser. Upon completion of the inspection or review, the Company shall
promptly provide the Purchaser with a written report of the environmental
inspection.
34
After reviewing the environmental inspection report, the Purchaser
shall determine how the Company shall proceed with respect to the Mortgaged
Property. In the event (a) the environmental inspection report indicates that
the Mortgaged Property is contaminated by hazardous or toxic substances or
wastes and (b) the Purchaser directs the Company to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Company shall be reimbursed for
all reasonable costs associated with such foreclosure or acceptance of a deed in
lieu of foreclosure and any related environmental clean up costs, as applicable,
from the related Liquidation Proceeds, or if the Liquidation Proceeds are
insufficient to fully reimburse the Company, the Company shall be entitled to be
reimbursed from amounts in the Custodial Account pursuant to Section 4.05
hereof. In the event the Purchaser directs the Company not to proceed with
foreclosure or acceptance of a deed in lieu of foreclosure, the Company shall be
reimbursed for all Servicing Advances made with respect to the related Mortgaged
Property from the Custodial Account pursuant to Section 4.05 hereof.
Section 4.03 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on
all Mortgage Loans are paid in full, the Company shall proceed diligently to
collect all payments due under each of the Mortgage Loans when the same shall
become due and payable and shall take special care in ascertaining and
estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Loan and the Mortgaged Property, to the end
that the installments payable by the Mortgagors will be sufficient to pay such
charges as and when they become due and payable.
Section 4.04 Establishment of and Deposits to Custodial Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand accounts, titled "Xxxxx Fargo Bank, N.A.
in trust for the Purchaser and/or subsequent purchasers of Mortgage Loans, and
various Mortgagors - P & I." The Custodial Account shall be established with a
Qualified Depository. Any funds deposited in the Custodial Account shall at all
times be insured to the fullest extent allowed by applicable law. Funds
deposited in the Custodial Account may be drawn on by the Company in accordance
with Section 4.05. The creation of any Custodial Account shall be evidenced by a
certification in the case of an account established with the Company, or by a
letter agreement in the case of an account held by a depository other than the
Company each in the forms attached hereto as Exhibit D. A copy of such
certification or letter agreement shall be furnished to the Purchaser or any
subsequent purchaser upon request.
The Company shall deposit in the Custodial Account within one (1)
Business Day of the Company's receipt, and retain therein, the following
collections received by the Company and payments made by the Company after the
Cut-off Date, other than payments of principal and interest due on or before the
Cut-off Date, or received by the Company prior to the Cut-off Date but allocable
to a period subsequent thereto:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
35
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be
deposited pursuant to Section 4.10 (other than proceeds to be
held in the Escrow Account and applied to the restoration or
repair of the Mortgaged Property or released to the Mortgagor
in accordance with Section 4.14), Section 4.11 and Section
4.15;
(v) all Condemnation Proceeds which are not applied to the
restoration or repair of the Mortgaged Property or released to
the Mortgagor in accordance with Section 4.14;
(vi) any amount required to be deposited in the Custodial Account
pursuant to Section 4.01, 5.03, 6.01 or 6.02;
(vii) any amounts payable in connection with the repurchase of any
Mortgage Loan pursuant to Section 3.03 and all amounts
required to be deposited by the Company in connection with a
shortfall in principal amount of any Qualified Substitute
Mortgage Loan pursuant to Section 3.03;
(viii) with respect to each Principal Prepayment an amount (to be
paid by the Company out of its funds) which, when added to all
amounts allocable to interest received in connection with the
Principal Prepayment, equals one month's interest on the
amount of principal so prepaid at the Mortgage Loan Remittance
Rate;
(ix) any amounts required to be deposited by the Company pursuant
to Section 4.11 in connection with the deductible clause in
any blanket hazard insurance policy;
(x) any amounts received with respect to or related to any REO
Property and all REO Disposition Proceeds pursuant to Section
4.16; and
(xi) an amount from the Subsidy Account that when added to the
Mortgagor's payment will equal the full monthly amount due
under the related Mortgage Note.
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 late payment charges and
assumption fees, to the extent permitted by Section 6.01, need not be deposited
by the Company 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 Company and the Company shall be entitled to retain and withdraw
such interest from the Custodial Account pursuant to Section 4.05.
36
Section 4.05 Permitted Withdrawals From Custodial Account.
The Company shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
(i) to make payments to the Purchaser in the amounts and in the
manner provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances of the Company's
funds made pursuant to Section 5.03, the Company's right to
reimburse itself pursuant to this subclause (ii) being limited
to amounts received on the related Mortgage Loan which
represent late payments of principal and/or interest
respecting which any such advance was made, it being
understood that, in the case of any such reimbursement, the
Company's right thereto shall be prior to the rights of
Purchaser, except that, where the Company is required to
repurchase a Mortgage Loan pursuant to Section 3.03 or 6.02,
the Company's right to such reimbursement shall be subsequent
to the payment to the Purchaser of the Repurchase Price
pursuant to such sections and all other amounts required to be
paid to the Purchaser with respect to such Mortgage Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances, and
for any unpaid Servicing Fees, the Company's right to
reimburse itself pursuant to this subclause (iii) with respect
to any Mortgage Loan being limited to related Liquidation
Proceeds, Condemnation Proceeds, Insurance Proceeds and such
other amounts as may be collected by the Company from the
Mortgagor or otherwise relating to the Mortgage Loan, it being
understood that, in the case of any such reimbursement, the
Company's right thereto shall be prior to the rights of
Purchaser, except that where the Company is required to
repurchase a Mortgage Loan pursuant to Section 3.03 or 6.02,
in which case the Company's right to such reimbursement shall
be subsequent to the payment to the Purchaser of the
Repurchase Price pursuant to such sections and all other
amounts required to be paid to the Purchaser with respect to
such Mortgage Loan;
(iv) to pay itself interest on funds deposited in the Custodial
Account;
(v) to reimburse itself for expenses incurred and reimbursable to
it pursuant to Section 8.01;
(vi) to pay any amount required to be paid pursuant to Section 4.16
related to any REO Property, it being understood that, in the
case of any such expenditure or withdrawal related to a
particular REO Property, the amount of such expenditure or
withdrawal from the Custodial Account shall be limited to
amounts on deposit in the Custodial Account with respect to
the related REO Property;
(vii) to reimburse itself for any Servicing Advances or REO expenses
after liquidation of the Mortgaged Property not otherwise
reimbursed above;
37
(viii) to remove funds inadvertently placed in the Custodial Account
by the Company; and
(ix) to clear and terminate the Custodial Account upon the
termination of this Agreement.
In the event that the Custodial Account is interest bearing, on each
Remittance Date, the Company shall withdraw all funds from the Custodial Account
except for those amounts which, pursuant to Section 5.01, the Company is not
obligated to remit on such Remittance Date. The Company may use such withdrawn
funds only for the purposes described in this Section 4.05.
Section 4.06 Establishment of and Deposits to Escrow Account.
The Company shall 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,
"Xxxxx Fargo Bank, N.A., in trust for the Purchaser and/or subsequent purchasers
of Mortgage Loans, and various Mortgagors - T & I." The Escrow Accounts shall be
established with a Qualified Depository, in a manner which shall provide maximum
available insurance thereunder. Funds deposited in the Escrow Account may be
drawn on by the Company in accordance with Section 4.07. The creation of any
Escrow Account shall be evidenced by a certification in the case of an account
established with the Company, or by a letter agreement in the case of an account
held by a depository other than the Company each in the forms attached hereto as
Exhibit E. A copy of such certification or letter agreement shall be furnished
to the Purchaser or any subsequent purchaser, upon request.
The Company shall deposit in the Escrow Account or Accounts within one
(1) Business Day of Company's receipt, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any such
items as required under the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or Condemnation
Proceeds which are to be applied to the restoration or repair
of any Mortgaged Property.
The Company shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 4.07. The Company shall be entitled to retain any interest paid on funds
deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Company shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or
that interest paid thereon is insufficient for such purposes.
38
Section 4.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the
Company only:
(i) to effect timely payments of ground rents, taxes, assessments,
water rates, mortgage insurance premiums, condominium charges,
fire and hazard insurance premiums or other items constituting
Escrow Payments for the related Mortgage;
(ii) to reimburse the Company for any Servicing Advances made by
the Company pursuant to Section 4.08 with respect to a related
Mortgage Loan, but only from amounts received on the related
Mortgage Loan which represent late collections of Escrow
Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess of
the amounts required under the terms of the related Mortgage
Loan;
(iv) for transfer to the Custodial Account and application to
reduce the principal balance of the Mortgage Loan in
accordance with the terms of the related Mortgage and Mortgage
Note;
(v) for application to the restoration or repair of the Mortgaged
Property in accordance with the procedures outlined in Section
4.14;
(vi) to pay to the Company, or any Mortgagor to the extent required
by law, any interest paid on the funds deposited in the Escrow
Account;
(vii) to remove funds inadvertently placed in the Escrow Account by
the Company; and
(viii) to clear and terminate the Escrow Account on the termination
of this Agreement.
Section 4.08 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Company shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates,
sewer rents, and other charges which are or may become a lien upon the Mortgaged
Property and the status of PMI Policy premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date, employing for such purpose deposits
of the Mortgagor in the Escrow Account (excluding the payment of LPMI Policy
premiums, which are to be paid from the Company's own funds without
reimbursement), which shall have been estimated and accumulated by the Company
in amounts sufficient for such purposes, as allowed under the terms of the
Mortgage. The Company assumes full responsibility for the timely payment of all
such bills and shall effect timely payment of all such charges irrespective of
each Mortgagor's faithful performance in the payment of same or the making of
the Escrow Payments, and the Company shall make advances from its own funds to
effect such payments.
39
Section 4.09 Protection of Accounts.
The Company may transfer the Custodial Account or the Subsidy Account
or the Escrow Account to a different Qualified Depository from time to time and
shall provide the Purchaser with notice of such transfer. The Company shall bear
any expenses, losses or damages sustained by the Purchaser because the Custodial
Account and/or the Escrow Account are not demand deposit accounts.
Section 4.10 Maintenance of Hazard Insurance.
The Company shall cause to be maintained for each Mortgage Loan hazard
insurance such that all buildings upon the Mortgaged Property are insured by an
insurer acceptable to Xxxxxx Xxx or Xxxxxxx Mac against loss by fire, hazards of
extended coverage and such other hazards as are customary in the area where the
Mortgaged Property is located, in an amount which is at least equal to the
lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan and (ii) the greater of (a) the outstanding principal balance of
the Mortgage Loan and (b) an amount such that the proceeds thereof shall be
sufficient to prevent the Mortgagor or the loss payee from becoming a
co-insurer. In the event a hazard insurance policy shall be in danger of being
terminated, or in the event the insurer shall cease to be acceptable to Xxxxxx
Mae or Xxxxxxx Mac, the Company shall notify the Purchaser and the related
Mortgagor, and shall use its best efforts, as permitted by applicable law, to
obtain from another qualified insurer a replacement hazard insurance policy
substantially and materially similar in all respects to the original policy. In
no event, however, shall a Mortgage Loan be without a hazard insurance policy at
any time, subject only to Section 4.11 hereof.
If upon origination of the Mortgage Loan, the related Mortgaged
Property was located in an area identified by the Flood Emergency Management
Agency as having special flood hazards (and such flood insurance has been made
available) a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration is in effect with a generally
acceptable insurance carrier acceptable to Xxxxxx Mae or Xxxxxxx Mac in an
amount representing coverage equal to the lesser of (i) the minimum amount
required, under the terms of coverage, to compensate for any damage or loss on a
replacement cost basis (or the unpaid balance of the mortgage if replacement
cost coverage is not available for the type of building insured) and (ii) the
maximum amount of insurance which is available under the Flood Disaster
Protection Act of 1973, as amended. If at any time during the term of the
Mortgage Loan, the Company determines in accordance with the applicable law and
pursuant to the Xxxxxx Mae Guide, that the Mortgaged Property is located in a
special flood hazard area and is not covered by flood insurance meeting the
requirements of the Flood Disaster Protection Act of 1973, as amended, the
Company shall notify the related Mortgagor that they must obtain such flood
insurance coverage and if the Mortgagor fails to provide proof of such coverage
within forty-five (45) days of such notice, the Company shall force place the
required flood insurance on the Mortgagor's behalf.
If a Mortgage is secured by a unit in a condominium project, the
Company shall verify that the coverage required of the owner's association,
including hazard, flood, liability, and fidelity coverage, is being maintained
in accordance with then current Xxxxxx Xxx requirements, and secure from the
owner's association its agreement to notify the Company promptly of any change
in the insurance coverage or of any condemnation or casualty loss that may have
a material effect on the value of the Mortgaged Property as security.
40
In the event that any Purchaser or the Company shall determine that the
Mortgaged Property should be insured against loss or damage by hazards and risks
not covered by the insurance required to be maintained by the Mortgagor pursuant
to the terms of the Mortgage, the Company shall communicate and consult with the
Mortgagor with respect to the need for such insurance and bring to the
Mortgagor's attention the desirability of protection of the Mortgaged Property.
All policies required hereunder shall name the Company as loss payee
and shall be endorsed with standard or union mortgagee clauses, without
contribution, which shall provide for at least 30 days prior written notice of
any cancellation, reduction in amount or material change in coverage.
The Company shall not interfere with the Mortgagor's freedom of choice
in selecting either his insurance carrier or agent, provided, however, that the
Company shall not accept any such insurance policies from insurance companies
unless such companies are acceptable to Xxxxxx Mae and Xxxxxxx Mac and are
licensed to do business in the jurisdiction in which the Mortgaged Property is
located. The Company shall determine that such policies provide sufficient risk
coverage and amounts, that they insure the property owner, and that they
properly describe the property address.
Pursuant to Section 4.04, any amounts collected by the Company under
any such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property, or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Company's normal servicing procedures as
specified in Section 4.14) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.05.
Section 4.11 Maintenance of Mortgage Impairment Insurance.
In the event that the Company shall obtain and maintain a blanket
policy insuring against losses arising from fire and hazards covered under
extended coverage on all of the Mortgage Loans, then, to the extent such policy
provides coverage in an amount equal to the amount required pursuant to Section
4.10 and otherwise complies with all other requirements of Section 4.10, it
shall conclusively be deemed to have satisfied its obligations as set forth in
Section 4.10. The Company shall prepare and make any claims on the blanket
policy as deemed necessary by the Company in accordance with Accepted Servicing
Practices. Any amounts collected by the Company under any such policy relating
to a Mortgage Loan shall be deposited in the Custodial Account subject to
withdrawal pursuant to Section 4.05. Such policy may contain a deductible
clause, in which case, in the event that there shall not have been maintained on
the related Mortgaged Property a policy complying with Section 4.10, and there
shall have been a loss which would have been covered by such policy, the Company
shall deposit in the Custodial Account at the time of such loss the amount not
otherwise payable under the blanket policy because of such deductible clause,
such amount to be deposited from the Company's funds, without reimbursement
therefor. Upon request of the Purchaser, the Company shall cause to be delivered
to such Purchaser a certificate of insurance and a statement from the insurer
thereunder that such policy shall in no event be terminated or materially
modified without 30 days' prior written notice to such Purchaser.
41
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions
Insurance.
The Company shall maintain with responsible companies, at its own
expense, a blanket Fidelity Bond and an Errors and Omissions Insurance Policy,
with broad coverage on all officers, employees or other persons acting in any
capacity requiring such persons to handle funds, money, documents or papers
relating to the Mortgage Loans ("Company Employees"). Any such Fidelity Bond and
Errors and Omissions Insurance Policy shall be in the form of the Mortgage
Banker's Blanket Bond and shall protect and insure the Company against losses,
including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such Company Employees. Such Fidelity Bond and Errors and
Omissions Insurance Policy also shall protect and insure the Company against
losses in connection with the release or satisfaction of a Mortgage Loan without
having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 4.12 requiring such Fidelity Bond and Errors and
Omissions Insurance Policy shall diminish or relieve the Company from its duties
and obligations as set forth in this Agreement. The minimum coverage under any
such Fidelity Bond and Errors and Omissions Insurance Policy shall be acceptable
to Xxxxxx Mae or Xxxxxxx Mac. Upon the request of any Purchaser, the Company
shall cause to be delivered to such Purchaser a certificate of insurance for
such Fidelity Bond and Errors and Omissions Insurance Policy and a statement
from the surety and the insurer that such Fidelity Bond and Errors and Omissions
Insurance Policy shall in no event be terminated or materially modified without
30 days' prior written notice to the Purchaser.
Section 4.13 Inspections.
If any Mortgage Loan is more than 60 days delinquent, the Company shall
inspect the Mortgaged Property and shall conduct subsequent inspections in
accordance with Xxxxxx Mae or Accepted Servicing Practices or as may be required
by the primary mortgage guaranty insurer. The Company shall produce a report of
each such inspection upon written request by the Purchaser.
Section 4.14 Restoration of Mortgaged Property.
The Company need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Accepted Servicing Practices. For claims greater than
$15,000, at a minimum the Company shall comply with the following conditions in
connection with any such release of Insurance Proceeds or Condemnation Proceeds:
(i) the Company shall receive satisfactory independent
verification of completion of repairs and issuance of any
required approvals with respect thereto;
42
(ii) the Company shall take all steps necessary to preserve the
priority of the lien of the Mortgage, including, but not
limited to requiring waivers with respect to mechanics' and
materialmen's liens;
(iii) the Company shall verify that the Mortgage Loan is not in
default; and
(iv) pending repairs or restoration, the Company shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow
Account.
If the Purchaser is named as an additional loss payee, the Company is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.
Section 4.15 Maintenance of PMI Policy; Claims.
If a Mortgage Loan was originated with an original LTV of greater than
80%, the Company shall, without any cost to the Purchaser maintain or cause the
Mortgagor to maintain in full force and effect a PMI Policy insuring the portion
over 78% until terminated pursuant to the Homeowners Protection Act of 1998, 12
USC ss.4901, et seq. In the event that such PMI Policy shall be terminated other
than as required by law, the Company shall obtain from another Qualified Insurer
a comparable replacement policy, with a total coverage equal to the remaining
coverage of such terminated PMI Policy. If the insurer shall cease to be a
Qualified Insurer, the Company shall determine whether recoveries under the PMI
Policy are jeopardized for reasons related to the financial condition of such
insurer, it being understood that the Company shall in no event have any
responsibility or liability for any failure to recover under the PMI Policy for
such reason. If the Company determines that recoveries are so jeopardized, it
shall notify the Purchaser and the Mortgagor, if required, and obtain from
another Qualified Insurer a replacement insurance policy. The Company shall not
take any action which would result in noncoverage under any applicable PMI
Policy of any loss which, but for the actions of the Company would have been
covered thereunder. In connection with any assumption or substitution agreement
entered into or to be entered into pursuant to Section 6.01, the Company shall
promptly notify the insurer under the related PMI Policy, if any, of such
assumption or substitution of liability in accordance with the terms of such PMI
Policy and shall take all actions which may be required by such insurer as a
condition to the continuation of coverage under such PMI Policy. If such PMI
Policy is terminated as a result of such assumption or substitution of
liability, the Company shall obtain a replacement PMI Policy as provided above.
In connection with its activities as servicer, the Company agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any PMI Policy in a timely fashion in accordance with the terms of
such PMI Policy and, in this regard, to take such action as shall be necessary
to permit recovery under any PMI Policy respecting a defaulted Mortgage Loan.
Pursuant to Section 4.04, any amounts collected by the Company under any PMI
Policy shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 4.05.
Any premiums payable on LPMI Policies will be paid from the Company's
own funds without reimbursement.
43
Section 4.16 Title, Management and Disposition of REO Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser or the Purchaser's designee, or in
the event the Purchaser is not authorized or permitted to hold title to real
property in the state where the REO Property is located, or would be adversely
affected under the "doing business" or tax laws of such state by so holding
title, the deed or certificate of sale shall be taken in the name of such Person
or Persons as shall be consistent with an Opinion of Counsel obtained by the
Company from any attorney duly licensed to practice law in the state where the
REO Property is located. The Person or Persons holding such title other than the
Purchaser shall acknowledge in writing that such title is being held as nominee
for the Purchaser.
The Company shall manage, conserve, protect and operate each REO
Property for the Purchaser solely for the purpose of its prompt disposition and
sale. The Company, either itself or through an agent selected by the Company,
shall manage, conserve, protect and operate the REO Property in the same manner
that it manages, conserves, protects and operates other foreclosed property for
its own account, and in the same manner that similar property in the same
locality as the REO Property is managed. The Company shall attempt to sell the
same (and may temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the Company
deems to be in the best interest of the Purchaser.
The Company shall use its best efforts to dispose of the REO Property
as soon as possible and shall sell such REO Property in any event prior to the
close of the third calendar year beginning after the year in which title has
been taken to such REO Property, unless(i) a REMIC election has not been made
with respect to the arrangement under which the Mortgage Loans and the REO
Property are held, and (ii) the Company determines that a longer period is
necessary for the orderly liquidation of such REO Property. If a period longer
than three years is permitted under the foregoing sentence and is necessary to
sell any REO Property, (i) the Company shall report monthly to the Purchaser as
to the progress being made in selling such REO Property and (ii) if no REMIC
election has been made and if a purchase money mortgage is taken in connection
with such sale, such purchase money mortgage shall name the Company as
mortgagee, and such purchase money mortgage shall not be held pursuant to this
Agreement, but instead a separate participation agreement among the Company and
Purchaser shall be entered into with respect to such purchase money mortgage.
The Company shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
44
The disposition of REO Property shall be carried out by the Company at
such price, and upon such terms and conditions, as the Company deems to be in
the best interests of the Purchaser. The proceeds of sale of the REO Property
shall be promptly deposited in the Custodial Account. As soon as practical
thereafter the expenses of such sale shall be paid and the Company shall
reimburse itself for any related unreimbursed Servicing Advances, unpaid
Servicing Fees and unreimbursed advances made pursuant to Section 5.03. On the
Remittance Date immediately following the Principal Prepayment Period in which
such sale proceeds are received the net cash proceeds of such sale remaining in
the Custodial Account shall be distributed to the Purchaser.
The Company shall withdraw from the Custodial Account in accordance
with Section 4.05, the funds necessary for the proper operation management and
maintenance of the REO Property, including the cost of maintaining any hazard
insurance pursuant to Section 4.10 and the fees of any managing agent of the
Company, or the Company itself. The Company shall make monthly distributions on
each Remittance Date to the Purchaser of the net cash flow from the REO Property
(which shall equal the revenues from such REO Property net of the expenses
described in this Section 4.16 and of any reserves reasonably required from time
to time to be maintained to satisfy anticipated liabilities for such expenses).
Section 4.17 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 5.02, the
Company shall furnish to the Purchaser on or before the Remittance Date each
month a statement with respect to any REO Property covering the operation of
such REO Property for the previous month and the Company's efforts in connection
with the sale of such REO Property and any rental of such REO Property
incidental to the sale thereof for the previous month. That statement shall be
accompanied by such other information as the Purchaser shall reasonably request.
Section 4.18 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed in lieu of foreclosure, the Company
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged
Property.
Following the foreclosure sale or abandonment of any Mortgaged
Property, the Company shall report such foreclosure or abandonment as required
pursuant to Section 6050J of the Code. The Company shall file information
reports with respect to the receipt of mortgage interest received in a trade or
business and information returns relating to cancellation of indebtedness income
with respect to any Mortgaged Property as required by the Code. Such reports
shall be in form and substance sufficient to meet the reporting requirements
imposed by the Code.
Section 4.20 Notification of Adjustments.
With respect to each adjustable rate Mortgage Loan, the Company shall
adjust the Mortgage Interest Rate on the related Interest Rate Adjustment Date
in compliance with the requirements of applicable law and the related Mortgage
and Mortgage Note. The Company shall execute and deliver any and all necessary
notices required under applicable law and the terms of the related Mortgage Note
and Mortgage regarding the Mortgage Interest Rate adjustments. Upon the
discovery by the Company or the receipt of notice from the Purchaser that the
Company has failed to adjust a Mortgage Interest Rate in accordance with the
terms of the related Mortgage Note, the Company shall immediately deposit in the
Custodial Account from its own funds the amount of any interest loss or deferral
caused the Purchaser thereby.
45
Section 4.21 Confidentiality/Protection of Customer Information.
The Company shall keep confidential and shall not divulge to any party,
without the Purchaser's prior written consent, the price paid by the Purchaser
for the Mortgage Loans, except to the extent that it is reasonable and necessary
for the Company to do so in working with legal counsel, auditors, taxing
authorities or other governmental agencies. Each party agrees that it shall
comply with all applicable laws and regulations regarding the privacy or
security of Customer Information and shall maintain appropriate administrative,
technical and physical safeguards to protect the security, confidentiality and
integrity of Customer Information, including maintaining security measures
designed to meet the Interagency Guidelines Establishing Standards for
Safeguarding Customer Information, 66 Fed. Reg. 8616, and the rules promulgated
thereunder, if applicable. For purposes of this Section, "Customer Information"
means any personal information concerning a Mortgagor or any other Person who
grants security under any mortgage, deed of trust or other security instrument
or equivalent document that is disclosed by one party to this Agreement to the
other.
Section 4.22 Fair Credit Reporting Act
The Company, in its capacity as servicer for each Mortgage Loan, agrees
to fully furnish, in accordance with the Fair Credit Reporting Act and its
implementing regulations, accurate and complete information (e.g., favorable and
unfavorable) on its borrower credit files to Equifax, Experian and Trans Union
Credit Information Company (three of the credit repositories), on a monthly
basis.
Section 4.23 Establishment of and Deposits to Subsidy Account.
(a) The Company shall segregate and hold all Subsidy Funds collected
and received pursuant to the Subsidy Loans separate and apart from any of its
own funds and general assets and shall establish and maintain one or more
Subsidy Accounts, in the form of time deposit or demand accounts, titled "Xxxxx
Fargo Bank, N.A., in trust for the Purchaser, its successors or assigns, and/or
subsequent purchasers of Residential Mortgage Loans, and various Mortgagors."
The Subsidy Account shall be an eligible deposit account established with an
eligible institution.
(b) The Company shall, from time to time, withdraw funds from the
Subsidy Account for the following purposes:
46
(i) to deposit in the Custodial Account in the amounts
and in the manner provided for in Section 4.04(xi);
(ii) to transfer funds to another eligible institution in
accordance with Section 4.09 hereof;
(iii) to withdraw funds deposited in error; and
(iv) to clear and terminate the Subsidy Account upon the
termination of this Agreement.
(c) Notwithstanding anything to the contrary elsewhere in this
Agreement, the Company may employ the Escrow Account as the Subsidy Account to
the extent that the Company can separately identify any Subsidy Funds deposited
therein.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances.
On each Remittance Date the Company shall remit by wire transfer of
immediately available funds to the Purchaser (a) all amounts deposited in the
Custodial Account as of the close of business on the Determination Date (net of
charges against or withdrawals from the Custodial Account pursuant to Section
4.05), plus (b) all amounts, if any, which the Company is obligated to
distribute pursuant to Section 5.03, minus (c) any amounts attributable to
Principal Prepayments received after the applicable Principal Prepayment Period
which amounts shall be remitted on the following Remittance Date, together with
any additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayment in accordance with Section 4.04(viii);
minus (d) any amounts attributable to Monthly Payments collected but due on a
Due Date or Dates subsequent to the first day of the month of the Remittance
Date, and minus (e) any amounts attributable to Buydown Funds being held in the
Custodial Account, which amounts shall be remitted on the Remittance Date next
succeeding the Due Period for such amounts.
With respect to any remittance received by the Purchaser after the
second Business Day following the Business Day on which such payment was due,
the Company shall pay to the Purchaser interest on any such late payment at an
annual rate equal to the Prime Rate, adjusted as of the date of each change,
plus three percentage points, but in no event greater than the maximum amount
permitted by applicable law. Such interest shall be deposited in the Custodial
Account by the Company on the date such late payment is made and shall cover the
period commencing with the day following such second Business Day and ending
with the Business Day on which such payment is made, both inclusive. Such
interest shall be remitted along with the distribution payable on the next
succeeding Remittance Date. The payment by the Company of any such interest
shall not be deemed an extension of time for payment or a waiver of any Event of
Default by the Company.
47
Section 5.02 Statements to Purchaser.
Not later than the tenth calendar day of the month, the Company shall
furnish in an agreed upon electronic format to the Purchaser or its designee, a
monthly, loan level, scheduled remittance advice, trial balance report and
payment and payoff activity detail, as to the remittance period ending on the
last day of the preceding month.
Section 5.03 Monthly Advances by Company.
On the Business Day immediately preceding each Remittance Date, the
Company shall deposit in the Custodial Account from its own funds or from
amounts held for future distribution an amount equal to all Monthly Payments
(with interest adjusted to the Mortgage Loan Remittance Rate) which were due on
the Mortgage Loans during the applicable Due Period and which were delinquent at
the close of business on the immediately preceding Determination Date or which
were deferred pursuant to Section 4.01. Any amounts held for future distribution
and so used shall be replaced by the Company by deposit in the Custodial Account
on or before any future Remittance Date if funds in the Custodial Account on
such Remittance Date shall be less than payments to the Purchaser required to be
made on such Remittance Date. The Company's obligation to make such Monthly
Advances as to any Mortgage Loan will continue through the last Monthly Payment
due prior to the payment in full of the Mortgage Loan, or through the last
Remittance Date prior to the Remittance Date for the distribution of all
Liquidation Proceeds and other payments or recoveries (including REO Disposition
Proceeds, Insurance Proceeds and Condemnation Proceeds) with respect to the
Mortgage Loan; provided, however, that such obligation shall cease if the
Company determines, in its sole reasonable opinion, that advances with respect
to such Mortgage Loan are non-recoverable by the Company from Liquidation
Proceeds, REO Disposition Proceeds, Insurance Proceeds, Condemnation Proceeds,
or otherwise with respect to a particular Mortgage Loan. In the event that the
Company determines that any such advances are non-recoverable, the Company shall
provide the Purchaser with a certificate signed by two officers of the Company
evidencing such determination.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Transfers of Mortgaged Property.
The Company shall use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note and to deny assumption by
the person to whom the Mortgaged Property has been or is about to be sold
whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains liable on the Mortgage and the Mortgage Note. When the
Mortgaged Property has been conveyed by the Mortgagor, the Company shall, to the
extent it has knowledge of such conveyance, exercise its rights to accelerate
the maturity of such Mortgage Loan under the "due-on-sale" clause applicable
thereto, provided, however, that the Company shall not exercise such rights if
prohibited by law from doing so or if the exercise of such rights would impair
or threaten to impair any recovery under the related PMI Policy, if any.
48
If the Company reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, the Company shall enter into (i) an
assumption and modification agreement with the person to whom such property has
been conveyed, pursuant to which such person becomes liable under the Mortgage
Note and the original Mortgagor remains liable thereon or (ii) in the event the
Company is unable under applicable law to require that the original Mortgagor
remain liable under the Mortgage Note and the Company has the prior consent of
the primary mortgage guaranty insurer, a substitution of liability agreement
with the purchaser of the Mortgaged Property pursuant to which the original
Mortgagor is released from liability and the purchaser of the Mortgaged Property
is substituted as Mortgagor and becomes liable under the Mortgage Note. If an
assumption fee is collected by the Company for entering into an assumption
agreement the fee will be retained by the Company as additional servicing
compensation. In connection with any such assumption, neither the Mortgage
Interest Rate borne by the related Mortgage Note, the term of the Mortgage Loan,
the outstanding principal amount of the Mortgage Loan nor any other material
terms shall be changed without Purchaser's consent.
To the extent that any Mortgage Loan is assumable, the Company shall
inquire diligently into the credit worthiness of the proposed transferee, and
shall use the underwriting criteria for approving the credit of the proposed
transferee which are used with respect to underwriting mortgage loans of the
same type as the Mortgage Loan. If the creditworthiness of the proposed
transferee does not meet such underwriting criteria, the Company diligently
shall, to the extent permitted by the Mortgage or the Mortgage Note and by
applicable law, accelerate the maturity of the Mortgage Loan.
Section 6.02 Satisfaction of Mortgages and Release of Retained Mortgage
Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Company of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Company shall notify the Purchaser in the
Monthly Remittance Advice as provided in Section 5.02, and may request the
release of any applicable Mortgage Loan Documents.
If the Company satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage or should
the Company otherwise prejudice any rights the Purchaser may have under the
mortgage instruments, upon written demand of the Purchaser, the Company shall
repurchase the related Mortgage Loan at the Repurchase Price by deposit thereof
in the Custodial Account within 2 Business Days of receipt of such demand by the
Purchaser. The Company shall maintain the Fidelity Bond and Errors and Omissions
Insurance Policy as provided for in Section 4.12 insuring the Company against
any loss it may sustain with respect to any Mortgage Loan not satisfied in
accordance with the procedures set forth herein.
49
Section 6.03 Servicing Compensation.
As compensation for its services hereunder, the Company shall be
entitled to retain from the interest payment the amount of its Servicing Fee.
The Servicing Fee shall be payable monthly and shall be computed on the basis of
the same unpaid principal balance and for the period respecting which any
related interest payment on a Mortgage Loan is received. The obligation of the
Purchaser to pay the Servicing Fee is limited to, and payable solely from, the
interest portion of such Monthly Payments.
Additional servicing compensation in the form of assumption fees, to
the extent provided in Section 6.01, and late payment charges shall be retained
by the Company to the extent not required to be deposited in the Custodial
Account. The Company shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement thereof except as specifically provided for herein.
Section 6.04 Annual Statements as to Compliance.
The Company shall deliver to the Purchaser, on or before February 28,
each year beginning February 28, 2006, an Officer's Certificate, stating that
(i) a review of the activities of the Company during the preceding calendar year
and of performance under this Agreement or similar agreements has been made
under such officer's supervision, and (ii) to the best of such officer's
knowledge, based on such review, the Company has fulfilled all its obligations
under this Agreement throughout such year, or, if there has been a default in
the fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof and the action being taken by the
Company to cure such default.
Section 6.05 Annual Independent Public Accountants' Servicing Report.
On or before February 28, of each year beginning February 28, 2006, the
Company, at its expense, shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to each Purchaser to the effect that such firm has examined
certain documents and records relating to the servicing of the mortgage loans
similar in nature and that such firm is of the opinion that the provisions of
this or similar Agreements have been complied with, and that, on the basis of
such examination conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers, nothing has come to their attention
which would indicate that such servicing has not been conducted in compliance
therewith, except for (i) such exceptions as such firm shall believe to be
immaterial, and (ii) such other exceptions as shall be set forth in such
statement. By providing Purchaser a copy of a Uniform Single Attestation Program
Report from their independent public accountant's on an annual basis, Company
shall be considered to have fulfilled its obligations under this Section 6.05.
Section 6.06 Right to Examine Company Records.
The Purchaser, or its designee, shall have the right to examine and
audit any and all of the books, records, or other information of the Company,
whether held by the Company or by another on its behalf, with respect to or
concerning this Agreement or the Mortgage Loans, during business hours or at
such other times as may be reasonable under applicable circumstances, upon
reasonable advance notice. The Purchaser shall pay its own expenses associated
with such examination.
50
Section 6.07 Compliance with REMIC Provisions.
If a REMIC election has been made with respect to the arrangement under
which the Mortgage Loans and REO Property are held, the Company shall not take
any action, cause the REMIC to take any action or fail to take any action that,
under the REMIC Provisions, if taken or not taken, as the case may be, could (i)
endanger the status of the REMIC as a REMIC or (ii) result in the imposition of
a tax upon the REMIC (including but not limited to the tax on "prohibited
transactions" as defined Section 860F(a)(2) of the Code and the tax on
"contributions" to a REMIC set forth in Section 860G(d) of the Code) unless the
Company has received an Opinion of Counsel (at the expense of the party seeking
to take such action) to the effect that the contemplated action will not
endanger such REMIC status or result in the imposition of any such tax.
ARTICLE VII
COMPANY TO COOPERATE
Section 7.01 Provision of Information.
During the term of this Agreement, the Company shall furnish to the
Purchaser such periodic, special, or other reports or information, and copies or
originals of any documents contained in the Servicing File for each Mortgage
Loan provided for herein. All other special reports or information not provided
for herein as shall be necessary, reasonable, or appropriate with respect to the
Purchaser or any regulatory agency will be provided at the Purchaser's expense.
All such reports, documents or information shall be provided by and in
accordance with all reasonable instructions and directions which the Purchaser
may give.
The Company shall execute and deliver all such instruments and take all
such action as the Purchaser may reasonably request from time to time, in order
to effectuate the purposes and to carry out the terms of this Agreement.
Section 7.02 Financial Statements; Servicing Facility.
In connection with marketing the Mortgage Loans, the Purchaser may make
available to a prospective Purchaser a Consolidated Statement of Operations of
the Company for the most recently completed two fiscal years for which such a
statement is available, as well as a Consolidated Statement of Condition at the
end of the last two fiscal years covered by such Consolidated Statement of
Operations. The Company, upon request, also shall make available any comparable
interim statements to the extent any such statements have been prepared by or on
behalf of the Company (and are available upon request to members or stockholders
of the Company or to the public at large).
51
The Company also shall make available to Purchaser or prospective
Purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions respecting recent developments affecting the Company or the
financial statements of the Company, and to permit any prospective purchaser to
inspect the Company's servicing facilities for the purpose of satisfying such
prospective purchaser that the Company has the ability to service the Mortgage
Loans as provided in this Agreement.
ARTICLE VIII
THE COMPANY
Section 8.01 Indemnification; Third Party Claims.
The Company shall indemnify the Purchaser and hold it harmless against
any and all claims, losses, damages, penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs, judgments, and any other costs, fees
and expenses that the Purchaser may sustain in any way related to the failure of
the Company to perform its duties, comply with its obligations and covenants
under the terms of this Agreement and service the Mortgage Loans all in strict
compliance with the terms of this Agreement. The Company immediately shall
notify the Purchaser if a claim is made by a third party with respect to this
Agreement or the Mortgage Loans, assume (with the prior written consent of the
Purchaser) the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or the Purchaser in respect
of such claim. The Company shall follow any written instructions received from
the Purchaser in connection with such claim. The Purchaser promptly shall
reimburse the Company for all amounts advanced by it pursuant to the preceding
sentence except when the claim is in any way related to the Company's
indemnification pursuant to Section 3.03, or the failure of the Company to
service and administer the Mortgage Loans in strict compliance with the terms of
this Agreement.
Section 8.02 Merger or Consolidation of the Company.
The Company shall keep in full effect its existence, rights and
franchises and shall obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement or any of the Mortgage
Loans and to perform its duties under this Agreement.
Any Person into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Company shall be a party, or any Person succeeding to the business of the
Company, shall be the successor of the Company hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, provided, however, that
the successor or surviving Person shall be an institution (i) having a net worth
of not less than $15,000,000 and (ii) which is a Xxxxxx Xxx/Xxxxxxx Mac-approved
company in good standing. Furthermore, in the event the Company transfers or
otherwise disposes of all or substantially all of its assets to an affiliate of
the Company, such affiliate shall satisfy the condition above, and shall also be
fully liable to the Purchaser for all of the Company's obligations and
liabilities hereunder.
52
Section 8.03 Limitation on Liability of Company and Others.
Neither the Company nor any of the directors, officers, employees or
agents of the Company shall be under any liability to the Purchaser for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment, provided, however, that
this provision shall not protect the Company or any such Person against any
breach of warranties or representations made herein, or failure to perform its
obligations in strict compliance with any standard of care set forth in this
Agreement or any other liability which would otherwise be imposed under this
Agreement. The Company and any director, officer, employee or agent of the
Company may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Company shall not be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement and which in its opinion may involve it
in any expense or liability, provided, however, that the Company may, with the
consent of the Purchaser, undertake any such action which it may deem necessary
or desirable in respect to this Agreement and the rights and duties of the
parties hereto. In such event, the Company shall be entitled to reimbursement
from the Purchaser of the reasonable legal expenses and costs of such action.
Section 8.04 Limitation on Resignation and Assignment by Company.
The Purchaser has entered into this Agreement with the Company and
subsequent Purchaser will purchase the Mortgage Loans in reliance upon the
independent status of the Company, and the representations as to the adequacy of
its servicing facilities, personnel, records and procedures, its integrity,
reputation and financial standing, and the continuance thereof. Therefore, the
Company shall neither assign this Agreement or the servicing rights hereunder or
sell or otherwise dispose of all of its property or assets without the prior
written consent of the Purchaser, which consent shall not be unreasonably
withheld by the Purchaser, with the understanding that any successor servicer
meet the requirements of this Agreement and be acceptable to the Rating Agencies
and trustee upon reconstitution.
The Company shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Company and the Purchaser or upon
the determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Company. Any such
determination permitting the resignation of the Company shall be evidenced by an
Opinion of Counsel to such effect delivered to the Purchaser which Opinion of
Counsel shall be in form and substance acceptable to the Purchaser. No such
resignation shall become effective until a successor shall have assumed the
Company's responsibilities and obligations hereunder in the manner provided in
Section 12.01.
Without in any way limiting the generality of this Section 8.04, in the
event that the Company either shall assign this Agreement or the servicing
responsibilities hereunder or sell or otherwise dispose of all or substantially
all of its property or assets, without the prior written consent of the
Purchaser, then the Purchaser shall have the right to terminate this Agreement
upon notice given as set forth in Section 10.01, without any payment of any
penalty or damages and without any liability whatsoever to the Purchaser or any
third party.
53
ARTICLE IX
PASS-THROUGH TRANSFERS
Section 9.01 Removal of Mortgage Loans from Inclusion Under this Agreement
Upon the Pass-Through
The Purchaser and the Company agree that with respect to some or all of
the Mortgage Loans, the Purchaser, at its sole option, may effect Whole Loan
Transfers, Agency Sales or Pass-Through Transfers, retaining the Company as the
servicer thereof or subservicer if a master servicer is employed, or as
applicable the "seller/servicer." On the Reconstitution Date, the Mortgage Loans
transferred may cease to be covered by this Agreement; provided, however, that,
in the event that any Mortgage Loan transferred pursuant to this Section 9 is
rejected by the transferee, the Company shall continue to service such rejected
Mortgage Loan on behalf of the Purchaser in accordance with the terms and
provisions of this Agreement.
The Company shall cooperate with the Purchaser in connection with each
Whole Loan Transfer, Agency Sale or Pass-Through Transfer in accordance with
this Section 9. In connection therewith the Company shall:
(a) make all representations and warranties with respect to the
Mortgage Loans as of the Closing Date and with respect to the
Company itself as of the closing date of each Whole Loan
Transfer, Agency Sale or Pass-Through Transfer;
(b) negotiate in good faith and execute any seller/servicer
agreements or pooling and servicing agreements required to
effectuate the foregoing provided such agreements create no
greater obligation or cost on the part of the Company than
otherwise set forth in this Agreement;
(c) with respect to any Mortgage Loans that are subject to a
Pass-Through Transfer or other securitization (a
"Securitization") in which the filing of a Xxxxxxxx-Xxxxx
certification directly with the Securities and Exchange
Commission is required, by February 28th of each year or in
connection with any additional Xxxxxxxx-Xxxxx certification
required to be filed, upon thirty (30) days written request,
an officer of the Company shall execute and deliver a Company
Certification substantially in the form attached hereto as
Exhibit H, to the entity filing the Xxxxxxxx-Xxxxx
certification directly with the Securities and Exchange
Commission (such as the Purchaser, any master servicer, any
trustee or any depositor) for the benefit of such entity and
such entity's affiliates and the officers, directors and
agents of such entity and such entity's affiliates, and shall
indemnify such entity or persons arising out of any breach of
the Company's obligations or representations relating thereto
as provided in such Company Certification;
54
(d) provide as applicable:
(i) any and all information and appropriate verification
of information which may be reasonably available to
the Company, whether through letters of its auditors
and counsel or otherwise, as the Purchaser shall
request;
(ii) such additional representations, warranties,
covenants, opinions of counsel, letters from
auditors, and certificates of public officials or
officers of the Company as are reasonably believed
necessary by the trustee, any rating agency,
guarantor or the Purchaser, as the case may be, in
connection with such Whole Loan Transfers, Agency
Sales or Pass-Through Transfers. The Purchaser shall
pay all third party costs associated with the
preparation of such information. The Company shall
execute any seller/servicer agreements required
within a reasonable period of time after receipt of
such seller/servicer agreements which time shall be
sufficient for the Seller and Seller's counsel to
review such seller/servicer agreements. Under this
Agreement, the Company shall retain a servicing fee
at a rate per annum equal to no less than 0.250% per
Mortgage Loan.
(e) indemnify the Purchaser for any material misstatements
contained in the information provided pursuant to (d) above;
provided, that the Purchaser shall provide indemnification to
the Company, its successors or assigns, with respect to any
material misstatements or omissions contained in any
information (other than the information provided by the
Company pursuant to (d) above) the Purchaser may disclose in
any securitization offering materials; and
(f) in the event the Mortgage Loans become subject to a Xxxxxxx
Mac securitization, negotiate in good faith the terms of such
reconstitution agreements as may be required.
In the event the Purchaser has elected to have the Company hold record
title to the Mortgages, prior to the Reconstitution Date the Company shall
prepare an Assignment of Mortgage in blank or to the trustee from the Company
acceptable to the trustee for each Mortgage Loan that is part of the Whole Loan
Transfers, Agency Sales or Pass-Through Transfers. The Purchaser shall pay all
preparation and recording costs associated therewith, unless the Assignment of
Mortgage is the initial Assignment of Mortgage delivered pursuant to Section
2.03. The Company shall execute each Assignment of Mortgage, track such
Assignments of Mortgage to ensure they have been recorded and deliver them as
required by the trustee upon the Company's receipt thereof. Additionally, the
Company shall prepare and execute, at the direction of the Purchaser, any note
endorsements in connection with any and all seller/servicer agreements. If
required at any time by the Rating Agencies, Purchaser or successor purchaser in
connection with any Whole Loan Transfer, Agency Sale or Pass-Through Transfer,
the Company shall deliver such additional documents from its Retained Mortgage
File within ten (10) Business Days to the Custodian, successor purchaser or
other designee of the Purchaser as the Rating Agencies, Purchaser or successor
purchaser may require.
55
Notwithstanding any provisions of this Agreement to the contrary, all
Mortgage Loans sold or transferred to an Agency, shall be serviced in accordance
with the guidelines of the respective Agency. All Mortgage Loans not sold or
transferred pursuant to Whole Loan Transfers, Agency Sales or Pass-Through
Transfers shall remain subject to this Agreement and shall continue to be
serviced in accordance with the terms of this Agreement and with respect thereto
this Agreement shall remain in full force and effect.
ARTICLE X
DEFAULT
Section 10.01 Events of Default.
Each of the following shall constitute an Event of Default on the part
of the Company:
(i) any failure by the Company to remit to the Purchaser any
payment required to be made under the terms of this Agreement
which continues unremedied for a period of five days after the
date upon which written notice of such failure, requiring the
same to be remedied, shall have been given to the Company by
the Purchaser; or
(ii) failure by the Company duly to observe or perform in any
material respect any other of the covenants or agreements on
the part of the Company set forth in this Agreement or in the
Custodial Agreement which continues unremedied for a period of
30 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been
given to the Company by the Purchaser or by the Custodian; or
(iii) failure by the Company to maintain its license to do business
in any jurisdiction where the Mortgaged Property is located if
such license is required; or
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, including bankruptcy, marshaling of
assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been
entered against the Company and such degree or order shall
have remained in force undischarged or unstayed for a period
of 60 days; or
(v) the Company shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of
debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Company or of or relating to
all or substantially all of its property; or
56
(vi) the Company shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take
advantage of any applicable insolvency, bankruptcy or
reorganization statute, make an assignment for the benefit of
its creditors, voluntarily suspend payment of its obligations
or cease its normal business operations for three Business
Days; or
(vii) the Company ceases to meet the qualifications of a Xxxxxx
Mae/Xxxxxxx Mac servicer; or
(viii) the Company attempts to assign its right to servicing
compensation hereunder or to assign this Agreement or the
servicing responsibilities hereunder in violation of Section
8.04.
In each and every such case, so long as an Event of Default shall not
have been remedied, in addition to whatever rights the Purchaser may have at law
or equity to damages, including injunctive relief and specific performance, the
Purchaser, by notice in writing to the Company, may terminate all the rights and
obligations of the Company under this Agreement and in and to the Mortgage Loans
and the proceeds thereof.
Upon receipt by the Company of such written notice, all authority and
power of the Company under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in the successor appointed
pursuant to Section 12.01. Upon written request from any Purchaser, the Company
shall prepare, execute and deliver to the successor entity designated by the
Purchaser any and all documents and other instruments, place in such successor's
possession all Retained Mortgage Files, and do or cause to be done all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, including but not limited to the transfer and endorsement or
assignment of the Mortgage Loans and related documents, at the Company's sole
expense. The Company shall cooperate with the Purchaser and such successor in
effecting the termination of the Company's responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Company to the Custodial Account or Subsidy Account or Escrow Account or
thereafter received with respect to the Mortgage Loans.
Section 10.02 Waiver of Defaults.
By a written notice, the Purchaser may waive any default by the Company
in the performance of its obligations hereunder and its consequences. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
57
ARTICLE XI
TERMINATION
Section 11.01 Termination.
This Agreement shall terminate upon either: (i) the later of the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or the disposition of any REO Property with respect to the last
Mortgage Loan and the remittance of all funds due hereunder; or (ii) mutual
consent of the Company and the Purchaser in writing.
Section 11.02 Termination Without Cause.
The Purchaser may terminate, at its sole option, any rights the Company
may have hereunder, without cause as provided in this Section 11.02. Any such
notice of termination shall be in writing and delivered to the Company by
registered mail as provided in Section 12.05.
The Company shall be entitled to receive, as such liquidated damages,
upon the transfer of the servicing rights, an amount equal to 2.75% of the
aggregate outstanding principal amount of the Mortgage Loans as of the
termination date paid by the Purchaser to the Company with respect to all of the
Mortgage Loans. In the event that it is terminated pursuant to this Section
11.02, the Company shall be required, at the expense of the Purchaser, to
deliver to the Custodian the entire contents of the Retained Mortgage File, to
the extent such contents were not previously delivered to the Custodian pursuant
to this Agreement or the Custodial Agreement.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Company.
Prior to termination of the Company's responsibilities and duties under
this Agreement pursuant to Sections 8.04, 10.01, 11.01 (ii) or pursuant to
Section 11.02, the Purchaser shall, (i) succeed to and assume all of the
Company's responsibilities, rights, duties and obligations under this Agreement,
or (ii) appoint a successor having the characteristics set forth in Section 8.02
and which shall succeed to all rights and assume all of the responsibilities,
duties and liabilities of the Company under this Agreement prior to the
termination of Company's responsibilities, duties and liabilities under this
Agreement. In connection with such appointment and assumption, the Purchaser may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree. In the event that the
Company's duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned sections, the Company shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with the
same degree of diligence and prudence which it is obligated to exercise under
this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor. The resignation or
removal of the Company pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 12.01
and shall in no event relieve the Company of the representations and warranties
made pursuant to Sections 3.01 and 3.02 and the remedies available to the
Purchaser under Section 3.03, it being understood and agreed that the provisions
of such Sections 3.01, 3.02, 3.03 and 8.01 shall be applicable to the Company
notwithstanding any such sale, assignment, resignation or termination of the
Company, or the termination of this Agreement.
58
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Company and to the Purchaser an instrument accepting such
appointment, wherein the successor shall make the representations and warranties
set forth in Section 3.01, except for subsections (h) with respect to the sale
of the Mortgage Loans and subsections (i) and (k) thereof, whereupon such
successor shall become fully vested with all the rights, powers, duties,
responsibilities, obligations and liabilities of the Company, with like effect
as if originally named as a party to this Agreement. Any termination or
resignation of the Company or termination of this Agreement pursuant to Section
8.04, 10.01, 11.01 or 11.02 shall not affect any claims that any Purchaser may
have against the Company arising out of the Company's actions or failure to act
prior to any such termination or resignation.
The Company shall deliver promptly to the successor servicer the funds
in the Custodial Account, Subsidy Account and Escrow Account and all Retained
Mortgage Files and related documents and statements held by it hereunder and the
Company shall account for all funds and shall execute and deliver such
instruments and do such other things as may reasonably be required to more fully
and definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Company.
Upon a successor's acceptance of appointment as such, the Company shall
notify by mail the Purchaser of such appointment in accordance with the
procedures set forth in Section 12.05.
Section 12.02 Amendment.
This Agreement may be amended from time to time by written agreement
signed by the Company and the Purchaser.
Section 12.03 Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
Each of the Company and the Purchaser hereby knowingly, voluntarily and
intentionally waives any and all rights it may have to a trial by jury in
respect of any litigation based on, or arising out of, under, or in connection
with, this Agreement, or any other documents and instruments executed in
connection herewith, or any course of conduct, course of dealing, statements
(whether oral or written), or actions of the Company or the Purchaser. This
provision is a material inducement for the Purchaser to enter into this
Agreement
59
Section 12.04 Duration of Agreement.
This Agreement shall continue in existence and effect until terminated
as herein provided. This Agreement shall continue notwithstanding transfers of
the Mortgage Loans by the Purchaser.
Section 12.05 Notices.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered at or mailed
by registered mail, postage prepaid, addressed as follows:
(i) if to the Company with respect to servicing issues:
Xxxxx Fargo Bank, N.A.
1 Home Campus
Xxx Xxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxx, MAC X2401-042
if to the Company with respect to all other issues:
Xxxxx Fargo Bank, N.A.
0000 Xxx Xxxxxxxxxx Xxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxx, MAC X3906-012
in each instance, with a copy to:
Xxxxx Fargo Bank, N.A.
1 Home Campus
Xxx Xxxxxx, Xxxx 00000-0000
Attention: General Counsel - MAC #X2401-06T
or such other address as may hereafter be furnished to the
Purchaser in writing by the Company;
(ii) if to Purchaser:
Xxxxxx Brothers Bank
000 0xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Section 12.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
60
Section 12.07 Relationship of Parties.
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of the
Company shall be rendered as an independent contractor and not as agent for the
Purchaser.
Section 12.08 Execution; Successors and Assigns.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Section 8.04, this Agreement
shall inure to the benefit of and be binding upon the Company and the Purchaser
and their respective successors and assigns.
Section 12.09 Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Company's expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option. The
Company shall only be responsible for the costs of recording the initial
Assignments of Mortgage. In no event shall the Company be responsible for the
cost of recording Assignments of Mortgage in connection with a subsequent sale
or transfer of the Mortgage Loans by the Purchaser.
Section 12.10 Assignment by Purchaser.
The Purchaser shall have the right, without the consent of the Company
but subject to the limit set forth in Section 2.02 hereof, to assign, in whole
or in part, its interest under this Agreement with respect to some or all of the
Mortgage Loans, and designate any Person to exercise any rights of the Purchaser
hereunder, by executing an Assignment and Assumption Agreement and the assignee
or designee shall accede to the rights and obligations hereunder of the
Purchaser with respect to such Mortgage Loans. All references to the Purchaser
in this Agreement shall be deemed to include its assignee or designee.
Section 12.11 Solicitation of Mortgagor.
Neither party shall, after the Closing Date, take any action to solicit
the refinancing of any Mortgage Loan. It is understood and agreed that neither
(i) promotions undertaken by the either party or any affiliate of such party
which are directed to the general public at large, including, without
limitation, mass mailings based upon commercially acquired mailing lists,
newspaper, radio, television advertisements nor (ii) serving the refinancing
needs of a Mortgagor
61
who, without solicitation, contacts either party in connection with the
refinance of such Mortgage or Mortgage Loan, shall constitute solicitation under
this Section.
[Intentionally Blank - Next Page Signature Page]
62
IN WITNESS WHEREOF, the Company and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the day and year first above written.
XXXXXX BROTHERS BANK, FSB XXXXX FARGO BANK, N.A.
By: By:
------------------------------------------------- -------------------------------------------------
Name: Name:
----------------------------------------------- -----------------------------------------------
Title: Title:
---------------------------------------------- ----------------------------------------------
63
STATE OF )
) ss:
COUNTY OF ___________ )
On the _____ day of _______________, 20___ before me, a Notary Public
in and for said State, personally appeared Xxxxxx Xxxx, known to me to be Vice
President of Xxxxx Fargo Bank, N.A., the national banking association that
executed the within instrument and also known to me to be the person who
executed it on behalf of said bank, and acknowledged to me that such bank
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal
the day and year in this certificate first above written.
_____________________________________
Notary Public
My Commission expires________________
64
STATE OF )
) ss:
COUNTY OF )
On the _____ day of _______________, 20___ before me, a Notary Public
in and for said State, personally appeared ______________________________, known
to me to be the ___________________________ of ___________________________, the
corporation that executed the within instrument and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal
the day and year in this certificate first above written.
_____________________________________
Notary Public
My Commission expires________________
65
EXHIBIT A
MORTGAGE LOAN SCHEDULE
(WFHM 2005-W08)
[Intentionally Omitted]
66
EXHIBIT A-1
MORTGAGE LOAN SCHEDULE
(WFHM 2005-W10)
[Intentionally Omitted]
67
EXHIBIT A-2
DATA FILE ELEMENTS
(1) the Mortgagor's first and last name;
(2) a code indicating whether the Mortgaged Property is
owner-occupied;
(3) the original date of the Mortgage Loan and the remaining
months to maturity from the Cut-off Date, based on the
original amortization schedule;
(4) the date on which the first Monthly Payment was due on the
Mortgage Loan;
(5) the current Monthly Payment;
(6) the amount of the Monthly Payment as of the Cut-off Date;
(7) the last Due Date on which a Monthly Payment was actually
applied to the Stated Principal Balance;
(8) the original principal amount of the Mortgage Loan;
(9) the first Adjustment Date;
(10) a code indicating the purpose of the loan (i.e., purchase,
financing, Rate/Term Refinancing, Cash-Out Refinancing);
(11) the maximum Mortgage Interest Rate under the terms of the
Mortgage Note;
(12) the Mortgage Interest Rate at origination;
(13) the Periodic Interest Rate Cap;
(14) the Index;
(15) the date on which the first Monthly Payment was due on the
Mortgage Loan and, if such date is not consistent with the Due
Date currently in effect, such Due Date;
(16) a code indicating the documentation style (i.e., full
(providing two years employment verification - 2 years W-2's
and current paystub or 2 years 1040's for self employed
borrowers), alternative or reduced);
(17) a code indicating if the Mortgage Loan is subject to a PMI
Policy;
(18) the Appraised Value of the Mortgage Property;
(19) the sale price of the Mortgaged Property, if applicable;
(20) the Mortgagor's and Co-Mortgagor's (if applicable) social
security numbers;
(21) the Mortgagor's FICO score;
(22) the street address of the Mortgaged Property including the
city, state, county and zip code;
(23) term of prepayment penalty;
68
(24) a code indicating whether the Mortgaged Property is a single
family residence, a 2-4 family dwelling, a PUD, a townhouse,
manufactured housing, a unit in a condominium project, or a
mobile home;
(25) a code indicating the product type;
(26) a code indicating the Credit Grade of the Mortgage Loan;
(27) the Loan to Value Ratio;
(28) the Mortgage Interest Rate as of the Cut-off Date;
(29) the stated maturity date;
(30) the original principal amount of the Mortgage Loan;
(31) the sale balance of the Mortgage Loan as of the close of
business on the Cut-off Date, after deduction of payments of
principal due on or before the Cut-off Date;
(32) the Mortgage Loan purpose type;
(33) the next Interest Rate Adjustment Date;
(34) the Gross Margin;
(35) the Note date of the Mortgage Loan;
(36) the Appraised value;
(37) the Mortgagor's and Co-Mortgagor's race;
(38) the Mortgagor's and Co-Mortgagor's gender;
(39) the qualifying monthly income of the Mortgagor;
(40) a code indicating whether the loan was originated through a
correspondent, retail or wholesale channel;
(41) the amount of the monthly principal and interest payment at
the time of origination;
(42) the Mortgage Insurance Certificate Number and percentage of
coverage, if applicable;
(43) borrower date of birth;
(44) a code indicating first time buyer;
(45) the monthly servicing fee;
(46) a code indicating the HMDA data;
(47) whether the Mortgage Loan is convertible;
(48) a code indicating whether the Mortgage Loan is a Time$aver(R)
Mortgage Loan;
(49) a code indicating whether the Mortgage Loan is a Cooperative
Loan;
69
(50) the MIN Number for each MERS Mortgage Loan;
(51) LEX number;
(52) employer name;
(53) subsidy code;
(54) a code indicating whether the Mortgage Loan is a relocation
loan;
(55) a code indicating whether the Mortgage Loan is a temporary
buydown;
(56) the master service fee, if applicable;
(57) servicer name;
(58) total Loan-to-Value;
(59) the Mortgagor's electronic credit score;
(60) a code indicating whether the Mortgage Loan is a leasehold
loan;
(61) a code indicating whether the Mortgage Loan is an Alt A loan;
(62) a code indicating whether the Mortgage Loan is a no ratio
loan;
(63) citizenship type code;
(64) lien status;
(65) loan RSCA indicator;
(66) terminal didget;
(67) servicer code;
(68) loan term number;
(69) a code indicating whether the Mortgage Loan is a pledged
asset;
(70) effective LTV percentage for pledged asset mortgage loans;
(71) a code indicating whether the Mortgage Loan is an interest
only loan;
(72) a code indicating whether the Mortgage Loan is a MERS Mortgage
Loan.
70
EXHIBIT B
MORTGAGE LOAN DOCUMENTS
With respect to each Mortgage Loan, the Retained and Custodial Mortgage
Files shall include each of the following items, which shall be available for
inspection by the Purchaser and any prospective Purchaser, and which shall be
retained by the Company in the Retained Mortgage File or Servicing File or
delivered to the Custodian pursuant to Sections 2.01 and 2.03 of the Seller's
Warranties and the Servicing Agreement to which this Exhibit is attached (the
"Agreement"):
WITH RESPECT TO EACH CUSTODIAL MORTGAGE FILE:
1. The original Mortgage Note bearing all intervening
endorsements, endorsed "Pay to the order of without recourse"
and signed in the name of the Company by an authorized officer
(in the event that the Mortgage Loan was acquired by the
Company in a merger, the signature must be in the following
form: "[Company], successor by merger to [name of
predecessor]"; and in the event that the Mortgage Loan was
acquired or originated by the Company while doing business
under another name, the signature must be in the following
form: "[Company], formerly known as [previous name]").
2. The originals or certified true copies of any document sent
for recordation of all assumption, modification, consolidation
or extension agreements, with evidence of recording thereon.
3. The original Assignment of Mortgage for each Mortgage Loan, in
form and substance acceptable for recording (except for the
insertion of the name of the assignee and recording
information). The Assignment of Mortgage must be duly recorded
only if recordation is either necessary under applicable law
or commonly required by private institutional mortgage
investors in the area where the Mortgaged Property is located
or on direction of the Purchaser as provided in the Custodial
Agreement. If the Assignment of Mortgage is to be recorded,
the Mortgage shall be assigned to the Purchaser. If the
Assignment of Mortgage is not to be recorded, the Assignment
of Mortgage shall be delivered in blank. If the Mortgage Loan
was acquired by the Company in a merger, the Assignment of
Mortgage must be made by "[Company], successor by merger to
[name of predecessor]." If the Mortgage Loan was acquired or
originated by the Company while doing business under another
name, the Assignment of Mortgage must be by "[Company],
formerly know as [previous name]."
4. The original of any guarantee executed in connection with the
Mortgage Note.
71
WITH RESPECT TO EACH RETAINED MORTGAGE FILE:
5. The original Mortgage, with evidence of recording thereon or a
certified true and correct copy of the Mortgage sent for
recordation. If in connection with any Mortgage Loan, the
Company cannot deliver or cause to be delivered the original
Mortgage with evidence of recording thereon on or prior to the
Closing Date because of a delay caused by the public recording
office where such Mortgage has been delivered for recordation
or because such Mortgage has been lost or because such public
recording office retains the original recorded Mortgage, the
Company shall deliver or cause to be delivered to the
Custodian, a photocopy of such Mortgage, together with (i) in
the case of a delay caused by the public recording office, an
Officer's Certificate of the Company stating that such
Mortgage has been dispatched to the appropriate public
recording office for recordation and that the original
recorded Mortgage or a copy of such Mortgage certified by such
public recording office to be a true and complete copy of the
original recorded Mortgage will be promptly delivered to the
Custodian upon receipt thereof by the Company; or (ii) in the
case of a Mortgage where a public recording office retains the
original recorded Mortgage or in the case where a Mortgage is
lost after recordation in a public recording office, a copy of
such Mortgage certified by such public recording office or by
the title insurance company that issued the title policy to be
a true and complete copy of the original recorded Mortgage.
Further, with respect to MERS Mortgage Loans, (a) the Mortgage
names MERS as the Mortgagee and (b) the requirements set forth
in the Electronic Tracking Agreement have been satisfied, with
a conformed recorded copy to follow as soon as the same is
received by the Company.
6. Originals or certified true copies of documents sent for
recordation of all intervening assignments of the Mortgage
with evidence of recording thereon, or if any such intervening
assignment has not been returned from the applicable recording
office or has been lost or if such public recording office
retains the original recorded assignments of mortgage, the
Company shall deliver or cause to be delivered to the
Custodian, a photocopy of such intervening assignment,
together with (i) in the case of a delay caused by the public
recording office, an Officer's Certificate of the Company
stating that such intervening assignment of mortgage has been
dispatched to the appropriate public recording office for
recordation and that such original recorded intervening
assignment of mortgage or a copy of such intervening
assignment of mortgage certified by the appropriate public
recording office or by the title insurance company that issued
the title policy to be a true and complete copy of the
original recorded intervening assignment of mortgage will be
promptly delivered to the Custodian upon receipt thereof by
the Company; or (ii) in the case of an intervening assignment
where a public recording office retains the original recorded
intervening assignment or in the case where an intervening
assignment is lost after recordation in a public recording
office, a copy of such intervening assignment certified by
such public recording office to be a true and complete copy of
the original recorded intervening assignment.
72
7. The original mortgagee policy of title insurance or other
evidence of title such as a copy of the title commitment or
copy of the preliminary title commitment.
8. Any security agreement, chattel mortgage or equivalent
executed in connection with the Mortgage.
9. For each Cooperative Loan, the original or a seller certified
true copy of the following:
The original Pledge Agreement entered into by the Mortgagor
with respect to such Cooperative Loan;
UCC-3 assignment in blank (or equivalent instrument),
sufficient under the laws of the jurisdiction where the
related Cooperative Apartment is located to reflect of record
the sale and assignment of the Cooperative Loan to the
Purchaser;
Original assignment of Pledge Agreement in blank showing a
complete chain of assignment from the originator of the
related Cooperative Loan to the Company;
Original Form UCC-1 and any continuation statements with
evidence of filing thereon with respect to such Cooperative
Loan;
Cooperative Shares with a Stock Certificate in blank attached;
Original Proprietary Lease;
Original Assignment of Proprietary Lease, in blank, and all
intervening assignments thereof;
Original recognition agreement of the interests of the
mortgagee with respect to the Cooperative Loan by the
Cooperative, the stock of which was pledged by the related
Mortgagor to the originator of such Cooperative Loan; and
Originals of any assumption, consolidation or modification
agreements relating to any of the items specified above.
With respect to each Mortgage Loan, the Servicing File shall include each of the
following items to the extent required by the Underwriting Guidelines:
10. The original hazard insurance policy and, if required by law,
flood insurance policy, in accordance with Section 4.10 of the
Agreement.
11. Residential loan application.
12. Mortgage Loan closing statement.
13. Verification of employment and income, unless originated under
the Company's Limited Documentation program.
14. Verification of acceptable evidence of source and amount of
down payment.
73
15. Credit report on the Mortgagor.
16. Residential appraisal report.
17. Photograph of the Mortgaged Property.
18. Survey of the Mortgage property, if required by the title
company or applicable law.
19. Copy of each instrument necessary to complete identification
of any exception set forth in the exception schedule in the
title policy, i.e. map or plat, restrictions, easements, sewer
agreements, home association declarations, etc.
20. All required disclosure statements.
21. If available, termite report, structural engineer's report,
water potability and septic certification.
22. Sales contract, if applicable.
23. Evidence of payment of taxes and insurance premiums, insurance
claim files, correspondence, current and historical
computerized data files, and all other processing,
underwriting and closing papers and records which are
customarily contained in a mortgage loan file and which are
required to document the Mortgage Loan or to service the
Mortgage Loan.
24. Amortization schedule, if available.
25. Payment history for any Mortgage Loan that has been closed for
more than 90 days.
26. Original power of attorney, if applicable.
In the event an Officer's Certificate of the Company is delivered to
the Custodian because of a delay caused by the public recording office in
returning any recorded document, the Company shall deliver to the Custodian,
within 240 days of the Closing Date, an Officer's Certificate which shall (i)
identify the recorded document, (ii) state that the recorded document has not
been delivered to the Custodian due solely to a delay caused by the public
recording office, (iii) state the amount of time generally required by the
applicable recording office to record and return a document submitted for
recordation, and (iv) specify the date the applicable recorded document will be
delivered to the Custodian. The Company shall be required to deliver to the
Custodian the applicable recorded document by the date specified in (iv) above.
An extension of the date specified in (iv) above may be requested from the
Purchaser, which consent shall not be unreasonably withheld.
74
EXHIBIT C
CUSTODIAL AGREEMENT
[Intentionally Omitted]
EXHIBIT D
FORMS OF CUSTODIAL ACCOUNT CERTIFICATIONS
CUSTODIAL ACCOUNT CERTIFICATION
_______________________ , 20_____
Xxxxx Fargo Bank, N.A. hereby certifies that it has established the
account described below as a Custodial Account pursuant to Section 4.04 of the
Seller's Warranties and Servicing Agreement, dated as of _______________________
_____ , 20 ___.
Title of Account: Xxxxx Fargo Bank, N.A. in trust for the Purchaser and/or
subsequent purchasers of Mortgage Loans, and various
Mortgagors - P & I
Address of office or branch
of the Company at which
Account is maintained:
_________________________________________
_________________________________________
_________________________________________
_________________________________________
XXXXX FARGO BANK, N.A.
Company
By: _____________________________________
Name: ___________________________________
Title: __________________________________
CUSTODIAL ACCOUNT LETTER AGREEMENT
_______________________ , 20_____
To: ____________________________
____________________________
____________________________
(the "Depository")
As Company under the Seller's Warranties and Servicing Agreement, dated
as of _____________, 20__, (the "Agreement"), we hereby authorize and request
you to establish an account, as a Custodial Account pursuant to Section 4.04 of
the Agreement, to be designated as "Xxxxx Fargo Bank, N.A., in trust for the
Purchaser and/or subsequent purchasers of Mortgage Loans, and various Mortgagors
- P & I". All deposits in the account shall be subject to withdrawal therefrom
by order signed by the Company.. This letter is submitted to you in duplicate.
Please execute and return one original to us.
XXXXX FARGO BANK, N.A.
Company
By: _____________________________________
Name: ___________________________________
Title: __________________________________
Date: ___________________________________
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 E
FORMS OF ESCROW ACCOUNT CERTIFICATIONS
ESCROW ACCOUNT CERTIFICATION
_______________________ , 20_____
Xxxxx Fargo Bank, N.A. hereby certifies that it has established the
account described below as an Escrow Account pursuant to Section 4.06 of the
Seller's Warranties and Servicing Agreement, dated as of
_____________________, 20__ .
Title of Account: Xxxxx Fargo Bank, N.A. in trust for the Purchaser and/or
subsequent purchasers of Mortgage Loans, and various
Mortgagors - T & I
Address of office or branch
of the Company at which
Account is maintained:
_________________________________________
_________________________________________
_________________________________________
_________________________________________
XXXXX FARGO BANK, N.A.
Company
By: _____________________________________
Name: ___________________________________
Title: __________________________________
ESCROW ACCOUNT LETTER AGREEMENT
_______________________ , 20_____
To: ____________________________
____________________________
____________________________
(the "Depository")
As Company under the Seller's Warranties and Servicing Agreement, dated
as of _______________, 20__, (the "Agreement"), we hereby authorize and request
you to establish an account, as an Escrow Account pursuant to Section 4.06 of
the Agreement, to be designated as "Xxxxx Fargo Bank, N.A., in trust for the
Purchaser and/or subsequent purchasers of Mortgage Loans, and various Mortgagors
- T & I". All deposits in the account shall be subject to withdrawal therefrom
by order signed by the Company. This letter is submitted to you in duplicate.
Please execute and return one original to us.
XXXXX FARGO BANK, N.A.
Company
By: _____________________________________
Name: ___________________________________
Title: __________________________________
Date: ___________________________________
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
XXXXX FARGO BANK, N.A.
Company
By: _____________________________________
Name: ___________________________________
Title: __________________________________
Date: ___________________________________
EXHIBIT F
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION
_______________________ , 20_____
ASSIGNMENT AND ASSUMPTION, dated ___________________, 20__ between
_________________, a _________________ corporation having an office at
_________________ ("Assignor") and _________________, having an office at
_________________ ("Assignee"):
For and in consideration of the sum of one dollar ($1.00) and other
valuable consideration the receipt and sufficiency of which are hereby
acknowledge, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to Assignee all of
the right, title and interest of Assignor, as Purchaser, in, to and under that
certain Seller's Warranties and Servicing Agreement, (the "Seller's Warranties
and Servicing Agreement"), dated as of _________________, by and between
_________________ (the "Purchaser"), and _________________ (the "Company"), and
the Mortgage Loans delivered thereunder by the Company to the Assignor, and that
certain Custodial Agreement, (the "Custodial Agreement"), dated as of
_________________, by and among the Company, the Purchaser and _________________
(the "Custodian").
2. The Assignor warrants and represents to, and covenants with, the
Assignee that:
a. The Assignor is the lawful owner of the Mortgage Loans with
the full right to transfer the Mortgage Loans free from any and all claims and
encumbrances whatsoever;
b. The Assignor has not received notice of, and has no
knowledge of, any offsets, counterclaims or other defenses available to the
Company with respect to the Seller's Warranties and Servicing Agreement or the
Mortgage Loans;
c. The Assignor has not waived or agreed to any waiver under,
or agreed to any amendment or other modification of, the Seller's Warranties and
Servicing Agreement, the Custodial Agreement or the Mortgage Loans, including
without limitation the transfer of the servicing obligations under the Seller's
Warranties and Servicing Agreement. The Assignor has no knowledge of, and has
not received notice of, any waivers under or amendments or other modifications
of, or assignments of rights or obligations under, the Seller's Warranties and
Servicing Agreement or the Mortgage Loans; and
d. Neither the Assignor nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other disposition of
the Mortgage Loans, any interest in the Mortgage Loans or any other similar
security from, or otherwise approached or negotiated with respect to the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action which
would constitute a distribution of the Mortgage Loans under the Securities Act
of 1933 (the "33 Act") or which would render the disposition of the Mortgage
Loans a violation of Section 5 of the 33 Act or require registration pursuant
thereto.
3. That Assignee warrants and represent to, and covenants with, the
Assignor and the Company pursuant to Section 12.10 of the Seller's Warranties
and Servicing Agreement that:
a. The Assignee agrees to be bound, as Purchaser, by all of
the terms, covenants and conditions of the Seller's Warranties and Servicing
Agreement, the Mortgage Loans and the Custodial Agreement, and from and after
the date hereof, the Assignee assumes for the benefit of each of the Company and
the Assignor all of the Assignor's obligations as purchaser thereunder;
b. The Assignee understands that the Mortgage Loans have not
been registered under the 33 Act or the securities laws of any state;
c. The purchase price being paid by the Assignee for the
Mortgage Loans are in excess of $250,000.00 and will be paid by cash remittance
of the full purchase price within 60 days of the sale;
d. The Assignee is acquiring the Mortgage Loans for investment
for its own account only and not for any other person. In this connection,
neither the Assignee nor any person authorized to act therefor has offered to
Mortgage Loans by means of any general advertising or general solicitation
within the meaning of Rule 502(c) of US Securities and Exchange Commission
Regulation D, promulgated under the 1933 Act;
e. The Assignee considers itself a substantial sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Mortgage Loans;
f. The Assignee has been furnished with all information
regarding the Mortgage Loans that it has requested from the Assignor or the
Company;
g. Neither the Assignee nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other disposition of
the Mortgage Loans, any interest in the Mortgage Loans or any other similar
security from, or otherwise approached or negotiated with respect to the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
with, any person in any manner which would constitute a distribution of the
Mortgage Loans under the 33 Act or which would render the disposition of the
Mortgage Loans a violation of Section 5 of the 33 Act or require registration
pursuant thereto, nor will it act, nor has it authorized or will it authorize
any person to act, in such manner with respect to the Mortgage Loans; and
h. Either (1) the Assignee is not an employee benefit plan
("Plan") within the meaning of section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or a plan (also "Plan") within the
meaning of section 4975(e)(1) of the Internal Revenue Code of 1986 ("Code"), and
the Assignee is not directly or indirectly purchasing the Mortgage Loans on
behalf of, investment manager of, as named fiduciary of, as Trustee of, or with
assets of, a Plan; or (2) the Assignee's purchase of the Mortgage Loans will not
result in a prohibited transaction under section 406 of ERISA or section 4975 of
the Code.
i. The Assignee's address for purposes of all notices and
correspondence related to the Mortgage Loans and the Seller's Warranties and
Servicing Agreements is:
______________________________________
______________________________________
______________________________________
______________________________________
Attention: _________________
The Assignee's wire transfer instructions for purposes of all
remittances and payments related to the Mortgage Loans and the Seller's
Warranties and Servicing Agreement is:
______________________________________
______________________________________
______________________________________
______________________________________
Attention: _________________
[Signatures Follow]
IN WITNESS WHEREOF, the parties have caused this Assignment and
Assumption to be executed by their duly authorized officers as of the date first
above written.
____________________________________________ ____________________________________________
Assignor Assignee
By: ________________________________________ By: ________________________________________
Name: ______________________________________ Name: ______________________________________
Its: _______________________________________ Its: _______________________________________
Tax Payer Identification No.: Tax Payer Identification No.:
____________________________________________ ____________________________________________
EXHIBIT G
UNDERWRITING GUIDELINES
[Intentionally Omitted]
EXHIBIT H
FORM OF ANNUAL CERTIFICATION
I, ______________________, Vice President of Xxxxx Fargo Bank, N.A. (the
"Servicer"), certify to __________________, and its officers, directors, agents
and affiliates (the "Sarbanes Certifying Party"), and with the knowledge and
intent that they will rely upon this certification, that:
(i) Based on my knowledge, the information relating to the
Mortgage Loans and the servicing thereof submitted by the
Servicer to the Sarbanes Certifying Party which is used in
connection with preparation of the reports on Form 8-K and the
annual report on Form 10-K filed with the Securities and
Exchange Commission with respect to the Securitization, taken
as a whole, does not contain any untrue statement of a
material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under
which such statements were made, not misleading as of the date
of this certification;
(ii) The servicing information required to be provided to the
Sarbanes Certifying Party by the Servicer under the relevant
servicing agreement has been provided to the Sarbanes
Certifying Party;
(iii) I am responsible for reviewing the activities performed by the
Servicer under the relevant servicing agreement and based upon
the review required by the relevant servicing agreement, and
except as disclosed in the Annual Statement of Compliance, the
Annual Independent Public Accountant's Servicing Report and
all servicing reports, officer's certificates and other
information relating to the servicing of the Mortgage Loans
submitted to the Sarbanes Certifying Party, the Servicer has,
as of the date of this certification fulfilled its obligations
under the relevant servicing agreement; and
(iv) I have disclosed to the Sarbanes Certifying Party all
significant deficiencies relating to the Servicer's compliance
with the minimum servicing standards in accordance with a
review conducted in compliance with the Uniform Single
Attestation Program for Mortgage Bankers or similar standard
as set forth in the relevant servicing agreement.
(v) The Servicer shall indemnify and hold harmless the Sarbanes
Certifying Party and its officers, directors, agents and
affiliates from and against any losses, damages, penalties,
fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based
upon a breach by the Servicer or any of its officers,
directors, agents or affiliates of its obligations under this
Certification or the negligence, bad faith or willful
misconduct of the Servicer in connection therewith. If the
indemnification provided for herein is unavailable or
insufficient to hold harmless the Sarbanes Certifying Party,
then the Servicer agrees that it shall contribute to the
amount paid or payable by the Sarbanes Certifying Party as a
result of the losses, claims, damages or liabilities of the
Sarbanes Certifying Party in such proportion as is appropriate
to reflect the relative fault of the Sarbanes Certifying Party
on the one hand and the Servicer on the other in connection
with a breach of the Servicer's obligations under this
Certification or the Servicer's negligence, bad faith or
willful misconduct in connection therewith.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of the
Servicer.
Dated: By:
Name:
Title:
MORTGAGE LOAN PURCHASE AGREEMENT
This is a Purchase Agreement (the "Agreement"), dated as of February 1,
2005 by and between Xxxxxx Brothers Bank, FSB, having an office at 000 0xx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000 (the "Purchaser") and Xxxxx Fargo Bank,
N.A., having an xxxxxx xx 0 Xxxx Xxxxxx, Xxx Xxxxxx, Xxxx 00000-0000 (the
"Seller").
W I T N E S S E T H
WHEREAS, the Seller agrees to sell, and the Purchaser agrees to
purchase, certain conventional residential adjustable rate mortgage loans (the
"Mortgage Loans") on a servicing retained basis as described herein:
WHEREAS, the Mortgage Loans shall be delivered as whole loans; and
WHEREAS, the parties intend hereby to set forth the terms and
conditions upon which the proposed transactions will be effected.
NOW THEREFORE, in consideration of the promises and the mutual
agreements set forth herein, the parties hereto agree as follows:
SECTION 1. All capitalized terms not otherwise defined herein have the
respective meanings set forth in the Seller's Warranties and Servicing
Agreement, dated as of the date herewith (the "Seller's Warranties and Servicing
Agreement"). The following terms are defined as follows (except as otherwise
agreed by the parties):
Cut-off Date: February 1, 2005
Closing Date: February 16, 2005
First Remittance Date: March 18, 2005
Servicing Fee Rate: 0.250%
SECTION 2. Agreement to Purchase. The Seller agrees to sell, and the
Purchaser agrees to purchase two pools (together, the "Pools") of Mortgage Loans
having an aggregate principal balance on the Cut-off Date in an amount as set
forth in the respective Commitment Letter, dated as of January 13, 2005 for the
WFHM 2005-W08 Pool and dated as of January 5, 2005 for the WFHM 2005-W10 Pool
(the "Commitment Letter"), or in such other amount as agreed to by the Purchaser
and the Seller as evidenced by the aggregate scheduled principal balance of the
Mortgage Loans accepted by the Purchaser on the Closing Date. The Mortgage Loans
will be delivered pursuant to a Seller's Warranties and Servicing Agreement,
between the Purchaser and the Seller.
SECTION 3. Mortgage Schedules. The Seller has provided the Purchaser
with certain information constituting a listing of the Mortgage Loans in each
Pool to be purchased under this Agreement (each a "Mortgage Loan Schedule")
substantially in the form attached hereto as Exhibit 1 and Exhibit 1A. Each
Mortgage Loan Schedule shall conform to the definition of "Mortgage Loan
Schedule" under the Seller's Warranties and Servicing Agreement.
SECTION 4. Purchase Price. The purchase price for the Mortgage Loans
(the "Purchase Price") shall be the percentage of par as stated in the
respective Commitment Letter, multiplied by the aggregate principal balance, as
of the Cut-off Date, of the Mortgage Loans listed on the related Mortgage Loan
Schedule, after application of scheduled payments of principal due on or before
the Cut-off Date whether or not collected. The Purchase Price may be adjusted as
stated in the respective Commitment Letter.
In addition to the Purchase Price as described above, the Purchaser
shall pay to the Seller, at closing, accrued interest on the initial principal
amount of the Mortgage Loans at the weighted average Mortgage Loan Remittance
Rate from the Cut-off Date through the day prior to the Closing Date, inclusive.
The Purchaser shall be entitled to (1) all scheduled principal due
after the Cut-off Date, (2) all other recoveries of principal collected after
the Cut-off Date (provided, however, that all scheduled payments of principal
due on or before the Cut-off Date and collected by the Seller after the Cut-off
Date shall belong to the Seller), and (3) all payments of interest on the
Mortgage Loans at the Mortgage Loan Remittance Rate (minus that portion of any
such payment which is allocable to the period prior to the Cut-off Date). The
principal balance of each Mortgage Loan as of the Cut-off Date is determined
after application of payments of principal due on or before the Cut-off Date
whether or not collected. Therefore, payments of scheduled principal and
interest prepaid for a Due Date beyond the Cut-off Date shall not be applied to
the principal balance as of the Cut-off Date. Such prepaid amounts (minus
interest at the Servicing Fee Rate) shall be the property of the Purchaser. The
Seller shall deposit any such prepaid amounts into the Custodial Account, which
account is established for the benefit of the Purchaser for subsequent
remittance by the Seller to the Purchaser.
SECTION 5. Examination of Custodial Mortgage Files. Prior to the
Closing Date, the Seller shall (a) deliver to the Purchaser in escrow, for
examination, the Custodial Mortgage File for each Mortgage Loan, including a
copy of the Assignment of Mortgage, pertaining to each Mortgage Loan, or (b)
make the Custodial Mortgage File and the Retained Mortgage File available to the
Purchaser for examination at the Seller's offices or such other location as
shall otherwise be agreed upon by the Purchaser and the Seller. Such examination
may be made by the Purchaser or by any prospective purchaser of the Mortgage
Loans from the Purchaser, at any time before or after the Closing Date upon
prior reasonable notice to the Seller. The fact that the Purchaser or any
prospective purchaser of the Mortgage Loans has conducted or has failed to
conduct any partial or complete examination of the Custodial Mortgage File and
the Retained Mortgage File shall not affect the Purchaser's (or any of its
successor's) rights to demand repurchase, substitution or other relief or remedy
as provided under the related Seller's Warranties and Servicing Agreement.
2
SECTION 6. Representations, Warranties and Agreements of Seller. The
Seller agrees and acknowledges that it shall, as a condition to the consummation
of the transactions contemplated hereby, make the representations and warranties
specified in Section 3.01 and 3.02 of the Seller's Warranties and Servicing
Agreement, as of the Closing Date. The meaning of the term "Agreement" as used
in Sections 3.01 and 3.02 of the Seller's Warranties and Servicing Agreement
shall include this Agreement. The Seller, without conceding that the Mortgage
Loans are securities, hereby makes the following additional representations,
warranties and agreements which shall be deemed to have been made as of the
Closing Date:
a) neither the Seller nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of
any Mortgage Loans, any interest in any Mortgage Loans or any
other similar security to, or solicited any offer to buy or
accept a transfer, pledge or other disposition of any Mortgage
Loans, any interest in any Mortgage Loans or any other similar
security from, or otherwise approached or negotiated with
respect to any Mortgage Loans, any interest in any Mortgage
Loans or any other similar security with, any person in any
manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action
which would constitute a distribution of the Mortgage Loans
under the Securities Act of 1933 (the "1933 Act") or which
would render the disposition of any Mortgage Loans a violation
of Section 5 of the 1933 Act or require registration pursuant
thereto, nor will it act, nor has it authorized or will it
authorize any person to act, in such manner with respect to
the Mortgage Loans; and
b) the Seller has not dealt with any broker or agent or anyone
else who might be entitled to a fee or commission in
connection with this transaction other than the Purchaser.
SECTION 7. Representation, Warranties and Agreement of Purchaser. The
Purchaser, without conceding that the Mortgage Loans are securities, hereby
makes the following representations, warranties and agreements, which shall have
been deemed to have been made as of the Closing Date.
a) the Purchaser understands that the Mortgage Loans have not
been registered under the 1933 Act or the securities laws of
any state;
b) the Purchaser is acquiring the Mortgage Loans for its own
account only and not for any other person;
c) the Purchaser considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in
financial and business matters that it is capable of
evaluating the merits and risks of investment in the Mortgage
Loans;
d) the Purchaser has been furnished with all information
regarding the Mortgage Loans which it has requested from the
Seller or the Company; and
3
e) neither the Purchaser nor anyone acting on its behalf offered,
transferred, pledged, sold or otherwise disposed of any
Mortgage Loan, any interest in any Mortgage Loan or any other
similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of any Mortgage Loan,
any interest in any Mortgage Loan or any other similar
security from, or otherwise approached or negotiated with
respect to any Mortgage Loan, any interest in any Mortgage
Loan or any other similar security with, any person in any
manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action
which would constitute a distribution of the Mortgage Loans
under the 1933 Act or which would render the disposition of
any Mortgage Loan a violation of Section 5 of the 1933 Act or
require registration pursuant thereto, nor will it act, nor
has it authorized or will it authorize any person to act, in
such manner with respect to the Mortgage Loans.
SECTION 8. Closing. The closing for the purchase and sale of the
Mortgage Loans, shall take place on the Closing Date. At the Purchaser's option,
the Closing shall be either: by telephone, confirmed by letter or wire as the
parties shall agree; or conducted in person, at such place as the parties shall
agree.
The closing shall be subject to each of the following conditions:
a) all of the representations and warranties of the Seller under
this Agreement and under the Seller's Warranties and Servicing
Agreement shall be true and correct as of the Closing Date and
no event shall have occurred which, with notice or the passage
of time, would constitute a default under this Agreement or an
Event of Default under the related Seller's Warranties and
Servicing Agreement;
b) the Purchaser shall have received, or the Purchaser's
attorneys shall have received in escrow, all Closing Documents
as specified in Section 9 of this Agreement, in such forms as
are agreed upon and acceptable to the Purchaser, duly executed
by all signatories other than the Purchaser as required
pursuant to the respective terms thereof;
c) the Seller shall have delivered and released to the Custodian
all documents required under the Seller's Warranties and
Servicing Agreement; and
d) all other terms and conditions of this Agreement and the
Seller's Warranties and Servicing Agreement shall have been
complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the
Seller on the Closing Date the Purchase Price, plus accrued interest pursuant to
Section 4 of this Agreement, by wire transfer of immediately available funds to
the account designated by the Seller.
SECTION 9. Closing Documents. With respect to the Mortgage Loans, the
Closing Documents shall consist of fully executed originals of the following
documents:
1. the Seller's Warranties and Servicing Agreement in three
counterparts;
4
2. this Agreement in three counterparts;
3. an originally executed Side Letter (the "Side Letter")
regarding repurchase price, by and between the Seller and the
Purchaser, dated as of February 1, 2005 in three counterparts;
4. the originally executed Custodial Assignment and Assumption
Agreement by and between the Purchaser and Seller dated as of
February 16, 2005 in three counter-parts assigning the
Purchaser's rights as Initial Servicer under the Custodial
Agreement, dated as of April 1, 2000, by and between the
Purchaser, as owner and the Initial Servicer and Xxxxx Fargo
Bank, N.A., successor by merger to Xxxxx Fargo Bank Minnesota,
N.A. (the "Custodian");
5. the Mortgage Loan Schedules, one copy to be attached to each
counterpart of the Seller's Warranties and Servicing
Agreement, to each counterpart of this Agreement, and to each
counterpart of the Custodial Agreement, as the Mortgage Loan
Schedules thereto;
6. an Officer's Certificate of the Seller;
7. a Receipt and Certification, as required under the Custodial
Agreement; and
8. an Opinion of Counsel of the Seller, in the form of Exhibit 2
hereto.
SECTION 10. Costs. The Purchaser shall pay any commissions due its
salesmen, the legal fees and expenses of its attorneys and the costs and
expenses associated with the Custodian. The Seller shall be responsible for
reasonable costs and expenses associated with any preparation and recording of
the initial Assignments of Mortgage. All other costs and expenses incurred in
connection with the transfer and delivery of the Mortgage Loans, including fees
for title policy endorsements and continuations and the Seller's attorney fees.
SECTION 11. Servicing. The Mortgage Loans shall be serviced by the
Seller in accordance with the terms of the applicable Seller's Warranties and
Servicing Agreement. The Seller shall be entitled to servicing fees calculated
as provided therein, at the Servicing Fee Rate shown on the first page of this
Agreement unless otherwise agreed by the parties.
SECTION 12. Financial Statements. The Seller understands that in
connection with the Purchaser's marketing of the Mortgage Loans, the Purchaser
may request from the Seller and make available to prospective purchasers a
Consolidated Statement of Operations of the Seller for the most recently
completed two fiscal years respecting which such a statement is available, as
well as a Consolidated Statement of Condition at the end of the last two fiscal
years covered by such Consolidated Statement of Operations. The Purchaser, upon
request, shall also make available any comparable interim statements to the
extent any such statements have been prepared by the Seller in a format intended
or otherwise suitable for the public at large. The Seller, upon request, agrees
to furnish promptly to the Purchaser copies of the statements specified above.
The Seller shall also make available information on its servicing performance
with respect to loans in its own portfolio and loans serviced for others (if
any), including foreclosure and delinquency ratios.
5
The Seller also agrees to allow access to a knowledgeable (as shall be
determined by the Seller) financial or accounting officer for the purpose of
answering questions asked by any prospective purchaser regarding recent
developments affecting the Seller or the financial statements of the Seller.
SECTION 13. Mandatory Delivery. The sale and delivery on the Closing
Date of the Mortgage Loans described on the related Mortgage Loan Schedule is
mandatory, it being specifically understood and agreed that each Mortgage Loan
is unique and identifiable on the date hereof and that an award of money damages
would be insufficient to compensate the Purchaser for the losses and damages
incurred by the Purchaser (including damages to prospective purchasers of the
Mortgage Loans) in the event of the Seller's failure to deliver the Mortgage
Loans on or before the Closing Date. All rights and remedies of the Purchaser
under this Agreement are distinct from, and cumulative with, any other rights or
remedies under this Agreement or afforded by law or equity and all such rights
and remedies may be exercised concurrently, independently or successively.
SECTION 14. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed, by
registered or certified mail, return receipt requested, or, if by other means,
when received by the other party at the address shown on the first page hereof,
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice of communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 15. Severability Clause. Any part, provision, representation or
warranty of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any part,
provision, representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good-faith, to develop a structure the economic effect of which is as close as
possible to the economic effect of this Agreement without regard to such
invalidity.
SECTION 16. Counterparts. This Agreement may be executed simultaneously
in any number of counterparts. Each counterpart shall be deemed to be an
original, and all such counterparts shall constitute one and the same
instrument.
6
SECTION 17. Place of Delivery and Governing Law. This Agreement shall
be construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with the laws of the State of New York, except to the extent
preempted by Federal Law.
SECTION 18. Further Agreements. The Purchaser and the Seller each agree
to execute and deliver to the other such additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of this
Agreement.
Without limiting the generality of the foregoing, the Seller shall
reasonably cooperate with the Purchaser in connection with the initial resales
of the Mortgage Loans by the Purchaser. In that connection, the Seller shall
provide to the Purchaser: (i) any and all information and appropriate
verification of information, whether through letters of its auditors and counsel
or otherwise, as the Purchaser shall reasonably request, and (ii) such
additional representations, warranties, covenants, opinions of counsel, letters
from auditors and certificates of public officials or officers of the Seller as
are reasonably believed necessary by the Purchaser in connection with such
resales. Prior to incurring any out-of-pocket expenses pursuant to this
paragraph, the Seller shall notify the Purchaser in writing of the estimated
amount of such expense. The Purchaser shall reimburse the Seller for any such
expense following its receipt of appropriate details thereof.
SECTION 19. Intention of the Parties. It is the intention of the
parties that the Purchaser is purchasing, and the Seller is selling, an
undivided 100% ownership interest in the Mortgage Loans and not a debt
instrument of the Seller or another security. Accordingly, the parties hereto
each intend to treat the transaction for Federal income tax purposes as a sale
by the Seller, and a purchase by the Purchaser, of the Mortgage Loans. The
Purchaser shall have the right to review the Mortgage Loans and the related
Custodial Mortgage Files to determine the characteristics of the Mortgage Loans
which shall affect the Federal income tax consequences of owning the Mortgage
Loans and the Seller shall cooperate with all reasonable requests made by the
Purchaser in the course of such review.
SECTION 20. Successors and Assigns; Assignment of Purchase Agreement.
This Agreement shall bind and inure to the benefit of and be enforceable by the
Seller and the Purchaser and the respective successors and assigns of the Seller
and the Purchaser. This Agreement shall not be assigned, pledged or hypothecated
by the Seller to a third party without the consent of the Purchaser.
SECTION 21. Waivers; Other Agreements. No term or provision of this
Agreement may be waived or modified unless such waiver or modification is in
writing and signed by the party against whom such waiver or modification is
sought to be enforced.
SECTION 22. Exhibits. The exhibits to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
7
SECTION 23. 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 without
limitation by reason of enumeration.
SECTION 24. Reproduction of Documents. This Agreement and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
[Signatures Follow]
8
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the date first above written.
XXXXXX BROTHERS BANK, FSB
(Purchaser)
By: ___________________________________
Name: _________________________________
Title: ________________________________
XXXXX FARGO BANK, N.A.
(Seller)
By: ___________________________________
Name: _________________________________
Title: ________________________________
9
EXHIBIT 1
MORTGAGE LOAN SCHEDULE
(WFHM 2005-W08)
[Intentionally Omitted]
EXHIBIT 1A
MORTGAGE LOAN SCHEDUL
(WFHM 2005-W10)
[Intentionally Omitted]
EXHIBIT 2
FORM OF OPINION OF COUNSEL
@
@
@
@
Re: Xxxxx Fargo Bank, N.A.
Mortgage Loan Series @
Dear Sir/Madam:
I am @ of Xxxxx Fargo Bank, N.A. and have acted as counsel to Xxxxx Fargo Bank,
N.A. (the "Company"), with respect to certain matters in connection with the
sale by the Company of the mortgage loans designated as Mortgage Loan Series @
(the "Mortgage Loans") pursuant to that certain Seller's Warranties and
Servicing Agreement and Mortgage Loan Purchase Agreement by and between the
Company and @ (the "Purchaser"), dated as of @, 2004, (the "Agreements"), which
sale is in the form of whole Mortgage Loans. Capitalized terms not otherwise
defined herein have the meanings set forth in the Seller's Warranties and
Servicing Agreement.
I have examined the following documents:
1. the Seller's Warranties and Servicing Agreement;
2. the Mortgage Loan Purchase Agreement;
3. the Custodial Agreement;
4. the form of endorsement of the Mortgage Notes; and
5. such other documents, records and papers as I have deemed
necessary and relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied upon the
representations and warranties of the Company contained in the Agreements. I
have assumed the authenticity of all documents submitted to me as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents.
Based upon the foregoing, it is my opinion that:
1. The Company is a national banking association duly organized,
validly existing and in good standing under the laws of the
United States.
2. The Company has the power to engage in the transactions
contemplated by the Agreements, the Custodial Agreement and
all requisite power, authority and legal right to execute and
deliver the Agreements, the Custodial Agreement and the
Mortgage Loans, and to perform and observe the terms and
conditions of such instruments.
3. Each person who, as an officer or attorney-in-fact of the
Company, signed (a) the Agreements, each dated as of @, 2005,
by and between the Company and the Purchaser, and (b) any
other document delivered prior hereto or on the date hereof in
connection with the sale and servicing of the Mortgage Loans
in accordance with the Agreements was, at the respective times
of such signing and delivery, and is, as of the date hereof,
duly elected or appointed, qualified and acting as such
officer or attorney-in-fact, and the signatures of such
persons appearing on such documents are their genuine
signatures.
4. Each of the Agreements, the Custodial Agreement and the
Mortgage Loans, has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding
agreement enforceable in accordance with its terms, subject to
the effect of insolvency, liquidation, conservatorship and
other similar laws administered by the Federal Deposit
Insurance Corporation affecting the enforcement of contract
obligations of insured banks and subject to the application of
the rules of equity, including those respecting the
availability of specific performance, none of which will
materially interfere with the realization of the benefits
provided thereunder or with the Purchaser's ownership of the
Mortgage Loans.
5. The Company has been duly authorized to allow any of its
officers to execute any and all documents by original or
facsimile signature in order to complete the transactions
contemplated by the Agreements and the Custodial Agreement in
order to execute the endorsements to the Mortgage Notes and
the assignments of the Mortgages, and the original or
facsimile signature of the officer at the Company executing
the Agreements, the Custodial Agreement, the endorsements to
the Mortgage Notes and the assignments of the Mortgages
represents the legal and valid signature of said officer of
the Company.
6. Either (i) no consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution, delivery and performance by the Company of or
compliance by the Company with the Agreements, the Custodial
Agreement or the sale and delivery of the Mortgage Loans or
the consummation of the transactions contemplated by the
Agreements and the Custodial Agreement; or (ii) any required
consent, approval, authorization or order has been obtained by
the Company.
7. Neither the consummation of the transactions contemplated by,
nor the fulfillment of the terms of the Agreements and the
Custodial Agreement, will conflict with or results in or will
result in a breach of or constitutes or will constitute a
default under the charter or by-laws of the Company, the terms
of any indenture or other agreement or instrument to which the
Company is a party or by which it is bound or to which it is
subject, or violates any statute or order, rule, regulations,
writ, injunction or decree of any court, governmental
authority or regulatory body to which the Company is subject
or by which it is bound.
8. There is no action, suit, proceeding or investigation pending
or, to the best of my knowledge, threatened against the
Company which, in my opinion, either in any one instance or in
the aggregate, may result in any material adverse change in
the business, operations, financial condition, properties or
assets of the Company or in any material impairment of the
right or ability of the Company to carry on its business
substantially as now conducted or in any material liability on
the part of the Company or which would draw into question the
validity of the Agreements, and the Custodial Agreement, or of
any action taken or to be taken in connection with the
transactions contemplated thereby, or which would be likely to
impair materially the ability of the Company to perform under
the terms of the Agreements and the Custodial Agreement.
9. For purposes of the foregoing, I have not regarded any legal
or governmental actions, investigations or proceedings to be
"threatened" unless the potential litigant or governmental
authority has manifested to the legal department of the
Company or an employee of the Company responsible for the
receipt of process a present intention to initiate such
proceedings; nor have I regarded any legal or governmental
actions, investigations or proceedings as including those that
are conducted by state or federal authorities in connection
with their routine regulatory activities. The sale of each
Mortgage Note and Mortgage as and in the manner contemplated
by the Agreements is sufficient fully to transfer all right,
title and interest of the Company thereto as noteholder and
mortgagee, apart from the rights to service the Mortgage Loans
pursuant to the Agreements.
10. The form of endorsement that is to be used with respect to the
Mortgage Loans is legally valid and sufficient to duly endorse
the Mortgage Notes to the Purchaser. Upon the completion of
the endorsement of the Mortgage Notes and the completion of
the assignments of the Mortgages, and the recording thereof,
the endorsement of the Mortgage Notes, the delivery to the
Custodian of the completed assignments of the Mortgages, and
the delivery of the original endorsed Mortgage Notes to the
Custodian would be sufficient to permit the entity to which
such Mortgage Note is initially endorsed at the Purchaser's
direction, and to whom such assignment of Mortgages is
initially assigned at the Purchaser's direction, to avail
itself of all protection available under applicable law
against the claims of any present or future creditors of the
Company, and would be sufficient to prevent any other sale,
transfer, assignment, pledge or hypothecation of the Mortgages
and the Mortgage Notes by the Company from being enforceable.
This opinion is given to you for your sole benefit, and no other person or
entity is entitled to rely hereon except that the purchaser or purchasers to
which you initially and directly resell the Mortgage Loans may rely on this
opinion as if it were addressed to them as of its date.
Sincerely,
