Exhibit 99.11(b)
EXECUTION COPY
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THIRD AMENDED AND RESTATED MORTGAGE
LOAN FLOW PURCHASE,
SALE & SERVICING AGREEMENT
dated as of January 1, 2006
between
XXXXXX XXXXXXX MORTGAGE CAPITAL INC.,
Purchaser
and
PHH MORTGAGE CORPORATION
(formerly known as
CENDANT MORTGAGE CORPORATION),
and
XXXXXX'X GATE RESIDENTIAL MORTGAGE TRUST
(formerly known as
CENDANT RESIDENTIAL MORTGAGE TRUST),
Sellers
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms..................................................1
ARTICLE II
SALE AND CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS
AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01 Sale and Conveyance of Mortgage Loans.........................20
Section 2.02 Possession of Mortgage Files..................................22
Section 2.03 Books and Records.............................................22
Section 2.04 Defective Documents; Delivery of Mortgage Loan
Documents....................................................22
Section 2.05 Transfer of Mortgage Loans....................................24
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER; REPURCHASE AND
SUBSTITUTION; REVIEW OF MORTGAGE LOANS
Section 3.01 Representations and Warranties of each Seller.................25
Section 3.02 Representations and Warranties of the Servicer................28
Section 3.03 Representations and Warranties as to Individual
Mortgage Loans...............................................29
Section 3.04 Repurchase and Substitution...................................45
Section 3.05 Removal of Mortgage Loans from Inclusion Under this
Agreement Upon an Agency Transfer, Whole-Loan
Transfer or a Securitization Transaction on One or
More Reconstitution Dates....................................47
Section 3.06 Review of Mortgage Loans......................................50
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER AND CONDITIONS PRECEDENT TO FUNDING
Section 4.01 Representations and Warranties................................51
Section 4.02 Conditions Precedent to Closing...............................53
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ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01 PHH Mortgage to Act as Servicer; Servicing Standards;
Additional Documents; Consent of the Purchaser...............55
Section 5.02 Collection of Mortgage Loan Payments..........................57
Section 5.03 Notice of Specially Serviced Mortgage Loans and
Foreclosure Sale.............................................57
Section 5.04 Establishment of Collection Account; Deposits in
Collection Account...........................................58
Section 5.05 Permitted Withdrawals from the Collection Account.............59
Section 5.06 Establishment of Escrow Accounts; Deposits in Escrow..........60
Section 5.07 Permitted Withdrawals From Escrow Accounts....................60
Section 5.08 Payment of Taxes, Insurance and Other Charges;
Maintenance of Primary Insurance Policies;
Collections Thereunder.......................................61
Section 5.09 Transfer of Accounts..........................................62
Section 5.10 Maintenance of Hazard Insurance...............................62
Section 5.11 Maintenance of Mortgage Impairment Insurance Policy...........64
Section 5.12 Fidelity Bond; Errors and Omissions Insurance.................64
Section 5.13 Management of REO Properties..................................65
Section 5.14 Sale of Specially Serviced Mortgage Loans and REO
Properties...................................................67
Section 5.15 Realization Upon Specially Serviced Mortgage Loans and
REO Properties...............................................67
Section 5.16 Investment of Funds in the Collection Account.................69
Section 5.17 MERS..........................................................70
Section 5.18 Pledged Asset Mortgage Loans..................................70
Section 5.19 Inspections...................................................74
Section 5.20 Transfer of Servicing.........................................74
Section 5.21 Fair Credit Reporting Act.....................................76
ARTICLE VI
REPORTS; REMITTANCES; ADVANCES
Section 6.01 Remittances...................................................76
Section 6.02 Reporting.....................................................77
Section 6.03 Monthly Advances by the Servicer..............................78
Section 6.04 Non-recoverable Advances......................................78
Section 6.05 Itemization of Servicing Advances.............................78
Section 6.06 Officers' Certificate.........................................78
Section 6.07 Compliance with REMIC Provisions..............................78
ARTICLE VII
GENERAL SERVICING PROCEDURES
Section 7.01 Enforcement of Due-on-Sale Clauses, Assumption
Agreements...................................................79
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Section 7.02 Satisfaction of Mortgages and Release of Mortgage Files.......80
Section 7.03 Servicing Compensation........................................80
Section 7.04 Annual Statement as to Compliance.............................81
Section 7.05 Annual Independent Certified Public Accountants'
Servicing Report or Attestation..............................81
Section 7.06 Purchaser's Right to Examine Servicer Records.................81
ARTICLE VIII
REPORTS TO BE PREPARED BY THE SERVICER
Section 8.01 The Servicer's Reporting Requirements.........................82
Section 8.02 Financial Statements..........................................82
ARTICLE IX
THE SELLERS
Section 9.01 Indemnification; Third Party Claims...........................82
Section 9.02 Merger or Consolidation of the Seller.........................83
Section 9.03 Limitation on Liability of the Sellers and Others.............84
Section 9.04 Servicer Not to Resign........................................84
ARTICLE X
DEFAULT
Section 10.01 Events of Default.............................................85
ARTICLE XI
TERMINATION
Section 11.01 Term and Termination..........................................87
Section 11.02 Survival......................................................87
ARTICLE XII
GENERAL PROVISIONS
Section 12.01 Successor to the Servicer.....................................88
Section 12.02 Governing Law; Jurisdiction; Consent to Service of
Process......................................................88
Section 12.03 Notices.......................................................89
Section 12.04 Severability of Provisions....................................90
Section 12.05 Schedules and Exhibits........................................90
Section 12.06 General Interpretive Principles...............................90
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Section 12.07 Waivers and Amendments, Noncontractual Remedies;
Preservation of Remedies.....................................91
Section 12.08 Captions......................................................91
Section 12.09 Counterparts; Effectiveness...................................91
Section 12.10 Entire Agreement; Amendment...................................91
Section 12.11 Further Assurances............................................91
Section 12.12 Intention of the Seller.......................................92
Section 12.13 Waiver of Trial by Jury.......................................92
ARTICLE XIII
COMPLIANCE WITH REGULATION AB
Section 13.01 Intent of the Parties; Reasonableness.........................92
Section 13.02 Additional Representations and Warranties of the
Sellers and the Servicer.....................................93
Section 13.03 Information to Be Provided by each Seller or the
Servicer.....................................................94
Section 13.04 Servicer Compliance Statement.................................98
Section 13.05 Report on Assessment of Compliance and Attestation............98
Section 13.06 Use of Subservicers and Subcontractors........................99
Section 13.07 Indemnification; Remedies....................................101
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Schedules
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A. Mortgage Loan Schedule
B. Contents of Mortgage File
B-1 Collateral File
B-2 Credit Documents
C. PHH Guide
Exhibits
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Exhibit 2.05 Form of Assignment, Assumption and Recognition Agreement
Exhibit 5.01 Workout Compensation
Exhibit 5.03(a) Report P4DL Notice for Specially Serviced Mortgage Loans
Exhibit 5.03(b) Form of Notice of Foreclosure
Exhibit 5.04-1 Form of Collection Account Certification
Exhibit 5.04-2 Form of Collection Account Letter Agreement
Exhibit 5.06-1 Form of Escrow Account Certification
Exhibit 5.06-2 Form of Escrow Account Letter Agreement
Exhibit 6.02(a) Report P-139 - Monthly Statement of Mortgage Accounts
Exhibit 6.02(b) Report S-50Y - Private Pool Detail Report
Exhibit 6.02(c) Report S-213 - Summary of Curtailments Made Remittance
Report
Exhibit 6.02(d) Report S-214 - Summary of Paid in Full Remittance Report
Exhibit 6.02(e) Report S-215 - Consolidation of Remittance Report
Exhibit 6.02(f) Report T-62C - Monthly Accounting Report
Exhibit 6.02(g) Report T-62E - Liquidation Report
Exhibit 8.01 Report P-195 - Delinquency Report
Exhibit 9 Form of Officer's Certificate
Exhibit 10 Form of Warranty Xxxx of Sale
Exhibit 11 Form of Xxxxxxxx-Xxxxx Certification
Exhibit 12 Process Guidelines
Exhibit 13 Form of Indemnification and Contribution Agreement
Exhibit 14 Servicing Criteria to be Addressed in Assessment of
Compliance
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THIRD AMENDED AND RESTATED MORTGAGE LOAN FLOW
PURCHASE, SALE & SERVICING AGREEMENT
This Third Amended and Restated Mortgage Loan Flow Purchase, Sale
& Servicing Agreement, dated as of January 1, 2006, among Xxxxxx Xxxxxxx
Mortgage Capital Inc., (the "Purchaser"), PHH Mortgage Corporation (formerly
known as Cendant Mortgage Corporation) ("PHH Mortgage") and Xxxxxx'x Gate
Residential Mortgage Trust (formerly known as Cendant Residential Mortgage
Trust) (the "Trust," together with Cendant Mortgage, the "Sellers" and
individually, each a "Seller").
PRELIMINARY STATEMENT
WHEREAS, the Purchaser and the Sellers are parties to that
certain Second Amended and Restated Mortgage Loan Flow Purchase, Sale &
Servicing Agreement, dated as of September 1, 2005 (the "Original Purchase
Agreement"), pursuant to which the Sellers may sell, from time to time, to
the Purchaser, and the Purchaser may purchase, from time to time, from the
Sellers, certain adjustable and fixed rate residential first lien mortgage
loans (the "Mortgage Loans") on a servicing retained basis as described
therein, and which shall be delivered in pools of whole loans on various
dates as provided therein (each, a "Closing Date");
WHEREAS, at the present time, the Purchaser and the Sellers
desire to amend the Original Purchase Agreement to make certain modifications
as set forth herein;
WHEREAS, each of the Sellers and the Purchaser intend, and have
agreed that, each purchase and sale of Mortgage Loans between the Seller and
the Purchaser on or after January 1, 2005, shall be governed by the terms and
conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Purchaser
and the Sellers agree as follows
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, the Purchaser and the Sellers agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms. Whenever used in this
Agreement, the following words and phrases shall have the following meaning
specified in this Article:
"Acceptance of Assignment and Assumption of Lease Agreement":
The specific agreement creating a first lien on and pledge of the Cooperative
Shares and the appurtenant Proprietary Lease securing a Cooperative Loan.
"Accepted Servicing Practices": With respect to any Mortgage
Loan, those customary 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.
"Adjustable Rate Mortgage Loan": A Mortgage Loan purchased
pursuant to this Agreement, the Note Rate of which is adjusted from time to
time in accordance with the terms of the related Mortgage Note.
"Affiliate": When used with reference to a specified Person, any
Person that (i) directly or indirectly controls or is controlled by or is
under common control with the specified Person, (ii) is an officer of,
partner in or trustee of, or serves in a similar capacity with respect to,
the specified person or of which the specified Person is an officer, partner
or trustee, or with respect to which the specified Person serves in a similar
capacity, or (iii) directly or indirectly is the beneficial owner of 10% or
more of any class of equity securities of the specified Person or of which
the specified person is directly or indirectly the owner of 10% or more of
any class of equity securities.
"Agency Transfer": The sale or transfer by Purchaser of some or
all of the Mortgage Loans to Xxxxxx Xxx under its "Cash Purchase Program" or
its "MBS Swap Program" (Special Servicing Option) or to Xxxxxxx Mac under its
"Xxxxxxx Xxx Xxxx Program" or "Gold PC Program", retaining the Servicer as
"servicer thereunder."
"Agreement": This Third Amended and Restated Mortgage Loan Flow
Purchase, Sale & Servicing Agreement between the Purchaser and the Sellers.
"ALTA": The American Land Title Association.
"Appraised Value": With respect to any Mortgaged Property, the
lesser of: (i) the value thereof as determined by an appraisal or a PHH
Mortgage approved AVM (as defined in the PHH Guide) made for the originator
of the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser who met the minimum requirements of Xxxxxx Xxx and Xxxxxxx Mac; or
(ii) the purchase price paid for the related Mortgaged Property by the
Mortgagor with the proceeds of the Mortgage Loan; provided that, in the case
of a Refinanced Mortgage Loan, such value of the Mortgaged Property shall be
based solely upon the value determined by an appraisal made for the
originator of such Refinanced Mortgage Loan at the time of origination of
such Refinanced Mortgage Loan by an appraiser who met the minimum
requirements of Xxxxxx Mae and Xxxxxxx Mac.
"ARM Loan": An "adjustable rate" Mortgage Loan, the Note Rate of
which is subject to periodic adjustment in accordance with the terms of the
Mortgage Note.
"Assignment": An individual assignment of a 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 of record the sale or transfer of the Mortgage Loan to the Purchaser
or, in the case of a MERS Mortgage Loan, an electronic transmission to MERS,
identifying a transfer of ownership of the related Mortgage to the Purchaser
or its designee.
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"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 Unit is located to reflect the
assignment of such Proprietary Lease.
"Assignment of Recognition Agreement": With respect to a
Cooperative Loan, an assignment of the Recognition Agreement sufficient under
the laws of the jurisdiction wherein the related Cooperative Unit is located
to reflect the assignment of such Recognition Agreement.
"AVM": Automated Value Model. Electronic system to calculate
the property value from a provider that has been approved by the Seller.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (11 U.S.C.
xx.xx. 101-1330), as amended, modified, or supplemented from time to time, and
any successor statute, and all rules and regulations issued or promulgated in
connection therewith.
"BPO": A broker's price opinion with respect to a Mortgaged
Property.
"Business Day": Any day other than (i) a Saturday or Sunday, or
(ii) a day on which the Federal Reserve is closed.
"PHH Guide": Shall have the meaning set forth in paragraph 3 of
the Preliminary Statement to this Agreement.
"Closing Date": The date or dates on which the Purchaser from
time to time shall purchase, and the Seller from time to time shall sell, the
Mortgage Loans listed on the related Mortgage Loan Schedule.
"Code": The Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Collection Account": The separate trust account or accounts
created and maintained pursuant to Section 5.04 which shall be entitled "PHH
Mortgage Corporation, as servicer and custodian for the Purchaser of Mortgage
Loans under the Third Amended and Restated Mortgage Loan Flow Purchase, Sale
& Servicing Agreement, dated as of January 1, 2006."
"Commission": The United States Securities and Exchange
Commission.
"Condemnation Proceeds": All awards or settlements in respect of
a taking of an entire Mortgaged Property or a part thereof by exercise of the
power of eminent domain or condemnation.
"Consent": A document executed by the Cooperative Corporation
(i) consenting to the sale of the Cooperative Unit to the Mortgagor and
(ii) certifying that all maintenance charges relating to the Cooperative Unit
have been paid.
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"Control Agreement": With respect to each Pledged Asset Mortgage
Loan, the Pledged Collateral Account Control Agreement between the guarantor
or mortgagor, as applicable, and the related Pledged Asset Servicer, pursuant
to which the guarantor or mortgagor, as applicable, has granted a security
interest in a Securities Account.
"Convertible Mortgage Loan": Any ARM Loan purchased pursuant to
this Agreement as to which the related Mortgage Note permits the Mortgagor to
convert the Note Rate on such Mortgage Loan to a fixed note rate.
"Cooperative Corporation": With respect to any Cooperative Loan,
the cooperative apartment corporation that holds legal title to the related
Cooperative Project and grants occupancy rights to units therein to
stockholders through Proprietary Leases or similar arrangements.
"Cooperative Lease": With respect to a Cooperative Loan, the
lease with respect to a dwelling unit occupied by the Mortgagor and relating
to the stock allocated to the related dwelling unit.
"Cooperative Lien Search": A search for (a) federal tax liens,
mechanics' liens, lis pendens, judgments of record or otherwise against
(i) the Cooperative Corporation and (ii) the seller of the Cooperative Unit,
(b) filings of Financing Statements and (c) the deed of the Cooperative
Project into the Cooperative Corporation.
"Cooperative Loan": A Mortgage Loan that is secured by a first
lien on and a perfected security interest in Cooperative Shares and the
related Proprietary Lease granting exclusive rights to occupy the related
Cooperative Unit in the building owned by the related Cooperative Corporation.
"Cooperative Project": With respect to any Cooperative Loan, all
real property and improvements thereto and rights therein and thereto owned
by a Cooperative Corporation including without limitation the land, separate
dwelling units and all common elements.
"Cooperative Shares": With respect to any Cooperative Loan, the
shares of stock issued by a Cooperative Corporation and allocated to a
Cooperative Unit and represented by a stock certificates.
"Cooperative Unit": With respect to any Cooperative Loan, a
specific unit in a Cooperative Project.
"Covered Loan": A Mortgage Loan categorized as Covered pursuant
to Appendix E of Standard & Poor's Glossary.
"Credit Documents": Those documents, comprising part of the
Mortgage File, required of the Mortgagor, as described in Section 2 (Specific
Loan Program Guidelines) of the PHH Guide. The Credit Documents are
specified on Schedule B-2 hereto.
"Custodial Agreement": With respect to each Mortgage Loan
purchase hereunder, the applicable Custodial Agreement, among the Purchaser,
the Servicer and the Custodian.
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"Custodian": With respect to each Mortgage Loan purchase, the
Custodian named in the applicable Custodial Agreement, or its successor in
interest or assigns or any successor to the Custodian under such Custodial
Agreement as provided therein.
"Cut-off Date" : The first day of the month in which the
respective Funding Date occurs.
Deemed Material and Adverse Representation: Each representation
and warranty identified as such in Section 3.03 of this Agreement.
"Defect": Shall have the meaning set forth in Section 2.04.
"Defective Mortgage Loan": Shall have the meaning set forth in
Section 3.04.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced with a Qualified Substitute Mortgage Loan.
"Delinquent Mortgage Loan": Shall have the meaning set forth in
Section 11.01.
"Depositor": The depositor, as such term is defined in
Regulation AB, with respect to any Securitization Transaction.
"Determination Date": The 15th day of each calendar month,
commencing on the 15th day of the month following the Funding Date, or, if
such 15th day is not a Business Day, the Business Day immediately preceding
such 15th day.
"Due Date": With respect to any Mortgage Loan, the day of the
month on which each Monthly Payment is due thereon, exclusive of any days of
grace.
"Due Period": With respect to each Remittance Date, the period
commencing on the second day of the month immediately preceding the month of
such Remittance Date and ending on the first day of the month of such
Remittance Date.
"Eligible Account": One or more accounts (i) that are maintained
with a depository institution the long-term unsecured debt obligations of
which have been rated by each Rating Agency in one of its two highest rating
categories at the time of any deposit therein, (ii) that are trust accounts
with any depository institution held by the depository institution in its
capacity as a corporate trustee, the deposits in which are insured by the
FDIC (to the limits established by the FDIC) and the uninsured deposits in
which are otherwise secured such that the Purchaser has a claim with respect
to the funds in such accounts or a perfected first security interest against
any collateral securing such funds that is superior to claims of any other
depositors or creditors of the depository institution with which such
accounts are maintained. In addition, solely with respect to Mortgage Loans
which are not part of a Securitization Transaction, "Eligible Account" shall
include any accounts that meet the standards established from time to time by
Xxxxxx Xxx or Xxxxxxx Mac, as applicable, for eligible custodial
depositories. In the event that the Mortgage Loans are subject to a
Securitization Transaction, the Servicer agrees that the definition of
Eligible Account shall satisfy the rating requirements
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established by each Rating Agency which rates any of the securities issued as
part of such Securitization Transaction.
"Environmental Assessment": A "Phase I" environmental assessment
of a Mortgaged Property prepared by an Independent Person who regularly
conducts environmental assessments and who has any necessary license(s)
required by applicable law and has at least five years experience conducting
environmental assessments.
"Environmental Conditions Precedent to Foreclosure": Shall have
the meaning set forth in Section 5.15.
"Environmental Laws": All federal, state, and local statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants or industrial, toxic or
hazardous substances or wastes into the environment, including ambient air,
surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or industrial, toxic or
hazardous substances or wastes or the cleanup or other remediation thereof.
"Escrow Account": The separate trust account or accounts created
and maintained pursuant to Section 5.06 which shall be entitled "PHH Mortgage
Corporation, as servicer for the Purchaser under the Third Amended and
Restated Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated as of
January 1, 2006, and various mortgagors."
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, mortgage insurance premiums, fire and hazard
insurance premiums and other payments required to be escrowed by the
Mortgagor with the mortgagee pursuant to any Mortgage Loan.
"Estoppel Letter": A document executed by the Cooperative
Corporation certifying, with respect to a Cooperative Unit, (i) the
appurtenant Proprietary Lease will be in full force and effect as of the date
of issuance thereof, (ii) the related Stock Certificate was registered in the
Mortgagor's name and the Cooperative Corporation has not been notified of any
lien upon, pledge of, levy of execution on or disposition of such Stock
Certificate, and (iii) the Mortgagor is not in default under the appurtenant
Proprietary Lease and all charges due the Cooperative Corporation have been
paid.
"Event of Default": Any one of the conditions or circumstances
enumerated in Section 10.01.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Xxxxxx Xxx": The Federal National Mortgage Association or any
successor organization.
"Xxxxxx Mae Guide": The Xxxxxx Xxx Selling Guide and the
Servicing Guide, collectively, in effect on and after the Funding Date.
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"FDIC": The Federal Deposit Insurance Corporation or any
successor organization.
"Fidelity Bond": A fidelity bond to be maintained by the
Servicer pursuant to Section 5.12.
"Financing Statement": A financing statement in the form of a
UCC-1 filed pursuant to the relevant state Uniform Commercial Code to perfect
a security interest in the Cooperative Shares and Pledge Instruments.
"Financing Statement Change": A financing statement in the form
of a UCC-3 filed to continue, terminate, release, assign or amend an existing
Financing Statement.
"Foreclosure Profits": As to any Distribution Date or related
Determination Date and any Mortgage Loan, the excess, if any, of Liquidation
Proceeds, Insurance Proceeds and proceeds from any REO Disposition (net of
all amounts reimbursable therefrom pursuant to Section 5.13, Section 5.14 and
Section 5.15) in respect of each Mortgage Loan or REO Property for which a
Cash Liquidation or REO Disposition occurred in the related prepayment period
over the sum of the Unpaid Principal Balance of such Mortgage Loan or REO
Property (determined, in the case of an REO Disposition, in accordance with
Section 5.13, Section 5.14 and Section 5.15) plus accrued and unpaid interest
at the Mortgage Rate on such Unpaid Principal Balance from the Due Date to
which interest was last paid by the Mortgagor to the first day of the month
following the month in which such Cash Liquidation or REO Disposition
occurred.
"Xxxxxxx Mac": The Federal Home Loan Mortgage Corporation or any
successor organization.
"Xxxxxxx Mac Servicing Guide": The Xxxxxxx Mac/ Xxxxxxx Xxx
Xxxxxxx' and Servicers' Guide in effect on and after the Funding Date.
"Funding Date": Each date (up to four per month) that Purchaser
purchases Mortgage Loans from the Sellers hereunder.
"Gross Margin": With respect to each ARM Loan, the fixed
percentage added to the Index on each Rate Adjustment Date, as specified in
each related Mortgage Note and listed in the Mortgage Loan Schedule.
"High Cost Loan": A Mortgage Loan (a) covered by the Home
Ownership and Equity Protection Act of 1994, (b) classified as a "high cost
home," "threshold," "covered," (excluding New Jersey "Covered Home Loans" as
that term was defined in clause (1) of the definition of that term in the New
Jersey Home Ownership Security Act of 2002 that were originated between
November 26, 2003 and July 7, 2004), "high risk home," "predatory" or similar
loan under any other applicable state, federal or local law (or a similarly
classified loan using different terminology under a law imposing heightened
regulatory scrutiny or additional legal liability for residential mortgage
loans having high interest rates, points and/or fees) or (c) a Mortgage Loan
categorized as High Cost pursuant to Appendix E of Standard & Poor's
Glossary. For avoidance of doubt, the parties agree that this definition
shall apply to any law
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regardless of whether such law is presently, or in the future becomes, the
subject of judicial review or litigation.
"HUD": The United States Department of Housing and Urban
Development, or any successor thereto.
"Indemnified Party": Each of the Purchaser and any Successor
Servicer and each of their present and former directors, officers, agents,
employees, Affiliates and assignees and each Person, if any, that controls
the Purchaser or Successor Servicer or such Affiliate within the meaning of
either the Securities Act or the Exchange Act.
"Independent": With respect to any specified Person, such Person
who: (i) does not have any direct financial interest or any material
indirect financial interest in the applicable Mortgagor, the Sellers, the
Purchaser, or their Affiliates; and (b) is not connected with the applicable
Mortgagor, the Sellers, the Purchaser, or their respective Affiliates as an
officer, employee, promoter, underwriter, trustee, member, partner,
shareholder, director, or Person performing similar functions.
"Index": With respect to each ARM Loan, the applicable rate
index set forth on the related Mortgage Note.
"Insolvency Proceeding": With respect to any Person: (i) any
case, action, or proceeding with respect to such Person before any court or
other governmental authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding up, or relief of
debtors; or (ii) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other, similar
arrangement in respect of the creditors generally of such Person or any
substantial portion of such Person's creditors; in any case undertaken under
federal, state or foreign law, including the Bankruptcy Code.
"Insurance Proceeds": Proceeds of any Primary Insurance Policy,
title policy, hazard policy or other insurance policy insuring a Mortgage
Loan or the related Mortgaged Property.
"Legal Documents": Those documents, comprising part of the
Mortgage File, set forth in Schedule B-1 of this Agreement.
"Lender-Paid Mortgage Insurance Rate": With respect to any
Mortgage Loan, the Lender-Paid Mortgage Insurance Rate for any "lender-paid"
Primary Insurance Policy shall be a per annum rate equal to the percentage
indicated on the Mortgage Loan Schedule.
"Lifetime Rate Cap": The provision of each Mortgage Note related
to an Adjustable Rate Mortgage Loan which provides for an absolute maximum
Note Rate thereunder. The Note Rate during the terms of each Adjustable Rate
Mortgage Loan shall not at any time exceed the Note Rate at the time of
origination of such Adjustable Rate Mortgage Loan by more than the amount per
annum set forth on the related Mortgage Loan Schedule.
"Liquidation Proceeds": Amounts, other than Insurance Proceeds
and Condemnation Proceeds, received by the Servicer in connection with the
liquidation of a
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defaulted Mortgage Loan through trustee's sale, foreclosure sale or
otherwise, other than amounts received following the acquisition of an REO
Property in accordance with the provisions hereof.
"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage
Loan, the original principal balance of such Mortgage Loan divided by the
lesser of the Appraised Value of the related Mortgaged Property or the
purchase price. The Loan-to-Value Ratio of any Pledged Asset Mortgage Loan
shall be calculated by reducing the principal balance of such Pledged Asset
Mortgage Loan by the amount of the Original Pledged Asset Requirement with
respect to such Mortgage Loan. This is referred to in the PHH Guide as the
effective loan-to- value.
"Losses": Shall have the meaning set forth in Section 9.01.
"MAI Appraiser": With respect to any real property, a member of
the American Institute of Real Estate Appraisers with a minimum of 5 years of
experience appraising real property of a type similar to the real property
being appraised and located in the same geographical area as the real
property being appraised.
"Maximum Rate": With respect to each ARM Loan, the rate per annum
set forth in the related Mortgage Note as the maximum Note Rate thereunder.
The Maximum Rate as to each ARM Loan is set forth on the related Mortgage
Loan Schedule.
"MERS": Mortgage Electronic Registration Systems, Inc., a
Delaware corporation, or any successor in interest thereto.
"MERS Eligible Mortgage Loan": Any Mortgage Loan that under
applicable law and investor requirements is recordable in the name of MERS in
the jurisdiction in which the related Mortgaged Property is located.
"MERS Mortgage Loan": Any Mortgage Loan as to which the related
Mortgage, or an Assignment, has been recorded in the name of MERS, as agent
for the holder from time to time of the Mortgage Note.
"Minimum Rate": With respect to each ARM Loan, the rate per annum
set forth in the related Mortgage Note as the minimum Note Rate thereunder.
The Minimum Rate as to each ARM Loan is set forth on the related Mortgage
Loan Schedule.
"Monthly Advance": The aggregate amount of the advances made by
the Servicer on any Remittance Date pursuant to and as more fully described
in Section 6.03.
"Monthly Payment": The scheduled monthly payment of principal
and interest on a Mortgage Loan which is payable by a Mortgagor under the
related Mortgage Note on each Due Date.
"Monthly Period": Initially, the period from the Funding Date
through to and including the first Record Date during the term hereof, and,
thereafter, the period commencing on the day after each Record Date during
the term hereof and ending on the next succeeding Record Date during the term
hereof (or, if earlier, the date on which this Agreement terminates).
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"Mortgage": The mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first lien on either (i) with
respect to a Mortgage Loan other than a Cooperative Loan, an unsubordinated
estate in fee simple in real property or (ii) with respect to a Cooperative
Loan, the Proprietary Lease and related Cooperative Shares, which in either
case secures the Mortgage Note.
"Mortgage File": With respect to a particular Mortgage Loan,
those origination and servicing documents, escrow documents, and other
documents as are specified on Schedule B-1 and B-2 to this Agreement and any
additional documents required to be added to the Mortgage File pursuant to
the related Purchase Price and Terms Letter. These documents shall be stored
in a secure manner using paper or electronic storage.
"Mortgage Loan": Each individual mortgage loan or Cooperative
Loan (including all documents included in the Mortgage File evidencing the
same, all Monthly Payments, Principal Prepayments, Insurance Proceeds,
Condemnation Proceeds, Liquidation Proceeds, and other proceeds relating
thereto, and any and all rights, benefits, proceeds and obligations arising
therefrom or in connection therewith) which is the subject of this Agreement
and the related Purchase Price and Terms Letter. The Mortgage Loans subject
to this Agreement shall be identified on Mortgage Loan Schedules prepared in
connection with each Funding Date.
"Mortgage Loan Schedule": The list of Mortgage Loans identified
on each Funding Date that sets forth the information with respect to each
Mortgage Loan that is specified on Schedule A hereto (as amended from time to
time to reflect the addition of any Qualified Substitute Mortgage Loans and
the withdrawal of any Deleted Mortgage Loans). A Mortgage Loan Schedule will
be prepared for each Funding Date.
"Mortgage Note": The note or other evidence of the indebtedness
of a Mortgagor secured by a Mortgage.
"Mortgaged Property": With respect to a Mortgage Loan, the
underlying property securing repayment of a Mortgage Note.
"Mortgagor": The obligor on a Mortgage Note.
"Negative Amortization": That portion of interest accrued at the
Note Rate in any month which exceeds the Monthly Payment on the related
Mortgage Loan for such month and which, pursuant to the terms of the Mortgage
Note, is added to the principal balance of the Mortgage Loan.
"Non-recoverable Advance": As of any date of determination, any
Monthly Advance or Servicing Advance previously made or any Monthly Advance
or Servicing Advance proposed to be made in respect of a Mortgage Loan which,
in the good faith judgment of the Servicer and in accordance with the
servicing standard set forth in Section 5.01, will not or, in the case of a
proposed advance, would not be ultimately recoverable pursuant to
Section 5.05 (3) or (4) hereof. The determination by the Servicer that it has
made a Non-recoverable Advance or that any proposed advance would constitute
a Non-recoverable Advance shall be evidenced by an Officers' Certificate
satisfying the requirements of Section 6.04 hereof and delivered to the
Purchaser on or before the Determination Date in any month.
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"Note Rate": With respect to any Mortgage Loan at any time any
determination thereof is to be made, the annual rate at which interest
accrues thereon.
OCC: Office of the Comptroller of the Currency, or any successor
thereto.
"Offering Materials": All documents, tapes, or other materials
relating to the Mortgage Loans provided by Seller to Purchaser prior to
Purchaser submitting its bid to purchase the Mortgage loans.
"Officers' Certificate": A certificate signed by (i) the
President or a Vice President and (ii) the Treasurer or the Secretary or one
of the Assistant Treasurers or Assistant Secretaries of the Servicer, and
delivered by the Servicer to the Purchaser as required by this Agreement.
"Original Pledged Asset Requirement": With respect to any Pledged
Asset Mortgage Loan, an amount equal to the Pledged Assets required at the
time of the origination of such Pledged Asset Mortgage Loan. Even though for
other purposes the Original Pledged Asset Requirement may actually exceed
thirty percent (30%) of the original principal balance of a Pledged Asset
Mortgage Loan, solely for purposes of the Required Surety Payment, the
Original Pledged Asset Requirement for a Pledged Asset Mortgage Loan will be
deemed not to exceed thirty percent (30%) of its original principal balance.
"OTS": The Office of Thrift Supervision or any successor thereto.
"Payment Adjustment Date": The date on which Monthly Payments
shall be adjusted. Payment Adjustment Date shall occur on the date which is
eleven months from the first payment date for the Mortgage Loan, unless
otherwise specified in the Mortgage Note, and on each anniversary of such
first Payment Adjustment Date.
"Payoff": With respect to any Mortgage Loan, any payment or
recovery received in advance of the last scheduled Due Date of such Mortgage
Loan, which payment or recovery consists of principal in an amount equal to
the outstanding principal balance of such Mortgage Loan, all accrued and
unpaid prepayment penalties, premiums, and/or interest with respect thereto,
and all other unpaid sums due with respect to such Mortgage Loan.
"Periodic Rate Cap": With respect to each ARM Loan and any Rate
Adjustment Date therefor, the number of basis points that is set forth in the
related Mortgage Loan Schedule and in the related Mortgage Note, which is the
maximum amount by which the Note Rate for such Mortgage Loan may increase or
decrease on such Rate Adjustment Date.
"Periodic Rate Floor": With respect to each Adjustable Rate
Mortgage Loan, the provision of each Mortgage Note which provides for an
absolute maximum amount by which the Mortgage Interest Rate therein may
decrease on an Rate Adjustment Date below the Mortgage Interest Rate
previously in effect.
"Permitted Investments": Investments that mature, unless payable
on demand, not later than the Business Day preceding the related Remittance
Date; provided that such investments shall only consist of the following:
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(i) direct obligations of, or obligations fully
guaranteed as to principal and interest by, the United States or any
agency or instrumentality thereof, provided such obligations are backed
by the full faith and credit of the United States;
(ii) repurchase obligations (the collateral for which is
held by a third party) with respect to any security described in clause
(i) above, provided that the long-term unsecured obligations of the
party agreeing to repurchase such obligations are at the time rated by
each Rating Agency in one of its two highest rating categories;
(iii) certificates of deposit, time deposits and bankers'
acceptances of any bank or trust company incorporated under the laws of
the United States or any state, provided that the long-term unsecured
debt obligations of such bank or trust company (or, in the case of the
principal depository institution of a depository institution holding
company, the long-term unsecured debt obligations of the depository
institution holding company) at the date of acquisition thereof have
been rated by each Rating Agency in one of its two highest rating
categories;
(iv) commercial paper (having original maturities of not
more than 365 days) of any corporation incorporated under the laws of
the United States or any state thereof which on the date of acquisition
has been rated by each Rating Agency in its highest rating category; and
(v) any other demand, money market or time deposit
account or obligation, or interest-bearing or other security or
investment, acceptable to the Purchaser (such acceptance evidenced in
writing);
provided further that "Permitted Investments" shall not include any
instrument described hereunder which evidences either the right to receive
(a) only interest with respect to the obligations underlying such instrument
or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with
respect to such instrument provide a yield to maturity at par greater than
120% of the yield to maturity at par of the underlying obligations.
"Person": Any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Pledge Agreements": Each Control Agreement and Pledged Asset
Agreement for each Pledged Asset Mortgage Loan.
"Pledge Instruments": With respect to each Cooperative Loan, the
Stock Power, the Assignment of the Proprietary Lease, the Assignment of the
Mortgage Note and the Acceptance of Assignment and Assumption of Lease
Agreement.
"Pledged Asset Agreement": With respect to each Pledged Asset
Mortgage Loan, the Pledge Agreement for Securities Account between the
related mortgagor and the related Pledged Asset Servicer pursuant to which
such mortgagor granted a security interest in the related securities and
other financial assets held therein.
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"Pledged Asset Mortgage Loan": Each Mortgage Loan as to which
Pledged Assets, in the form of a security interest in the Securities Account
and the financial assets held therein and having a value, as of the date of
origination of such Mortgage Loan, of at least equal to the related Original
Pledged Asset Requirement, were required to be provided at the closing
thereof, which is subject to the terms of this Agreement from time to time.
"Pledged Asset Servicer": The entity responsible for
administering and servicing the Pledged Assets with respect to a Pledged
Asset Mortgage Loan.
"Pledged Asset Servicing Agreement": With respect to each
Pledged Asset Mortgage Loan, the Agreement between the related Pledged Asset
Servicer and PHH Mortgage, including any exhibits thereto, pursuant to which
such Pledged Asset Servicer shall service and administer the related Pledged
Assets.
"Pledged Assets": With respect to any Pledged Asset Mortgage
Loan, the related Securities Account and the financial assets held therein
subject to a security interest pursuant to the related Pledged Asset
Agreement.
"Prepaid Monthly Payment": Any Monthly Payment received prior to
its scheduled Due Date and which is intended to be applied to a Mortgage Loan
on its scheduled Due Date.
"Prepayment Interest Shortfall Amount": With respect to any
Mortgage Loan that was subject to a voluntary (not including discounted
payoffs) Principal Prepayment in full or in part during any Due Period, which
Principal Prepayment was applied to such Mortgage Loan prior to such Mortgage
Loan's Due Date in such Due Period, the amount of interest (net of the
related Servicing Fee for Principal Prepayments in full only) that would have
accrued on the amount of such Principal Prepayment during the period
commencing on the date as of which such Principal Prepayment was applied to
such Mortgage Loan and ending on the day immediately preceding such Due Date,
inclusive.
"Primary Insurance Policy": A policy of primary mortgage
guaranty insurance issued by an insurer acceptable under the Underwriting
Guidelines and qualified to do business in the jurisdiction where the
Mortgaged Property is located, in effect with respect to a Mortgage Loan and
as so indicated on the Mortgage Loan Schedule, or any replacement policy
therefor obtained by the Servicer pursuant to Section 5.08.
"Principal Prepayment": Any payment or other recovery of
principal on a Mortgage Loan (including a Payoff), other than a Monthly
Payment or a Prepaid Monthly Payment which is received in advance of its
scheduled Due Date, including any prepayment penalty or premium thereon,
which is not accompanied by an amount of interest representing scheduled
interest due on any date or dates in any month or months subsequent to the
month of prepayment and which is intended to reduce the principal balance of
the Mortgage Loan.
"Principal Prepayment Period": The Due Period preceding the
related Remittance Date occurs.
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"Proprietary Lease": The lease on a Cooperative Unit evidencing
the possessory interest of the owner of the Cooperative Shares in such
Cooperative Unit.
"PUD": Shall have the meaning set forth in Section 3.03.
"Purchase Price": As to each Mortgage Loan to be sold hereunder,
the price set forth in the Mortgage Loan Schedule and the related Purchase
Price and Terms Letter.
"Purchase Price and Terms Letter": With respect to any pool of
Mortgage Loans purchased and sold on any Funding Date, the letter agreement
or the electronic loan confirmation between the Purchaser and Seller
(including any exhibits, schedules and attachments thereto), setting forth
the terms and conditions of such transaction and describing the Mortgage
Loans to be purchased by the Purchaser on such Funding Date. A Purchase
Price and Terms Letter may relate to more than one pool of Mortgage Loans to
be purchased on one or more Funding Dates hereunder.
"Purchase Price Percentage": Shall have the meaning set forth in
the related Purchase Price and Terms Letter.
"Purchaser": Xxxxxx Xxxxxxx Mortgage Capital Inc., or its
successor in interest or any successor under this Agreement appointed as
herein provided.
"Purchaser's Account": The account of the Purchaser at a bank or
other entity most recently designated in a written notice by the Purchaser to
the Sellers as the "Purchaser's Account."
"Qualified Appraiser": An appraiser, duly appointed by the
Seller, who had no interest, direct or indirect in the Mortgaged Property or
in any loan made on the security thereof, and whose compensation was not
affected by the approval or disapproval of the Mortgage Loan, and such
appraiser and the appraisal made by such appraiser both satisfied the
requirements of Title XI of FIRREA and the regulations promulgated
thereunder, all as in effect on the date the Mortgage Loan was originated.
"Qualified Correspondent": Any Person from which a Seller
purchased Mortgage Loans, provided that the following conditions are
satisfied: (i) such Mortgage Loans were originated pursuant to an agreement
between the related Seller and such Person that contemplated that such Person
would underwrite mortgage loans from time to time, for sale to the related
Seller, in accordance with underwriting guidelines designated by the related
Seller ("Designated Guidelines") or guidelines that do not vary materially
from such Designated Guidelines; (ii) such Mortgage Loans were in fact
underwritten as described in clause (i) above and were acquired by the
related Seller within 180 days after origination; (iii) either (x) the
Designated Guidelines were, at the time such Mortgage Loans were originated,
used by the related Seller in origination of mortgage loans of the same type
as the Mortgage Loans for the related Seller's own account or (y) the
Designated Guidelines were, at the time such Mortgage Loans were
underwritten, designated by the related Seller on a consistent basis for use
by lenders in originating mortgage loans to be purchased by the related
Seller; and (iv) the related Seller employed, at the time such Mortgage Loans
were acquired by the related Seller, pre-purchase or post-purchase quality
assurance procedures (which may involve, among other things, review of a
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sample of mortgage loans purchased during a particular time period or through
particular channels) designed to ensure that Persons from which it purchased
mortgage loans properly applied the underwriting criteria designated by the
related Seller.
"Qualified Mortgage Insurer": American Guaranty Corporation,
Commonwealth Mortgage Assurance Company, General Electric Mortgage Insurance
Companies, Mortgage Guaranty Insurance Corporation, PMI Mortgage Insurance
Company, Republic Mortgage Insurance Company or United Guaranty Residential
Insurance Corporation.
"Qualified Substitute Mortgage Loan": A Mortgage Loan substituted
by a Seller 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 and received 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 Unpaid
Principal Balance of the Deleted Mortgage Loan and not less than ninety
percent (90%) of the Unpaid Principal Balance of the Deleted Mortgage Loan
(the amount of any shortfall to be distributed by the applicable Seller to
the Purchaser in the month of substitution), (ii) have a remaining term to
maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (iii) have a Note Rate not less than (and not more
than one percentage point greater than) the Note Rate of the Deleted Mortgage
Loan, (iv) with respect to each ARM Loan, have a Minimum Rate not less than
that of the Deleted Mortgage Loan, (v) with respect to each ARM Loan, have a
Maximum Rate not less than that of the Deleted Mortgage Loan and not more
than two (2) percentage points above that of the Deleted Mortgage Loan,
(vi) with respect to each ARM Loan, have a Gross Margin not less than that of
the Deleted Mortgage Loan, (vii) with respect to each ARM Loan, have a
Periodic Rate Cap equal to that of the Deleted Mortgage Loan, (viii) have a
Loan-to-Value Ratio at the time of substitution equal to or less than the
Loan-to-Value Ratio of the Deleted Mortgage Loan at the time of substitution,
(ix) with respect to each ARM Loan, have the same Rate Adjustment Date as
that of the Deleted Mortgage Loan, (x) with respect to each ARM Loan, have an
Index as provided herein for all ARM Loans subject to this Agreement,
(xi) comply as of the date of substitution with each representation and
warranty set forth in Sections 3.01, 3.02 and 3.03, (xii) be in the same
credit grade category as the Deleted Mortgage Loan, (xiii) have the same
prepayment penalty term, (xiv) be current in the payment of principal and
interest; (xv) be secured by a Mortgaged Property of the same type and
occupancy status as secured the Deleted Mortgage Loan; and (xvi) have payment
terms that do not vary in any material respect from those of the Deleted
Mortgage Loan.
"Rate Adjustment Date": With respect to each ARM Loan, the date
on which the Note Rate adjusts.
"Rating Agency": Standard & Poor's Ratings Services, a division
of The XxXxxx-Xxxx Companies, Xxxxx'x Investors Service, Inc., and Fitch,
Inc.
"Recognition Agreement": An agreement among a Cooperative
Corporation, a lender and a Mortgagor with respect to a Cooperative Loan
whereby such parties (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.
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"Reconstitution": Any Securitization Transaction or Whole Loan
Transfer.
"Reconstitution Agreements": The agreement or agreements entered
into by the Purchaser, the Servicer, and/or certain third parties on any
Reconstitution Date with respect to any or all of the Mortgage Loans in
connection with a Securitization Transaction, Whole-Loan Transfer or an
Agency Transfer, including, but not limited to, (i) an Assignment, Assumption
and Recognition Agreement in substantially the form of Exhibit 2.05 hereof,
(ii) a Xxxxxx Xxx Mortgage Selling and Servicing Contract, a Pool Purchase
Contract, and any and all servicing agreements and tri-party agreements
reasonably required by Xxxxxx Mae with respect to a Xxxxxx Xxx Transfer,
(iii) a Purchase Contract and all purchase documents associated therewith as
set forth in the Xxxxxxx Xxx Xxxxxxx' & Servicers' Guide, and any and all
servicing agreements and tri-party agreements reasonably required by Xxxxxxx
Mac with respect to a Xxxxxxx Mac Transfer, and (iv) a Pooling and Servicing
Agreement, trust agreement, assignment and assumption agreements, and/or a
subservicing/master servicing agreement and any related custodial agreement,
officers' certificates, and correspondence and related documents related to a
Securitization Transaction.
"Reconstitution Date": The date or dates on which any or all of
the Mortgage Loans serviced under this Agreement shall be subject to an
Agency Transfer, a Whole Loan Transfer or a Securitization Transaction.
"Record Date": The close of business of the first Business Day
of the month of the related Remittance Date.
"Refinanced Mortgage Loan": A Mortgage Loan that was made to a
Mortgagor who owned the Mortgaged Property prior to the origination of such
Mortgage Loan and the proceeds of which were used in whole or part to satisfy
an existing mortgage.
"Regulation AB": Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from
time to time, and subject to such clarification and interpretation as have
been provided by the Commission in the adopting release (Asset-Backed
Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531
(Jan. 7, 2005)) or by the staff of the Commission, or as may be provided by
the Commission or its staff from time to time.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Internal Revenue Code or any similar tax
vehicle providing for the pooling of assets (such as a Financial Asset
Security Investment Trust).
"Remittance Date": The 18th day of each calendar month,
commencing on the 18th day of the month following the Funding Date, or, if
such 18th day is not a Business Day, then the next Business Day immediately
preceding such 18th day.
"Remittance Rate": With respect to each Mortgage Loan, the
related Note Rate minus the Servicing Fee Rate.
"REO Disposition": The final sale by the Servicer of any REO
Property.
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"REO Disposition Proceeds": All amounts received with respect to
any REO Disposition.
"REO Property": A Mortgaged Property acquired by the Servicer on
behalf of the Purchaser as described in Section 5.13.
"Repurchase Price": With respect to any Defective Mortgage Loan,
the price for such repurchase shall be calculated as follows: (a) during the
first year immediately following the Closing Date, an amount equal to the sum
of (i) the product of (x) the Purchase Price Percentage (as adjusted pursuant
the Purchase Price and Terms Letter) and (y) the then outstanding principal
balance of such Defective Mortgage Loan as of the date of such repurchase,
plus (ii) accrued interest on such Defective Mortgage Loan at the applicable
mortgage interest rate from the date to which interest had last been paid
through the date of such repurchase, plus (iii) the amount of any outstanding
advances owed to the Servicer, and (b) thereafter, an amount equal to the sum
of (i) then outstanding principal balance of such Defective Mortgage Loan as
of the date of such repurchase plus (ii) accrued interest thereon at the
mortgage interest rate from the date to which interest had last been paid
through the date of such repurchase, plus (iii) the amount of any outstanding
advances owed to the Servicer. In the event the Purchaser has securitized or
sold the Mortgage Loans, the price for such repurchase shall be as set forth
in clause (b) hereof.
"Required Surety Payment": With respect to any defaulted Pledged
Asset Mortgage Loan for which a claim is payable under the related Surety
Bond under the procedures referred to herein, the lesser of (i) the principal
portion of the realized loss with respect to such Mortgage Loan and (ii) the
excess, if any, of (a) the amount of Pledged Assets required at origination
with respect to such Mortgage Loan (but not more than 30% of the original
principal balance of such Mortgage Loan) over (b) the net proceeds realized
by the related Pledged Asset Servicer from the related Pledged Assets.
"Sale": Shall have the meaning set forth in Section 3.05.
"Scheduled Principal Balance": With respect to any Mortgage
Loan, (i) the outstanding principal balance as of the Funding Date after
application of principal payments due on or before such date whether or not
received, minus (ii) all amounts previously remitted to the Purchaser with
respect to such Mortgage Loan representing (a) payments or other recoveries
of principal, or (b) advances of principal made pursuant to Section 6.03.
"Securities Account": With respect to any Pledged Asset Mortgage
Loans, the account, together with the financial assets held therein, that is
the subject of the related Pledged Asset Agreement.
"Securities Act": The federal Securities Act of 1933, as amended.
"Securitization Transaction": Any transaction involving either
(1) a sale or other transfer of some or all of the Mortgage Loans directly or
indirectly to an issuing entity in connection with an issuance of publicly
offered or privately placed, rated or unrated mortgage-backed securities or
(2) an issuance of publicly offered or privately placed, rated or unrated
securities, the payments on which are determined primarily by reference to
one or more
-17-
portfolios of residential mortgage loans consisting, in whole or in part, of
some or all of the Mortgage Loans.
"Security Agreement": The agreement creating a security interest
in the stock allocated to a dwelling unit in the residential cooperative
housing corporation that was pledged to secure such Cooperative Loan and the
related Cooperative Lease.
"Sellers": PHH Mortgage Corporation (formerly known as Cendant
Mortgage Corporation), a New Jersey corporation and Xxxxxx'x Gate Residential
Mortgage Trust (formerly known as Cendant Residential Mortgage Trust), a
Delaware statutory trust, or their successors in interest or any successor
under this Agreement appointed as herein provided.
"Seller Information": As defined in Section 13.07(a).
"Servicer": PHH Mortgage Corporation, a New Jersey corporation,
or with respect to Subsection 13.03(c), as defined therein.
"Servicing Advances": All "out of pocket" costs and expenses
that are customary, reasonable and necessary which are incurred by the
Servicer in the performance of its servicing obligations hereunder, including
(without duplication) (i) reasonable attorneys' fees and (ii) the cost of
(a) the preservation, restoration and protection of the Mortgaged Property,
(b) any enforcement or judicial proceedings, including foreclosures, (c) the
servicing, management and liquidation of any Specially Serviced Mortgaged
Loans and/or any REO Property, and (d) compliance with the Servicer's
obligations under Section 5.08.
"Servicing Criteria": The "servicing criteria" set forth in Item
1122(d) of Regulation AB, as such may be amended from time to time.
"Servicing Event": Any of the following events with respect to
any Mortgage Loan: (i) any Monthly Payment being more than 60 days
delinquent; (ii) any filing of an Insolvency Proceeding by or on behalf of
the related Mortgagor, any consent by or on behalf of the related Mortgagor
to the filing of an Insolvency Proceeding against such Mortgagor, or any
admission by or on behalf of such Mortgagor of its inability to pay such
Person's debts generally as the same become due; (iii) any filing of an
Insolvency Proceeding against the related Mortgagor that remains undismissed
or unstayed for a period of 60 days after the filing thereof; (iv) any
issuance of any attachment or execution against, or any appointment of a
conservator, receiver or liquidator with respect to, all or substantially all
of the assets of the related Mortgagor or with respect to any Mortgaged
Property; (v) any receipt by the Servicer of notice of the foreclosure or
proposed foreclosure of any other lien on the related Mortgaged Property;
(vi) any proposal of a material modification (as reasonably determined by the
Seller) to such Mortgage Loan due to a default or imminent default under such
Mortgage Loan; or (vii) in the reasonable judgment of the Servicer, the
occurrence, or likely occurrence within 60 days, of a payment default with
respect to such Mortgage Loan that is likely to remain uncured by the related
Mortgagor within 60 days thereafter.
"Servicing Fee": The annual fee, payable monthly to the Servicer
out of the interest portion of the Monthly Payment actually received on each
Mortgage Loan. The Servicing Fee with respect to each Mortgage Loan for any
calendar month (or a portion thereof)
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shall be 1/12 of the product of (i) the Unpaid Principal Balance of the
Mortgage Loan and (ii) the Servicing Fee Rate applicable to such Mortgage
Loan.
"Servicing Fee Rate": Unless otherwise specified on the Mortgage
Loan Schedule, (i) with respect to any ARM Loan, 0.375% per annum; provided
that, prior to the first Rate Adjustment Date with respect to any such
Mortgage Loan, such rate may be, at the Servicer's option, not less than
0.25% per annum; and (ii) with respect to any Mortgage Loan other than an ARM
Loan, 0.25% per annum.
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a written list of servicing officers furnished by the
Servicer to the Purchaser upon request therefor by the Purchaser, as such
list may from time to time be amended.
"Specially Serviced Mortgage Loan": A Mortgage Loan as to which
a Servicing Event has occurred and is continuing.
"Sponsor": The sponsor, as such term is defined in Regulation
AB, with respect to any Securitization Transaction.
"Standard & Poor's": Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies Inc., and any successor thereto.
"Standard & Poor's Glossary": The Standard & Poor's LEVELS(R)
Glossary, as may be in effect from time to time.
"Static Pool Information": Static pool information as described
in Item 1105(a)(1)-(3) and 1105(c) of Regulation AB.
"Subcontractor": Any vendor, subcontractor or other Person that
is not responsible for the overall servicing (as "servicing" is commonly
understood by participants in the mortgage-backed securities market) of
Mortgage Loans but performs one or more discrete functions identified in Item
1122(d) of Regulation AB with respect to Mortgage Loans under the direction
or authority of the Servicer or a Subservicer.
"Subservicer": Any Person that services Mortgage Loans on behalf
of the Servicer or any Subservicer and is responsible for the performance
(whether directly or through Subservicers or Subcontractors) of a substantial
portion of the material servicing functions required to be performed by the
Seller under this Agreement or any Reconstitution Agreement that are
identified in Item 1122(d) of Regulation AB.
"Stock Certificate": With respect to a Cooperative Loan, the
certificates evidencing ownership of the Cooperative Shares issued by the
Cooperative Corporation.
"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 Corporation.
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"Surety Bond": With respect to each Pledged Asset Mortgage Loan,
the surety bond issued by the related Surety Bond Issuer covering such
Pledged Asset Mortgage Loan.
"Surety Bond Issuer": With respect to each Pledged Asset Mortgage
Loan, the surety bond issuer for the related Surety Bond covering such
Pledged Asset Mortgage Loan.
"Third-Party Originator": Each Person, other than a Qualified
Correspondent, that originated Mortgage Loans acquired by the Seller.
"Transaction Servicer": As defined in Section 13.03(c).
"Transfer Date": In the event the Servicer is terminated as
servicer of a Mortgage Loan, the date on which the Purchaser, or its
designee, shall receive the transfer of servicing responsibilities with
respect to such Mortgage Loan and begin to perform the servicing of such
Mortgage Loans and the Servicer shall cease all servicing responsibilities.
"Trust Financials": Shall have the meaning set forth in
Section 3.01
"Underwriting Guidelines": The underwriting guidelines of the
Seller, a copy of which shall be attached as an exhibit to the related
Assignment and Conveyance.
"Uniform Commercial Code": The Uniform Commercial Code as in
effect on the date hereof in the State of New York; provided that if by
reason of mandatory provisions of law, the perfection or the effect of
perfection or non perfection of the security interest in any collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, "Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or effect of perfection or non perfection.
"Unpaid Principal Balance": With respect to any Mortgage Loan,
at any time, the actual outstanding principal balance then payable by the
Mortgagor under the terms of the related Mortgage Note including any
cumulative Negative Amortization.
"Warranty Xxxx of Sale": A warranty xxxx of sale with respect to
the Mortgage Loans purchased on a Funding Date in the form annexed hereto as
Exhibit 10.
"Whole Loan Transfer": Any sale or transfer of some or all of
the Mortgage Loans, other than a Securitization Transaction.
ARTICLE II
SALE AND CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS
AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01 Sale and Conveyance of Mortgage Loans. Seller
agrees to sell and Purchaser agrees to purchase, from time to time, those
certain Mortgage Loans identified in a Mortgage Loan Schedule, at the price
and on the terms set forth herein and in the related Purchase Price and Terms
Letter. Purchaser, on any Funding Date, shall be obligated to
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purchase only such Mortgage Loans set forth in the applicable Mortgage Loan
Schedule, subject to the terms and conditions of this Agreement and the
related Purchase Price and Terms Letter.
Purchaser will purchase Mortgage Loans from Seller, up to four
(4) times per month on such Funding Dates as may be agreed upon by Purchaser
and Seller. The closing shall, at Purchaser's option 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. On the Funding
Date and subject to the terms and conditions of this Agreement, each Seller
will sell, transfer, assign, set over and convey to the Purchaser, without
recourse except as set forth in this Agreement, and the Purchaser will
purchase, all of the right, title and interest of the applicable Seller in
and to the Mortgage Loans being conveyed by it hereunder, as identified on
the Mortgage Loan Schedule.
Examination of the Mortgage Files may be made by Purchaser or its
designee as follows. No later than 5 Business Days prior to the Funding
Date, Seller will deliver to Purchaser or its custodian, Legal Documents
required pursuant to Schedule B-1. Upon Purchaser's request, Seller shall
make the Credit Documents available in either original paper form or
electronic imaged format to Purchaser for review, at Seller's place of
business and during reasonable business hours. If Purchaser makes such
examination prior to the Funding Date and identifies any Mortgage Loans that
do not conform to the PHH Guide, such Mortgage Loans will be deleted from the
Mortgage Loan Schedule at Purchaser's discretion. Purchaser may, at its
option and without notice to Seller, purchase all or part of the Mortgage
Loans without conducting any partial or complete examination. The fact that
Purchaser has conducted or has failed to conduct any partial or complete
examination of the Mortgage Files shall not affect Purchaser's rights to
demand repurchase, substitution or other relief as provided herein.
On the Funding Date and in accordance with the terms herein,
Purchaser will pay to Seller by 2:00 p.m. Eastern Standard Time, by wire
transfer of immediately available funds, the Purchase Price for the Mortgage
Loans, which shall be calculated in accordance with the terms of the related
Purchase Price and Terms Letter and paid by the Purchaser to the Sellers in
accordance with the instructions to be provided, respectively, by PHH
Mortgage and the Trust. Seller, simultaneously with the payment of the
Purchase Price, shall execute and deliver to Purchaser a Warranty Xxxx of
Sale with respect to the Mortgage Loans in the form annexed hereto as Exhibit
10.
Purchaser shall be entitled to all scheduled principal due on and
after the Cut-off Date, all other recoveries of principal collected after the
Cut-off Date and all payments of interest on the Mortgage Loans (minus that
portion of any such payment which is allocable to the period prior to the
Cut-off Date). Notwithstanding the foregoing, on the first Remittance Date
after the Funding Date the Purchaser shall be entitled to receive the
interest accrued from and including the Cut-off Date through and including
the day immediately preceding the Funding 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 shall be the property
of Purchaser. Seller shall hold any such prepaid amounts for the benefit of
Purchaser for subsequent remittance by Seller to Purchaser. All scheduled
payments of principal due on or before the Cut-off Date and collected by
Servicer after the Cut-off Date shall belong to Seller.
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Section 2.02 Possession of Mortgage Files. Upon the sale of
any Mortgage Loan, the ownership of such Mortgage Loan, including the
Mortgage Note, the Mortgage, the contents of the related Mortgage File and
all rights, benefits, payments, proceeds and obligations arising therefrom or
in connection therewith, shall then be vested in the Purchaser, and the
ownership of all records and documents with respect to such Mortgage Loan
prepared by or which come into the possession of the Seller shall immediately
vest in the Purchaser and, to the extent retained by the Seller, shall be
retained and maintained, in trust, by the Seller at the will of the Purchaser
in a custodial capacity only. The contents of such Mortgage File not
delivered to the Purchaser are and shall be held in trust by the Seller for
the benefit of the Purchaser as the owner thereof and the Sellers' possession
of the contents of each Mortgage File so retained is at the will of the
Purchaser for the sole purpose of servicing the related Mortgage Loan, and
such retention and possession by the Seller shall be in a custodial capacity
only. Mortgage Files shall be maintained by the Seller and shall be marked
to clearly reflect the sale of the related Mortgage Loan to the Purchaser.
Each Seller shall release from its custody of the contents of any Mortgage
File only in accordance with written instructions from the Purchaser, except
where such release is required as incidental to the Servicer's servicing of
the Mortgage Loans or is in connection with a repurchase or substitution of
any such Mortgage Loan pursuant to Section 3.04.
Any documents released to a Seller or the Servicer in connection
with the foreclosure or servicing of any Mortgage Loan shall be held by such
Person in trust for the benefit of the Purchaser in accordance with this
Section 2.02. Such Person shall return to the Purchaser such documents when
such Person's need therefor in connection with such foreclosure or servicing
no longer exists (unless sooner requested by the Purchaser); provided that,
if such Mortgage Loan is liquidated, then, upon the delivery by a Seller or
the Servicer to the Purchaser of a request for the release of such documents
and a certificate certifying as to such liquidation, the Purchaser shall
promptly release and, to the extent necessary, deliver to such Person such
documents.
Section 2.03 Books and Records. The sale of each of its
Mortgage Loans shall be reflected on the applicable Seller's balance sheet
and other financial statements as a sale of assets by the applicable Seller.
Each Seller shall be responsible for maintaining, and shall maintain, a
complete set of books and records for the Mortgage Loans it conveyed to the
Purchaser which shall be clearly marked to reflect the sale of each Mortgage
Loan to the Purchaser and the ownership of each Mortgage Loan by the
Purchaser.
Section 2.04 Defective Documents; Delivery of Mortgage Loan
Documents. If, subsequent to the related Funding Date, the Purchaser or
either Seller finds any document or documents constituting a part of a
Mortgage File to be defective or missing in any material respect (in this
Section 2.04, a "Defect"), the party discovering such Defect shall promptly
so notify the other parties. If the Defect pertains to the Mortgage Note or
the Mortgage, then the applicable Seller shall have a period of 60 days
within which to correct or cure any such defect after the earlier of such
Seller's discovery of same or such Seller being notified of same. If such
Defect can ultimately be cured but is not reasonably expected to be cured
within such 60-day period, such Seller shall have such additional time as is
reasonably determined by the Purchaser to cure or correct such Defect,
provided that such Seller has commenced curing or correcting such Defect and
is diligently pursuing same; and provided, however, that in no event shall
the
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cure period be extended beyond 90 days after notice or discovery of such
Defect. If the Defect pertains to any other document constituting a part of
a Mortgage File, then such Seller shall have a period of 60 days within which
to correct or cure any such Defect after the earlier of such Seller's
discovery of same or such Seller being notified of same. If such Defect can
ultimately be cured but is not reasonably expected to be cured within the
60-day period, then such Seller shall have such additional time as is
reasonably determined by the Purchaser to cure or correct such Defect
provided such Seller has commenced curing or correcting such Defect and is
diligently pursuing same; and provided, however, that in no event shall the
cure period be extended beyond 90 days after notice or discovery of such
Defect. PHH Mortgage hereby covenants and agrees that, if any material
Defect cannot be corrected or cured, the related Mortgage Loan shall
automatically constitute, upon the expiration of the applicable cure period
described above and without any further action by any other party, a
Defective Mortgage Loan, whereupon PHH Mortgage shall repurchase such
Mortgage Loan by paying to the Purchaser the Repurchase Price therefor in
accordance with Section 3.04.
The applicable Seller will, with respect to each Mortgage Loan to
be purchased by the Purchaser, deliver and release to the Purchaser on the
related Funding Date (or on such earlier date as may be specified in the
related Purchase Price and Terms Letter), the Legal Documents as set forth in
Section 2.01. If the applicable Seller cannot deliver an original Mortgage
with evidence of recording thereon, original assumption, modification and
substitution agreements with evidence of recording thereon or an original
intervening assignment with evidence of recording thereon within the time
periods specified in the preceding sentence, then such Seller shall promptly
deliver to the Purchaser such original Mortgages and original intervening
assignments with evidence of recording indicated thereon upon receipt thereof
from the public recording official, except in cases where the original
Mortgage or original intervening assignments are retained permanently by the
recording office, in which case, such Seller shall deliver a copy of such
Mortgage or intervening assignment, as the case may be, certified to be a
true and complete copy of the recorded original thereof. If the applicable
Seller cannot deliver the original security instrument or if an original
intervening assignment has been lost, then the applicable Seller will deliver
a copy of such security instrument or intervening assignment, certified by
the local public recording official. If the original title policy has been
lost, the applicable Seller will deliver a duplicate original title policy.
If the original Mortgage was not delivered pursuant to the
preceding paragraph, then the applicable Seller shall use its best efforts to
promptly secure the delivery of such originals and shall cause such originals
to be delivered to the Purchaser promptly upon receipt thereof.
Notwithstanding the foregoing, if the original Mortgage, original assumption,
modification, and substitution agreements, the original of any intervening
assignment or the original policy of title insurance is not so delivered to
the Purchaser within 180 days following the Funding Date, then, upon written
notice by the Purchaser to PHH Mortgage, the Purchaser may, in its sole
discretion, then elect (by providing written notice to PHH Mortgage) to treat
such Mortgage Loan as a Defective Mortgage Loan, whereupon PHH Mortgage shall
repurchase such Mortgage Loan by paying to the Purchaser the Repurchase Price
therefor in accordance with Section 3.04. It is understood that from time to
time certain local recorder offices become backlogged with document volume.
It is agreed that the Seller will provide an Officers' Certificate to
document that the Seller has performed all necessary tasks to ensure delivery
of the required documentation within 180 days and the delay beyond 180 is
caused by the backlog. If
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the delay exceeds 240 days, regardless of the backlog the Purchaser may elect
to collect the documents with its own resources with the reasonable cost and
expense to be borne by the Seller. The fact that the Purchaser has conducted
or failed to conduct any partial or complete examination of the Mortgage
Files shall not affect its right to demand repurchase or any other remedies
provided in this Agreement.
At the Purchaser's request, the Assignments shall be promptly
recorded in the name of the Purchaser or in the name of a Person designated
by the Purchaser in all appropriate public offices for real property
records. If any such Assignment is lost or returned unrecorded because of a
defect therein, then the applicable Seller shall promptly prepare a
substitute Assignment to cure such defect and thereafter cause each such
Assignment to be duly recorded. All recording fees related to such a
one-time recordation of the Assignments to or by a Seller shall be paid by
the applicable Seller.
Section 2.05 Transfer of Mortgage Loans. Subject to the
provisions of this Section 2.05, the Purchaser shall have the right, without
the consent of the Sellers, at any time and from time to time, to assign any
of the Mortgage Loans and all or any part of its interest in this Agreement
and designate any person to exercise any rights of the Purchaser hereunder,
and the assignees or designees shall accede to the rights and obligations
hereunder of the Purchaser with respect to such Mortgage Loans. The Sellers
recognize that the Mortgage Loans may be divided into "packages" for resale.
All of the provisions of this Agreement shall inure to the
benefit of the Purchaser and any of its assignees or designees. All
references to the Purchaser shall be deemed to include its assignees or
designees. Utilizing resources reasonably available to the Seller without
incurring any cost except the Seller's overhead and employees' salaries, the
applicable Seller shall cooperate in any such assignment of the Mortgage
Loans and this Agreement; provided that the Purchaser shall bear all costs
associated with any such assignment of the Mortgage Loans and this Agreement
other than such Seller's overhead or employees' salaries.
The Servicer and Purchaser agree that the Servicer shall continue
to remit funds and make available via Servicer's website remittance reports
to no more than four (4) Persons (not including the Servicer or any Affiliate
or transferee thereof) at any given time with respect to any Mortgage Loans
sold on a particular Funding Date.
The Servicer and the Purchaser acknowledge that the Servicer
shall continue to remit payments to the Purchaser on the Remittance Date
after the transfer of the Mortgage Loans, unless the Servicer was notified in
writing of the new record owner of the Mortgage Loans prior to the
immediately preceding Record Date, in which case, the Servicer shall remit to
the new record owner (or trustee or master servicer, as the case may be) of
the Mortgage Loans.
Any prospective assignees of the Purchaser who have entered into
a commitment to purchase any of the Mortgage Loans may review and underwrite
the Servicer's servicing and origination operations, upon reasonable prior
notice to the Servicer, and the Servicer shall cooperate with such review and
underwriting to the extent such prospective assignees request information or
documents that are reasonably available and can be produced without
unreasonable expense or effort. The Servicer shall make the Mortgage Files
related to the
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Mortgage Loans held by the Servicer available at the Servicer's principal
operations center for review by any such prospective assignees during normal
business hours upon reasonable prior notice to the Servicer (in no event less
than 10 Business Days prior notice). The Servicer may, in its sole
discretion, require that such prospective assignees sign a confidentiality
agreement with respect to such information disclosed to the prospective
assignee which is not available to the public at large and a release
agreement with respect to its activities on the Servicer's premises.
The Servicer shall keep at its servicing office books and records
in which, subject to such reasonable regulations as it may prescribe, the
Servicer shall note transfers of Mortgage Loans. The Purchaser may, subject
to the terms of this Agreement, sell and transfer, in whole or in part, any
or all of the Mortgage Loans; provided that no such sale and transfer shall
be binding upon the Servicer unless such transferee shall agree in writing to
an Assignment, Assumption and Recognition Agreement, in substantially the
form of Exhibit 2.05 attached hereto, and an executed copy of such
Assignment, Assumption and Recognition Agreement shall have been delivered to
the Servicer. The Servicer shall evidence its acknowledgment of any
transfers of the Mortgage Loans to any assignees of the Purchaser by
executing such Assignment, Assumption and Recognition Agreement. The
Servicer shall xxxx its books and records to reflect the ownership of the
Mortgage Loans by any such assignees, and the previous Purchaser shall be
released from its obligations hereunder accruing after the date of transfer
to the extent such obligations relate to Mortgage Loans sold by the
Purchaser. This Agreement shall be binding upon and inure to the benefit of
the Purchaser and the Servicer and their permitted successors, assignees and
designees.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER; REPURCHASE AND
SUBSTITUTION; REVIEW OF MORTGAGE LOANS
Section 3.01 Representations and Warranties of each Seller.
Each Seller, as to itself, represents, warrants and covenants to the
Purchaser that as of each Funding Date or as of such date specifically
provided herein:
(1) Due Organization and Authority. The Seller is a New Jersey
corporation, validly existing, and in good standing under the laws of its
jurisdiction of incorporation or formation and has all licenses necessary to
carry on its business as now being conducted and is licensed, qualified and
in good standing in the states where the 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 Seller. The Seller has corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered pursuant to
this Agreement) by the Seller and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement has
been duly executed and delivered and constitutes the valid, legal, binding
and enforceable obligation of the Seller, except as enforceability may be
limited by (i) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the enforcement of the rights
of creditors and (ii) general principles of equity, whether enforcement is
sought in a proceeding in equity or at law. All requisite
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corporate action has been taken by the Seller to make this Agreement valid
and binding upon the Seller in accordance with its terms;
(2) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition or origination of the Mortgage Loans by the
Seller, the sale of the Mortgage Loans to the Purchaser, the consummation of
the transactions contemplated hereby, nor the fulfillment of or compliance
with the terms and conditions of this Agreement, will conflict with or result
in a breach of any of the terms, conditions or provisions of the Seller's
charter or by-laws or any legal restriction or any agreement or instrument to
which the Seller is now a party or by which it is bound, or constitute a
default or result in an acceleration under any of the foregoing, or result in
the violation of any law, rule, regulation, order, judgment or decree to
which the Seller or its property is subject, or result in the creation or
imposition of any lien, charge or encumbrance that would have an adverse
effect upon any of its properties pursuant to the terms of any mortgage,
contract, deed of trust or other instrument, or impair the ability of the
Purchaser to realize on the Mortgage Loans, impair the value of the Mortgage
Loans, or impair the ability of the Purchaser to realize the full amount of
any insurance benefits accruing pursuant to this Agreement;
(3) Ability to Perform; Solvency. The Seller 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 Seller is solvent and
the sale of the Mortgage Loans will not cause the Seller to become
insolvent. The sale of the Mortgage Loans is not undertaken with the intent
to hinder, delay or defraud any of Seller's creditors;
(4) No Material Default. Neither the Seller nor any of its
Affiliates is in material default under any agreement, contract, instrument
or indenture of any nature whatsoever to which the Seller or any of its
Affiliates is a party or by which it (or any of its assets) is bound, which
default would have a material adverse effect on the ability of the Seller to
perform under this Agreement, nor, to the best of the Seller's knowledge, has
any event occurred which, with notice, lapse of time or both, would
constitute a default under any such agreement, contract, instrument or
indenture and have a material adverse effect on the ability of the Seller to
perform its obligations under this Agreement;
(5) Financial Statements. The Seller has delivered to the
Purchaser financial statements as to its last three complete fiscal years and
any later quarter ended more than 60 days prior to the execution of this
Agreement. All such financial statements fairly present the pertinent
results of operations and changes in financial position for each of such
periods and the financial position at the end of each such period of the
Seller and its subsidiaries and have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as set forth in the notes thereto. In addition, the
Seller has delivered information as to its loan gain and loss experience in
respect of foreclosures and its loan delinquency experience for the
immediately preceding three year period, in each case with respect to
mortgage loans owned by it and such mortgage loans serviced for others during
such period, and all such information so delivered shall be true and correct
in all material respects. There has been no change in the business,
operations, financial condition, properties or assets of the Seller since the
date of the Seller's financial statements that would have a material adverse
effect on its ability to perform its obligations under this Agreement. The
Seller has completed
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any forms requested by the Purchaser in a timely manner and in accordance
with the provided instructions;
(6) No Change in Business. There has been no change in the
business, operations, financial condition, properties or assets of the
applicable Seller since (i) in the case of PHH Mortgage, the date of its
financial statements and (ii) in the case of the Trust, the date of delivery
of the Trust Financials, that would have a material adverse effect on the
ability of the applicable Seller to perform its obligations under this
Agreement;
(7) No Litigation Pending. There is no action, suit,
proceeding or investigation pending or threatened against the Seller, before
any court, administrative agency or other tribunal asserting the invalidity
of this Agreement, seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or 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
Seller, or in any material impairment of the right or ability of the Seller
to carry on its business substantially as now conducted, or in any material
liability on the part of the Seller, or which would draw into question the
validity of this Agreement or the Mortgage Loans or of any action taken or to
be taken in connection with the obligations of the Seller contemplated
herein, or which would be likely to impair materially the ability of the
Seller to perform under the terms of this Agreement;
(8) No Consent Required. No consent, approval, authorization or
order is required for the transactions contemplated by this Agreement from
any court, governmental agency or body, or federal or state regulatory
authority having jurisdiction over the Seller is required or, if required,
such consent, approval, authorization or order has been or will, prior to the
related Closing Date, be obtained;
(9) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in
effect in any applicable jurisdiction;
(10) No Brokers. The Seller has not dealt with any broker,
investment banker, agent or other person that may be entitled to any
commission or compensation in connection with the sale of the Mortgage Loans;
(11) No Untrue Information. Neither this Agreement nor any
information, statement, tape, diskette, report, form, or other document
furnished or to be furnished pursuant to this Agreement or any Reconstitution
Agreement or in connection with the transactions contemplated hereby
(including any Securitization Transaction or Whole Loan Transfer) contains or
will contain any untrue statement of fact or omits or will omit to state a
fact necessary to make the statements contained herein or therein not
misleading;
(12) Non-solicitation. The Seller agrees that it shall not
solicit any Mortgagors (in writing or otherwise) to refinance any of the
Mortgage Loans; provided that mass advertising or mailings (such as placing
advertisements on television, on radio, in magazines or in
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newspapers or including messages in billing statements) that are not
exclusively directed towards the Mortgagors shall not constitute solicitation
and shall not violate this covenant;
(13) Privacy. The Seller agrees and acknowledges that as to all
nonpublic personal information received or obtained by it with respect to any
Mortgagor: (a) such information is and shall be held by Seller in accordance
with all applicable law, including but not limited to the privacy provisions
of the Xxxxx-Xxxxx Xxxxxx Act, as may be amended from time to time; (b) such
information is in connection with a proposed or actual secondary market sale
related to a transaction of the Mortgagor for purposes of 16 C.F.R.
ss.313.14(a)(3); and (c) Seller is hereby prohibited from disclosing or using
any such information other than to carry out the express provisions of this
Agreement, or as otherwise permitted by applicable law;
(14) Seller's Origination. The Seller's decision to originate
any mortgage loan or to deny any mortgage loan application is an independent
decision based upon the Underwriting Guidelines, and is in no way made as a
result of Purchaser's decision to purchase, or not to purchase, or the price
Purchaser may offer to pay for, any such mortgage loan, if originated; and
(15) Fair Consideration. The consideration received by the
Seller upon the sale of the Mortgage Loans under this Agreement constitutes
fair consideration and reasonably equivalent value for the Mortgage Loans.
Section 3.02 Representations and Warranties of the
Servicer. The Servicer represents, warrants and covenants to the Purchaser
that as of the Funding Date or as of such date specifically provided herein:
(1) Ability to Service. Servicer has the facilities,
procedures, and experienced personnel necessary for the sound servicing of
mortgage loans of the same type as the Mortgage Loans. The Servicer is duly
qualified, licensed, registered and otherwise authorized under all applicable
federal, state and local laws, and regulations, if applicable, meets the
minimum capital requirements set forth by HUD, the OTS, the OCC or the FDIC,
if applicable, and is in good standing to enforce, originate, sell mortgage
loans to, and service mortgage loans in the jurisdiction wherein the
Mortgaged Properties are located;
(2) No Litigation Pending. There is no action, suit,
proceeding or investigation pending or threatened against the Servicer,
before any court, administrative agency or other tribunal asserting the
invalidity of this Agreement, seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or which, either in any one
instance or in the aggregate, may result in any material adverse change in
the business, operations, financial condition, properties or assets of the
Servicer, or in any material impairment of the right or ability of the
Servicer to carry on its business substantially as now conducted, or in any
material liability on the part of the Servicer, or which would draw into
question the validity of this Agreement or the Mortgage Loans or of any
action taken or to be taken in connection with the obligations of the
Servicer contemplated herein, or which would be likely to impair materially
the ability of the Servicer to perform under the terms of this Agreement;
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(3) Collection Practices. The collection practices used by the
Servicer with respect to each Mortgage Note and Mortgage have been in all
respects legal, proper and prudent in the mortgage servicing business;
(4) MERS. The Servicer is a member of MERS in good standing,
and will comply in all material respects with the rules and procedures of
MERS in connection with the servicing of the MERS Mortgage Loans for as long
as such Mortgage Loans are registered with MERS;
(5) Non-solicitation. The Servicer agrees that it shall not
solicit any Mortgagors (in writing or otherwise) to refinance any of the
Mortgage Loans; provided that mass advertising or mailings (such as placing
advertisements on television, on radio, in magazines or in newspapers or
including messages in billing statements) that are not exclusively directed
towards the Mortgagors shall not constitute solicitation and shall not
violate this covenant;
(6) Privacy. The Servicer agrees and acknowledges that as to
all nonpublic personal information received or obtained by it with respect to
any Mortgagor: (a) such information is and shall be held by Servicer in
accordance with all applicable law, including but not limited to the privacy
provisions of the Xxxxx-Xxxxx Bliley Act, as may be amended from time to
time; (b) such information is in connection with a proposed or actual
secondary market sale related to a transaction of the Mortgagor for purposes
of 16 X.X.X.xx. 313.14(a)(3); and (c) Servicer is hereby prohibited from
disclosing or using any such information other than to carry out the express
provisions of this Agreement, or as otherwise permitted by applicable law; and
(7) Reasonable Servicing Fee. The Servicer 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 Servicer, for accounting and tax purposes, as compensation for the
servicing and administration of the Mortgage Loans pursuant to this Agreement.
Section 3.03 Representations and Warranties as to Individual
Mortgage Loans. With respect to each Mortgage Loan, the applicable Seller
hereby makes the following representations and warranties to the Purchaser on
which the Purchaser specifically relies in purchasing such Mortgage Loan.
Such representations and warranties speak as of the Funding Date unless
otherwise indicated, but shall survive any subsequent transfer, assignment or
conveyance of such Mortgage Loans:
(1) Mortgage Loans as Described. Such Mortgage Loan complies
with the terms and conditions set forth herein, and all of the information
set forth in the related Mortgage Loan Schedule is complete, true and correct;
(2) Delivery to the Custodian. The Mortgage Note, the
Mortgage, the Assignment and any other documents required to be delivered
with respect to each Mortgage Loan pursuant to the Custodial Agreement, shall
be delivered to the Custodian all in compliance with the specific
requirements of the Custodial Agreement. With respect to each Mortgage
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Loan, the Seller will be in possession of a complete Mortgage File in
compliance with Exhibit 2 hereto, except for such documents as will be
delivered to the Custodian;
(3) Owner of Record. The Seller is the owner of record of each
Mortgage and the indebtedness evidenced by each Mortgage Note, except for the
Assignments of Mortgage which have been sent for recording, and upon
recordation the Seller will be the owner of record of each Mortgage and the
indebtedness evidenced by each Mortgage Note, and upon the sale of the
Mortgage Loans to the Purchaser, the Seller will retain the Mortgage Files
with respect thereto in trust only for the purpose of servicing and
supervising the servicing of each Mortgage Loan;
(4) Payments Current. All payments required to be made up to
the related Closing Date for the Mortgage Loan under the terms of the
Mortgage Note have been made and credited. No payment required under the
Mortgage Loan is 30 days or more delinquent nor has any payment under the
Mortgage Loan been 30 days or more delinquent at any time since the
origination of the Mortgage Loan;
(5) No Outstanding Charges. There are no defaults in complying
with the terms of the Mortgage, and all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold payments or
ground rents 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 Seller has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the Mortgagor,
directly or indirectly, for 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
earlier, to the day which precedes by one month the related Due Date of the
first installment of principal and interest;
(6) Original Terms Unmodified. The terms of the Mortgage Note
and Mortgage have not been impaired, waived, altered or modified in any
respect, from the date of origination 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 or to such other Person as the
Purchaser shall designate in writing, and the terms of which are reflected in
the related Mortgage Loan Schedule. The substance of any such waiver,
alteration or modification has been approved by the issuer of any related
Primary Insurance Policy and the title insurer, if any, to the extent
required by the policy, and its terms are reflected on the related Mortgage
Loan Schedule, if applicable. No Mortgagor has been released, in whole or in
part, except in connection with an assumption agreement, approved by the
issuer of any related Primary Insurance Policy and the title insurer, to the
extent required by the policy, and which assumption agreement is part of the
Mortgage File delivered to the Custodian or to such other Person as the
Purchaser shall designate in writing and the terms of which are reflected in
the related Mortgage Loan Schedule;
(7) 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,
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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;
(8) Hazard Insurance. Pursuant to the terms of the Mortgage,
all buildings or other improvements upon the Mortgaged Property are insured
by a generally acceptable insurer against loss by fire, hazards of extended
coverage and such other hazards as are provided for in the Underwriting
Guidelines. If required by the National Flood Insurance Act of 1968, as
amended, each Mortgage Loan is covered by a flood insurance policy meeting
the requirements of the current guidelines of the Federal Insurance
Administration as in effect which policy conforms with the Underwriting
Guidelines. All individual insurance policies contain a standard mortgagee
clause naming the Seller and its successors and assigns as mortgagee, and all
premiums thereon have been paid. The Mortgage obligates the Mortgagor
thereunder to maintain the 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.
Where required by state law or regulation, the Mortgagor has been given an
opportunity to choose the carrier of the required hazard insurance, provided
the policy is not a "master" or "blanket" hazard insurance policy covering a
condominium, or any hazard insurance policy covering the common facilities of
a planned unit development. 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 Seller
has not engaged in, and has no knowledge of the Mortgagor's having engaged
in, any act or omission which would impair the coverage of any such policy,
the benefits of the endorsement provided for herein, or the validity and
binding effect of either including, without limitation, no unlawful fee,
commission, kickback or other unlawful compensation or value of any kind has
been or will be received, retained or realized by any attorney, firm or other
person or entity, and no such unlawful items have been received, retained or
realized by the Seller;
(9) 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, predatory and abusive lending, equal credit opportunity and
disclosure laws applicable to the Mortgage Loan, including, without
limitation, any provisions relating to a Prepayment Penalty, have been
complied with, the consummation of the transactions contemplated hereby will
not involve the violation of any such laws or regulations, and the Seller
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. This representation and warranty is a Deemed Material
and Adverse Representation;
(10) No Satisfaction of Mortgage. The Mortgage has not 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. The Seller has not
waived the performance by the Mortgagor of any action, if the Mortgagor's
failure to
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perform such action would cause the Mortgage Loan to be in default, nor has
the Seller waived any default resulting from any action or inaction by the
Mortgagor;
(11) Valid First Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien on the Mortgaged Property, including
all buildings and improvements 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:
(a) the lien of current real property taxes and assessments
not yet due and payable;
(b) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of
recording acceptable to prudent mortgage lending institutions generally
and specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and (a) specifically
referred to or otherwise considered in the appraisal made for the
originator of the Mortgage Loan or (b) which do not adversely affect
the Appraised Value of the Mortgaged Property set forth in such
appraisal; and
(c) 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, enforceable and perfected first lien and first
priority security interest on the property described therein and the Seller
has full right to sell and assign the same to the Purchaser.
With respect to any Cooperative Loan, the related Mortgage is a
valid, subsisting and enforceable first priority security interest on the
related cooperative shares securing the Mortgage Note, subject only to (a)
liens of the related residential cooperative housing corporation for unpaid
assessments representing the Mortgagor's pro rata share of the related
residential cooperative housing corporation'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 (b) other matters to which like collateral is commonly subject
which do not materially interfere with the benefits of the security interest
intended to be provided by the related Security Agreement;
(12) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor in
connection with a Mortgage Loan 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 such
related agreement had legal capacity to enter into the Mortgage Loan and to
execute and deliver the Mortgage Note, the Mortgage and any such agreement,
and the Mortgage
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Note, the Mortgage and any other such related agreement have been duly and
properly executed by other such related parties. No fraud, error, omission,
misrepresentation, negligence or similar occurrence with respect to a
Mortgage Loan has taken place on the part of the Seller in connection with
the origination of the Mortgage Loan or in the application of any insurance
in relation to such Mortgage Loan. The documents, instruments and agreements
submitted for loan underwriting were not falsified and contain no untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the information and statements therein
not misleading. No fraud, error, omission, misrepresentation, negligence or
similar occurrence with respect to a Mortgage Loan has taken place on the
part of any Person, including without limitation, the Mortgagor, any
appraiser, any builder or developer, or any other party involved in the
origination of the Mortgage Loan or in the application for any insurance in
relation to such Mortgage Loan. The Seller has reviewed all of the documents
constituting the Servicing File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein;
(13) Valid Execution of Documents. All parties to the Mortgage
Note and the Mortgage related to such Mortgage Loan had legal capacity to
enter into such Mortgage Loan and to execute and deliver the related Mortgage
Note and the related Mortgage and the related Mortgage Note and the related
Mortgage have been duly and properly executed by such parties; with respect
to each Cooperative Loan, all parties to the Mortgage Note and the Mortgage
Loan had legal capacity to execute and deliver the Mortgage Note, the
Acceptance of Assignment and Assumption of Lease Agreement, the Proprietary
Lease, the Stock Power, the Recognition Agreement, the Financing Statement
and the Assignment of Proprietary Lease and such documents have been duly and
properly executed by such parties; 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 Corporation if the Seller undertakes to convert the ownership of
the collateral securing the related Cooperative Loan;
(14) Full Disbursement of Proceeds. The Mortgage Loan has been
closed and the proceeds of the Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder, and any and all
requirements as to completion of any on-site or off-site improvement and as
to disbursements of any escrow funds therefor have been complied with. 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;
(15) Ownership. The Seller is the sole owner of record and
holder of the Mortgage Loan and the indebtedness evidenced by each Mortgage
Note and upon the sale of the Mortgage Loans to the Purchaser, the Seller
will retain the Mortgage Files or any part thereof with respect thereto not
delivered to the Custodian, the Purchaser or the Purchaser's designee, in
trust only for the purpose of servicing and supervising the servicing of each
Mortgage Loan. The Mortgage Loan is not assigned or pledged, and the Seller
has good, indefeasible and marketable title thereto, and has full right to
transfer and sell the Mortgage Loan to the Purchaser free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest, and has full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell and assign each
Mortgage Loan pursuant to this Agreement and following the sale of each
Mortgage Loan, the Purchaser will own such Mortgage Loan free and
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clear of any encumbrance, equity, participation interest, lien, pledge,
charge, claim or security interest. The Seller intends to relinquish all
rights to possess, control and monitor the Mortgage Loan. After the related
Closing Date, the Seller will have no right to modify or alter the terms of
the sale of the Mortgage Loan and the Seller will have no obligation or right
to repurchase the Mortgage Loan or substitute another Mortgage Loan, except
as provided in this Agreement;
(16) Doing Business. 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) either (i) organized under the laws of such state, or (ii) qualified to do
business in such state, or (iii) a federal savings and loan association, a
savings bank or a national bank having a principal office in such state, or
(3) not doing business in such state;
(17) Title Insurance. With respect to a Mortgage Loan which is
not a Cooperative Loan, the Mortgage Loan is covered by an ALTA lender's
title insurance policy or other generally acceptable form of policy or
insurance acceptable under the Underwriting Guidelines and each such title
insurance policy is issued by a title insurer acceptable under the
Underwriting Guidelines and qualified to do business in the jurisdiction
where the Mortgaged Property is located, insuring the Seller, its successors
and assigns, as to the first priority lien of the Mortgage in the original
principal amount of the Mortgage Loan (or to the extent a Mortgage Note
provides for negative amortization, the maximum amount of negative
amortization in accordance with the Mortgage), subject only to the exceptions
contained in clauses (a) and (b) of paragraph (11) of this Subsection 3.03,
and in the case of Adjustable Rate Mortgage Loans, 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 Note Rate and
Monthly Payment. Where required by state law or regulation, the Mortgagor
has been given the opportunity to choose the carrier of the required mortgage
title insurance. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress, and against encroachments by or
upon the Mortgaged Property or any interest therein. The Seller, its
successor and assigns, are the sole insureds of such lender's title insurance
policy, and such lender's title insurance policy is valid and remains 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 related
Mortgage, including the Seller, has done, by act or omission, anything which
would impair the coverage of such lender's title insurance policy, including
without limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by any attorney, firm or other person or entity, and no such
unlawful items have been received, retained or realized by the Seller;
(18) No Defaults. Other than payments due but not yet 30 days
or more delinquent, there is no default, breach, violation or event which
would permit 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 which would permit acceleration, and neither the Seller
nor any of its affiliates nor any of their respective predecessors, have
waived any default, breach, violation or event which would permit
acceleration;
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(19) 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 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;
(20) Location of Improvements; No Encroachments. 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;
(21) Origination; Payment Terms. The Mortgage Loan was
originated by a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act, a
savings and loan association, a savings bank, a commercial bank, credit
union, insurance company or other similar institution which is supervised and
examined by a federal or state authority. Principal payments on the Mortgage
Loan commenced no more than seventy days after funds were disbursed in
connection with the Mortgage Loan. The Note Rate as well as, in the case of
an Adjustable Rate Mortgage Loan, the Lifetime Rate Cap and the Periodic Rate
Cap and the Periodic Rate Floor are as set forth on the related Mortgage Loan
Schedule. The Note Rate is adjusted, with respect to Adjustable Rate
Mortgage Loans, on each Rate Adjustment Date to equal the Index plus the
Gross Margin (rounded up or down to the nearest 0.125%), subject to the
Periodic Rate Cap. The Mortgage Note is payable in equal monthly
installments of principal and interest, which installments of interest, with
respect to Adjustable Rate Mortgage Loans, are subject to change due to the
adjustments to the Note Rate on each Rate Adjustment Date, with interest
calculated and payable in arrears, sufficient to amortize the Mortgage Loan
fully by the stated maturity date, over an original term of not more than
fifteen years from commencement of amortization. Unless otherwise specified
on the related Mortgage Loan Schedule, the Mortgage Loan is payable on the
first day of each month. The Mortgage Loan by its original terms or any
modification thereof, does not provide for amortization beyond its scheduled
maturity date;
(22) Due-On-Sale. With respect to each Fixed Rate Mortgage
Loan, the Mortgage 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;
(23) Prepayment Penalty. No Mortgage Loan is subject to any
prepayment penalty. This representation and warranty is a Deemed Material
and Adverse Representation;
(24) Mortgaged Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property. The Mortgaged Property is undamaged
by waste, 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 and each Mortgaged Property is in good repair. There have not been
any condemnation proceedings
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with respect to the Mortgaged Property and the Seller has no knowledge of any
such proceedings in the future;
(25) Customary Provisions. The Mortgage contains 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. Upon default by a Mortgagor on a
Mortgage Loan and foreclosure on, or trustee's sale of, the Mortgaged
Property pursuant to the proper procedures, the holder of the Mortgage Loan
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, subject to applicable
federal and state laws and judicial precedent with respect to bankruptcy and
right of redemption or similar law;
(26) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines
(a copy of which is attached to the related Assignment and Conveyance as
Exhibit C). The Mortgage Note and Mortgage are on forms acceptable to
Xxxxxxx Mac or Xxxxxx Mae and no representations have been made to a
Mortgagor that are inconsistent with the mortgage instruments used;
(27) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a Qualified Appraiser, duly appointed by the Seller, 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 appraiser
both satisfy the requirements of Xxxxxx Xxx or Xxxxxxx Mac and Title XI of
the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 and
the regulations promulgated thereunder, all as in effect on the date the
Mortgage Loan was originated;
(28) Deeds of Trust. In the event the Mortgage constitutes a
deed of trust, a trustee, authorized and 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 Purchaser to the trustee under the deed of trust, except in connection
with a trustee's sale after default by the Mortgagor;
(29) LTV, Primary Insurance Policy. No Mortgage Loan has an LTV
greater than 100%. Any Mortgage Loan that had at the time of origination an
LTV in excess of 80% is insured as to payment defaults by a Primary Insurance
Policy. Any Primary Insurance Policy in effect covers the related Mortgage
Loan for the life of such Mortgage Loan. All provisions of such Primary
Insurance Policy have been and are being complied with, such policy is in
full force and effect, and all premiums due thereunder have been paid. No
action, inaction, or event has occurred and no state of facts exists that
has, or will result in the exclusion from, denial of, or defense to
coverage. Any Mortgage Loan subject to a Primary Insurance Policy obligates
the Mortgagor thereunder to maintain the Primary Insurance Policy and to pay
all premiums and charges in connection therewith. The Note Rate for the
Mortgage Loan as set forth on the related Mortgage Loan Schedule is net of
any such insurance premium;
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(30) Occupancy of the Mortgaged Property. As of the related
Closing Date the Mortgaged Property is lawfully occupied under applicable
law. 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. Unless otherwise
specified on the related Mortgage Loan Schedule, the Mortgagor represented at
the time of origination of the Mortgage Loan that the Mortgagor would occupy
the Mortgaged Property as the Mortgagor's primary residence;
(31) Supervision and Examination by a Federal or State
Authority. Each Mortgage Loan either was (a) closed in the name of the PHH
Mortgage, or (b) closed in the name of another entity that is either a
savings and loan association, a savings bank, a commercial bank, credit
union, insurance company or an institution which is supervised and examined
by a federal or state authority, or a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Sections 203 and 211 of the
National Housing Act (a "HUD Approved Mortgagee"), and was so at the time
such Mortgage Loan was originated (PHH Mortgage or such other entity, the
"Originator") or (c) closed in the name of a loan broker under the
circumstances described in the following sentence. If such Mortgage Loan was
originated through a loan broker, such Mortgage Loan met the Originator's
underwriting criteria at the time of origination and was originated in
accordance with the Originator's policies and procedures and the Originator
acquired such Mortgage Loan from the loan broker contemporaneously with the
origination thereof. The Mortgage Loans that the Trust is selling to
Purchaser were originated by or on behalf of PHH Mortgage and subsequently
assigned to the Trust;
(32) Adjustments. All of the terms of the related Mortgage Note
pertaining to interest rate adjustments, payment adjustments and adjustments
of the outstanding principal balance, if any, are enforceable and such
adjustments will not affect the priority of the lien of the related Mortgage;
all such adjustments on such Mortgage Loan have been made properly and in
accordance with the provisions of such Mortgage Loan;
(33) Insolvency Proceedings; Servicemembers Civil Relief Act.
To the best of the Seller's knowledge, the related Mortgagor is not the
subject of any Insolvency Proceeding;
(34) Servicemembers Civil Relief Act. The Mortgagor has not
notified the Seller, and the Seller has no knowledge of any relief requested
or allowed to the Mortgagor under the Servicemembers Civil Relief Act or
other similar state statute;
(35) Xxxxxx Mae/Xxxxxxx Mac Documents. Such Mortgage Loan was
closed on standard Xxxxxx Mae or Xxxxxxx Mac documents or on such documents
otherwise acceptable to them;
(36) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any
separate account established by the Seller, the Mortgagor, or anyone on
behalf of the Mortgagor, or paid by any source other than the Mortgagor nor
does it contain any other similar provisions which may constitute a "buydown"
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provision. 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;
(37) Recordation. Each original Mortgage was recorded and all
subsequent assignments of the original Mortgage (other than the assignment to
the Purchaser) have been recorded in the appropriate jurisdictions wherein
such recordation is necessary to perfect the lien thereof as against
creditors of the Seller, or is in the process of being recorded;
(38) Consolidation of Future Advances. Any future advances made
to the Mortgagor prior to the applicable 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. 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 and
Xxxxxxx Mac. The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan;
(39) Balloon Loans. Unless otherwise disclosed in the Offering
Materials or the Mortgage Loan Schedule, no Mortgage Loan has a balloon
payment feature. With respect to any Mortgage Loan with a balloon payment
feature, the Mortgage Note is payable in Monthly Payments based on a thirty
year amortization schedule and has a final Monthly Payment substantially
greater than the proceeding Monthly Payment which is sufficient to amortize
the remaining principal balance of the Mortgage Loan;
(40) Condominium Units/PUDs. If the residential dwelling on the
Mortgaged Property is a condominium unit or a unit in a planned unit
development (other than a de minimis planned unit development) such
condominium or planned unit development project meets the eligibility
requirements of the PHH Guide;
(41) Predatory Lending Regulations. No Mortgage Loan is a High
Cost Loan. No Mortgage Loan is covered by the Home Ownership and Equity
Protection Act of 1994 and no Mortgage Loan is in violation of any comparable
state or local law. The Mortgaged Property is not located in a jurisdiction
where a breach of this representation with respect to the related Mortgage
Loan may result in additional assignee liability to the Purchaser, as
determined by Purchaser in its reasonable discretion. This representation
and warranty is a Deemed Material and Adverse Representation;
(42) No Rehabilitation Loan. Unless otherwise disclosed in the
Offering Materials or the Mortgage Loan Schedule, no Mortgage Loan was made
in connection with (a) the construction or rehabilitation of a Mortgaged
Property or (b) facilitating the trade-in or exchange of a Mortgaged Property;
(43) No Adverse Conditions. The Seller has no knowledge of any
circumstances or condition with respect to the Mortgage, the Mortgage
Property (or with respect to a Cooperative Loan, the Acceptance of Assignment
and Assumption of Lease Agreement, the Cooperative Unit or the Cooperative
Project), the Mortgagor or the Mortgagor's credit standing that can
reasonably be expected to cause the Mortgage Loan to be an unacceptable
investment,
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cause the Mortgage Loan to become delinquent, or adversely affect the value
of the Mortgage Loan;
(44) Scheduled Interest. Interest on each Mortgage Loan is
calculated on the basis of a 360-day year consisting of twelve 30-day months;
(45) No Violation of Environmental Laws. To the best of the
Seller's knowledge, there is no pending action or proceeding directly
involving the Mortgaged Property in which compliance with any environmental
law, rule or regulation is an issue; there is no violation of any
environmental law, rule or regulation with respect to the Mortgage Property;
and nothing further remains to be done to satisfy in full all requirements of
each such law, rule or regulation constituting a prerequisite to use and
enjoyment of said property;
(46) Negative Amortization. Unless otherwise disclosed in the
Offering Materials or the Mortgage Loan Schedule, no Mortgage Loan is subject
to negative amortization;
(47) Cooperative Lien Search. With respect to each Cooperative
Loan, a Cooperative Lien Search has been made by a company competent to make
the same which company is acceptable to Xxxxxx Mae and qualified to do
business in the jurisdiction where the Cooperative Unit is located;
(48) Cooperative Loan - Proprietary Lease. With respect to each
Cooperative Loan, (i) the terms of the related Proprietary Lease is longer
than the terms of the Cooperative Loan, (ii) 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
Corporation, (iii) there is no prohibition in any Proprietary Lease against
pledging the Cooperative Shares or assigning the Proprietary Lease and
(iv) the Recognition Agreement is on a form of agreement published by the
Aztech Document Systems, Inc. or includes provisions which are no less
favorable to the lender than those contained in such agreement;
(49) Cooperative Loan - UCC Financing Statement. With respect
to each Cooperative Loan, 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 priority lien and security
interest in the Cooperative Shares 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 the Mortgagor or
its designee establishes in the Mortgagor a valid and subsisting perfected
first lien on and security interest in the Mortgaged Property described
therein, and the Mortgagor has full right to sell and assign the same;
(50) Cooperative Loan- Acceptance of Assignment and Assumption
of Lease Agreement. With respect to each Cooperative Loan, each Acceptance
of Assignment and Assumption of Lease Agreement contains enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization of the benefits of the security provided
thereby. The Acceptance of Assignment and Assumption of Lease Agreement
contains an enforceable provision for the acceleration of the payment of the
Unpaid Principal Balance of the
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Mortgage Note in the event the Cooperative Unit is transferred or sold
without the consent of the holder thereof;
(51) Imaging. Each imaged document represents a true, complete,
and correct copy of the original document in all respects, including, but not
limited to, all signatures conforming with signatures contained in the
original document, no information having been added or deleted, and no imaged
document having been manipulated or altered in any manner. Each imaged
document is clear and legible, including, but not limited to, accurate
reproductions of photographs. No original documents have been or will be
altered in any manner;
(52) Qualified Mortgage. The Mortgage Loan is a qualified
mortgage under Section 860G(a)(3) of the Code;
(53) No Adverse Selection. The Seller used no adverse selection
procedures in selecting the Mortgage Loans among the outstanding first lien
residential mortgagee loans owned by it which were available for inclusion in
the Mortgage Loans;
(54) Leaseholds. If the Mortgage Loan is secured by a long-term
residential lease, (1) the lessor under the lease holds a fee simple interest
in the land; (2) the terms of such lease expressly permit the mortgaging of
the leasehold estate, the assignment of the lease without the lessor's
consent and the acquisition by the holder of the Mortgage of the rights of
the lessee upon foreclosure or assignment in lieu of foreclosure or provide
the holder of the Mortgage with substantially similar protections; (3) the
terms of such lease do not (a) allow the termination thereof upon the
lessee's default without the holder of the Mortgage being entitled to receive
written notice of, and opportunity to cure, such default, (b) allow the
termination of the lease in the event of damage or destruction as long as the
Mortgage is in existence, (c) prohibit the holder of the Mortgage from being
insured (or receiving proceeds of insurance) under the hazard insurance
policy or policies relating to the Mortgaged Property or (d) permit any
increase in rent other than pre-established increases set forth in the lease;
(4) the original term of such lease is not less than 15 years; (5) the term
of such lease does not terminate earlier than five years after the maturity
date of the Mortgage Note; and (6) the Mortgaged Property is located in a
jurisdiction in which the use of leasehold estates in transferring ownership
in residential properties is a widely accepted practice;
(55) Assumability. With respect to each Adjustable Rate
Mortgage Loan, the Mortgage Loan Documents provide that after the related
first Rate Adjustment Date, a related Mortgage Loan may only be assumed if
the party assuming such Mortgage Loan meets certain credit requirements
stated in the Mortgage Loan Documents;
(56) Disclosure Materials. The Mortgagor has executed a
statement to the effect that the Mortgagor has received all disclosure
materials required by, and the Seller has complied with, all applicable law
with respect to the making of the Mortgage Loans. The Seller shall maintain
such statement in the Mortgage File;
(57) No Defense to Insurance Coverage. No action has been taken
or failed to be taken, no event has occurred and no state of facts exists or
has existed on or prior to the related Funding Date (whether or not known to
the Seller on or prior to such date) which has
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resulted or will result in an exclusion from, denial of, or defense to
coverage under any primary mortgage insurance (including, without limitation,
any exclusions, denials or defenses which would limit or reduce the
availability of the timely payment of the full amount of the loss otherwise
due thereunder to the insured), provided this shall not include the failure
of such insurer to pay by reason of such insurer's breach of such insurance
policy or such insurer's financial inability to pay;
(58) Prior Servicing. Each Mortgage Loan has been serviced in
compliance with Accepted Servicing Practices;
(59) Credit Information. As to each consumer report (as defined
in the Fair Credit Reporting Act, Public Law 91-508) or other credit
information furnished by the Seller to the Purchaser, that Seller has full
right and authority and is not precluded by law or contract from furnishing
such information to the Purchaser and the Purchaser is not precluded from
furnishing the same to any subsequent or prospective purchaser of such
Mortgage. The Seller has and shall in its capacity as servicer, for each
Mortgage Loan, 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. This representation and warranty is a
Deemed Material and Adverse Representation;
(60) Convertible Loans. With respect to ARM Loans, unless
otherwise set forth in the Mortgage Loan Schedule, the Mortgage Loan is not a
Convertible Mortgage Loan;
(61) Type of Mortgaged Property. With respect to a Mortgage
Loan that is not a Cooperative Loan and is not secured by an interest in a
leasehold estate, the Mortgaged Property is a fee simple estate that consists
of a single parcel of real property with a detached single family residence
erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a condominium project, or an individual unit
in a planned unit development, or an individual unit in a residential
cooperative housing corporation; provided, however, that any condominium
unit, planned unit development or residential cooperative housing corporation
shall conform with the Underwriting Guidelines. No portion of the Mortgaged
Property (or underlying Mortgaged Property, in the case of a Cooperative
Loan) is used for commercial purposes, and since the date of origination, no
portion of the Mortgaged Property has been used for commercial purposes;
provided, that Mortgaged Properties which contain a home office shall not be
considered as being used for commercial purposes as long as the Mortgaged
Property has not been altered for commercial purposes and is not storing any
chemicals or raw materials other than those commonly used for homeowner
repair, maintenance and/or household purposes. None of the Mortgaged
Properties are Manufactured Homes, log homes, mobile homes, geodesic domes or
other unique property types. This representation and warranty is a Deemed
Material and Adverse Representation;
(62) No Additional Collateral. The Mortgage Note is not and has
not been secured by any collateral except the lien of the corresponding
Mortgage and the security interest of any applicable security agreement or
chattel mortgage referred to in clause (j) above;
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(63) Acceptable Investment. There are no circumstances or
conditions with respect to the Mortgage, the Mortgaged Property, the
Mortgagor, the Mortgage File or the Mortgagor's credit standing that can
reasonably be expected to cause private institutional investors who invest in
prime mortgage loans similar to the Mortgage Loan 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, or cause
the Mortgage Loan to prepay during any period materially faster or slower
than the mortgage loans originated by the Seller generally. No Mortgaged
Property is located in a state, city, county or other local jurisdiction
which the Buyer has determined in its sole good faith discretion would cause
the related Mortgage Loan to be ineligible for whole loan sale or
securitization in a transaction consistent with the prevailing sale and
securitization industry (including, without limitation, the practice of the
rating agencies) with respect to substantially similar mortgage loans;
(64) Transfer of Mortgage Loans. The Assignment (except with
respect to any Mortgage that has been recorded in the name of MERS or its
designee) with respect to each Mortgage Loan is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;
(65) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination, servicing and collection practices used by the
Seller with respect to the Mortgage Loan have been in all respects in
compliance with Accepted Servicing Practices, applicable laws and
regulations, and have been in all respects legal and proper. With respect to
escrow deposits and Escrow Payments, all such payments are in the possession
of, or under the control of, the Seller 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 and the provisions of the related
Mortgage Note and Mortgage. An escrow of funds is not prohibited by
applicable law and has been established in an amount sufficient to pay for
every item that remains unpaid and has been assessed but is not yet due and
payable. No escrow deposits or Escrow Payments or other charges or payments
due the Seller have been capitalized under the Mortgage or the Mortgage
Note. All Note Rate adjustments have been made in strict compliance with
state and federal law and the terms of the related Mortgage and Mortgage Note
on the related Rate Adjustment Date. If, pursuant to the terms of the
Mortgage Note, another index was selected for determining the Note Rate, the
same index was used with respect to each Mortgage Note which required a new
index to be selected, and such selection did not conflict with the terms of
the related Mortgage Note. The Seller executed and delivered any and all
notices required under applicable law and the terms of the related Mortgage
Note and Mortgage regarding the Note Rate and the Monthly Payment
adjustments. Any interest required to be paid pursuant to state, federal and
local law has been properly paid and credited;
(66) Conversion to Fixed Interest Rate. The Mortgage Loan does
not contain a provision whereby the Mortgagor is permitted to convert the
Note Rate from an adjustable rate to a fixed rate;
(67) Other Insurance Policies; No Defense to Coverage. No
action, inaction or event has occurred and no state of facts exists or has
existed on or prior to the Closing Date that has resulted or will result in
the exclusion from, denial of, or defense to coverage under any
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applicable hazard insurance policy, Primary Insurance Policy or bankruptcy
bond (including, without limitation, any exclusions, denials or defenses
which would limit or reduce the availability of the timely payment of the
full amount of the loss otherwise due thereunder to the insured),
irrespective of the cause of such failure of coverage. The Seller has caused
or will cause to be performed any and all acts required to preserve the
rights and remedies of the Purchaser in any insurance policies applicable to
the Mortgage Loans including, without limitation, any necessary notifications
of insurers, assignments of policies or interests therein, and establishments
of coinsured, joint loss payee and mortgagee rights in favor of the
Purchaser. In connection with the placement of any such insurance, no
commission, fee, or other compensation has been or will be received by the
Seller or by any officer, director, or employee of the Seller or any designee
of the Seller or any corporation in which the Seller or any officer,
director, or employee had a financial interest at the time of placement of
such insurance;
(68) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(69) Escrow Analysis. If applicable, with respect to each
Mortgage, the Seller has within the last twelve months (unless such Mortgage
was originated within such twelve month period) analyzed the required Escrow
Payments for each Mortgage and adjusted the amount of such payments so that,
assuming all required payments are timely made, any deficiency will be
eliminated on or before the first anniversary of such analysis, or any
overage will be refunded to the Mortgagor, in accordance with RESPA and any
other applicable law;
(70) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the ground
lease will not terminate earlier than five years after the maturity date of
the Mortgage Loan; (3) the ground lease does not provide for termination of
the lease in the event of lessee's default without the mortgagee being
entitled to receive written notice of, and a reasonable opportunity to cure
the default; (4) the ground lease permits the mortgaging of the related
Mortgaged Property; (5) the ground lease protects the mortgagee's interests
in the event of a property condemnation; (6) all ground lease rents, other
payments, or assessments that have become due have been paid; and (7) the use
of leasehold estates for residential properties is a widely accepted practice
in the jurisdiction in which the Mortgaged Property is located;
(71) Single-premium credit life insurance policy. No Mortgagor
was required to purchase any single premium credit insurance policy (e.g.,
life, mortgage, disability, property, accident, unemployment or health
insurance product) or debt cancellation agreement as a condition of obtaining
the extension of credit. No Mortgagor obtained a prepaid single premium
credit insurance policy (e.g., life, mortgage, disability, property,
accident, unemployment, mortgage or health insurance) in connection with the
origination of the Mortgage Loan. No proceeds from any Mortgage Loan were
used to purchase single premium credit insurance policies or debt
cancellation agreements as part of the origination of, or as a condition to
closing, such Mortgage Loan. This representation and warranty is a Deemed
Material and Adverse Representation;
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(72) Tax Service Contract. Each Mortgage Loan is covered by a
paid in full, life of loan, tax service contract issued by First American
Real Estate Tax Service, and such contract is transferable;
(73) Origination. No predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to the
ability of the Mortgagor to repay and the extension of credit which has no
apparent benefit to the Mortgagor, were employed in the origination of the
Mortgage Loan;
(74) Cooperative Loans. With respect to a Mortgage Loan that is
a Cooperative Loan, the stock that is pledged as security for the Mortgage
Loan is held by a person as a tenant-stockholder (as defined in Section 216
of the Code) in a cooperative housing corporation (as defined in Section 216
of the Code);
(75) Mortgagor Bankruptcy. On or prior to the date 60 days
after the related Closing Date, the Mortgagor has not filed and will not file
a bankruptcy petition or has not become the subject and will not become the
subject of involuntary bankruptcy proceedings or has not consented to or will
not consent to the filing of a bankruptcy proceeding against it or to a
receiver being appointed in respect of the related Mortgaged Property;
(76) No Prior Offer. The Mortgage Loan has not previously been
offered for sale;
(77) Georgia Fair Lending Act. There is no Mortgage Loan that
was originated (or modified) on or after October 1, 2002 and before March 7,
2003 which is secured by property located in the State of Georgia. There is
no Mortgage Loan that was originated on or after March 7, 2003 that is a
"high cost home loan" as defined under the Georgia Fair Lending Act. This
representation and warranty is a Deemed Material and Adverse Representation;
(78) No Arbitration. 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. This representation and warranty is a Deemed Material and
Adverse Representation;
(79) Flood Service Contract. Each Mortgage Loan is covered by
a paid in full, life of loan, flood service contract issued by First American
Real Estate Tax Service or Fidelity, and such contract is transferable;
(80) Origination Practices/No Steering. No Mortgagor was
encouraged or required to select a mortgage loan product offered by the
Mortgage Loan's originator which is a higher cost product designed for less
creditworthy borrowers, unless at the time of the Mortgage Loan's
origination, such Mortgagor did not qualify taking into account credit
history and debt-to-income ratios for a lower-cost credit product then
offered by the Mortgage Loan's originator or any affiliate of the Mortgage
Loan's originator. If, at the time of loan application, the Mortgagor may
have qualified for a lower-cost credit product then offered by any mortgage
lending affiliate of the Mortgage Loan's originator, the Mortgage Loan's
originator referred the Mortgagor's application to such affiliate for
underwriting consideration. This representation and warranty is a Deemed
Material and Adverse Representation;
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(81) Underwriting Methodology. The methodology used in
underwriting the extension of credit for each Mortgage Loan employs, in part,
objective mathematical principles which relate the Mortgagor's income, assets
and liabilities to the proposed payment and such underwriting methodology
does not rely on the extent of the Mortgagor's equity in the collateral as
the principal determining factor in approving such credit extension. Such
underwriting methodology confirmed that at the time of origination
(application/approval) the Mortgagor had a reasonable ability to make timely
payments on the Mortgage Loan. This representation and warranty is a Deemed
Material and Adverse Representation;
(82) Points and Fees. No Mortgagor was charged "points and
fees" (whether or not financed) in an amount greater than (i) $1,000, or
(ii) 5% of the principal amount of such Mortgage Loan, whichever is greater.
For purposes of this representation, such 5% limitation is calculated in
accordance with Xxxxxx Mae's anti-predatory lending requirements as set forth
in the Xxxxxx Mae Guides and "points and fees" (x) include origination,
underwriting, broker and finder fees and charges that the mortgagee imposed
as a condition of making the Mortgage Loan, whether they are paid to the
mortgagee or a third party; and (y) exclude bona fide discount points, fees
paid for actual services rendered in connection with the origination of the
Mortgage Loan (such as attorneys' fees, notaries fees and fees paid for
property appraisals, credit reports, surveys, title examinations and
extracts, flood and tax certifications, and home inspections), the cost of
mortgage insurance or credit-risk price adjustments, the costs of title,
hazard, and flood insurance policies, state and local transfer taxes or fees,
escrow deposits for the future payment of taxes and insurance premiums, and
other miscellaneous fees and charges that, in total, do not exceed 0.25% of
the principal amount of such Mortgage Loan. This representation and warranty
is a Deemed Material and Adverse Representation; and
(83) Fees Charges. All points, fees and charges (including
finance charges) and whether or not financed, assessed, collected or to be
collected in connection with the origination and servicing of each Mortgage
Loan have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation. This representation and
warranty is a Deemed Material and Adverse Representation.
Section 3.04 Repurchase and Substitution. It is understood
and agreed that the representations and warranties set forth in Sections
3.01, 3.02 and 3.03 shall survive the sale of the Mortgage Loans to the
Purchaser and shall inure to the benefit of the Purchaser, notwithstanding
any restrictive or qualified endorsement on any Mortgage Note or Assignment
or the examination of any Mortgage File.
Upon discovery by either of the Sellers or the Purchaser of a
breach of any of the representations and warranties contained in Sections
3.01, 3.02 or 3.03 that materially and adversely affects the interest of the
Purchaser (or that materially and adversely affects the interests of the
Purchaser in the related Mortgage Loan, in the case of a representation or
warranty relating to a particular Mortgage Loan), the party discovering such
breach shall give prompt written notice to the other.
Unless permitted a greater period of time to cure as set forth in
Section 2.04, the applicable Seller shall have a period of 60 days from the
earlier of either discovery by or receipt of written notice from the
Purchaser to the Seller of any breach of any of the representations and
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warranties contained in Sections 3.01, 3.02 or 3.03 that materially and
adversely affects the interest of the Purchaser (or that materially and
adversely affects the interests of the Purchaser in the related Mortgage
Loan, in the case of a representation or warranty relating to a particular
Mortgage Loan) (a "Defective Mortgage Loan"; provided that "Defective
Mortgage Loan" shall also include (a) any Mortgage Loan treated or designated
as such in accordance with Section 2.04 and (b) any Mortgage Loan regarding
which the Mortgagor fails to make the first regularly scheduled payment of
principal and interest within 30 days of its Due Date) within which to
correct or cure such breach. If such breach can ultimately be cured but is
not reasonably expected to be cured within the 60-day period, then the
applicable Seller shall have such additional time, if any, as is reasonably
determined by the Purchaser to cure such breach, provided that the Seller has
commenced curing or correcting such breach and is diligently pursuing same.
Notwithstanding anything to the contrary contained herein, (i) within sixty
(60) days after the earlier of either discovery by, or notice to, the Seller
of any breach of the representation and warranty set forth in clause (52) of
Subsection 3.03, the Seller shall repurchase such Mortgage Loan at the
Repurchase Price and (ii) any breach of a Deemed Material and Adverse
Representation shall automatically be deemed to materially and adversely
affect the value of the Mortgage Loans or the interest of the Purchaser
therein. Each Seller hereby covenants and agrees with respect to each
Mortgage Loan conveyed by it that, if any breach relating thereto cannot be
corrected or cured within the applicable cure period or such additional time,
if any, as is reasonably determined by the Purchaser, then such Seller shall,
at the direction of the Purchaser, repurchase the Defective Mortgage Loan at
the applicable Repurchase Price. Notwithstanding anything to the contrary
contained herein, if the first regularly scheduled payment of principal and
interest due under any Mortgage Loan has been delinquent more than 30 days,
the Purchaser may, by written notice to the applicable Seller, require that
the Seller repurchase the related Mortgage Loan. However, if the Seller
provides evidence that the delinquency was due to a servicing setup error, no
repurchase shall be required. Within 10 Business Days following the delivery
of any such written notice from the Purchaser, the applicable Seller shall
repurchase the specified Mortgage Loan by paying the Repurchase Price
therefor by wire transfer of immediately available funds directly to the
Purchaser's Account.
Except with respect to any breach of the representation and
warranty set forth in clause (52) of Subsection 3.03, the applicable Seller
may, at its option and assuming that such Seller has a Qualified Substitute
Mortgage Loan or Qualified Substitute Mortgage Loans, rather than repurchase
the Mortgage Loan as provided above, remove such Mortgage Loan ("Deleted
Mortgage Loan") and substitute in its place a Qualified Substitute Mortgage
Loan or Qualified Substitute Mortgage Loans, provided that no such
substitution shall be effected after the Mortgage Loan has been conveyed as
part of a Sale transaction as described in Section 3.05 hereof and no such
substitution shall be effected more than 180 days after the related Funding
Date. If the applicable Seller has no Qualified Substitute Mortgage Loan, it
shall repurchase the Defective Mortgage Loan.
As to any Deleted Mortgage Loan for which the applicable Seller
substitutes a Qualified Substitute Mortgage Loan or Qualified Substitute
Mortgage Loans, the applicable Seller shall effect such substitution by
delivering to the Purchaser or its designee for such Qualified Substitute
Mortgage Loan or Qualified Substitute Mortgage Loans the Legal Documents as
are required by Section 2. In the event of a repurchase or substitution, the
Seller
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shall, simultaneously with such reassignment, give written notice (by
telecopier, electronically or otherwise) 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 the Qualified
Substitute Mortgage Loan or Qualified Substitute Mortgage Loans and amend the
related Mortgage Loan Schedule to reflect the addition of such Qualified
Substitute Mortgage Loan or Qualified Substitute Mortgage Loans to this
Agreement. Upon such substitution, such Qualified Substitute Mortgage Loan
or Qualified Substitute Mortgage Loans shall be subject to the terms of this
Agreement in all respects, and the applicable Seller shall be deemed to have
made with respect to such Qualified Substitute Mortgage Loan or Qualified
Substitute Mortgage Loans, as of the date of substitution, the covenants,
representations and warranties set forth in Sections 3.01, 3.02 and 3.03.
The Seller 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.
For any month in which the applicable Seller substitutes one or
more Qualified Substitute Mortgage Loans for one or more Deleted Mortgage
Loans, the applicable Seller will determine the amount (if any) by which the
aggregate principal balance of all such Qualified Substitute Mortgage Loans
as of the date of substitution (after application of scheduled principal
payments due in the month of substitution which have been received or as to
which an advance has been made) is less than the aggregate outstanding
principal balance of all such Deleted Mortgage Loans. The amount of such
shortfall shall be paid by the applicable Seller on the date of such
substitution) by wire transfer of immediately available funds directly to the
Purchaser's Account.
Any repurchase of a Defective Mortgage Loan required hereunder
shall be accomplished by payment of the applicable Repurchase Price within 3
Business Days of expiration of the applicable time period referred to above
in paragraph 3.04 by wire transfer of immediately available funds directly to
the Purchaser's Account. It is understood and agreed that the obligations of
a Seller (a) set forth in this Section 3.04 to cure any breach of such
Seller's representations and warranties contained in Sections 3.01, 3.02 and
3.03 or to repurchase the Defective Mortgage Loan or Defective Mortgage Loans
and (b) set forth in Section 9.01 to indemnify the Indemnified Parties in
connection with any breach of a Seller's representations and warranties
contained in Sections 3.01, 3.02 and 3.03 shall constitute the sole remedies
of the Purchaser respecting a breach of such representations and warranties.
The parties further agree that, in recognition of the Trust's
rights against PHH Mortgage with respect to the Mortgage Loans acquired by it
from PHH Mortgage and conveyed to the Purchaser hereunder, the Purchaser
shall have the right to cause PHH Mortgage to repurchase directly any
Defective Mortgage Loan (other than as a result of a breach by the Trust of
Section 3.03(3) or 3.03(16) hereof, in which case the Purchaser shall have
the right to cause the Trust to repurchase directly the Defective Mortgage
Loan) acquired hereunder by the Purchaser from the Trust.
Section 3.05 Removal of Mortgage Loans from Inclusion Under
this Agreement Upon an Agency Transfer, Whole-Loan Transfer or a
Securitization Transaction on One or More
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Reconstitution Dates. Without incurring undue effort or any cost except the
Seller's overhead or employees' salaries, each Seller shall take reasonable
steps to assist the Purchaser, if the Purchaser so requests by 15 days'
advance written notice to the related Seller or Sellers (it is agreed that
electronic mail shall be considered valid notification if not followed by
verbal communication by the Purchaser to the related Seller or Sellers), in
re-selling the Mortgage Loans in (i) an Agency Transfer, (ii) a Whole Loan
Transfer or (iii) a Securitization Transaction (each, a "Sale") in each case
retaining the Servicer as the servicer or subservicer thereof, or as
applicable the "seller/servicer."
Unless otherwise agreed to between the Purchaser and the
Servicer, the Purchaser shall give the Servicer 15 days notice of any Sale.
The Servicer shall cooperate with the Purchaser in connection with each Sale
in accordance with this Section. In connection therewith the Servicer shall:
(1) negotiate in good faith and timely execute any
Reconstitution Agreements, required by Purchaser to effectuate the foregoing;
provided such agreements create no materially greater obligation or cost on
the part of the Servicer than otherwise set forth in this Agreement;
(2) represent to the Purchaser, the depositor, the trustee, and
the initial purchaser of the securities issued in connection with any Sale
that: (1) that the Servicer has serviced the Mortgage Loans in accordance
with the terms of this Agreement, and has otherwise complied with all
covenants and obligations hereunder, and (2) that the Servicer has taken no
action that would, nor omitted to take any required action the omission of
which would, have the effect of impairing any mortgage insurance or guarantee
on the Mortgage Loans. The Servicer also agrees to represent the accuracy of
any information provided to the Purchaser by the Servicer for inclusion in
any prospectus supplement, offering memorandum or term sheet prepared in
connection with any Sale;
(3) provide as applicable:
(a) any and all information regarding delinquencies and
defaults with respect to Servicer's Mortgage Loan portfolio and
appropriate verification of information which may be reasonably
available to the Servicer, whether through letters of its auditors and
counsel or otherwise, as the Purchaser shall request;
(b) such additional statements, certificates or other similar
documents of the Servicer or reports from the Servicer's accountants in
connection with a Securitization Transaction and in substance as
required by applicable law; and
(c) such additional representations, warranties, covenants,
opinions of counsel, letters from auditors, financial description of
the Servicer as servicer for inclusion in any offering documents to be
distributed to potential investors in connection with a Sale with
respect to the Mortgage Loans, and certificates of public officials or
officers of the Servicer as are reasonably believed necessary by the
trustee, any Rating Agency, the Purchaser, as the case may be, in
connection with such Sale. The Purchaser shall pay all third party
costs associated with the preparation of such information;
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(4) enter into any other servicing, custodial or other similar
agreements, that are consistent with the provisions of this Agreement, and
which contain such provisions as are customary in securitizations rated "AAA"
(including a securitization involving a REMIC);
(5) restate the representations and warranties contained in
Article III hereof as of the closing date of such Sale; provided, however,
that with respect to the representations and warranties set forth in
Section 3.03 (4), (20), (21), (25), (31), and (58), the Seller or Servicer may
make such additional qualifications as are reasonably necessary to make such
representations and warranties accurate at the time of such restatement;
(6) provide such opinions of counsel as are customary in such
transactions, provided, however, that any opinion of outside counsel shall be
provided at Purchaser's expense;
(7) to execute, deliver and satisfy all conditions set forth in
any indemnity agreement required by the Purchaser or any participant in such
Sale, including, without limitation, an Indemnification and Contribution
Agreement in substantially the form attached hereto as Exhibit 13; and
(8) provide Xxxxxxxx-Xxxxx certification in the form of Exhibit
11.
In connection with a Securitization Transaction, the Purchaser
may be required to engage a master servicer or trustee to determine the
allocation of payments to and make remittances to the certificateholders, at
the Purchaser's sole cost and expense. In the event that a master servicer
or trustee is requested by the Purchaser to determine the allocation of
payments and to make remittances to the certificateholders, the Servicer
agrees to service the Mortgage Loans in accordance with the reasonable and
customary requirements of such Securitization Transaction, which may include
the Servicer's acting as a subservicer in a master servicing arrangement.
With respect to the then owners of the Mortgage Loans, the Servicer shall
thereafter deal solely with such master servicer or trustee, as the case may
be with respect to such Mortgage Loans which are subject to the
Securitization Transaction and shall not be required to deal with any other
party with respect to such Mortgage Loans. The cost of such Securitization
Transaction shall be borne by the Purchaser, other than the Seller's overhead
or employees' salaries.
The Servicer shall indemnify each Indemnified Party and hold each
of them harmless from and against any losses, damages, liabilities,
penalties, fines, forfeitures, reasonable and necessary legal fees and
related costs, judgments, and any other costs, fees and expenses that each of
them may sustain arising from any false statements or omissions with respect
to information provided by or on behalf of the Servicer in connection with
any Sale.
In the event the Purchaser has elected to have the Servicer hold
record title to the Mortgages, prior to a Reconstitution Date the Servicer or
its designee shall prepare an Assignment of the Mortgage in blank from the
Servicer, acceptable to Xxxxxx Mae or Xxxxxxx Mac, as applicable, the trustee
or such third party, as the case may be, for each Mortgage Loan that is part
of a Sale and shall pay all preparation and recording costs associated
therewith. The Servicer shall execute each Assignment of the Mortgage, track
such Assignments of the Mortgage to ensure they have been recorded and
deliver them as required by Xxxxxx Mae or
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Xxxxxxx Mac, as applicable, the trustee or such third party, as the case may
be, upon the Servicer's receipt thereof. Additionally, the Servicer shall
prepare and execute, at the direction of the Purchaser, any note endorsements
in connection with any and all Reconstitution Agreements.
All Mortgage Loans not sold or transferred pursuant to a Sale
shall remain subject to this Agreement.
With respect to any Mortgage Loans sold in a Securitization
Transaction where the Servicer remains as the servicer, the Servicer agrees
that on or before March 1st each year following the year such Securitization
Transaction occurs, the Servicer shall deliver to the depositor and the
trustee, a certification in the form attached as Exhibit 11 hereto, executed
by a senior officer of the Servicer in charge of servicing for use in
connection with any Form 10-K to be filed with the Securities and Exchange
Commission with respect to the securitization trust. The obligation to
provide such certification will terminate to the extent the related
securitization trust's obligation to file reports under the Exchange Act
terminates. The Servicer shall indemnify and hold harmless the Indemnified
Parties from and against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other
costs and expenses arising out of or based upon any breach of the Servicer's
obligations under this paragraph or the Servicer's material misstatement or
omission, bad faith or willful misconduct in connection therewith.
Notwithstanding any provisions of this Agreement to the contrary,
all Mortgage Loans sold or transferred to Xxxxxx Mae or Xxxxxxx Mac shall be
serviced in accordance with the Xxxxxx Mae Guide or the Xxxxxxx Mac Servicing
Guide, as applicable, as the same may be amended from time to time. The
Servicer further agrees that it will service the related Mortgage Loans in
accordance with the terms of any Xxxxxx Mae or Xxxxxxx Mac requirements which
are in addition to those set forth in the Xxxxxx Mae Guide or the Xxxxxxx Mac
Servicing Guide. The Servicer acknowledges that the Purchaser may from to
time sell or transfer certain of the Mortgage Loans to Xxxxxx Mae and/ or
Xxxxxxx Mac or deliver certain securities secured by the Mortgage Loans to
Xxxxxx Mae or Xxxxxxx Mac to be guaranteed. In the event such sale or
delivery occurs, the Servicer agrees that it shall deliver to Xxxxxx Mae or
Xxxxxxx Mac, all reports, certificates, and other documentation required by
each such agency and that it shall remit to Xxxxxx Mae or Xxxxxxx Mac, as
applicable, all amounts required to be remitted in accordance with such
agency's guaranty program. The Purchaser and the Servicer agree that any
Mortgage Loans sold by the Purchaser to Xxxxxx Mae, will be managed in
accordance with the Process Guidelines set forth in Exhibit 12 hereto. The
Servicer acknowledges that the requirements of the Process Guidelines are in
addition to the Servicer's obligations to service the Loans in accordance
with the Xxxxxx Xxx Guide and Accepted Servicing Practices.
Section 3.06 Review of Mortgage Loans. From the related
Funding Date until the date 30 days after the related Funding Date, the
Purchaser shall have the right to review the Mortgage Files and obtain BPOs
on the Mortgaged Properties relating to the Mortgage Loans purchased on the
related Funding Date, with the results of such BPO reviews to be communicated
to the Seller for a period up to 30 days after the related Funding Date. In
addition, the Purchaser shall have the right to reject any Mortgage Loan
which in the Purchaser's sole determination (i) fails to conform to the PHH
Guide, (ii) is not an acceptable credit risk, or
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(iii) the value which based on the related BPO varies by more than plus or
minus 15% from the lesser of (A) the original appraised value of the
Mortgaged Property or (B) the purchase price of the Mortgaged Property. In
the event the Purchaser so rejects any Mortgage Loan, the Seller shall
repurchase the rejected Mortgage Loan at the Repurchase Price in the manner
prescribed in Section 3.04 upon receipt of notice from the Purchaser of the
rejection of such Mortgage Loan. Any rejected Mortgage Loan shall be removed
from the related Mortgage Loan Schedule. The Seller shall make available all
files required by Purchaser in order to complete its review. To the extent
that during the course of the Purchaser's initial review, the Purchaser
discovers that the Mortgage Loans do not otherwise comport with the terms of
the PHH Guide or this Agreement, the Purchaser shall have the right to carry
out additional due diligence reviews, which additional due diligence shall be
at the expense of the Seller. Purchaser's decision to increase its level of
due diligence review or obtain additional BPO's or other property evaluations
is at its sole discretion. The additional reviews may be for any reason
including but not limited to credit quality, property valuations, and data
integrity. Any review performed by the Purchaser prior to the related
Funding Date shall not limit the Purchaser's rights or the Seller's
obligations under this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER AND CONDITIONS PRECEDENT TO FUNDING
Section 4.01 Representations and Warranties.
The Purchaser represents, warrants and covenants to the Seller
that as of each Funding Date or as of such date specifically provided herein:
(1) Due Organization. The Purchaser is an entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has all licenses necessary to carry on its
business now being conducted and is licensed, qualified and in good standing
under the laws of each state where a Mortgaged Property is located or is
otherwise exempt under applicable law from such qualification or is otherwise
not required under applicable law to effect such qualification; no demand for
such qualification has been made upon the Purchaser by any state having
jurisdiction and in any event the Purchaser is or will be in compliance with
the laws of any such state to the extent necessary to enforce each Mortgage
Loan.
(2) Due Authority. The Purchaser had the full power and
authority and legal right to acquire the Mortgage Loans that it acquired.
The Purchaser has the full power and authority to hold each Mortgage Loan, to
sell each Mortgage Loan and to execute, deliver and perform, and to enter
into and consummate, all transactions contemplated by this Agreement. The
Purchaser has duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered this Agreement, and this
Agreement, assuming due authorization, execution and delivery by the Seller,
constitutes a legal, valid and binding obligation of the Purchaser,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, reorganization, receivership, conservatorship, insolvency,
moratorium and other laws relating to or affecting creditors' rights
generally or the rights of creditors of
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banks and to the general principles of equity (whether such enforceability is
considered in a proceeding in equity or at law);
(3) No Conflict. None of the execution and delivery of this
Agreement, the acquisition or origination, as applicable, of the Mortgage
Loans by the Purchaser, the purchase of the Mortgage Loans, the consummation
of the transactions contemplated hereby, or the fulfillment of or compliance
with the terms and conditions of this Agreement, will conflict with or result
in a breach of any of the terms, conditions or provisions of the Purchaser's
organizational documents and bylaws or any legal restriction or any agreement
or instrument to which the Purchaser is now a party or by which it is bound,
or constitute a default or result in an acceleration under any of the
foregoing, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Purchaser 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;
(4) Ability to Perform. The Purchaser 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;
(5) No Material Default. The Purchaser is not in material
default under any agreement, contract, instrument or indenture of any nature
whatsoever to which the Purchaser is a party or by which it (or any of its
assets) is bound, which default would have a material adverse effect on the
ability of the Purchaser to perform under this Agreement, nor, to the best of
the Purchaser's knowledge, has any event occurred which, with notice, lapse
of time or both would constitute a default under any such agreement,
contract, instrument or indenture and have a material adverse effect on the
ability of the Purchaser to perform its obligations under this Agreement;
(6) No Change in Business. There has been no change in the
business, operations, financial condition, properties or assets of the
Purchaser since the date of the Purchaser's financial statements that would
have a material adverse effect on the ability of the Purchaser to perform its
obligations under this Agreement;
(7) Litigation Pending. There is no action, suit, proceeding
or investigation pending against the Purchaser, which, either in any one
instance or in the aggregate, if determined adversely to the Purchaser would
adversely affect the Purchaser's ability to purchase the Mortgage Loans;
(8) Broker. The Purchaser 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.
(9) 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 Purchaser of or compliance by the
Purchaser with this Agreement, the purchase of the Mortgage Loans from the
Seller or the consummation of the transactions contemplated by this Agreement
or, if required, such approval has been obtained prior to the Funding Date;
(10) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement is in the ordinary course of
business of the Purchaser;
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(11) Non-Petition Agreement. The Purchaser covenants and agrees
that it shall not, prior to the date which is one year and one day (or if
longer, the applicable preference period then in effect) after the payment in
full of all rated obligations of Xxxxxx'x Gate Residential Mortgage Trust,
acquiesce, petition or otherwise, directly or indirectly, invoke or cause
Xxxxxx'x Gate Residential Mortgage Trust to invoke the process of any
governmental authority for the purpose of commencing or sustaining a case
against Xxxxxx'x Gate Residential Mortgage Trust under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator, or other similar official of
Xxxxxx'x Gate Residential Mortgage Trust. This covenant and agreement shall
be binding upon the Purchaser and any assignee or transferee of the Purchaser;
(12) No Untrue Information. Neither this Agreement nor any
statement or instrument furnished or to be furnished pursuant to this
Agreement contains or will contain any materially untrue statement of fact or
omits or will omit to state a fact necessary to make the statements contained
therein not misleading;
(13) Non-solicitation. The Purchaser agrees that it shall not
solicit any Mortgagors (in writing or otherwise) to refinance any of the
Mortgage Loans; provided that mass advertising or mailings (such as placing
advertisements on television, on radio, in magazines or in newspapers or
including messages in billing statements) that are not exclusively directed
towards the Mortgagors shall not constitute solicitation and shall not
violate this covenant;
(14) Privacy. Purchaser agrees and acknowledges that as to all
nonpublic personal information received or obtained by it with respect to any
Mortgagor: (a) such information is and shall be held by Purchaser in
accordance with all applicable law, including but not limited to the privacy
provisions of the Xxxxx-Xxxxx Xxxxxx Act, as may be amended from time to
time; (b) such information is in connection with a proposed or actual
secondary market sale related to a transaction of the Mortgagor for purposes
of 16 C.F.R.ss.313.14(a)(3); and (c) Purchaser is hereby prohibited from
disclosing or using any such information other than to carry out the express
provisions of this Agreement, or as otherwise permitted by applicable law; and
(15) MERS. The Purchaser is a member of MERS in good standing,
and will comply in all material respects with the rules and procedures of
MERS in connection with the Purchaser's performance of its obligations under
this Agreement with respect to the Mortgage Loans, for as long as such
Mortgage Loans are registered with MERS.
Section 4.02 Conditions Precedent to Closing. Each purchase
of Mortgage Loans hereunder shall be subject to each of the following
conditions:
(a) All of the representations and warranties of the Seller
under the PHH Guide, and of the Sellers and Purchaser under this
Agreement shall be true and correct as of the related Funding Date, and
no event shall have occurred which, with notice or the passage of time,
would constitute an Event of Default under this Agreement or under the
PHH Guide;
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(b) On or before the each Funding Date, the Seller shall submit
to the Purchaser fully executed originals of the following documents:
(i) this Agreement, in four counterparts;
(ii) the Custodial Agreement, in four counterparts;
(iii) an Officers' Certificate, in the form of Exhibit 9 hereto,
including all attachments thereto;
(iv) an Opinion of Counsel to the Seller;
(v) a certificate or other evidence of merger or change of name,
signed or stamped by the applicable regulatory authority, if any, which
states that the Mortgage Loans were acquired by the Seller by merger or
acquired or originated by the Seller while conducting business under a
name other than its present name, if applicable;
(vi) the related Purchase Price and Terms Letter, together with
the related Mortgage Loan Schedule;
(c) The closing documents for the Mortgage Loans to be
purchased on each Funding Date shall consist of fully executed
originals of the following documents:
(i) the related Purchase Price and Terms Letter together with
the related Mortgage Loan Schedule;
(ii) this Agreement, as originally executed (subject to
amendments), in four counterparts;
(iii) the Custodial Agreement, as originally executed (subject to
amendments), in four counterparts;
(iv) an Officers' Certificate, in the form of Exhibit 9 hereto,
as originally executed (subject to amendments), including all
attachments thereto;
(v) an Opinion of Counsel to the Seller (to the extent requested
by the Seller with respect to a specific sale of Mortgage Loans);
(vi) the related Mortgage Loan Schedule, one copy to be attached
to each counterpart of this Agreement, and to each counterpart of the
related Custodial Agreement; and
(vii) an Assignment, Assumption and Recognition Agreement, in the
form of Exhibit 2.05 hereto.
(d) All other terms and conditions of this Agreement and the
Purchase Price and Terms Letter shall have been complied with.
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Subject to the foregoing conditions, Purchaser shall pay to
Seller on each Funding Date the applicable Purchase Price as provided herein.
ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01 PHH Mortgage to Act as Servicer; Servicing
Standards; Additional Documents; Consent of the Purchaser. (1) The Servicer,
as independent contract servicer, shall service and administer the Mortgage
Loans and REO Property from and after each Funding Date in accordance with
the terms and provisions of the Mortgage Loans, applicable law and the terms
and provisions of this Agreement for and on behalf of, and in the best
interests of, the Purchaser (without taking into account any relationship the
Servicer may have with any Mortgagor or other Person, the participation, if
any, of the Servicer in any financing provided in connection with the sale of
any Mortgaged Property, or the Servicer's obligation to advance any expenses
or incur any costs in the performance of its duties hereunder) in accordance
with a standard that is not less than the higher of (a) the same care, skill,
prudence and diligence with which it services similar assets held for its own
or its Affiliates' account and (b) the same care, skill, prudence and
diligence with which it services similar assets for third party institutional
investors, in each case giving due consideration to customary and usual
standards of practice of prudent institutional mortgage loan servicers
utilized with respect to mortgage loans comparable to the Mortgage Loans.
Subject to the foregoing standards, in connection with such servicing and
administration, the Servicer shall seek to maximize the timely recovery of
principal and interest on the Mortgage Notes; provided that nothing contained
herein shall be construed as an express or implied guarantee by the Servicer
of the collectibility of payments on the Mortgage Loans or shall be construed
as impairing or adversely affecting any rights or benefits specifically
provided by this Agreement to the Seller, including with respect to Servicing
Fees.
In the event that any of the Mortgage Loans included on the
Mortgage Loan Schedule for a particular Funding Date are Pledged Asset
Mortgage Loans, such Pledged Asset Mortgage Loans will be serviced in
accordance with Section 5.18 hereof.
(2) To the extent consistent with Section 5.01(1) and further
subject to any express limitations set forth in this Agreement, the Servicer
(acting alone or, solely in the circumstances permitted hereunder, acting
through a subservicer) shall have full power and authority to do or cause to
be done any and all things that it may deem necessary or desirable in
connection with such servicing and administration, including the power and
authority (a) to execute and deliver, on behalf of the Purchaser, customary
consents or waivers and other instruments and documents (including estoppel
certificates), (b) to consent to transfers of any Mortgaged Property and
assumptions of the Mortgage Notes and related Mortgages, (c) to submit claims
to collect any Insurance Proceeds and Liquidation Proceeds, (d) to consent to
the application of any Insurance Proceeds or Condemnation Proceeds to the
restoration of the applicable Mortgaged Property or otherwise, (e) to bring
an action in a court of law, including an unlawful detainer action, to
enforce rights of the Purchaser with respect to any Mortgaged Property,
(f) to execute and deliver, on behalf of the Purchaser, documents relating to
the management, operation, maintenance, repair, leasing, marketing and sale
of any Mortgaged
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Property or any REO Property, and (g) to effectuate foreclosure or other
conversion of the ownership of the Mortgaged Property securing any Mortgage
Loan; provided that the Servicer shall not take any action not provided for
in this Agreement that is materially inconsistent with or materially
prejudices the interest of the Purchaser in any Mortgage Loan or under this
Agreement. If reasonably requested by the Servicer, the Purchaser shall
furnish the Servicer with any powers of attorney and other documents
reasonably necessary or appropriate to enable the Servicer to service and
administer the Mortgage Loans and the REO Properties, including documents
relating to the foreclosure, receivership, management, operation,
maintenance, repair, leasing, marketing and sale (in foreclosure or
otherwise) of any Mortgaged Property or any REO Property. Nothing contained
in this Agreement shall limit the ability of the Servicer to lend money to
(whether on a secured or unsecured basis), and otherwise generally engage in
any kind of business or dealings with, any Mortgagor as though the Servicer
were not a party to this Agreement or to the transactions contemplated hereby.
(3) Notwithstanding anything to the contrary contained herein:
(a) the Servicer acknowledges that the Purchaser will retain
title to, and ownership of, the Mortgage Loans and the REO Properties
and that the Servicer does not hereby acquire any title to, security
interest in, or other rights of any kind in or to any Mortgage Loan or
REO Property or any portion thereof;
(b) the Servicer shall not file any lien or any other
encumbrance on, exercise any right of setoff against, or attach or
assert any claim in or on any Mortgage Loan or REO Property, unless
authorized pursuant to a judicial or administrative proceeding or a
court order;
(c) the Servicer shall, in servicing the Mortgage Loans, follow
and comply with the servicing guidelines established by Xxxxxx Xxx or
Xxxxxxx Mac, as applicable, provided that the Servicer shall
specifically notify the Purchaser in writing and obtain the Purchaser's
written consent prior to the Servicer taking any of the following
actions: (1) modifying, amending or waiving any of the financial terms
of, or making any other material modifications to, a Mortgage Loan,
except the Servicer may be permitted to do so in the event of a
Specially Serviced Mortgage Loan or, upon the Mortgagor's request,
accept a principal prepayment and re-amortize the then remaining
principal balance over the then remaining term of the loan (resulting
in a lower scheduled monthly payment but no change in the maturity
date); (2) selling any Specially Serviced Mortgage Loan; (3) making,
with respect to any Specially Serviced Mortgage Loan or REO Property,
Servicing Advances provided that the Servicer shall not be required to
so advise the Purchaser to the extent that each related Servicing
Advance as to the related Mortgaged Property or REO Property is in the
best interests of the Purchaser or other owner of the Mortgage Loan and
that are deemed to be recoverable by the Servicer; (4) forgiving
principal or interest on, or permitting to be satisfied at a discount,
any Mortgage Loan except in the event of a Specially Serviced Mortgage
Loan; (5) accepting substitute or additional collateral, or releasing
any collateral, for a Mortgage Loan. If the Purchaser has not approved
or rejected in writing any proposed action(s) recommended by the
Servicer to be taken hereunder within 5 Business Days of the date such
recommendation
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is made, then the Purchaser shall be deemed to have rejected such
recommended action(s) and the Servicer shall not take any such
action(s);
(d) the Servicer shall notify the Purchaser of any
modification, waiver or amendment of any term of any Mortgage Loan and
the date thereof and shall deliver to the Purchaser, for deposit in the
related Mortgage File, an original counterpart of the agreement
relating to such modification, waiver or amendment promptly following
the execution thereof;
(e) in accordance with the Xxxxxx Xxx Guide and the Xxxxxxx Mac
Servicing Guide, the Servicer shall be entitled to workout compensation
as it relates to repayment plans, loan modifications, short-sales and
deed-in lieu of foreclosure as evidenced in Exhibit 5.01;
(f) the Servicer shall remain primarily liable for the full
performance of its obligations hereunder notwithstanding any
appointment by the Servicer of a subservicer or subservicers hereunder;
and
(g) the Purchaser may at any time and from time to time, in its
sole discretion, terminate the Servicer's servicing obligations
hereunder with respect to (1) any REO Property upon 10 Business Days
written notice to the Servicer, or (2) any Mortgage Loan that, in
accordance with the Purchaser's internal credit classification
criteria, has been classified as "doubtful" or a "loss," upon 30
calendar days written notice to the Servicer, and Purchaser shall in
each case reimburse Servicer all Monthly Advances and take all
necessary steps to assume such servicing. Upon the effectiveness of
any such termination of the Servicer's servicing obligations with
respect to any such REO Property or Mortgage Loan, the Servicer shall
deliver all agreements, documents, and instruments related thereto to
the Purchaser, in accordance with applicable law.
Section 5.02 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, the Servicer will proceed diligently to
collect all payments due under each Mortgage Loan when the same shall become
due and payable and shall, to the extent such procedures shall be consistent
with this Agreement and the terms and provisions of any related Primary
Insurance Policy, follow such collection procedures as it follows with
respect to mortgage loans comparable to the Mortgage Loans, which procedures
shall in any event comply with the servicing standards set forth in
Section 5.01. Furthermore, the Servicer shall ascertain and estimate annual
ground rents, taxes, assessments, fire and hazard insurance premiums,
mortgage insurance premiums, and all other charges that, as provided in the
Mortgages, will become due and payable 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 5.03 Notice of Specially Serviced Mortgage Loans and
Foreclosure Sale. (a) The Servicer shall, within five (5) calendar days
following each Record Date, deliver to the Purchaser monthly reports
substantially in the form of Exhibit 5.03(a) with respect to all Specially
Serviced Mortgage Loans. The Servicer shall, within one (1) Business Day
following
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the occurrence of any foreclosure sale with respect to any Mortgaged
Property, deliver to the Purchaser a notice of foreclosure sale substantially
in the form of Exhibit 5.03(b).
(b) Following the foreclosure sale or abandonment of any
Mortgaged Property, the Servicer shall report such foreclosure or
abandonment as required pursuant to Section 6050J of the Code.
Section 5.04 Establishment of Collection Account; Deposits
in Collection Account. The Servicer shall segregate and hold all funds
collected and received pursuant to each Mortgage Loan separate and apart from
any of its own funds and general assets and shall establish and maintain one
or more Collection Accounts, in the form of time deposit or demand accounts.
Any funds deposited in the Collection Account shall at all times be fully
insured to the full extent permitted under applicable law. The creation of
any Collection Account shall be evidenced by a certification in the form of
Exhibit 5.04-1 attached hereto, in the case of an account established with
the Servicer, or a letter agreement in the form of Exhibit 5.04-2 attached
hereto, in the case of an account held by a depository other than the
Servicer. In either case, a copy of such certification or letter agreement
shall be furnished to the Purchaser.
The Servicer shall deposit in the Collection Account, within two
Business Days of receipt (or as otherwise required pursuant to this Agreement
in the case of clauses (8), (9) and (10) of this Section 5.04) and retain
therein the following payments and collections received or made by it
subsequent to each Funding Date, or received by it prior to the Funding Date
but allocable to a period subsequent thereto, other than in respect of
principal and interest on the Mortgage Loans due on or before the Funding
Date:
(1) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(2) all payments on account of interest less the Servicing Fee
on the Mortgage Loans;
(3) all Liquidation Proceeds;
(4) all REO Proceeds;
(5) all Insurance Proceeds, including amounts required to be
deposited pursuant to Sections 5.10 and 5.11, other than proceeds to be held
in the Escrow Account and applied to the restoration or repair of the
Mortgaged Properties or released to the applicable Mortgagors in accordance
with the Servicer's normal servicing procedures, the related Mortgages or
applicable law;
(6) all Condemnation Proceeds affecting any Mortgaged Property
which are not released to a Mortgagor in accordance with the Servicer's
normal servicing procedures, the related Mortgage or applicable law;
(7) any Monthly Advances in accordance with Section 6.03;
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(8) any amounts required to be deposited by the Servicer
pursuant to Section 5.11 in connection with the deductible clause in any
blanket hazard insurance policy, such deposit to be made from the Servicer's
own funds without reimbursement therefor;
(9) any amounts required to be deposited by the Servicer
pursuant to Section 5.16 in connection with any losses on Permitted
Investments; and
(10) any amounts required to be deposited in the Collection
Account pursuant to Sections 7.01 or 7.02 or otherwise pursuant to the terms
hereof.
The foregoing requirements for deposit in the Collection Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of servicing fees, late
payment charges and assumption fees, to the extent permitted by Section 7.01,
need not be deposited by the Servicer in the Collection Account and shall be
retained by the Servicer as additional compensation.
Section 5.05 Permitted Withdrawals from the Collection
Account . The Servicer may, from time to time in accordance with the
provisions hereof, withdraw amounts from the Collection Account for the
following purposes (without duplication):
(1) to reimburse itself for unreimbursed Monthly Advances and
Servicing Advances that the Servicer has determined to be Non-Recoverable
Advances as provided in Section 6.04;
(2) to make payments to the Purchaser in the amounts, at the
times and in the manner provided for in Section 6.01;
(3) to reimburse itself for Monthly Advances, the Servicer's
right to reimburse itself pursuant to this Subsection (3) being limited to
amounts received on the related Mortgage Loan which represent late payments
of principal and/or interest with respect to which any such Monthly Advance
was made;
(4) to reimburse itself for unreimbursed Servicing Advances and
for unreimbursed Monthly Advances, the Servicer's right to reimburse itself
pursuant to this Subsection (4) 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 Servicer from the
Mortgagor or otherwise relating to the Mortgage Loan, it being understood
that, in the case of such reimbursement, the Servicer's right thereto shall
be prior to the rights of the Purchaser, except that, where a Seller or the
Servicer is required to repurchase (or substitute a Qualified Substitute
Mortgage Loan for) a Mortgage Loan pursuant to Sections 2.04, 3.04 and/or
7.02, the Servicer's right to such reimbursement shall be subsequent and
subordinate to the payment to the Purchaser of the applicable Repurchase
Price (or delivery of a Qualified Substitute Mortgage Loan) and all other
amounts required to be paid to the Purchaser with respect to such Mortgage
Loan;
(5) to pay to itself as additional servicing compensation any
interest earned on funds in the Collection Account (all such interest to be
withdrawn monthly not later than each Remittance Date), and any prepayment
penalties or premiums relating to any Principal
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Prepayments; provided that no such amounts shall be payable as servicing
compensation to the extent they relate to a Mortgage Loan with respect to
which a default, breach, violation, or event of acceleration exists or would
exist but for the lapse of time, the giving of notice, or both;
(6) to pay to itself with respect to each Mortgage Loan that
has been repurchased pursuant to Sections 2.04, 3.04 and/or 7.02 all amounts
received thereon and not distributed as of the date on which the related
Repurchase Price is determined (except to the extent that such amounts
constitute part of the Repurchase Price to be remitted to the Purchaser);
(7) to remove any amounts deposited into the Collection Account
in error; and
(8) to clear and terminate the Collection Account upon the
termination of this Agreement, with any funds contained therein to be
distributed in accordance with the terms of this Agreement.
The Servicer shall keep and maintain a separate, detailed
accounting, on a Mortgage Loan-by-Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Collection Account pursuant to this
Section. All funds required to be deposited in the Collection Account shall
be held in trust for the Purchaser until withdrawn in accordance with this
Section 5.05.
Section 5.06 Establishment of Escrow Accounts; Deposits in
Escrow. The Servicer shall segregate and hold all funds collected and
received pursuant to each Mortgage Loan which constitute 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. Any funds deposited in the Escrow Accounts shall
at all times be fully insured to the full extent permitted under applicable
law. The creation of any Escrow Account shall be evidenced by a
certification in the form shown on Exhibit 5.06-1 attached hereto, in the
case of an account established with the Servicer, or a letter agreement in
the form shown on Exhibit 5.06-2 attached hereto, in the case of an account
held by a depository other than the Servicer, such depository having been
consented to by the Purchaser. In either case, a copy of such certification
or letter agreement shall be furnished to the Purchaser.
The Servicer shall deposit in each Escrow Account within two
Business Days of receipt, and retain therein, (i) all Escrow Payments
collected on account of the related Mortgage Loans for the purpose of
effecting timely payment of any such items as required under the terms of
this Agreement, and (ii) all Insurance Proceeds which are to be applied to
the restoration or repair of any Mortgaged Property. The Servicer shall make
withdrawals therefrom only to effect such payments as are required under
Sections 5.07 and/or 5.08. The Servicer 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 and, to the extent required by law, the Servicer shall pay
interest on escrowed funds to the Mortgagor notwithstanding that the Escrow
Account is non-interest bearing or that interest paid thereon is insufficient
for such purposes, without any right of reimbursement therefor.
Section 5.07 Permitted Withdrawals From Escrow Accounts.
Withdrawals from any Escrow Account may be made by the Servicer only (i) to
effect timely payments of ground
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rents, taxes, assessments, hazard insurance premiums, Primary Insurance
Policy premiums, if applicable, and comparable items constituting Escrow
Payments for the related Mortgage, (ii) to reimburse the Servicer for any
Servicing Advance made by the Servicer with respect to a related Mortgage
Loan but only from amounts received on the related Mortgage Loan that
represent late payments or collections of Escrow Payments thereunder,
(iii) to refund to the Mortgagor any funds as may be determined to be
overages, (iv) if permitted by applicable law, for transfer to the Collection
Account in accordance with the terms of this Agreement, (v) for application
to the restoration or repair of the Mortgaged Property in accordance with the
terms of the related Mortgage Loan, (vi) to pay to the Servicer, or to the
Mortgagor to the extent required by law, any interest paid on the funds
deposited in the Escrow Account, (vii) to reimburse a Mortgagor in connection
with the making of the Payoff of the related Mortgage Loan or the termination
of all or part of the escrow requirement in connection with the Mortgage
Loan, (viii) to remove any amounts deposited into the Escrow Account in
error; or (ix) to clear and terminate the Escrow Account on the termination
of this Agreement.
Section 5.08 Payment of Taxes, Insurance and Other Charges;
Maintenance of Primary Insurance Policies; Collections Thereunder. With
respect to each Mortgage Loan, the Servicer shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, and other charges
which are or may become a lien upon the Mortgaged Property and the status of
Primary Insurance 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 and at a time appropriate for securing
maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in the Escrow Account which shall have been estimated and
accumulated by the Servicer in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage and applicable law. If a Mortgage
does not provide for Escrow Payments, then the Servicer shall require that
any such payments be made by the Mortgagor at the time they first become
due. The Servicer assumes full responsibility for the timely payment of all
such bills and shall effect timely payments of all such bills irrespective of
the Mortgagor's faithful performance in the payment of same or the making of
the Escrow Payments and shall make advances from its own funds to effect such
payments but shall be entitled to reimbursement thereof in accordance with
the terms of this Agreement.
The Servicer shall maintain in full force and effect a Primary
Insurance Policy, conforming in all respects to the description set forth in
Section 3.03(30), issued by an insurer described in that Section, with
respect to each Mortgage Loan for which such coverage is required. Such
coverage will be maintained until the Loan-to-Value Ratio of the related
Mortgage Loan is reduced to 75% or less in the case of a Mortgage Loan having
a Loan-to-Value Ratio at origination in excess of 80% or until such time, if
any, as such insurance is required to be released in accordance with the
provisions of applicable law including, but not limited to, the Homeowners
Protection Act of 1998. The Servicer shall assure that all premiums due
under any Primary Insurance Policy are paid in a timely manner, but, shall be
entitled to reimbursement pursuant to the terms of this Agreement for
premiums paid by the Servicer on behalf of any Mortgagor who is obligated to
pay such premiums but fails to do so. The Servicer shall not cancel or
refuse to renew any Primary Insurance Policy in effect on the related Funding
Date that is required to be kept in force under this Agreement unless a
replacement Primary Insurance
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Policy for such canceled or nonrenewed policy is obtained from and maintained
with an insurer that satisfies the standards set forth in Section 3.03(30).
The Servicer shall not take any action which would result in noncoverage
under any applicable Primary Insurance Policy of any loss which, but for the
actions of the Servicer, would have been covered thereunder. In connection
with any assumption or substitution agreement entered into or to be entered
into pursuant to Section 7.01, the Servicer shall promptly notify the insurer
under the related Primary Insurance Policy, if any, of such assumption or
substitution of liability in accordance with the terms of such policy and
shall take all actions which may be required by such insurer as a condition
to the continuation of coverage under the Primary Insurance Policy. If such
Primary Insurance Policy is terminated as a result of such assumption or
substitution of liability, then the Servicer shall obtain, and, except as
otherwise provided above, maintain, a replacement Primary Insurance Policy as
provided above.
In connection with its activities as servicer, the Servicer
agrees to prepare and present, on behalf of itself and the Purchaser, claims
to the insurer under any Primary Insurance Policy in a timely fashion in
accordance with the terms of such policies and, in this regard, to take such
action as shall be necessary to permit recovery under any Primary Insurance
Policy respecting a defaulted Mortgage Loan. Pursuant to Section 5.04, any
amounts collected by the Servicer under any Primary Insurance Policy shall be
deposited in the Collection Account, subject to withdrawal in accordance with
Section 5.05.
Purchaser, in its sole discretion, at any time, may (i) either
obtain an additional Primary Insurance Policy on any Mortgage Loan which
already has a Primary Insurance Policy in place, or (ii) obtain a Primary
Insurance Policy for any Mortgage Loan which does not already have a Primary
Insurance Policy in place. Upon the mutual agreement of the Purchaser and
the Servicer, such Primary Insurance Policy will be administered by the
Servicer in accordance with the terms of this Agreement or any Reconstitution
Agreement.
Section 5.09 Transfer of Accounts. The Servicer may
transfer the Collection Account or any Escrow Account to a different
depository institution from time to time; provided that (i) no such transfer
shall be made unless all certifications or letter agreements required under
Section 5.04 or Section 5.06, as applicable, have been executed and delivered
by the parties thereto; and (ii) concurrently upon any such transfer, the
Servicer shall give written notice thereof to the Purchaser. Notwithstanding
anything to the contrary contained herein, the Collection Account and each
Escrow Account shall at all times constitute Eligible Accounts.
Section 5.10 Maintenance of Hazard Insurance. The Servicer
shall cause to be maintained for each Mortgage Loan fire and hazard insurance
with extended coverage as is customary in the area where the Mortgaged
Property is located in an amount that is at least equal to the lesser of
(a) the maximum insurable value of the improvements securing such Mortgage
Loan and (b) the greater of (1) the Unpaid Principal Balance of such Mortgage
Loan or (2) an amount such that the proceeds thereof shall be sufficient to
prevent the Mortgagor and/or the loss payee from becoming a co insurer.
If any Mortgaged Property is in an area identified by the Federal
Emergency Management Agency as having special flood hazards and such flood
insurance has been made available, then the Servicer will cause to be
maintained a flood insurance policy meeting the
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requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable insurance carrier rated "A" or
better in Best's or in accordance with then current Xxxxxx Xxx, Xxxxxxx Mac,
GNMA or VA guidelines, as applicable, in an amount representing coverage not
less than the lesser of (a) the minimum amount required, under the terms of
coverage, to compensate for any damage or loss on a replacement cost basis
(or the outstanding principal balance of the related Mortgage Loan if
replacement cost coverage is not available for the type of building insured)
or (b) the maximum amount of insurance which is available under the Flood
Disaster Protection Act of 1973, as amended (assuming that the area in which
such Mortgaged Property is located is participating in such program). If at
any time during the term of the Mortgage Loan, the Servicer determines in
accordance with applicable law and pursuant to the then current Xxxxxx Mae or
Xxxxxxx Mac guidelines, as applicable, that a Mortgaged Property is located
in a special flood hazard area and is not covered by flood insurance or is
covered in an amount less than the amount required by the Flood Disaster
Protection Act of 1973, as amended, the Servicer shall notify the related
Mortgagor that the Mortgagor must obtain such flood insurance coverage, and
if said Mortgagor fails to obtain the required flood insurance coverage
within forty-five (45) days after such notification, the Servicer shall
immediately force place the required flood insurance on the Mortgagor's
behalf.
The Servicer shall also maintain on each REO Property fire,
hazard and liability insurance, and to the extent required and available
under the Flood Disaster Protection Act of 1973, as amended, flood insurance
with extended coverage in an amount which is at least equal to the lesser of
(a) the maximum insurable value of the improvements which are a part of such
property and (b) the outstanding principal balance of the related Mortgage
Loan at the time it became an REO Property plus accrued interest at the Note
Rate and related Servicing Advances.
All such policies shall be endorsed with standard mortgagee
clauses with loss payable to the Servicer, or upon request to the Purchaser,
and shall provide for at least 30 days prior written notice of any
cancellation, reduction in the amount of, or material change in, coverage to
the Servicer. The Servicer shall not interfere with the Mortgagor's freedom
of choice in selecting either his insurance carrier or agent, provided that
the Servicer shall not accept any such insurance policies from insurance
companies unless such companies (a) currently reflect (1) a general
policyholder's rating of B+ or better and a financial size category of III or
better in Best's Key Rating Guide, or (2) a general policyholder's rating of
"A" or "A-" or better in Best's Key Rating Guide, and (b) are licensed to do
business in the state wherein the related Mortgaged Property is located.
Notwithstanding the foregoing, the Servicer may accept a policy underwritten
by Lloyd's of London or, if it is the only coverage available, coverage under
a state's Fair Access to Insurance Requirement (FAIR) Plan. If a hazard
policy becomes in danger of being terminated, or the insurer ceases to have
the ratings noted above, the Servicer 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 5.11.
Pursuant to Section 5.04, any amounts collected by the Servicer
under any such policies other than amounts to be deposited in the Escrow
Account and applied to the restoration or repair of the Mortgaged Property or
REO Property, or released to the Mortgagor in accordance
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with the Servicer's normal servicing procedures, shall be deposited in the
Collection Account within two Business Days of receipt, subject to withdrawal
in accordance with Section 5.05. Any cost incurred by the Servicer in
maintaining any such insurance shall not, for the purpose of calculating
remittances to the Purchaser, be added to the Unpaid Principal Balance of the
related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan
so permit.
If a Mortgage is secured by a unit in a condominium project, the
Servicer shall verify that the coverage required of the owner's association,
including hazard, flood, liability, and fidelity coverage, is being
maintained in accordance with the PHH Guide (with respect to any loans
originated in connection with PHH Mortgage's non-warrantable condominium
program) or the applicable Xxxxxx Xxx or Xxxxxxx Mac guidelines, and secure
from the owner's association its agreement to notify the Servicer 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.
It is understood and agreed that no earthquake or other
additional insurance need be required by the Servicer of the Mortgagor or
maintained on property acquired in respect of the Mortgage Loan, other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance.
Section 5.11 Maintenance of Mortgage Impairment Insurance
Policy. If the Servicer obtains and maintains a blanket policy issued by an
issuer that has a Best's Key rating of A+ insuring against hazard losses 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 5.10 and
otherwise complies with all other requirements of Section 5.10, it shall
conclusively be deemed to have satisfied its obligations as set forth in
Section 5.10, it being understood and agreed that such policy may contain a
deductible clause, in which case the Servicer shall, if there shall not have
been maintained on the related Mortgaged Property or REO Property a policy
complying with Section 5.10 and there shall have been one or more losses
which would have been covered by such policy, deposit in the Collection
Account the amount not otherwise payable under the blanket policy because of
such deductible clause; provided that the Servicer shall not be entitled to
obtain reimbursement therefor. In connection with its activities as servicer
of the Mortgage Loans, the Servicer agrees to prepare and present, on behalf
of the Purchaser, claims under any such blanket policy in a timely fashion in
accordance with the terms of such policy. Upon request of the Purchaser, the
Servicer shall cause to be delivered to the Purchaser a certified true copy
of such policy 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 the Purchaser.
Section 5.12 Fidelity Bond; Errors and Omissions Insurance.
The Servicer shall maintain, at its own expense, a blanket fidelity bond and
an errors and omissions insurance policy, with broad coverage with
responsible companies that would meet the requirements of Xxxxxx Mae and
Xxxxxxx Mac on all officers, employees or other Persons acting in any
capacity with regard to the Mortgage Loans to handle funds, money, documents
and papers relating to the Mortgage Loans. The Fidelity Bond and errors and
omissions insurance shall be in the form of the "Mortgage Banker's Blanket
Bond" and shall protect and insure the Servicer against losses, including
losses arising by virtue of any Mortgage Loan not being satisfied in
accordance with the procedures set forth in Section 7.02 and/or losses
resulting from or arising in connection
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with forgery, theft, embezzlement, fraud, errors and omissions and negligent
acts of or by such Persons. Such Fidelity Bond shall also protect and insure
the Servicer against losses in connection with the failure to maintain any
insurance policies required pursuant to this Agreement and the release or
satisfaction of a Mortgage Loan without having obtained payment in full of
the indebtedness secured thereby. No provision of this Section 5.12
requiring the Fidelity Bond and errors and omissions insurance shall diminish
or relieve the Servicer from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such bond and insurance policy
shall be at least equal to the corresponding amounts required by Xxxxxx Mae
in the Xxxxxx Xxx Guide and by Xxxxxxx Mac in the Xxxxxxx Mac Servicing
Guide. The Servicer shall cause to be delivered to the Purchaser upon
request: (i) a certified true copy of the Fidelity Bond and insurance
policy; (ii) a written statement from the surety and the insurer that such
Fidelity Bond or insurance policy shall in no event be terminated or
materially modified without 30 days' prior written notice to the Purchaser;
and (iii) written evidence reasonably satisfactory to the Purchaser that such
Fidelity Bond or insurance policy provides that the Purchaser is a
beneficiary or loss payee thereunder.
Section 5.13 Management of REO Properties If title to any
Mortgaged Property is acquired in foreclosure or by deed in lieu of
foreclosure (each, an "REO Property"), the deed or certificate of sale shall
be taken in the name of the Purchaser or the Person (which may be the
Servicer for the benefit of the Purchaser) designated by the Purchaser, or in
the event the Purchaser notifies the Servicer that the Purchaser or such
Person 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 Purchaser
from an attorney duly licensed to practice law in the state where the REO
Property is located. The Servicer (acting alone or through a subservicer),
on behalf of the Purchaser, shall, subject to Section 5.01(3)(c), dispose of
any REO Property pursuant to Section 5.14. Unless an appraisal prepared by
an MAI Appraiser who is Independent in accordance with the provisions of 12
C.F.R. ss.225.65 shall have been obtained in connection with the acquisition of
such REO Property, promptly following any acquisition by the Purchaser
(through the Servicer) of an REO Property, the Servicer shall obtain a
narrative appraisal thereof (at the expense of the Purchaser) in order to
determine the fair market value of such REO Property. The Servicer shall
also cause each REO Property to be inspected promptly upon the acquisition of
title thereto and shall cause each REO Property to be inspected at least
annually thereafter, and Servicer shall be entitled to be reimbursed for
expenses in connection therewith in accordance with this Agreement. The
Servicer shall make or cause to be made a written report of each such
inspection. Such reports shall be retained in the Mortgage File and copies
thereof shall be forwarded by the Servicer to the Purchaser. The Servicer
shall also furnish to the Purchaser the applicable reports required under
Section 8.01.
Notwithstanding anything to the contrary contained herein, if a
REMIC election has been or is to be made with respect to the arrangement
under which the Mortgage Loans and the REO Properties are held, then the
Servicer shall manage, conserve, protect and operate each REO Property in a
manner that does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by such REMIC of any "income from non-permitted assets"
within the meaning of Section 860F(a)(2)(B) or any "net income from
foreclosure property" within the meaning of
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Section 860G (c)(2) of the Code (or comparable provisions of any successor or
similar legislation).
The Servicer shall deposit and hold all revenues and funds
collected and received in connection with the operation of each REO Property
in the Collection Account, and the Servicer shall account separately for
revenues and funds received or expended with respect to each REO Property.
The Servicer shall have full power and authority, subject only to
the specific requirements and prohibitions of this Agreement (and, in
particular, Section 5.01(3)(c)), to do any and all things in connection with
any REO Property as are consistent with the servicing standards set forth in
Section 5.01. In connection therewith, the Servicer shall deposit or cause
to be deposited within two (2) Business Day of receipt in the Collection
Account all revenues and collections received or collected by it with respect
to each REO Property, including all proceeds of any REO Disposition. Subject
to Section 5.15, the Servicer shall withdraw (without duplication) from the
Collection Account, but solely from the revenues and collections received or
collected by it with respect to a specific REO Property, such funds necessary
for the proper operation, management and maintenance of such REO Property,
including the following:
(1) all insurance premiums due and payable in respect of such
REO Property;
(2) all real estate taxes and assessments in respect of such
REO Property that may result in the imposition of a lien thereon;
(3) all customary and reasonable costs and expenses necessary
to maintain, repair, appraise, evaluate, manage or operate such REO Property
(including the customary and reasonable costs incurred by any "managing
agent" retained by the Servicer in connection with the maintenance, management
or operation of such REO Property);
(4) all reasonable costs and expenses of restoration
improvements, deferred maintenance and tenant improvements; and
(5) all other reasonable costs and expenses, including
reasonable attorneys' fees, that the Servicer may suffer or incur in
connection with its performance of its obligations under this Section (other
than costs and expenses that the Servicer is expressly obligated to bear
pursuant to this Agreement).
To the extent that amounts on deposit in the Collection Account
are insufficient for the purposes set forth in clauses (1) through (5) above,
the Servicer shall, subject to Section 6.04, advance the amount of funds
required to cover the shortfall with respect thereto. The Servicer shall
promptly notify the Purchaser in writing of any failure by the Servicer to
make a Servicing Advance of the type specified in clauses (1) or (2) above
(irrespective of whether such Servicing Advance is claimed to be
non-recoverable by the Servicer pursuant to Section 6.04).
Following the consummation of an REO Disposition, the Servicer
shall remit to the Purchaser, in accordance with Section 6.01, any proceeds
from such REO Disposition in the
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Collection Account following the payment of all expenses and Servicing
Advances relating to the subject REO Property.
Section 5.14 Sale of Specially Serviced Mortgage Loans and
REO Properties. The Servicer shall offer to sell any REO Property in the
manner that is in the best interests of the Purchaser or other owner of the
REO, but no later than the time determined by the Servicer to be sufficient
to result in the sale of such REO Property on or prior to the time specified
in Section 5.15. In accordance with the servicing standards set forth in
Section 5.01, the Servicer or designated agent of the Servicer shall solicit
bids and offers from Persons for the purchase of any Specially Serviced
Mortgage Loan or REO Property.
The Servicer shall act on behalf of the Purchaser in negotiating
and taking any other action necessary or appropriate in connection with the
sale of any Specially Serviced Mortgage Loan or REO Property, including the
collection of all amounts payable in connection therewith. The Servicer
shall manage and negotiate terms of sale on Specially Serviced Mortgage Loans
or REO Properties with the same care, skill, prudence and diligence with
which Servicer manages its own REO Properties. The proceeds of any sale
after deduction of the expenses of such sale incurred in connection therewith
shall be promptly deposited in (a) if such sale is an REO Disposition, in the
Collection Account in accordance with Section 5.13 and (b) in any other
circumstance, the Collection Account in accordance with Section 5.04.
Section 5.15 Realization Upon Specially Serviced Mortgage
Loans and REO Properties. The Servicer shall foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Specially
Serviced Mortgage Loans as come into and continue in default and as to which
(a) in the reasonable judgment of the Servicer, no satisfactory arrangements
can, in accordance with prudent lending practices, be made for collection of
delinquent payments pursuant to Section 5.01 and (b) such foreclosure or
other conversion is otherwise in accordance with Section 5.01. Prior to
commencing foreclosure proceedings, the Servicer shall notify the Purchaser
in writing of the Servicer's intention to do so. The Servicer shall not be
required to expend its own funds in connection with any foreclosure or
towards the restoration, repair, protection or maintenance of any property
unless it shall determine that such expenses will be recoverable to it as
Servicing Advances either through Liquidation Proceeds or through Insurance
Proceeds (in accordance with Section 5.05) or from any other source relating
to the Specially Serviced Mortgage Loan. The Servicer shall be required to
advance funds for all other costs and expenses incurred by it in any such
foreclosure proceedings; provided that it shall be entitled to reimbursement
thereof from the proceeds of liquidation of the related Mortgaged Property,
as contemplated by Section 5.05.
Upon any Mortgaged Property becoming an REO Property, the
Servicer shall promptly notify the Purchaser thereof, specifying the date on
which such Mortgaged Property became an REO Property. Pursuant to its
efforts to sell such REO Property, the Servicer shall, either itself or
through an agent selected by it, protect and conserve such REO Property in
accordance with the servicing standards set forth in Section 5.01 and may,
subject to Section 5.01(3)(c) and incident to its conservation and protection
of the interests of the Purchaser, rent the same, or any part thereof, for
the period to the sale of such REO Property.
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Notwithstanding anything to the contrary contained herein, the
Purchaser shall not, and the Servicer shall not on the Purchaser's behalf,
acquire any real property (or personal property incident to such real
property) except in connection with a default or a default that is imminent
on a Mortgage Loan. If the Purchaser acquires any real property (or personal
property incident to such real property) in connection with such a default,
then such property shall be disposed of by the Servicer in accordance with
this Section and Section 5.14 as soon as possible but in no event later than
3 years after its acquisition by the Servicer on behalf of the Purchaser,
unless the Servicer obtains, at the expense of the Purchaser, in a timely
fashion an extension from the Internal Revenue Service for an additional
specified period.
Any recommendation of the Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Servicer that the
proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding. If the Servicer determines that the proceeds of such
foreclosure would not exceed the costs and expenses of bringing such a
proceeding, the Servicer will request the Purchaser to allow Servicer to
pursue a Deed in Lieu of Foreclosure or recommend to the Purchaser to perform
a charge-off of the remaining principal balance, delinquent interest and any
and all fees and/or expenses the Servicer has advanced or incurred through
Customary Servicing Procedures. The income earned from the management of any
REO Property, net of reimbursement to the Servicer for Servicing Advances,
incurred with respect to such REO Property under Section 5.13, shall be
applied to the payment of the costs and expenses set forth in
Section 5.13(4), with any remaining amounts to be promptly deposited in the
Collection Account in accordance with Section 5.13.
If, in the exercise of its servicing obligations with respect to
any Mortgaged Property hereunder, the Servicer deems it is necessary or
advisable to obtain an Environmental Assessment, then the Servicer shall so
obtain an Environmental Assessment, it being understood that all reasonable
costs and expenses incurred by the Servicer in connection with any such
Environmental Assessment (including the cost thereof) shall be deemed to be
Servicing Advances recoverable by the Servicer pursuant to Section 5.13(4).
Upon completion of the inspection, the Seller shall promptly provide a
written Environmental Assessment report to the Purchaser. Such Environmental
Assessment shall (a) assess whether (1) such Mortgaged Property is in
material violation of applicable Environmental Laws or (2) after consultation
with an environmental expert, taking the actions necessary to comply with
applicable Environmental Laws is reasonably likely to produce a greater
recovery on a net present value basis than not taking such actions, and
(b) identify whether (1) any circumstances are present at such Mortgaged
Property relating to the use, management or disposal of any hazardous
materials for which investigation, testing, monitoring, containment, clean-up
or re mediation could be required under any federal, state or local law or
regulation, or (2) if such circumstances exist, after consultation with an
environmental expert, taking such actions is reasonably likely to produce a
greater recovery on a present value basis than not taking such actions. (The
conditions described in the immediately preceding clauses (a) and (b) shall
be referred to herein as "Environmental Conditions Precedent to
Foreclosure.") If any such Environmental Assessment so warrants, the Servicer
is hereby authorized to and shall perform such additional environmental
testing as it deems necessary and prudent to establish the satisfaction of
the foregoing Environmental Conditions Precedent to Foreclosure or to proceed
as set forth below (such additional testing thereafter being included in the
term "Environmental Assessment").
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If an Environmental Assessment deemed necessary or advisable by
the Servicer in accordance with this Section 5.15 establishes that any of the
Environmental Conditions Precedent to Foreclosure is not satisfied with
respect to any Mortgaged Property, but the Servicer in good faith reasonably
believes that it is in the best economic interest of the Purchaser to proceed
against such Mortgaged Property and, if title thereto is acquired, to take
such remedial, corrective or other action with respect to the unsatisfied
condition or conditions as may be prescribed by applicable law to satisfy
such condition or conditions, then the Servicer shall so notify the
Purchaser. If, pursuant to Section 5.01(3)(c), the Purchaser has notified
the Servicer in writing to proceed against such Mortgaged Property, then the
Servicer shall so proceed. The cost of any remedial, corrective or other
action contemplated by the preceding sentence in respect of any of the
Environmental Conditions Precedent to Foreclosure that is not satisfied shall
not be an expense of the Servicer and the Servicer shall not be required to
expend or risk its own funds or otherwise incur any financial liability in
connection with any such action.
If an Environmental Assessment deemed necessary or advisable by
the Servicer in accordance with this Section 5.15 establishes that any of the
Environmental Conditions Precedent to Foreclosure is not satisfied with
respect to any Mortgaged Property and, in accordance with Section 5.01(3)(c),
the Purchaser elects or is deemed to have elected not to proceed against such
Mortgaged Property, then the Servicer shall, subject to Section 5.01(3)(c),
take such action as it deems to be in the best economic interest of the
Purchaser (other than proceeding against the Mortgaged Property or directly
or indirectly becoming the owner or operator thereof) as determined in
accordance with the servicing standard set forth in Section 5.01 and is
hereby authorized at such time as it deems appropriate to release such
Mortgaged Property from the lien of the related Mortgage.
Prior to the Servicer taking any action with respect to the use,
management or disposal of any hazardous materials on any Mortgaged Property,
the Servicer shall request the approval of the Purchaser in accordance with
Section 5.01(3)(c) and, if such action is approved by the Purchaser, (a) keep
the Purchaser apprised of the progress of such action; and (b) take such
action in compliance with all applicable Environmental Laws.
Section 5.16 Investment of Funds in the Collection Account.
The Servicer may direct any depository institution which holds the Collection
Account to invest the funds in the Collection Account in one or more
Permitted Investments bearing interest. Any such Permitted Investment shall
be made in the name of the Servicer in trust for the benefit of the
Purchaser. All such Permitted Investments shall be held to maturity, unless
payable on demand. In the event amounts on deposit in the Collection Account
are at any time invested in a Permitted Investment payable on demand, the
Servicer shall:
(a) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such Permitted
Investment may otherwise mature hereunder in an amount equal to the
lesser of (1) all amounts then payable thereunder and (2) the amount
required to be withdrawn on such date; and
(b) demand payment of all amounts due thereunder promptly upon
determination by the Servicer or notice from the Purchaser that such
Permitted
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Investment would not constitute a Permitted Investment in respect of
funds thereafter on deposit in the Collection Account.
All income and gain realized from investment of funds deposited
in the Collection Account shall be for the benefit of the Servicer and shall
be subject to its withdrawal in accordance with Section 5.05. The Servicer
shall, out of its own funds, deposit in the Collection Account the amount of
any loss incurred in respect of any Permitted Investment immediately upon
realization of such loss.
Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment,
or if a default occurs in any other performance required under any Permitted
Investment, the Purchaser may elect to take such action, or instruct the
Servicer to take such action, as may be appropriate to enforce such payment
or performance, including the institution and prosecution of appropriate
proceedings, at the expense of the Servicer.
Section 5.17 MERS. In the case of each MERS Mortgage Loan,
the Servicer shall, as soon as practicable after the Purchaser's request (but
in no event more than 30 days thereafter with respect to each Mortgage Loan
that was a MERS Mortgage Loan as of the Funding Date, or 90 days thereafter
with respect to each Mortgage Loan that was a MERS Eligible Mortgage Loan as
of the Funding Date and subsequent to the Funding Date becomes a MERS
Mortgage Loan), the Servicer shall take such actions as are necessary to
cause the Purchaser to be clearly identified as the owner of each MERS
Mortgage Loan on the records of MERS for purposes of the system of recording
transfers of beneficial ownership of mortgages maintained by MERS. Each of
the Purchaser and the Servicer shall maintain in good standing its membership
in MERS. In addition, each of the Purchaser and the Servicer shall comply
with all rules, policies and procedures of MERS, including the Rules of
Membership, as amended, and the MERS Procedures Manual, as amended. With
respect to all MERS Mortgage Loans serviced hereunder, the Servicer shall
promptly notify MERS as to any transfer of beneficial ownership or release of
any security interest in such Mortgage Loans. The Servicer shall cooperate
with the Purchaser and any successor owner or successor servicer to the
extent necessary to ensure that any transfer of ownership or servicing is
appropriately reflected on the MERS system.
Section 5.18 Pledged Asset Mortgage Loans
(a) Representations of Servicer:
(1) Servicer hereby represents and warrants to Purchaser
that prior to its assignment to Purchaser of the security interest in
and to any Pledged Assets set forth in Section 5.18(b) hereof, Servicer
had a first priority perfected security interest in each Securities
Account, and/or, if necessary to perfect a first priority security
interest in each asset contained in such Securities Account, a first
priority perfected security interest in each such asset contained in
such Securities Account and following Servicer's assignment of the
Pledged Asset Agreements and such security interest in and to any
Pledged Assets, Purchaser has a first priority perfected security
interest in each Securities Account, and/or, if necessary to perfect a
first priority security interest in each asset contained in such
Securities Account, a perfected first priority security interest in
each
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such asset contained in such Securities Account. Servicer hereby
represents and warrants to Purchaser that prior to the related Pledged
Asset Servicer's assignment to the Servicer of the security interest in
and to any Pledged Assets, the related Pledged Asset Servicer had a
first priority perfected security interest in each Securities Account,
and/or, if necessary to perfect a first priority security interest in
each asset contained in such Securities Account, a first priority
perfected security interest in each such asset contained in such
Securities Account and following such Pledged Asset Servicer's
assignment of the Pledged Asset Agreements and such security interest
in and to any Pledged Assets, the Servicer had a first priority
perfected security interest in each Securities Account, and/or, if
necessary to perfect a first priority security interest in each asset
contained in such Securities Account, a perfected first priority
security interest in each such asset contained in such Securities
Account.
(2) Servicer represents and warrants to Purchaser that
each Pledged Asset Mortgage Loan is insured under the terms and
provisions of a Surety Bond subject to the limitations set forth
therein. Servicer covenants that within 2 Business Days after the
Funding Date for any purchase of Pledged Asset Mortgage Loans, Servicer
will deliver to each Surety Bond Issuer any instrument required to be
delivered under the related Surety Bond, executed by the necessary
parties, and that all other requirements for transferring coverage
under the related Surety Bonds in respect of such Pledged Asset
Mortgage Loans to the Purchaser shall be complied with. Servicer shall
indemnify each Indemnified Party 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 are related to or arise from the
non-payment of Required Surety Payments with respect to the Pledged
Asset Mortgage Loans purchased by Purchaser from applicable Seller
under this Agreement. The indemnification obligation provided in this
subparagraph 2 with respect to each Pledged Asset Mortgage Loan shall
expire upon receipt by the related Surety Bond Issuer of the necessary
documentation referred to in this paragraph, signed by the appropriate
parties thereto.
(3) Servicer represents and warrants that the assignment
of rights to Purchaser under each Surety Bond, as described herein,
will not result in Purchaser assuming any obligations or liabilities of
Servicer with respect thereto.
(4) Servicer represents and warrants that each Pledged
Asset Servicing Agreement and the Pledge Agreements are in full force
and effect as of the Funding Date and their provisions have not been
waived, amended or modified in any respect, nor has any notice of
termination been given thereunder. Servicer represents to Purchaser
that as of the Funding Date, neither Servicer nor any Pledged Asset
Servicer is in default under the related Pledged Asset Servicing
Agreement.
(b) Assignment of Security Interest.
(1) With respect to each Pledged Asset Mortgage Loan sold
to Purchaser under this Agreement, the Servicer hereby assigns to the
Purchaser its security interest in and to any related Pledged Assets,
all of its rights in each related Pledge
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Agreement, its right to receive amounts due or to become due in respect
of any related Pledged Assets and its rights as beneficiary under the
related Surety Bond in respect of any Pledged Asset Mortgage Loans.
(c) Servicing of Pledged Assets.
(1) The parties acknowledge that pursuant to each Pledged
Asset Servicing Agreement between Servicer and the related Pledged
Asset Servicer, the Securities Accounts and other Pledged Assets in
which Purchaser shall (pursuant to the terms of this Agreement) have a
security interest, shall continue to be maintained and serviced by such
Pledged Asset Servicer. Servicer represents and warrants that the
terms of each Pledged Asset Servicing Agreement are not inconsistent
with any of the provisions of this Agreement. Subject to
Subsection (c)(2) below, the Servicer shall service and administer the
Securities Accounts and other Pledged Assets, in accordance with
(i) prudent business practices and procedures employed in the industry
to administer securities accounts and additional collateral similar to
that securing the Pledged Asset Mortgage Loans; (ii) the terms of the
related Pledge Agreements; and (iii) the terms of this Agreement.
Servicer's obligations under this Section 5.18(c) will be subject to
the provisions of Section 9.04 hereof.
(2) Notwithstanding any other provision of this Agreement
to the contrary, except as provided below in this Subsection (c)(2),
the Servicer shall have no duty or obligation to service and administer
the Pledged Assets, and the Servicer shall not be deemed to be the
Pledged Asset Servicer with respect to any Pledged Asset Mortgage Loan,
unless and until the related Pledged Asset Servicer's obligations to
administer the Pledged Asset as provided in the related Pledged Asset
Servicing Agreement have been terminated with respect to such Pledged
Asset Mortgage Loans sold hereunder, in which case the Servicer shall
be bound to service and administer the related Pledged Assets and the
related Surety Bond in accordance with the provisions of this Agreement
and the related Pledge Agreements, from the date of such termination.
The Servicer shall enforce the obligations of each Pledged Asset
Servicer to service and administer the Pledged Assets as provided in
the related Pledged Asset Servicing Agreement, and shall take
appropriate action thereunder if any Pledged Asset Servicer fails to
substantially comply with its obligations to administer the Pledged
Assets. Such enforcement, including without limitation, the legal
prosecution of claims, termination of the related Pledged Asset
Servicing Agreement with respect to the related Pledged Asset Mortgage
Loans, and the pursuit of other appropriate remedies, shall be carried
out as the Servicer, in its good faith business judgment, would require
were it the owner of the related Securities Accounts and other Pledged
Assets. Without in any way limiting any other remedies set forth
herein, Servicer shall indemnify each Indemnified Party hold it
harmless against any and all Losses that arise with respect to Pledged
Asset Mortgage Loans purchased by Purchaser from Servicer hereunder,
provided that (i) such Losses are caused by the related Pledged Asset
Servicer's failure to administer the Pledged Assets as provided in the
related Pledged Asset Servicing Agreement and in a manner consistent
with the standard set forth in Subsection (c)(1) above, (ii) the
indemnification contained in this Subsection (c)(2) will in no event
exceed the Original Pledged Asset Requirement for the
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related Pledged Asset Mortgage Loan, and (iii) such indemnification
liability shall be offset to the extent that the Losses are covered by
a Required Surety Payment.
(3) The related Pledged Asset Servicer shall use its best
reasonable efforts to realize upon any related Pledged Assets for such
of the Pledged Asset Mortgage Loans as come into and continue in
default and as to which no satisfactory arrangements can be made for
collection of delinquent payments; provided that the related Pledged
Asset Servicer shall not obtain title to any such Pledged Assets as a
result of or in lieu of the disposition thereof or otherwise; and
provided further that (i) the related Pledged Asset Servicer shall not
proceed with respect to such Pledged Assets in any manner that would
impair the ability to recover against the related Mortgaged Property,
and (ii) the Servicer shall proceed with any acquisition of REO
Property in a manner that preserves the ability to apply the proceeds
of such Pledged Assets against amounts owed under the defaulted
Mortgage Loan. Any proceeds realized from such Pledged Assets (other
than amounts to be released to the Mortgagor or the related guarantor
in accordance with procedures that the Servicer would follow in
servicing loans held for its own account, subject to the terms and
conditions of the related Mortgage and Mortgage Note and to the terms
and conditions of any security agreement, guarantee agreement, mortgage
or other agreement governing the disposition of the proceeds of such
Pledged Assets) shall be deposited in the Collection Account, subject
to withdrawal pursuant to Section 5.05 hereof; provided, that such
proceeds shall not be so deposited if the Required Surety Payment in
respect of such Pledged Asset Mortgage Loan has been deposited in the
Collection Account or otherwise paid to the Purchaser (except to the
extent of any such proceeds taken into account in calculating the
amount of the Required Surety Payment).
(4) Servicer's obligations to administer the Securities
Accounts shall terminate upon termination of the related Pledged Asset
Agreement. Purchaser acknowledges coverage under the terms and
provisions of the related Surety Bond as to any particular Pledged
Asset Mortgage Loan shall terminate upon termination of the related
Pledged Asset Agreement; provided, however, that such termination shall
not affect claims arising under this Agreement or the related Surety
Bond prior to the date of termination of the related Pledged Asset
Agreement.
(5) The Pledged Asset Servicer with respect to each
Pledged Asset Mortgage Loan may, without the consent of the Purchaser,
amend or modify a Pledged Asset Agreement in any non-material respect
to reflect administrative or account changes, provided that the same
are consistent with the PHH Guide.
(d) Surety Bonds.
(1) If a Required Surety Payment is payable pursuant to
the related Surety Bond with respect to any Pledged Asset Mortgage
Loan, as determined by the Servicer, the related Pledged Asset Servicer
shall so notify the related Surety Bond Issuer promptly. The Servicer
shall cause the prompt completion of any necessary documentation
relating to the related Surety Bond and shall cause the prompt
submission of such documentation to the related Surety Bond Issuer as a
claim for a required surety.
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The Purchaser shall execute such documentation if requested by the
related Pledged Asset Servicer.
(2) In the event that the Servicer receives a Required
Surety Payment from a Surety Bond Issuer on behalf of the Purchaser,
the Servicer shall deposit such Required Surety Payment in the
Collection Account and shall distribute such Required Surety Payment,
or the proceeds thereof, in accordance with the provisions hereof
applicable to Insurance Proceeds.
(3) Purchaser will cooperate with Servicer to transfer to
Purchaser the coverage of each Surety Bond in respect of the related
Pledged Asset Mortgage Loans.
Section 5.19 Inspections. The Servicer shall inspect the
Mortgaged Property as often as deemed necessary by the Servicer to assure
itself that the value of the Mortgaged Property is being preserved. In
addition, if any Mortgage Loan is more than 60 days delinquent, the Servicer
shall immediately inspect the Mortgaged Property and shall conduct subsequent
inspections in accordance with Accepted Servicing Practices or as may be
required by the primary mortgage insurer or guarantor. The Servicer shall
keep a written report of each such inspection.
Section 5.20 Transfer of Servicing. On the related Transfer
Date, if any, the Purchaser, or its designee, shall assume all servicing
responsibilities related to, and the Servicer shall cease all servicing
responsibilities related to, the related Mortgage Loans subject to the
servicing transfer or such Transfer Date. On or prior to the related
Transfer Date, the Servicer shall, at its sole cost and expense, take such
steps as may be necessary or appropriate to effectuate and evidence the
transfer of the servicing of the related Mortgage Loans to the Purchaser, or
its designee, including but not limited to the following:
(1) Notice to Mortgagors. The Servicer shall mail to the
Mortgagor of each related Mortgage Loan a letter advising such Mortgagor of
the transfer of the servicing of the related Mortgage Loan to the Purchaser,
or its designee, in accordance with the Xxxxxxxx Xxxxxxxx National Affordable
Housing Act of 1990, as amended; provided, however, the content and format of
the letter shall have the prior approval of the Purchaser. The Servicer
shall provide the Purchaser with copies of all such related notices no later
than the related Transfer Date.
(2) Notice to Taxing Authorities and Insurance Companies. The
Servicer shall transmit to the applicable taxing authorities and insurance
companies (including primary mortgage insurance policy insurers, if
applicable) and/or agents, notification of the transfer of the servicing to
the Purchaser, or its designee, and instructions to deliver all notices, tax
bills and insurance statements, as the case may be, to the Purchaser or its
designee from and after the related Transfer Date. The Servicer shall
provide the Purchaser with copies of all such notices no later than the
related Transfer Date.
(3) Delivery of Servicing Records. The Servicer shall forward
to the Purchaser, or its designee, all servicing records and the Mortgage
Files in the Servicer's possession relating to each related Mortgage Loan.
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(4) Escrow Payments. The Servicer shall provide to the
Purchaser, or its designee, in immediately available funds by wire transfer
an amount equal to the balance in the related Escrow Account net of all
Escrow Payments, suspense balances, servicing advances and loss draft
balances associated with the related Mortgage Loans. The Servicer shall
provide the Purchaser with an accounting statement, in electronic format
reasonably acceptable to the Purchaser, of Escrow Payments, servicing
advances, suspense balances and loss draft balances sufficient to enable the
Purchaser to reconcile the amount of such payment with the accounts related
to the Mortgage Loans. Additionally, the Servicer shall wire transfer to the
Purchaser the amount of any agency, trustee or prepaid Mortgage Loan payments
and all other similar amounts held by the Servicer.
(5) Payoffs and Assumptions. For a period of thirty days after
the Transfer Date, the Servicer shall promptly deliver to the Purchaser, or
its designee, within a reasonable time period, copies of all assumption and
payoff statements generated by the Servicer on the related Mortgage Loans
prior to the related Transfer Date.
(6) Mortgage Payments Received Prior to Transfer Date. Prior
to the related Transfer Date all payments received by the Servicer on each
related Mortgage Loan shall be properly applied by the Servicer to the
account of the each related Mortgagor.
(7) Mortgage Payments Received after Transfer Date. For a
period of sixty days after the Transfer Date any related Monthly Payments
received by the Servicer shall be forwarded to the Purchaser by overnight
mail on the date of receipt. After the initial sixty day period such
payments may be delivered by regular mail or such other method(s) as may be
agreed to by the parties. The Servicer shall notify the Purchaser of the
particulars of the payments, which notification requirement shall be
satisfied if the Servicer forwards with its payment sufficient information to
permit appropriate processing of the payment by the Purchaser.
(8) Misapplied Payments. Misapplied payments shall be
processed as follows:
(i) All parties shall cooperate in correcting misapplication
errors;
(ii) The party receiving notice of a misapplied payment occurring
prior to the related Transfer Date and discovered after such Transfer
Date shall immediately notify the other party;
(iii) If a misapplied payment received prior to the related
Transfer Date cannot be identified and such misapplied payment has
resulted in a shortage in a Collection Account or Escrow Account, the
Servicer shall be liable for the amount of such shortage. The Servicer
shall reimburse the Purchaser for the amount of such shortage within
thirty (30) days after receipt of written demand therefor from the
Purchaser;
(iv) If a misapplied payment received prior to the related
Transfer Date caused the payment to be incorrectly calculated as the
result of an inaccurate outstanding principal balance, a check shall be
issued to the party shorted by the improper payment application within
five (5) Business Days after notice thereof by the other party; and
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(1) Any check issued under the provisions of this
Section 5.20(8) shall be accompanied by a statement indicating the
corresponding Servicer, the Mortgage Loan identification number and an
explanation of the allocation of any such payments.
(9) Books and Records. On the related Transfer Date, the
books, records and accounts of the Servicer with respect to the related
Mortgage Loans shall be delivered in accordance with all applicable Purchaser
requirements.
(10) Reconciliation. The Servicer shall, on or before the
related Transfer Date, reconcile principal balances and make any monetary
adjustments required by the Purchaser. Any such monetary adjustments will be
transferred between the Servicer and the Purchaser as appropriate.
(11) IRS Forms. The Servicer shall or shall file all IRS forms
1099, 1099A, 1098 or 1041 and K-1 which are required to be filed on or before
the related Transfer Date in relation to the servicing and ownership of the
related Mortgage Loans. The Servicer shall provide copies of such forms to
the Purchaser upon request and shall reimburse the Purchaser for any costs or
penalties incurred by the Purchaser due to the Servicer's failure to comply
with this paragraph.
Section 5.21 Fair Credit Reporting Act. For each Mortgage
Loan, the Servicer shall 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, or their
successors, on a monthly basis. The Servicer shall provide evidence of such
monthly reporting to the Purchaser upon request.
ARTICLE VI
REPORTS; REMITTANCES; ADVANCES
Section 6.01 Remittances. (1) On each Remittance Date, the
Servicer shall remit to the Purchaser (a) all amounts credited to the
Collection Account as of the close of business on the last day of the related
Due Period (including (1) the amount of any Principal Prepayment, together
with interest thereon at the related Remittance Rate to the end of the month
in which prepayment of the related Mortgage Loan occurs except when such
Principal Prepayment is received on the last day of the related Due Period in
which case interest calculated at the related Remittance Rate to the end of
the month in which prepayment of the related Mortgage Loan occurs shall not
be remitted, (2) all proceeds of any REO Disposition net of amounts payable
to the Servicer pursuant to Section 5.13, (3) prior to the occurrence of any
Securitization Transaction with respect to the Mortgage Loans, any
Foreclosure Profits and (4) after the occurrence of a Securitization
Transaction, Foreclosure Profits shall be distributed to the related trustee
or as otherwise directed in the related Reconstitution Agreements), net of
charges against or withdrawals from the Collection Account in accordance with
Section 5.05, which charges against or withdrawals from the Collection
Account the Servicer shall make solely on such Remittance Date, plus (b) all
Monthly Advances, if any, which the Servicer is obligated to remit pursuant
to Section 6.03; provided that the Servicer shall not be required to
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remit, until the next following Remittance Date, any amounts attributable to
Monthly Payments collected but due on a Due Date or Dates subsequent to the
related Due Period.
(2) All remittances made to the Purchaser on each Remittance
Date will be made to the Purchaser by wire transfer of immediately available
funds accordingly to the instructions that will be provided by Purchaser to
the Servicer.
(3) With respect to any remittance received by the Purchaser
after the Business Day on which such payment was due, the Servicer shall pay
to the Purchaser interest on any such late payment at an annual rate equal to
One-month LIBOR (as published in the Wall Street Journal) plus 200 basis
points, but in no event greater than the maximum amount permitted by
applicable law. Such interest shall be paid by the Servicer to the Purchaser
on the date such late payment is made and shall cover the period commencing
with the Business Day on which such payment was due and ending with the
Business Day on which such payment is made, both inclusive. Such interest
shall be remitted along with such late payment. Neither the payment by the
Servicer nor the acceptance by the Purchaser of any such interest shall be
deemed an extension of time for payment or a waiver by the Purchaser of any
Event of Default.
Section 6.02 Reporting. On or before the 5th Business Day
of each month during the term hereof, the Servicer shall deliver to the
Purchaser monthly accounting reports in the form of Exhibits 6.02(a) through
6.02(g) attached hereto with respect to the most recently ended Due Period.
Such monthly accounting reports shall include information as to the aggregate
Unpaid Principal Balance of all Mortgage Loans, the scheduled amortization of
all Mortgage Loans, any delinquencies and the amount of any Principal
Prepayments as of the most recently ended Record Date. Such monthly reports
shall be available by the Servicer for the Purchaser on Servicer's secured
web site. The Servicer shall provide training, secured access and
password(s) to the Purchaser on the operation of the website.
Utilizing resources reasonably available to the Servicer and to
the extent the requested data is contained within the Servicer's electronic
systems without incurring any cost except the Servicer's overhead and
employees' salaries, the Servicer shall furnish to the Purchaser during the
term of this Agreement such periodic, special or other reports, information
or documentation, whether or not provided for herein, as shall be reasonably
requested by the Purchaser with respect to Mortgage Loans or REO Properties
(provided, the Purchaser shall have given the Servicer reasonable notice and
opportunity to prepare such reports, information or documentation), including
any reports, information or documentation reasonably required to comply with
any regulations of any governmental agency or body having jurisdiction over
the Purchaser, all such reports or information to be as provided by and in
accordance with such applicable instructions and directions as the Purchaser
may reasonably request. If any of such reports are not customarily prepared
by the Servicer or require that the Servicer program data processing systems
to create the reports, then the Purchaser shall pay to the Servicer a fee
mutually agreed to by the Purchaser and the Servicer taking into account the
Servicer's actual time and cost in preparing such reports. The Servicer
agrees to execute and deliver all such instruments and take all such action
as the Purchaser, from time to time, may reasonably request in order to
effectuate the purposes and to carry out the terms of this Agreement.
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Section 6.03 Monthly Advances by the Servicer. (1) Not
later than the close of business on the Business Day immediately preceding
each Remittance Date, the Servicer shall deposit in the Collection Account an
amount equal to all Monthly Payments not previously advanced by the Servicer
(with interest adjusted to the Remittance Rate) that were due on a Mortgage
Loan and delinquent at the close of business on the related Determination
Date. The Servicer may reduce the total amount to be deposited in the
Collection Account as required by the foregoing sentence by the amount of
funds in the Collection Account which represent Prepaid Monthly Payments;
provided, however, that after any Securitization Transaction, the Servicer or
its parent must meet the criteria of the Rating Agencies at the time that the
Servicer proposes to use Prepaid Monthly Payments for the making of any
Monthly Advances from such funds.
(2) The Servicer's obligations to make 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 Remittance Date
prior to the Remittance Date for the remittance of all Liquidation Proceeds
and other payments or recoveries (including Insurance Proceeds or
Condemnation Proceeds) with respect to the Mortgage Loan; provided that such
obligation shall cease if the Servicer furnishes to the Purchaser an
Officers' Certificate evidencing the determination by the Servicer in
accordance with Section 6.04 that an advance with respect to such Mortgage
Loan would constitute a Non-recoverable Advance.
(3) On the Business Day prior to the Remittance Date, the
Servicer shall deposit into the Collection Account payments on account of
Prepayment Interest Shortfall Amount in an aggregate amount equal to the
lesser of (i) the aggregate amount of Prepayment Interest Shortfall Amount
for the related Remittance Date resulting solely from Principal Prepayments
during the related Due Period, and (ii) the total amount of the servicing
compensation that would be payable to the Servicer if no Principal Prepayment
was made during the Due Period related to such Remittance Date. Such
payments shall be deposited into the Collection Account.
Section 6.04 Non-recoverable Advances. The determination by
the Servicer that it has made a Non-recoverable Advance or that any Monthly
Advance or Servicing Advance, if made, would constitute a Non-recoverable
Advance shall be evidenced by an Officers' Certificate delivered to the
Purchaser detailing the reasons for such determination.
Section 6.05 Itemization of Servicing Advances. The
Servicer shall provide the Purchaser with an itemization of all Servicing
Advances incurred or made by the Servicer hereunder as the Purchaser may from
time to time reasonably request.
Section 6.06 Officers' Certificate. The Seller shall
deliver to the Purchaser an Officers' Certificate in the form attached hereto
as Exhibit 9 on the Initial Funding Date and upon Purchaser's reasonable
request thereafter.
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 Servicer shall not take any
action, cause the REMIC to take any action or fail to take (or fail to cause
to be taken) any action, that under the REMIC Provisions, if taken or not
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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 in
Section 860(a)(2) of the Code and the tax on "contributions" to a REMIC set
forth in Section 860(D) of the Code) unless the Servicer 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 tax on the REMIC.
ARTICLE VII
GENERAL SERVICING PROCEDURES
Section 7.01 Enforcement of Due-on-Sale Clauses, Assumption
Agreements. (1) The Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance by any Mortgagor of the Mortgaged
Property (whether by absolute conveyance or by contract of sale, and whether
or not the Mortgagor remains or is to remain liable under the Mortgage Note
and/or the Mortgage), exercise its rights to accelerate the maturity of such
Mortgage Loan under any "due-on-sale" clause applicable thereto; provided
that the Servicer shall not exercise any 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 Primary Insurance Policy, if any.
(2) If the Servicer is prohibited from enforcing such
"due-on-sale" clause, then the Servicer will attempt to enter into an
assumption agreement with the Person to whom the Mortgaged Property has been
conveyed or is proposed to be conveyed, pursuant to which such Person becomes
liable under the Mortgage Note and, to the extent permitted by applicable
state law, the Mortgagor remains liable thereon. (For purposes of this
Section 7.01, the term "assumption" is deemed to also include a sale of the
Mortgaged Property subject to the Mortgage that is not accompanied by an
assumption or substitution of liability agreement.)
(3) If the Servicer receives a request for any Mortgage Loan to
be assumed, then the Servicer shall inquire into the creditworthiness of the
proposed transferee and shall use the same underwriting criteria for
approving the credit of the proposed transferee that are used with respect to
underwriting mortgage loans of the same type as the Mortgage Loans. Where an
assumption is allowed, the Servicer, with the prior written consent of the
primary mortgage insurer, if any, and subject to the conditions of
Section 7.01(3), shall, and is hereby authorized to, enter into a substitution
of liability agreement with the Person to whom the Mortgaged Property is
proposed to be conveyed pursuant to which the original mortgagor is released
from liability and such Person is substituted as mortgagor and becomes liable
under the related Mortgage Note. Any such substitution of liability
agreement shall be in lieu of an assumption agreement. In no event shall the
Note Rate, the amount of the Monthly Payment or the final maturity date be
changed. The Servicer shall notify the Purchaser that any such substitution
of liability or assumption agreement has been completed by forwarding to the
Purchaser the original of any such substitution of liability or assumption
agreement, which document shall be added to the related Purchaser's Mortgage
File and shall, for all purposes, be considered a part of such Purchaser's
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. Any fee collected by the Servicer for entering
into an assumption or substitution
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of liability agreement shall be retained by the Servicer as additional
compensation for servicing the Mortgage Loans.
If the credit of the proposed transferee does not meet such
underwriting criteria, then the Servicer shall, to the extent permitted by
the Mortgage or the Mortgage Note and by applicable law, accelerate the
maturity of the Mortgage Loan.
Section 7.02 Satisfaction of Mortgages and Release of
Mortgage Files. Upon the payment in full of any Mortgage Loan, the Servicer
will immediately notify the Purchaser by a certification of a Servicing
Officer, which certification shall include a statement to the effect that all
amounts received or to be received in connection with such payment which are
required to be deposited in the Collection Account pursuant to Section 5.04
have been or will be so deposited and shall request delivery to it of the
Purchaser's Mortgage File held by the Purchaser. Upon receipt of such
certification and request, the Purchaser shall promptly release the related
mortgage documents to the Servicer and the Servicer shall promptly prepare
and process any satisfaction or release. No expense incurred in connection
with any instrument of satisfaction or deed of reconveyance shall be
chargeable to the Collection Account.
If the Servicer satisfies or releases a Mortgage without having
obtained payment in full of the indebtedness secured by the Mortgage, or
should it otherwise take such action which results in a reduction of the
coverage under the Primary Insurance Policy, if any, then the Servicer shall
promptly give written notice thereof to the Purchaser, and, within 10
Business Days following written demand therefor from the Purchaser to the
Servicer, the Servicer shall repurchase the related Mortgage Loan by paying
to the Purchaser the Repurchase Price therefor by wire transfer of
immediately available funds directly to the Purchaser's Account.
From time to time and as appropriate for the servicing or
foreclosure of the Mortgage Loan, including for this purpose collection under
any Primary Insurance Policy, the Purchaser shall, upon request of the
Servicer and delivery to the Purchaser of a servicing receipt signed by a
Servicing Officer, release the Purchaser's Mortgage File held by the
Purchaser to the Servicer. Such servicing receipt shall obligate the
Servicer to return the related mortgage documents to the Purchaser when the
need therefor by the Servicer no longer exists, unless the Mortgage Loan has
been liquidated and the Liquidation Proceeds relating to the Mortgage Loan
have been deposited in the Collection Account or the Purchaser's Mortgage
File or such document has been delivered to an attorney, or to a public
trustee or other public official as required by law, for purposes of
initiating or pursuing legal action or other proceedings for the foreclosure
of the Mortgaged Property either judicially or nonjudicially, and the
Servicer has delivered to the Purchaser a certificate of a Servicing Officer
certifying as to the name and address of the Person to which such Purchaser's
Mortgage File or such document was delivered and the purpose or purposes of
such delivery. Upon receipt of a certificate of a Servicing Officer stating
that such Mortgage Loan was liquidated and the Liquidation Proceeds were
deposited in the Collection Account, the servicing receipt shall be released
by the Purchaser to the Servicer.
Section 7.03 Servicing Compensation. As compensation for
its services hereunder, the Servicer shall be entitled to retain from
interest payments on the Mortgage Loans the amount provided for as the
Servicing Fee. The Servicing Fee in respect of a Mortgage Loan for a
particular month shall become payable only upon the receipt by the Servicer
from the
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Mortgagor of the full Monthly Payment in respect of such Mortgage Loan.
Additional servicing compensation in the form of assumption fees, as provided
in Section 7.01, late payment charges and other servicer compensation for
modifications, short sales as provided in Section 5.01(e), and other shall be
retained by the Servicer to the extent not required to be deposited in the
Collection Account. In the event that Liquidation Proceeds, Insurance
Proceeds and proceeds from any REO Disposition exceeds the Unpaid Principal
Balance of such Mortgage Loan plus unpaid interest accrued thereon at a per
annum rate equal to the related Remittance Rate, the Servicer shall be
entitled to retain therefrom and pay to itself any Servicing Fee, Monthly
Advances and Servicing Advances considered to be accrued but unpaid. The
Servicer shall be required to pay all expenses incurred by it in connection
with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided for herein.
Section 7.04 Annual Statement as to Compliance. The
Servicer shall deliver to the Purchaser on or before March 10, 2006, an
Officer's Certificate stating that (1) a review of the activities of the
Servicer during the preceding calendar year and its performance under this
Agreement has been made under such officer's supervision, and (2) to the best
of such officer's knowledge, based on such review, the Servicer 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 Servicer to cure such default.
Section 7.05 Annual Independent Certified Public
Accountants' Servicing Report or Attestation. On or before March 10, 2006,
the Servicer, 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 the Purchaser to the effect that such
firm has, with respect to the Servicer's overall servicing operations,
examined such operations in accordance with the requirements of the Uniform
Single Attestation Program for Mortgage Bankers, stating such firm's
conclusions relating thereto.
Section 7.06 Purchaser's Right to Examine Servicer Records.
The Purchaser shall have the right to examine and audit, during business
hours or at such other times as are reasonable under applicable
circumstances, upon 10 days advance notice any and all of (i) the credit and
other loan files relating to the Mortgage Loans or the Mortgagors, (ii) any
and all books, records, documentation or other information of the Servicer
(whether held by the Servicer or by another) relating to the servicing of the
Mortgage Loans and (iii) any and all books, records, documentation or other
information of the Servicer (whether held by the Servicer or by another) that
are relevant to the performance or observance by the Servicer of the terms,
covenants or conditions of this Agreement. In particular, the Servicer 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, as applicable, to the extent the
Seller is required by law or Accepted Servicing Practices to maintain such
evidence. The Servicer shall be obligated to make the foregoing information
available to the Purchaser at the site where such information is stored;
provided that the Purchaser shall be required to pay all reasonable costs and
expenses incurred by the Servicer in making such information available. To
the extent that original documents are not required for purposes of
realization of Liquidation Proceeds or Insurance Proceeds, documents
maintained by the Servicer may be in the form of
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microfilm or microfiche or such other reliable means of recreating original
documents, including but not limited to, optical imagery techniques so long
as the Servicer complies with the requirements of the Xxxxxx Mae Guide, as
amended from time to time.
ARTICLE VIII
REPORTS TO BE PREPARED BY THE SERVICER
Section 8.01 The Servicer's Reporting Requirements.
Electronic Format. If requested by the Purchaser, the Servicer shall supply
any and all information regarding the Mortgage Loans and the REO Properties,
including all reports required to be delivered pursuant to Section 5.03,
Section 6.02 and this Section 8.01, to the Purchaser in electronic format
reasonably acceptable to Purchaser, unless otherwise limited by the servicing
system utilized by the Servicer.
Section 8.02 Financial Statements. The Servicer understands
that, in connection with marketing the Mortgage Loans, the Purchaser may make
available to any prospective purchaser of the Mortgage Loans the Servicer's
audited financial statements for the two fiscal years immediately preceding
any Sale of the Mortgage Loans, together with any additional statements
required pursuant to the next sentence. During the term hereof, the Servicer
will deliver to the Purchaser audited financial statements for each of its
fiscal years following the Funding Date and all other financial statements
prepared following the Funding Date to the extent any such statements are
available upon request to the public at large.
The Servicer also agrees to make available upon reasonable notice
and during normal business hours to any prospective purchasers of the
Mortgage Loans a knowledgeable financial or accounting officer for the
purpose of answering questions respecting recent developments affecting the
Servicer or the financial statements of the Servicer which may affect, in any
material respect, the Servicer's ability to comply with its obligations under
this Agreement, and to permit any prospective purchasers upon reasonable
notice and during normal business hours to inspect the Servicer's servicing
facilities for the purpose of satisfying such prospective purchasers that the
Servicer has the ability to service the Mortgage Loans in accordance with
this Agreement.
ARTICLE IX
THE SELLERS
Section 9.01 Indemnification; Third Party Claims(1) .
Each Seller and Servicer shall indemnify and hold harmless the Purchaser and
any Successor Servicer and each of their present and former directors,
officers, agents, employees, Affiliates and assignees and each Person, if
any, that controls the Purchaser or Successor Servicer or such Affiliate
within the meaning of either the Securities Act or the Exchange Act (each, an
"Indemnified Party"), from and against any costs, damages, expenses
(including reasonable attorneys' fees and costs, irrespective of whether or
not incurred in connection with the defense of any actual or threatened
action, proceeding, or claim), fines, forfeitures, injuries, liabilities or
losses ("Losses") suffered
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or sustained in any way by any such Person, no matter how or when arising
(including Losses incurred or sustained in connection with any judgment,
award, settlement or repurchase hereunder), in connection with or relating to
the Seller's or Servicer's failure (i) to observe and perform any or all of
the Seller's or Servicer's duties, obligations, covenants, agreements,
warranties or representations contained in this Agreement or in the Purchase
Price and Terms Agreement or (ii) to comply with all applicable requirements
contained in this Agreement or the Purchase Price and Terms Agreement with
respect to the servicing of the Mortgage Loan, provided, however, in the case
of both of the preceding clauses (i) and (ii), PHH Mortgage shall have no
obligation to indemnify an Indemnified Party for a breach by the Trust of the
Trust's representations contained in Sections 3.01, 3.03(3) or 3.03(16)
hereof. In the event of a breach by the Trust of the Trust's representations
in Section 3.01, 3.03(3) or 3.03(16), the Indemnified Party's sole right to
indemnification shall be from the Trust. The applicable Seller shall
immediately (i) notify the Purchaser if a claim is made by a third party with
respect to this Agreement, any Reconstitution Agreement, any Mortgage Loan
and/or any REO Property (and shall promptly notify the trustee with respect
to any claim made by a third party with respect to any Reconstitution
Agreement) (ii) assume (with the prior written consent of the Purchaser) the
defense of any such claim and pay all expenses in connection therewith,
including attorneys' fees, and (iii) promptly pay, discharge and satisfy any
judgment, award, or decree that may be entered against it or the Purchaser in
respect of such claim. The applicable Seller shall follow any written
instructions received from the Purchaser in connection with such claim.
Nothing contained herein shall prohibit the Purchaser, at its expense, from
retaining its own counsel to assist in any such proceedings or to observe
such proceedings; provided that neither Seller shall be obligated to pay or
comply with any settlement to which it has not consented. The Seller agrees
that it will not enter into any settlement of any such claim without the
consent of the Purchaser. In addition to the obligations of the Seller set
forth in this Section 9.01, the Purchaser may pursue any and all remedies
otherwise available at law or in equity, including, but not limited to, the
right to seek damages. The Servicer shall be reimbursed from amounts on
deposit in the Collection Account for all amounts advanced by it pursuant to
the second preceding sentence except when the claim in any way relates to the
Servicer's indemnification pursuant to this Section 9.01.
Notwithstanding anything to the contrary contained herein, in no
event shall a termination of this Agreement or the Servicer hereunder
terminate any indemnification obligations of the Servicer or each Seller
under this Agreement, which obligations shall survive any such termination.
Section 9.02 Merger or Consolidation of the Seller. Each
Seller will keep in full effect its existence, rights and franchises as a
corporation or a Delaware statutory trust, as applicable, under the laws of
the state of its organization and will obtain and preserve its qualification
to do business as a foreign entity in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform
its duties under this Agreement.
Any Person into which a Seller may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation
(including by means of the sale of all or substantially all of such Seller's
assets to such Person) to which the Seller shall be a party, or any Person
succeeding to the business of the Seller, shall be the successor of the
Seller
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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 that, unless otherwise consented to by the
Purchaser, the successor or surviving Person, in the case of a merger or
consolidation, etc. of the Servicer, shall be an institution qualified to
service mortgage loans on behalf of Xxxxxx Xxx and Xxxxxxx Mac in accordance
with the requirements of Section 3.02(1), shall not cause a rating on any
security backed by a Mortgage Loan to be downgraded and shall satisfy the
requirements of Section 12.01 with respect to the qualifications of a
successor to such Seller.
Section 9.03 Limitation on Liability of the Sellers and
Others. Neither the Sellers nor any of the officers, employees or agents of
the Sellers 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 pursuant to the express written instructions of the
Purchaser, or for errors in judgment made in good faith; provided that this
provision shall not protect the Sellers or any such Person against any breach
of warranties or representations made herein, or failure to perform its
obligations in compliance with any standard of care set forth in this
Agreement, or any liability which would otherwise be imposed by reasons of
willful misfeasance, bad faith, negligence or any breach in the performance
of the obligations and duties hereunder. The Sellers and any officer,
employee or agent of the Sellers may rely in good faith on any document of
any kind reasonably believed by the Sellers or such Person to be genuine and
prima facie properly executed and submitted by any Person respecting any
matters arising hereunder.
The Sellers shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to their duties
hereunder and which in their opinion may involve them in any expense or
liability; provided that the Sellers may in their discretion undertake any
such action that it may deem necessary or desirable in respect of this
Agreement and the rights and duties of the parties hereto. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities for which the Sellers
shall be entitled to be reimbursed therefor out of the Collection Account.
This indemnity shall survive the termination of this Agreement.
Section 9.04 Servicer Not to Resign. With respect to the
retention by PHH Mortgage of the servicing of the Mortgage Loans and the REO
Properties hereunder, PHH Mortgage acknowledges that the Purchaser has acted
in reliance upon PHH Mortgage's independent status, the adequacy of its
servicing facilities, plan, personnel, records and procedures, its integrity,
reputation and financial standing and the continuance thereof. Consequently,
PHH Mortgage shall not assign the servicing rights retained by it hereunder
to any third party nor resign from the obligations and duties hereby imposed
on it except (i) with the approval of the Purchaser, such approval not to be
unreasonably withheld, or (ii) 3 Business Days following any determination
that its duties hereunder are no longer permissible under applicable law and
such incapacity cannot be cured by PHH Mortgage. Any determination
permitting the transfer of the servicing rights or the resignation of PHH
Mortgage under Subsection (ii) hereof 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 reasonably acceptable to the Purchaser.
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Without in any way limiting the generality of this Section 9.04,
in the event that the Seller either shall sell or otherwise dispose of all or
substantially all of its property or assets (including its rights hereunder),
without the prior written consent of the Purchaser, which consent shall not
be unreasonably withheld, 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 Servicer or any third party; provided however, that in the
event a sale or merger as described above occurs without notice to the Seller
or the Purchaser, the Purchaser agrees that upon its receipt of notice of
such sale or merger, it will review fully all information provided by the
Purchaser regarding the successor servicer, including information regarding
the adequacy of its servicing facilities, personnel, records and procedures,
its integrity, reputation and financial standing, prior to making any
determination to terminate this Agreement. In the event that such successor
servicer is not acceptable to the Purchaser, the Purchaser shall have the
right to terminate in its sole discretion, the successor servicer's rights
under this servicing agreement.
ARTICLE X
DEFAULT
Section 10.01 Events of Default. In case one or more of the
following events shall occur and be continuing:
(1) any failure by the Servicer to remit to the Purchaser any
payment required to be made under the terms of this Agreement which continues
unremedied for a period of 3 Business Days unless such failure to remit is
due to a cause beyond the Servicer's control, including an act of God, act of
civil, military or governmental authority, fire, epidemic, flood, blizzard,
earthquake, riot, war, or sabotage, provided that the Servicer gives the
Purchaser notice of such cause promptly and uses its reasonable efforts to
correct such failure to remit and does so remit within 2 Business Days
following the end of the duration of the cause of such failure to remit;
(2) any failure on the part of a Seller/Servicer duly to
observe or perform in any material respect any of the covenants or agreements
on the part of such Seller/Servicer set forth in this Agreement which
continues unremedied for a period of 30 days (or, in the case of (i) the
annual statement of compliance required under Section 7.04, (ii) the annual
independent public accountants' servicing report or attestation required
under Section 7.05, or (iii) the certification required under Section 3.05 in
the form of Exhibit 11, five (5) days) after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given to
the applicable Seller/Servicer by the Purchaser; provided that such 30-day
period shall not begin with respect to any failure to cure, repurchase or
substitute in accordance with Sections 2.04 and/or 3.04 until the expiration
of the cure periods provided for in Sections 2.04 and/or 3.04, as applicable;
(3) any filing of an Insolvency Proceeding by or on behalf of a
Seller/Servicer, any consent by or on behalf of a Seller/Servicer to the
filing of an Insolvency Proceeding against it, or any admission by or on
behalf of a Seller/Servicer of its inability to pay its debts generally as
the same become due, suspension of a Seller/Servicer's payment
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obligations or cessation of the Servicer's normal business operations for
three Business Days (as a result of an occurrence specific to the Servicer);
(4) any filing of an Insolvency Proceeding against a
Seller/Servicer that remains undismissed or unstayed for a period of 60 days
after the filing thereof;
(5) any issuance of any attachment or execution against, or any
appointment of a conservator, receiver or liquidator with respect to, all or
substantially all of the assets of a Seller/Servicer;
(6) any failure or inability of PHH Mortgage to be eligible to
service Mortgage Loans for Xxxxxx Xxx, or Xxxxxxx Mac;
(7) any sale, transfer, assignment, or other disposition by a
Seller/Servicer of all or substantially all of its property or assets to a
Person who does not meet the qualifications enumerated or incorporated by
reference into Section 9.02, any assignment by a Seller/Servicer of this
Agreement or any of a Seller's/Servicer's rights or obligations hereunder
except in accordance with Section 9.04, or any action taken or omitted to be
taken by a Seller/Servicer in contemplation or in furtherance of any of the
foregoing, without the consent of the Purchaser;
(8) any failure by the Seller to be in compliance with
applicable "doing business" or licensing laws of any jurisdiction where
Mortgaged Property is located; or
(9) the failure of the Servicer to maintain a minimum net worth
of $25,000,000;
then, and in each and every such case, so long as an Event of Default shall
not have been remedied, the Purchaser, by notice in writing to the Sellers
may, in addition to whatever rights the Purchaser may have at law or in
equity to damages, including injunctive relief and specific performance,
terminate all the rights and obligations of the Sellers under this Agreement
and in and to the Mortgage Loans and the proceeds thereof subject to
Section 12.01, without the Purchaser's incurring any penalty or fee of any
kind whatsoever in connection therewith; provided that, upon the occurrence
of an Event of Default under Subsection (3), (4) or (5) of this
Section 10.01, this Agreement and all authority and power of the Sellers
hereunder (whether with respect to the Mortgage Loans, the REO Properties or
otherwise) shall automatically cease. On or after the receipt by the Sellers
of such written notice, all authority and power of the Sellers under this
Agreement (whether with respect to the Mortgage Loans or otherwise) shall
cease. Notwithstanding the occurrence of an Event of Default, the Sellers or
the Servicer, as applicable, shall be entitled to all amounts due to such
party and remaining unpaid on such date of termination.
If any of the Mortgage Loans are MERS Mortgage Loans, in
connection with the termination or resignation (as described in Section 9.04)
of the Servicer hereunder, either (i) the successor servicer shall represent
and warrant that it is a member of MERS in good standing and shall agree to
comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the MERS Mortgage Loans, or (ii) the
predecessor servicer shall cooperate with the successor servicer either
(x) in causing MERS to execute and deliver an assignment of Mortgage in
recordable form to transfer the Mortgage from MERS to the
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Purchaser and to execute and deliver such other notices, documents and other
instruments as may be necessary to effect a transfer of such Mortgage Loan or
servicing of such Mortgage Loan on the MERS system to the successor servicer
or (y) in causing MERS to designate on the MERS system the successor servicer
as the servicer of such Mortgage Loan.
ARTICLE XI
TERMINATION
Section 11.01 Term and Termination (1) The servicing
obligations of the Servicer under this Agreement may be terminated as
provided in Section 10.01 hereof.
(2) In any case other than as provided under Subsection (1)
hereof, the respective obligations and responsibilities of the Sellers
hereunder shall terminate upon: (a) the later of the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
or the disposition of all REO Property and the remittance of all funds due
hereunder; or (b) the mutual written consent of the Sellers and the Purchaser.
(3) Upon any termination of this Agreement or the servicing
obligations of the Servicer hereunder, then the Servicer shall prepare,
execute and deliver all agreements, documents and instruments, including all
Servicer Mortgage Files, and do or accomplish all other acts or things
necessary or appropriate to effect such termination, all at the Servicer's
sole expense. In any such event, the Servicer agrees to cooperate with the
Purchaser in effecting the termination of the Servicer's servicing
responsibilities hereunder, including the transfer to the Purchaser or its
designee for administration by it of all cash amounts which shall at the time
be contained in, or credited by the Servicer to, the Collection Account
and/or the Escrow Account or thereafter received with respect to any Mortgage
Loan or REO Property.
(4) Notwithstanding and in addition to the foregoing, in the
event that (i) a Mortgage Loan becomes delinquent for a period of 91 days or
more (a "Delinquent Mortgage Loan") or (ii) a Mortgage Loan becomes an REO
Property, the Purchaser may at its election terminate this Agreement with
respect to such Delinquent Mortgage Loan or REO Property upon 30 days'
written notice to the Servicer; provided that, upon termination of the
Agreement with respect to such Delinquent Mortgage Loan or REO Property, the
Purchaser shall reimburse the Servicer for all outstanding Servicing
Advances, Monthly Advances and Servicing Fees.
Section 11.02 Survival. Notwithstanding anything to the
contrary contained herein, the representations and warranties of the parties
contained herein and in any certificate or other instrument delivered
pursuant hereto, as well as the other covenants hereof (including those set
forth in Section 9.01) that, by their terms, require performance after the
termination by this Agreement, shall survive the delivery and payment for the
Mortgage Loans on each Funding Date as well as the termination of this
Agreement and shall inure to the benefit of the parties, their successors and
assigns. Sellers further agree that the representations, warranties and
covenants made by Sellers herein and in any certificate or other instrument
delivered pursuant hereto shall be deemed to be relied upon by Purchaser
notwithstanding any investigation heretofore made by Purchaser or on
Purchaser's behalf.
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ARTICLE XII
GENERAL PROVISIONS
Section 12.01 Successor to the Servicer. Upon the
termination of the Servicer's servicing responsibilities and duties under
this Agreement pursuant to Sections 9.04, 10.01, or 11.01, the Purchaser
shall (i) succeed to and assume all of the Servicer's responsibilities,
rights, duties and obligations under this Agreement or (ii) appoint a
successor servicer which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under this Agreement
prior to the termination of the Servicer's responsibilities, duties and
liabilities under this Agreement. If the Servicer's duties, responsibilities
and liabilities under this Agreement should be terminated pursuant to the
aforementioned Sections, then the Servicer shall continue to discharge such
duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof (if
applicable) all on the terms and conditions contained herein and shall take
no action whatsoever that might impair or prejudice the rights or financial
condition of its successor. The termination of the Servicer's servicing
responsibilities pursuant to any of the aforementioned Sections shall not,
among other things, relieve the Servicer of its obligations pursuant to
Section 2.04 and/or 7.02, the representations and warranties or other
obligations set forth in Sections 2.04, 3.01, 3.02 and 3.03 and the remedies
available to the Purchaser under the various provisions of this Agreement.
In addition, such termination or resignation shall not affect any claims that
the Purchaser may have against the Servicer arising prior to any such
termination or resignation.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Servicer and to the Purchaser an instrument
accepting such appointment, wherein the successor shall make the
representations and warranties set forth in Section 3.02, whereupon such
successor shall become fully vested with all the rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer, with like
effect as if originally named as a party to this Agreement.
The Servicer shall promptly deliver to the successor the funds in
the Collection Account and the Escrow Account and the Mortgage Files and
related documents and statements held by it hereunder and the Servicer shall
account for all funds. The Servicer shall execute and deliver such
instruments and do such other things all as may reasonably be required to
more fully and definitely vest and confirm in the successor all such rights,
powers, duties, responsibilities, obligations and liability of the Servicer.
The successor shall make such arrangements as it may deem appropriate to
reimburse the Servicer for unrecovered Servicing Advances which the successor
retains hereunder and which could otherwise have been recovered by the
Servicer pursuant to this Agreement but for the appointment of the successor
Servicer.
Section 12.02 Governing Law; Jurisdiction; Consent to Service
of Process. This Agreement is to be governed by, and construed in accordance
with the internal laws of the State of New York without giving effect to
principals of conflicts of laws. The obligations, rights, and remedies of
the parties hereunder shall be determined in accordance with such laws. Each
of the Purchaser and the Servicer irrevocably (i) submits to the exclusive
jurisdiction of the courts of the state of New York and the federal courts of
the United States of America for the Southern District of New York for the
purpose of any action or proceeding relating to this agreement;
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(ii) waives, to the fullest extent permitted by law, the defense of an
inconvenient forum in any action or proceeding in any such court; and
(iii) consents to service of process upon it by mailing a copy thereof by
certified mail addressed to it as provided for notices hereunder.
Section 12.03 Notices. Any notices or other communications
permitted or required hereunder shall be in writing and shall be deemed
conclusively to have been given if personally delivered, sent by courier with
delivery against signature therefor, mailed by registered mail, postage
prepaid, and return receipt requested or transmitted by telex, telegraph or
telecopier and confirmed by a similar writing mailed or sent by courier as
provided above, to the address set forth below:
(a) if to the Purchaser:
Xxxxxx Xxxxxxx Mortgage Capital Inc.
1221 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxxx - Whole Loan Operations Manager
Fax: 000-000-0000
Email: xxxxx.xxxxxxxxxx@xxxxxxxxxxxxx.xxx
with copies to:
Xxxx Xxxxxxxx
Xxxxxx Xxxxxxx - Servicing Oversight
0000 X-Xxx Xxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Fax: 000-000-0000
Email: xxxx.xxxxxxxx@xxxxxxxxxxxxx.xxx
Xxxxx Xxxxxx
Xxxxxx Xxxxxxx - RFPG
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
Email: xxxxx.xxxxxx@xxxxxxxxxxxxx.xxx
(b) if to PHH Mortgage:
Xxxxx X. Xxxxxx
PHH Mortgage Corporation - Vice President, Secondary
Marketing
0000 Xxxxxxxxxx Xxxx
Xx. Xxxxxx, Xxx Xxxxxx 00000
Fax: 000-000-0000
Email: xxxx.xxxxxx@xxxxxxxxxxxxxx.xxx
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(b) if to Xxxxxx'x Gate Residential Mortgage Trust::
c/o PHH Mortgage Corporation, as Administrator
Xxxxx X. Xxxxxx
PHH Mortgage Corporation - Vice President, Secondary
Marketing
0000 Xxxxxxxxxx Xxxx
Xx. Xxxxxx, Xxx Xxxxxx 00000
Fax: 000-000-0000
Email: xxxx.xxxxxx@xxxxxxxxxxxxxx.xxx
or such other address as may hereafter be furnished to the other
party by like notice.
Section 12.04 Severability of Provisions. If any one or more
of the covenants, agreements, provisions or terms of this Agreement shall be
for any reason whatsoever held invalid, the invalidity of any such covenant,
agreement, provision or term of this Agreement shall in no way affect the
validity or enforceability of the other provisions of this Agreement.
Section 12.05 Schedules and Exhibits. The schedules and
exhibits that are attached to this Agreement are hereby incorporated herein
and made a part hereof by this reference.
Section 12.06 General Interpretive Principles. For purposes
of this Agreement, except as otherwise expressly provided or unless the
context otherwise requires:
(1) 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;
(2) any reference in this Agreement to this Agreement or any
other agreement, document, or instrument shall be a reference to this
Agreement or any other such agreement, document, or instrument as the same
has been amended, modified, or supplemented in accordance with the terms
hereof and thereof (as applicable);
(3) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles;
(4) 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, unless the context shall otherwise require;
(5) 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;
(6) a reference to a "day" shall be a reference to a calendar
day;
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(7) 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
(8) the terms "include" and "including" shall mean without
limitation by reason of enumeration.
Section 12.07 Waivers and Amendments, Noncontractual
Remedies; Preservation of Remedies. This Agreement may be amended,
superseded, canceled, renewed or extended and the terms hereof may be waived,
only by a written instrument signed by authorized representatives of the
parties or, in the case of a waiver, by an authorized representative of the
party waiving compliance. No such written instrument shall be effective
unless it expressly recites that it is intended to amend, supersede, cancel,
renew or extend this Agreement or to waive compliance with one or more of the
terms hereof, as the case may be. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any such right,
power or privilege, or any single or partial exercise of any such right,
power or privilege, preclude any further exercise thereof or the exercise of
any other such right, power or privilege. The rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies that
any party may otherwise have at law or in equity.
Section 12.08 Captions. All section titles or captions
contained in this Agreement or in any schedule or exhibit annexed hereto or
referred to herein, and the table of contents to this Agreement, are for
convenience only, shall not be deemed a part of this Agreement and shall not
affect the meaning or interpretation of this Agreement.
Section 12.09 Counterparts; Effectiveness. This Agreement
may be executed by the parties hereto in separate counterparts, each of which
when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument. This
Agreement shall become effective as of the date first set forth herein upon
the due execution and delivery of this Agreement by each of the parties
hereto.
Section 12.10 Entire Agreement; Amendment. This Agreement
(including the schedules and exhibits annexed hereto or referred to herein),
together with the PHH Guide, contains the entire agreement between the
parties hereto with respect to the transactions contemplated hereby and
supersedes all prior agreements, written or oral, with respect thereto. No
amendment, modification or alteration of the terms or provisions of this
Agreement shall be binding unless the same shall be in writing and duly
executed by the authorized representatives of the parties hereto.
Section 12.11 Further Assurances. Each party hereto shall
take such additional action as may be reasonably necessary to effectuate this
Agreement and the transactions contemplated hereby. The Sellers will
promptly and duly execute and deliver to the Purchaser such documents and
assurances and take such further action as the Purchaser may from time to
time reasonably request in order to carry out more effectively the intent and
purpose of this Agreement and to establish and protect the rights and
remedies created or intended to be created in favor of the Purchaser.
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Section 12.12 Intention of the Seller. Each Seller intends
that the conveyance of such Seller's right, title and interest in and to the
Mortgage Loans to the Purchaser shall constitute a sale and not a pledge of
security for a loan. If such conveyance is deemed to be a pledge of security
for a loan, however, the applicable Seller intends that the rights and
obligations of the parties to such loan shall be established pursuant to the
terms of this Agreement. Each Seller also intends and agrees that, in such
event, (i) the applicable Seller shall be deemed to have granted to the
Purchaser and its assigns a first priority security interest in such Seller's
entire right, title and interest in and to the Mortgage Loans, all principal
and interest received or receivable with respect to the Mortgage Loans, all
amounts held from time to time in the accounts mentioned pursuant to this
Agreement and all reinvestment earnings on such amounts, together with all of
the applicable Seller's right, title and interest in and to the proceeds of
any title, hazard or other insurance policies related to such Mortgage Loans
and (ii) this Agreement shall constitute a security agreement under
applicable law. 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 12.13 Waiver of Trial by Jury. THE SELLER AND THE
PURCHASER EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT.
ARTICLE XIII
COMPLIANCE WITH REGULATION AB
Section 13.01 Intent of the Parties; Reasonableness. The
Purchaser, each Seller and the Servicer acknowledges and agrees that the
purpose of Article XIII of this Agreement is to facilitate compliance by the
Purchaser and any Depositor with the provisions of Regulation AB and related
rules and regulations of the Commission. Although Regulation AB is applicable
by its terms only to offerings of asset-backed securities that are registered
under the Securities Act, the Seller and the Servicer acknowledges that
investors in privately offered securities may require that the Purchaser or
any Depositor provide comparable disclosure in unregistered offerings.
References in this Agreement to compliance with Regulation AB include
provision of comparable disclosure in private offerings.
Neither the Purchaser nor any Depositor shall exercise its right
to request delivery of information or other performance under these
provisions other than in good faith, or for purposes other than compliance
with the Securities Act, the Exchange Act and the rules and regulations of
the Commission thereunder (or the provision in a private offering of
disclosure comparable to that required under the Securities Act). Each
Seller and the Servicer acknowledges that interpretations of the requirements
of Regulation AB may change over time, whether due to interpretive guidance
provided by the Commission or its staff, consensus among participants in the
asset-backed securities markets, advice of counsel, or otherwise, and agrees
to comply with requests made by the Purchaser or any Depositor in good faith
for delivery of information under these provisions on the basis of evolving
interpretations of Regulation AB. In connection with any Securitization
Transaction, the Sellers and the Servicer shall cooperate fully
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with the Purchaser to deliver to the Purchaser (including any of its
assignees or designees) and any Depositor, any and all statements, reports,
certifications, records and any other information necessary in the good faith
determination of the Purchaser or any Depositor to permit the Purchaser or
such Depositor to comply with the provisions of Regulation AB, together with
such disclosures relating to the Sellers, the Servicer, any Subservicer, any
Third-Party Originator and the Mortgage Loans, or the servicing of the
Mortgage Loans, reasonably believed by the Purchaser or any Depositor to be
necessary in order to effect such compliance.
The Purchaser shall cooperate with the Sellers and the Servicer
by providing timely notice of requests for information under these provisions
and by reasonably limiting such requests to information necessary, in the
Purchaser's reasonable judgment, to comply with Regulation AB.
Section 13.02 Additional Representations and Warranties of
the Sellers and the Servicer.
(a) Each Seller and/or the Servicer, as applicable, as to
itself, shall be deemed to represent to the Purchaser and to any
Depositor, as of the date on which information is first provided to the
Purchaser or any Depositor under Subsection 13.03 that, except as
disclosed in writing to the Purchaser or such Depositor prior to such
date: (i) the Servicer is not aware and has not received notice that
any default, early amortization or other performance triggering event
has occurred as to any other securitization due to any act or failure
to act of the Servicer; (ii) the Servicer has not been terminated as
servicer in a residential mortgage loan securitization, either due to a
servicing default or to application of a servicing performance test or
trigger; (iii) no material noncompliance with the applicable servicing
criteria with respect to other securitizations of residential mortgage
loans involving the Servicer as servicer has been disclosed or reported
by such Servicer; (iv) no material changes to the Servicer's policies
or procedures with respect to the servicing function it will perform
under this Agreement and any Reconstitution Agreement for mortgage
loans of a type similar to the Mortgage Loans have occurred during the
three-year period immediately preceding the related Securitization
Transaction; (v) there are no aspects of the Servicer's financial
condition that could have a material adverse effect on the performance
by such Servicer of its servicing obligations under this Agreement or
any Reconstitution Agreement; (vi) there are no material legal or
governmental proceedings pending (or known to be contemplated) against
the Seller, the Servicer, any Subservicer or any Third-Party
Originator; and (vii) there are no affiliations, relationships or
transactions relating to any Seller, the Servicer, any Subservicer or
any Third-Party Originator with respect to any Securitization
Transaction and any party thereto identified by the related Depositor
of a type described in Item 1119 of Regulation AB.
(b) If so requested by the Purchaser or any Depositor on any
date following the date on which information is first provided to the
Purchaser or any Depositor under Subsection 13.03, each Seller and the
Servicer shall, within five Business Days following such request,
confirm in writing the accuracy of the representations and warranties
set forth in paragraph (a) of this Section or, if any such
representation and warranty is not
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accurate as of the date of such request, provide reasonably adequate
disclosure of the pertinent facts, in writing, to the requesting party.
Section 13.03 Information to Be Provided by each Seller or
the Servicer. In connection with any Securitization Transaction, the Sellers
or the Servicer shall (i) within five Business Days following request by the
Purchaser or any Depositor, provide to the Purchaser and such Depositor (or,
as applicable, cause each Third-Party Originator and each Subservicer to
provide), in writing and in form and substance reasonably satisfactory to the
Purchaser and such Depositor, the information and materials specified in
paragraphs (a), (b), (c) and (f) of this Section, and (ii) as promptly as
practicable following notice to or discovery by any Seller or the Servicer,
provide to the Purchaser and any Depositor (in writing and in form and
substance reasonably satisfactory to the Purchaser and such Depositor) the
information specified in paragraph (d) of this Section.
(a) If so requested by the Purchaser or any Depositor, the
Sellers shall provide such information regarding (i) each Seller, as
originator of the Mortgage Loans (including as an acquirer of Mortgage
Loans from a Qualified Correspondent), or (ii) each Third-Party
Originator, and (iii) as applicable, each Subservicer, as is requested
for the purpose of compliance with Items 1103(a)(1), 1105, 1110, 1117
and 1119 of Regulation AB. Such information shall include, at a
minimum:
(A) the originator's form of organization;
(B) a description of the originator's origination program
and how long the originator has been engaged in originating
residential mortgage loans, which description shall include a
discussion of the originator's experience in originating mortgage
loans of a similar type as the Mortgage Loans; information
regarding the size and composition of the originator's
origination portfolio; and information that may be material, in
the good faith judgment of the Purchaser or any Depositor, to an
analysis of the performance of the Mortgage Loans, including the
originators' credit-granting or underwriting criteria for
mortgage loans of similar type(s) as the Mortgage Loans and such
other information as the Purchaser or any Depositor may
reasonably request for the purpose of compliance with Item
1110(b)(2) of Regulation AB;
(C) a description of any material legal or governmental
proceedings pending (or known to be contemplated) against each
Seller, each Third-Party Originator and each Subservicer; and
(D) a description of any affiliation or relationship
between each Seller, each Third-Party Originator, each
Subservicer and any of the following parties to a Securitization
Transaction, as such parties are identified to the Sellers, by
the Purchaser or any Depositor in writing in advance of such
Securitization Transaction:
(1) the sponsor;
(2) the depositor;
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(3) the issuing entity;
(4) any servicer;
(5) any trustee;
(6) any originator;
(7) any significant obligor;
(8) any enhancement or support provider; and
(9) any other material transaction party.
(b) If so requested by the Purchaser or any Depositor, the
Sellers shall provide (or, as applicable, cause each Third-Party
Originator to provide) Static Pool Information with respect to the
mortgage loans (of a similar type as the Mortgage Loans, as reasonably
identified by the Purchaser as provided below) originated by (i) the
Sellers, if any Seller is an originator of Mortgage Loans (including as
an acquirer of Mortgage Loans from a Qualified Correspondent), and/or
(ii) each Third-Party Originator. Such Static Pool Information shall
be prepared in form and substance reasonably satisfactory to the
Purchaser, by each Seller (or Third-Party Originator) on the basis of
its reasonable, good faith interpretation of the requirements of Item
1105(a)(1)-(3) of Regulation AB. To the extent that there is
reasonably available to the Sellers (or Third-Party Originator) Static
Pool Information with respect to more than one mortgage loan type, the
Purchaser or any Depositor shall be entitled to specify whether some or
all of such information shall be provided pursuant to this paragraph.
Such Static Pool Information for each vintage origination year or prior
securitized pool, as applicable, shall be presented in increments no
less frequently than quarterly over the life of the mortgage loans
included in the vintage origination year or prior securitized pool.
The most recent periodic increment must be as of a date no later than
135 days prior to the date of the prospectus or other offering document
in which the Static Pool Information is to be included or incorporated
by reference. The Static Pool Information shall be provided in an
electronic format that provides a permanent record of the information
provided, such as a portable document format (pdf) file, or other such
electronic format reasonably required by the Purchaser or the
Depositor, as applicable.
Promptly following notice or discovery of a material error in
Static Pool Information provided pursuant to the immediately preceding
paragraph (including an omission to include therein information required to
be provided pursuant to such paragraph), the Seller shall provide corrected
Static Pool Information to the Purchaser or any Depositor, as applicable, in
the same format in which Static Pool Information was previously provided to
such party by the Seller.
If so requested by the Purchaser or any Depositor, each Seller
shall provide (or, as applicable, cause each Third-Party Originator to
provide), at the expense of the requesting party (to the extent of any
additional incremental expense associated with delivery pursuant to this
Agreement), such agreed-upon procedures letters of certified public
accountants reasonably acceptable to the Purchaser or Depositor, as
applicable, pertaining to Static Pool Information relating to prior
securitized pools for securitizations closed on or after January 1, 2006 or,
in the case of Static Pool Information with respect to such Seller's or
Third-Party Originator's originations or purchases, to calendar months
commencing January 1, 2006, as the Purchaser or such Depositor shall
reasonably request. Such letters shall be addressed to and be for the
benefit
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of such parties as the Purchaser or such Depositor shall designate, which may
include, by way of example, any Sponsor, any Depositor and any broker dealer
acting as underwriter, placement agent or initial purchaser with respect to a
Securitization Transaction. Any such statement or letter may take the form
of a standard, generally applicable document accompanied by a reliance letter
authorizing reliance by the addressees designated by the Purchaser or such
Depositor.
(c) If so requested by the Purchaser or any Depositor, the
Servicer shall provide such information regarding the Servicer, as
servicer of the Mortgage Loans, and each Subservicer (the Servicer and
each Subservicer, for purposes of this paragraph, a "Transaction
Servicer"), as is requested for the purpose of compliance with Item
1108 of Regulation AB. Such information shall include, at a minimum:
(A) the Transaction Servicer's form of organization;
(B) a description of how long the Transaction Servicer
has been servicing residential mortgage loans; a general
discussion of the Transaction Servicer's experience in servicing
assets of any type as well as a more detailed discussion of the
Transaction Servicer's experience in, and procedures for, the
servicing function it will perform under this Agreement and any
Reconstitution Agreements; information regarding the size,
composition and growth of the Transaction Servicer's portfolio of
residential mortgage loans of a type similar to the Mortgage
Loans and information on factors related to the Transaction
Servicer that may be material, in the good faith judgment of the
Purchaser or any Depositor, to any analysis of the servicing of
the Mortgage Loans or the related asset-backed securities, as
applicable, including, without limitation:
(1) whether any prior securitizations of mortgage
loans of a type similar to the Mortgage Loans involving the
Transaction Servicer have defaulted or experienced an early
amortization or other performance triggering event because
of servicing during the three-year period immediately
preceding the related Securitization Transaction;
(2) the extent of outsourcing the Transaction
Servicer utilizes;
(3) whether there has been previous disclosure of
material noncompliance with the applicable servicing
criteria with respect to other securitizations of
residential mortgage loans involving the Transaction
Servicer as a servicer during the three-year period
immediately preceding the related Securitization
Transaction;
(4) whether the Transaction Servicer has been
terminated as servicer in a residential mortgage loan
securitization, either due to a servicing default or to
application of a servicing performance test or trigger; and
(5) such other information as the Purchaser or any
Depositor may reasonably request for the purpose of
compliance with Item 1108(b)(2) of Regulation AB;
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(C) a description of any material changes during
the three-year period immediately preceding the related
Securitization Transaction to the Transaction Servicer's
policies or procedures with respect to the servicing
function it will perform under this Agreement and any
Reconstitution Agreements for mortgage loans of a type
similar to the Mortgage Loans;
(D) information regarding the Transaction
Servicer's financial condition, to the extent that there is
a material risk that an adverse financial event or
circumstance involving the Transaction Servicer could have
a material adverse effect on the performance by the
Servicer of its servicing obligations under this Agreement
or any Reconstitution Agreement;
(E) information regarding advances made by the
Transaction Servicer on the Mortgage Loans and the
Transaction Servicer's overall servicing portfolio of
residential mortgage loans for the three-year period
immediately preceding the related Securitization
Transaction, which may be limited to a statement by an
authorized officer of the Transaction Servicer to the
effect that the Transaction Servicer has made all advances
required to be made on residential mortgage loans serviced
by it during such period, or, if such statement would not
be accurate, information regarding the percentage and type
of advances not made as required, and the reasons for such
failure to advance;
(F) a description of the Transaction Servicer's
processes and procedures designed to address any special or
unique factors involved in servicing loans of a similar
type as the Mortgage Loans;
(G) a description of the Transaction Servicer's
processes for handling delinquencies, losses, bankruptcies
and recoveries, such as through liquidation of mortgaged
properties, sale of defaulted mortgage loans or workouts;
and
(H) information as to how the Transaction Servicer
defines or determines delinquencies and charge-offs,
including the effect of any grace period, re-aging,
restructuring, partial payments considered current or other
practices with respect to delinquency and loss experience.
(d) If so requested by the Purchaser or any Depositor for the
purpose of satisfying its reporting obligation under the Exchange Act
with respect to any class of asset-backed securities, each Seller and
the Servicer shall (or shall cause each Subservicer and Third-Party
Originator to) (i) notify the Purchaser and any Depositor in writing of
(A) any material litigation or governmental proceedings pending against
such Seller or the Servicer, any Subservicer or any Third-Party
Originator and (B) any affiliations or relationships that develop
following the closing date of a Securitization Transaction between such
Seller or the Servicer, any Subservicer or any Third-Party Originator
and any of the parties specified in clause (D) of paragraph (a) of this
Section
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(and any other parties identified in writing by the requesting party)
with respect to such Securitization Transaction, and (ii) provide to
the Purchaser and any Depositor a description of such proceedings,
affiliations or relationships.
(e) As a condition to the succession to the Servicer or any
Subservicer as servicer or subservicer under this Agreement or any
Reconstitution Agreement by any Person (i) into which the Servicer or
such Subservicer may be merged or consolidated, or (ii) which may be
appointed as a successor to the Servicer or any Subservicer, the
Servicer shall provide to the Purchaser and any Depositor, at least 15
calendar days prior to the effective date of such succession or
appointment, (x) written notice to the Purchaser and any Depositor of
such succession or appointment and (y) in writing and in form and
substance reasonably satisfactory to the Purchaser and such Depositor,
all information reasonably requested by the Purchaser or any Depositor
in order to comply with its reporting obligation under Item 6.02 of
Form 8-K with respect to any class of asset-backed securities.
(f) In addition to such information as the Servicer, as
servicer, is obligated to provide pursuant to other provisions of this
Agreement, if so requested and upon reasonable notice by the Purchaser
or any Depositor, the Servicer shall provide such information regarding
the performance or servicing of the Mortgage Loans as is reasonably
required by the Purchaser or any Depositor to facilitate preparation of
distribution reports in accordance with Item 1121 of Regulation AB and
to permit the Purchaser or such Depositor to comply with the provisions
of Regulation AB relating to Static Pool Information regarding the
performance of the Mortgage Loans on the basis of the Purchaser's or
such Depositor's reasonable, good faith interpretation of the
requirements of Item 1105(a)(1)-(3) of Regulation AB (including without
limitation as to the format and content of such Static Pool
Information). Such information shall be provided concurrently with the
monthly reports otherwise required to be delivered by the Servicer
under this Agreement commencing with the first such report due in
connection with the applicable Securitization Transaction.
Section 13.04 Servicer Compliance Statement. On or before
March 1 of each calendar year, commencing in 2007, the Servicer shall deliver
to the Purchaser and any Depositor a statement of compliance addressed to the
Purchaser and such Depositor and signed by an authorized officer of the
Servicer, to the effect that (i) a review of the Servicer's activities during
the immediately preceding calendar year (or applicable portion thereof) and
of its performance under this Agreement and any applicable Reconstitution
Agreement during such period has been made under such officer's supervision,
and (ii) to the best of such officers' knowledge, based on such review, the
Servicer has fulfilled all of its obligations under this Agreement and any
applicable Reconstitution Agreement in all material respects throughout such
calendar year (or applicable portion thereof) or, if there has been a failure
to fulfill any such obligation in any material respect, specifically
identifying each such failure known to such officer and the nature and the
status thereof.
Section 13.05 Report on Assessment of Compliance and
Attestation. (a) On or before March 1 of each calendar year,
commencing in 2007, the Servicer shall:
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(i) deliver to the Purchaser and any Depositor a report (in form
and substance reasonably satisfactory to the Purchaser and such
Depositor) regarding the Servicer's assessment of compliance with the
Servicing Criteria during the immediately preceding calendar year, as
required under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122
of Regulation AB. Such report shall be addressed to the Purchaser and
such Depositor and signed by an authorized officer of the Servicer, and
shall address each of the Servicing Criteria specified on a
certification substantially in the form of Exhibit 14 hereto delivered
to the Purchaser concurrently with the execution of this Agreement;
(ii) deliver to the Purchaser and any Depositor a report of a
registered public accounting firm reasonably acceptable to the Purchaser
and such Depositor that attests to, and reports on, the assessment of
compliance made by the Servicer and delivered pursuant to the preceding
paragraph. Such attestation shall be in accordance with Rules 1-02(a)(3)
and 2-02(g) of Regulation S-X under the Securities Act and the Exchange
Act;
(iii) cause each Subservicer, and each Subcontractor determined by
the Servicer pursuant to Subsection 13.06(b) to be "participating in the
servicing function" within the meaning of Item 1122 of Regulation AB, to
deliver to the Purchaser and any Depositor an assessment of compliance
and accountants' attestation as and when provided in paragraphs (a) and
(b) of this Section; and
(iv) deliver to the Purchaser, any Depositor and any other Person
that will be responsible for signing the certification (a "Sarbanes
Certification") required by Rules 13a-14(d) and 15d-14(d) under the
Exchange Act (pursuant to Section 302 of the Xxxxxxxx-Xxxxx Act of 2002)
on behalf of an asset-backed issuer with respect to a Securitization
Transaction a certification in the form attached hereto as Exhibit 11.
The Servicer acknowledges that the parties identified in clause
(a)(iv) above may rely on the certification provided by the Servicer pursuant
to such clause in signing a Sarbanes Certification and filing such with the
Commission. Neither the Purchaser nor any Depositor will request delivery of
a certification under clause (a)(iv) above, unless a Depositor is required
under the Exchange Act to file an annual report on Form 10-K with respect to
an issuing entity whose asset pool includes Mortgage Loans.
(b) Each assessment of compliance provided by a Subservicer
pursuant to Subsection 13.05(a)(i) shall address each of the Servicing
Criteria specified on a certification substantially in the form of
Exhibit 14 hereto delivered to the Purchaser concurrently with the
execution of this Agreement or, in the case of a Subservicer
subsequently appointed as such, on or prior to the date of such
appointment. An assessment of compliance provided by a Subcontractor
pursuant to Subsection 13.05(a)(iii) need not address any elements of
the Servicing Criteria other than those specified by the Servicer
pursuant to Subsection 13.06.
Section 13.06 Use of Subservicers and Subcontractors.
The Servicer shall not hire or otherwise utilize the services of
any Subservicer to fulfill any of the obligations of the Servicer as
servicers under this Agreement or any
-99-
Reconstitution Agreement unless the Servicer complies with the provisions of
paragraph (a) of this Section. The Servicer shall not hire or otherwise
utilize the services of any Subcontractor, and shall not permit any
Subservicer to hire or otherwise utilize the services of any Subcontractor,
to fulfill any of the obligations of the Servicer as servicer under this
Agreement or any Reconstitution Agreement unless the Servicer complies with
the provisions of paragraph (b) of this Section.
(a) The Servicer shall not hire or otherwise utilize the
services of any Subservicer with respect to the Mortgage Loans without
giving the Purchaser or its designee fifteen (15) calendar days'
advance written notice of the effective date of such hiring or
utilization of a Subservicer, followed by written confirmation of such
hiring or utilization of a Subservicer on the effective date of such
engagement and indicating the circumstances surrounding such hiring or
utilization. Any notices required by this Subsection 13.06(a) shall be
sent via telecopier or certified or registered mail to the addresses
set forth below: Xxxx X. Xxxxxxxx, Servicer Oversight Group, 0000 X-Xxx
Xxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000, Telecopy: 000-000-0000,
and emailed to: xxxxx_xxxxxxxx_xxxxxx@xxxxxxxxxxxxx.xxx, with a copy to
Xxxxxxx Xxxxxx, Cadwalader, Xxxxxxxxxx & Xxxx, LLP, Xxx Xxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Telecopy: 000-000-0000, Email:
xxxxxxx.xxxxxx@xxx.xxx (or such other address as such Person may
otherwise specify to Servicer). Notwithstanding the preceding two
sentences, it shall not be necessary for the Servicer to obtain the
consent of the Purchaser or any designee to the utilization of any such
Subservicer. The Servicer shall cause any Subservicer used by the
Servicer (or by any Subservicer) for the benefit of the Purchaser and
any Depositor to comply with the provisions of this Section and with
Subsections 13.02, 13.03(c) and (e), 13.04, 13.05 and 13.07 of this
Agreement to the same extent as if such Subservicer were the Servicer,
and to provide the information required with respect to such
Subservicer under Subsection 13.03(d) of this Agreement. The Servicer
shall be responsible for obtaining from each Subservicer and delivering
to the Purchaser and any Depositor any servicer compliance statement
required to be delivered by such Subservicer under Subsection 13.04,
any assessment of compliance and attestation required to be delivered
by such Subservicer under Subsection 13.05 and any certification
required to be delivered to the Person that will be responsible for
signing the Sarbanes Certification under Subsection 13.05 as and when
required to be delivered.
(b) It shall not be necessary for the Servicer to seek the
consent of the Purchaser or any Depositor to the utilization of any
Subcontractor. The Servicer shall promptly upon request provide to the
Purchaser and any Depositor (or any designee of the Depositor, such as
a master servicer or administrator) a written description (in form and
substance satisfactory to the Purchaser and such Depositor) of the role
and function of each Subcontractor utilized by the Servicer or any
Subservicer, specifying (i) the identity of each such Subcontractor,
(ii) which (if any) of such Subcontractors are "participating in the
servicing function" within the meaning of Item 1122 of Regulation AB,
and (iii) which elements of the Servicing Criteria will be addressed in
assessments of compliance provided by each Subcontractor identified
pursuant to clause (ii) of this paragraph.
-100-
As a condition to the utilization of any Subcontractor determined
to be "participating in the servicing function" within the meaning of Item
1122 of Regulation AB, the Servicer shall cause any such Subcontractor used
by the Servicer (or by any Subservicer) for the benefit of the Purchaser and
any Depositor to comply with the provisions of Subsections 13.05 and 13.07 of
this Agreement to the same extent as if such Subcontractor were the
Servicer. The Servicer shall be responsible for obtaining from each
Subcontractor and delivering to the Purchaser and any Depositor any
assessment of compliance and attestation required to be delivered by such
Subcontractor under Subsection 13.05, in each case as and when required to be
delivered.
Section 13.07 Indemnification; Remedies.
(a) Each Seller and the Servicer shall indemnify the Purchaser,
each affiliate of the Purchaser, and each of the following parties
participating in a Securitization Transaction: each sponsor and
issuing entity; each Person responsible for the preparation, execution
or filing of any report required to be filed with the Commission with
respect to such Securitization Transaction, or for execution of a
certification pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the
Exchange Act with respect to such Securitization Transaction; each
broker dealer acting as underwriter, placement agent or initial
purchaser, each Person who controls any of such parties or the
Depositor (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act); and the respective present and former
directors, officers, employees and agents of each of the foregoing and
of the Depositor, and shall hold each of them harmless from and against
any losses, damages, penalties, fines, forfeitures, legal fees and
expenses and related costs, judgments, and any other costs, fees and
expenses that any of them may sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or
alleged to be contained in any information, report, certification,
accountants' letter or other material provided in written or electronic
form under this Article XIII by or on behalf of the related Seller or
the Servicer, as applicable, or provided under this Article XIII by or
on behalf of any Subservicer, Subcontractor or Third-Party Originator
(collectively, the "Seller Information"), or (B) the omission or alleged
omission to state in the related Seller Information a material fact
required to be stated in the Seller Information or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, by way of clarification, that
clause (B) of this paragraph shall be construed solely by reference to
the Seller Information and not to any other information communicated in
connection with a sale or purchase of securities, without regard to
whether the Seller Information or any portion thereof is presented
together with or separately from such other information;
(ii) any failure by the related Seller, the Servicer, any
Subservicer, any Subcontractor or any Third-Party Originator to deliver
any information, report, certification, accountants' letter or other
material when and as required under this Article XIII, including any
failure by the Servicer to identify pursuant to Subsection 13.06(b) any
Subcontractor "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB; or
-101-
(iii) any breach by the related Seller or the Servicer, as
applicable, of a representation or warranty set forth in Subsection
13.02(a) or in a writing furnished pursuant to Subsection 13.02(b) and
made as of a date prior to the closing date of the related
Securitization Transaction, to the extent that such breach is not cured
by such closing date, or any breach by the related Seller or the
Servicer, as applicable, of a representation or warranty in a writing
furnished pursuant to Subsection 13.02(b) to the extent made as of a
date subsequent to such closing date.
In the case of any failure of performance described in clause
(a)(ii) of this Section, the Sellers and the Servicer shall promptly
reimburse the Purchaser, any Depositor, as applicable, and each Person
responsible for the preparation, execution or filing of any report required
to be filed with the Commission with respect to such Securitization
Transaction, or for execution of a certification pursuant to Rule 13a-14(d)
or Rule 15d-14(d) under the Exchange Act with respect to such Securitization
Transaction, for all costs reasonably incurred by each such party in order to
obtain the information, report, certification, accountants' letter or other
material not delivered as required by any Seller, the Servicer, any
Subservicer, any Subcontractor or any Third-Party Originator.
(b) (i) Any failure by any Seller, the Servicer, any
Subservicer, any Subcontractor or any Third-Party Originator to deliver
any information, report, certification, accountants' letter or other
material when and as required under this Article XIII, or any breach by
any Seller or the Servicer of a representation or warranty set forth in
Subsection 13.02(a) or in a writing furnished pursuant to Subsection
13.02(b) and made as of a date prior to the closing date of the related
Securitization Transaction, to the extent that such breach is not cured
by such closing date, or any breach by any Seller or the Servicer of a
representation or warranty in a writing furnished pursuant to
Subsection 13.02(b) to the extent made as of a date subsequent to such
closing date, shall, except as provided in clause (ii) of this
paragraph, immediately and automatically, without notice or grace
period, constitute an Event of Default with respect to the Sellers and
the Servicer under this Agreement and any applicable Reconstitution
Agreement, and shall entitle the Purchaser or Depositor, as applicable,
in its sole discretion to terminate the rights and obligations of the
Sellers and the Servicer under this Agreement and/or any applicable
Reconstitution Agreement without payment (notwithstanding anything in
this Agreement or any applicable Reconstitution Agreement to the
contrary) of any compensation to the Sellers or the Servicer; provided
that to the extent that any provision of this Agreement and/or any
applicable Reconstitution Agreement expressly provides for the survival
of certain rights or obligations following termination of the Servicer
as servicer, such provision shall be given effect.
(ii) Any failure by the Servicer, any Subservicer or any
Subcontractor to deliver any information, report, certification
or accountants' letter when and as required under Subsection
13.04 or 13.05, including (except as provided below) any failure
by the Servicer to identify pursuant to Subsection 13.06(b) any
Subcontractor "participating in the servicing function" within
the meaning of Item 1122 of Regulation AB, which continues
unremedied for ten calendar days after the date on which such
information, report, certification or accountants' letter was
required to be delivered shall constitute an Event of Default
with respect to the
-102-
Servicer under this Agreement and any applicable Reconstitution
Agreement, and shall entitle the Purchaser or Depositor, as
applicable, in its sole discretion to terminate the rights and
obligations of the Servicer as servicer under this Agreement
and/or any applicable Reconstitution Agreement without payment
(notwithstanding anything in this Agreement to the contrary) of
any compensation to the Servicer; provided that to the extent
that any provision of this Agreement and/or any applicable
Reconstitution Agreement expressly provides for the survival of
certain rights or obligations following termination of the
Servicer as servicer, such provision shall be given effect.
Neither the Purchaser nor any Depositor shall be entitled to
terminate the rights and obligations of the Servicer pursuant to this
subparagraph (b)(ii) if a failure of the Servicer to identify a
Subcontractor "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB was attributable solely to the
role or functions of such Subcontractor with respect to mortgage loans
other than the Mortgage Loans.
The Sellers and the Servicer shall promptly reimburse the
Purchaser (or any designee of the Purchaser, such as a master servicer)
and any Depositor, as applicable, for all reasonable expenses incurred
by the Purchaser (or such designee) or such Depositor, as such are
incurred, in connection with the termination of the Servicer as
servicer and the transfer of servicing of the Mortgage Loans to a
successor servicer. The provisions of this paragraph shall not limit
whatever rights the Purchaser or any Depositor may have under other
provisions of this Agreement and/or any applicable Reconstitution
Agreement or otherwise, whether in equity or at law, such as an action
for damages, specific performance or injunctive relief.
-103-
IN WITNESS WHEREOF, the Sellers and the Purchaser have caused
their names to be signed hereto by their respective officers as of the date
first written above.
XXXXXX XXXXXXX MORTGAGE
CAPITAL INC.
By:____________________________________
Name:
Title:
PHH MORTGAGE CORPORATION
(formerly known as CENDANT
MORTGAGE CORPORATION)
By:____________________________________
Name:
Title:
XXXXXX'X GATE RESIDENTIAL
MORTGAGE TRUST (formerly known
as CENDANT RESIDENTIAL
MORTGAGE TRUST)
By:PHH Mortgage Corporation, as
Administrator
By:____________________________________
Name:
Title:
SCHEDULE A
MORTGAGE LOAN SCHEDULE
A-1
SCHEDULE B-1
CONTENTS OF PURCHASER'S MORTGAGE FILE
With respect to each Mortgage Loan, the Purchaser's Mortgage File
shall include each of the following items, which shall be available for
inspection by the Purchaser, and which shall be retained by the applicable
Seller or delivered to the Purchaser pursuant to the provisions of the Third
Amended and Restated Mortgage Loan Flow Purchase, Sale & Servicing Agreement.
To be Delivered 5 days prior to Funding Date:
---------------------------------------------
1. The original Mortgage Note bearing all intervening
endorsements, endorsed, at the direction of the Purchaser either
(1) "Pay to the order of "-------," without recourse," or (2) in blank
and signed in the name of the applicable Seller by an authorized
officer. To the extent that there is no space on the face of the
Mortgage Notes for endorsements, the endorsement may be contained on an
allonge, if state law so allows and the Purchaser is so advised by the
Seller that state law so allows. If the Mortgage Loan was acquired by
the Seller in a merger, the endorsement must be by "[Seller], successor
by merger to [name of predecessor]." If the Mortgage Loan was acquired
or originated by the Seller while doing business under another name,
the endorsement must be by "[Seller], formerly known as [previous
name]."
2. If the Mortgage Loan is not a MERS Mortgage Loan, the
original Assignment for each Mortgage Loan, in form and substance
acceptable for recording. The Mortgage shall be assigned, at the
direction of the Purchaser either (1) to "---------" or (2) with
assignee's name left blank. The Assignment must be duly recorded only
on the direction of the Purchaser. If the Mortgage Loan was acquired
by the applicable Seller in a merger, the Assignment must be made by
"PHH Mortgage Corporation, successor by merger to [name of
predecessor]." If the Mortgage Loan was acquired or originated by the
Seller while doing business under another name or under an assumed
name, the Assignment must be by "PHH Mortgage Corporation formerly
known as [previous name] or [PHH Mortgage Corporation dba
______________, ] respectively.
3. With respect to each Additional Collateral Mortgage Loan, a
copy of the related Pledge Agreement.
4. With respect to each Additional Collateral Mortgage Loan, a
copy of the UCC-1, to the extent the additional collateral servicer was
required to deliver such UCC-1 to the Servicer, and an original form
UCC-3, if applicable, to the extent the additional collateral servicer
was required to deliver such UCC-3 to the Servicer, together with a
copy of the applicable notice of assignment to and acknowledgment by
the additional collateral servicer.
5. With respect to each Cooperative Loan, the original stock
certificate and related stock power, in blank, executed by the
Mortgagor with such signature guaranteed and original stock power, in
blank executed by the Seller provided, that if the Seller
B-1-1
delivers a certified copy, the Seller shall deliver the original stock
certificate and stock powers to the Custodian on or prior to the date
which is 120 days after the related Funding Date.
To be delivered within 120 days after the related Funding Date:
---------------------------------------------------------------
1. The original Mortgage with evidence of recording thereon.
If in connection with any Mortgage Loan, the applicable Seller cannot
deliver or cause to be delivered the original Mortgage with evidence of
recording thereon on or prior to the Funding 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 applicable Seller 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 Officers'
Certificate of the applicable Seller (or certified by the title
company, escrow agent, or closing attorney) 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 applicable
Seller; 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 to be a true
and complete copy of the original recorded Mortgage.
2. To the extent applicable, the original of each power of
attorney, surety agreement or guaranty agreement with respect to such
Mortgage Loan.
3. Originals of any executed intervening assignments of the
Mortgage, with evidence of recording thereon or, if the original
intervening assignment has not yet been returned from the recording
office, a copy of such assignment certified by the applicable Seller to
be a true copy of the original of the assignment which has been sent
for recording in the appropriate jurisdiction in which the Mortgaged
Property is located.
4. Originals of all assumption, modification and substitution
agreements, if any, or, if the originals of any such assumption,
modification and substitution agreements have not yet been returned
from the recording office, a copy of such instruments certified by the
applicable Seller to be a true copy of the original of such instruments
which have been sent for recording in the appropriate jurisdictions in
which the Mortgaged Properties are located.
5. The original mortgagee policy of title insurance or, in the
event such original title policy is unavailable, a certified true copy
of the related policy binder or commitment for title certified to be
true and complete by the title insurance company, in each case,
including an Environmental Protection Agency Endorsement and an
adjustable-rate endorsement.
B-1-2
6. With respect to each Cooperative Loan, the original
Recognition Agreement and the original Assignment of Recognition
Agreement.
7. With respect to each Cooperative Loan, an Estoppel Letter
and/or Consent.
8. With respect to each Cooperative Loan, the Cooperative Lien
Search.
9. With respect to each Cooperative Loan, the guaranty of the
Mortgage Note and Cooperative Loan, if any.
10. With respect to each Cooperative Loan, the original of any
security agreement or similar document executed in connection with the
Cooperative Loan.
11. With respect to each Cooperative Loan, the original
Proprietary Lease and the Assignment of Proprietary Lease executed by
the Mortgagor in blank or if the Proprietary Lease has been assigned by
the Mortgagor to the Seller, then the Seller must execute an assignment
of the Assignment of Proprietary Lease in blank.
12. With respect to each Cooperative Loan, the recorded state
and county Financing Statements and Financing Statement Changes.
From time to time, the Sellers shall forward to the Custodian
additional original documents pursuant to the Agreement or additional
documents evidencing an assumption, modification, consolidation or extension
of a Mortgage Loan approved by the Sellers, in accordance with the
Agreement. All such mortgage documents held by the Custodian as to each
Mortgage Loan shall constitute the "Custodial File."
B-1-3
PHH Mortgage Corporation
Mortgage File Cover Sheet: Credit Documents
(Schedule B-2)
Prepared by:_________________________ Phone: _____________
Location: PHH Mortgage Corporation Fax: ________________
Borrower Name: ___________________
Loan Number: ___________________
-------------------------------------------------------------------------------
General :
_______ 1. Mortgage File Cover Sheet Checklist - Inside File
_______ 2. Borrower's Authorization to Obtain Information
(Original)
_______ 3. Xxxxxx Xxx 1008(original) or Underwriter's Worksheet
(CUW2)
Applications:
_______ 4. Final Signed Typed Loan Application (Form 1003 or
personal profile)
______ 5. Initial Signed Loan Application (personal profile,
handwritten or typed)
Credit Documentation:
______ 6. Credit Report(s), Merged In-file or RMCR) (original
or photocopy)
______ 7. Borrower's explanations (credit, employment, etc., if
applicable)
_______ 8. VOM(s) or other form of verification(s) on all
mortgages (not required on Aus scored loans)
______ 9. Separation agreement, divorce decree (if applicable)
_______ 10. Miscellaneous Credit Documents (if applicable)
Employment/Income Documentation:
_______ 11. Copy or Original initial VOE(s); OR
_______ 12. Paystubs dated with 30 days of closing; OR
_______ 13. IRS Form W-2's Original or Copy (for wage earner); OR
_______ 14. IRS Form 1040's, 1120's, 1065's, etc. (2 years for
self-employed);
_______ 15. Leases (if applicable)
_______ 16. All documentation required to support Borrower's cash
flow for loans Originated.
Asset Documentation:
B-2-1
_______ 17. Copy or Original VOD(s) or source of funds to close
(if applicable)
_______ 18. Gift Letter (if applicable) (original)
_______ 19. Verification of original purchase price, real estate
sales contract, or HUD-1 on first mortgage (if
applicable)
Property Documentation:
_______ 20. Appraisal, including original photos of subject and
comps. (original)
_______ 21. Review Appraisal or second full Appraisal (if
required) (original)
_______ 22. 442 Final Inspection
_______ 23. Copy or Original Contract of Sale
_______ 24. Miscellaneous
B-2-2
SCHEDULE C
PHH GUIDE
C-1
EXHIBIT 2.05
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
THIS ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT (this
"Assignment"), dated of _________ __, 200[_], is entered into among
[_________________], a ___________________ (the "Assignee"),
[______________________] (the "Assignor"), [PHH Mortgage Corporation]
[Xxxxxx'x Gate Residential Mortgage Trust] (the "Seller"), with PHH Mortgage
Corporation, as the servicer (the "Servicer").
RECITALS
WHEREAS the Assignor, the Seller and the Servicer have entered
into a certain Third Amended and Restated Mortgage Loan Flow Purchase, Sale
and Servicing Agreement, dated as of January 1, 2006 (as amended or modified
to the date hereof, the "Agreement"), pursuant to which the Assignor has
acquired certain Mortgage Loans pursuant to the terms of the Agreement and
Servicer has agreed to service such Mortgage Loans; and
WHEREAS the Assignee has agreed, on the terms and conditions
contained herein, to purchase from the Assignor all of the Mortgage Loans
(the "Specified Mortgage Loans") which are subject to the provisions of the
Agreement and are listed on the mortgage loan schedule attached as Exhibit I
hereto (the "Specified Mortgage Loan Schedule");
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration (the receipt and sufficiency
of which are hereby acknowledged), the parties agree as follows:
1. Assignment and Assumption
(a) On and of the date hereof, the Assignor hereby sells,
assigns and transfers to the Assignee all of its right, title and interest in
the Specified Mortgage Loans and all rights related thereto as provided under
the Agreement to the extent relating to the Specified Mortgage Loans, the
Assignee hereby accepts such assignment from the Assignor and hereby agrees
to the release of the Assignor from any obligations under the Agreement, to
the extent of the Specified Mortgage Loans, from the date hereof, and the
Seller hereby acknowledges such assignment, assumption and release.
(b) On and as of the date hereof, the Assignor represents and
warrants to the Assignee that the Assignor has not taken any action that
would serve to impair or encumber the Assignee's ownership interest in the
Specified Mortgage Loans since the date of the Assignor's acquisition of the
Specified Mortgage Loans.
2. Recognition of Purchaser
From and after the date hereof, both the Assignee and the Seller
shall note the transfer of the Specified Mortgage Loans to the Assignee in
their respective books and records
Exh. 2.05-1
and shall recognize the Assignee as the owner of the Specified Mortgage
Loans, and Servicer shall service the Specified Mortgage Loans for the
benefit of the Assignee pursuant to the Agreement, the terms of which are
incorporated herein by reference. It is the intention of the Seller, the
Servicer, the Assignee and the Assignor that (a) the Assignee fully enjoy all
of the rights and benefits enjoyed by the Assignor under the Agreement as if
the Assignee were a party thereto and (b) the Assignment shall be binding
upon and inure to the benefit of the Assignee and the Assignor and their
successors and assigns.
3. Representations and Warranties
(a) The Assignee represents and warrants that it is a
sophisticated investor able to evaluate the risks and merits of the
transactions contemplated hereby, and that it has not relied in connection
therewith upon any statements or representations of the Seller or the
Assignor other than those contained in the Agreement or this Assignment.
(b) Each of the parties hereto represents and warrants that it
is duly and legally authorized to enter into this Assignment.
(c) Each of the parties hereto represents and warrants that
this Assignment has been duly authorized, executed and delivered by it and
(assuming due authorization, execution and delivery thereof by each of the
other parties hereto) constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
4. Continuing Effect
Except as contemplated hereby, the Agreement shall remain in full
force and effect in accordance with its terms.
5. Governing Law
This Assignment and the rights and obligations hereunder shall be
governed by and construed in accordance with the internal laws of the State
of New York.
6. Notices
Any notices or other communications permitted or required under
the Agreement to be made to the Assignee shall be made in accordance with the
terms of the Agreement and shall be sent to the Assignee as follows:
[_____________________], or to such other address as may hereafter be
furnished by the Assignee to the parties in accordance with the provisions of
the Agreement.
Exh. 2.05-2
7. Counterparts
This Assignment may be executed in counterparts, each of which
when so executed shall be deemed to be an original and all of which when
taken together shall constitute one and the same instrument.
8. Definitions
Any capitalized term used but not defined in this Assignment has
the same meaning as in the Agreement.
[Assignment continues with signature page]
Exh. 2.05-3
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment the day and year first above written.
ASSIGNOR:
[------------------]
By:____________________________________
Name:
Title:
SELLER:
[PHH MORTGAGE CORPORATION]
[XXXXXX'X GATE RESIDENTIAL
MORTGAGE TRUST]
By:____________________________________
Name:
Title:
ASSIGNEE:
By:____________________________________
Name:
Title:
SERVICER:
PHH MORTGAGE CORPORATION
By:____________________________________
Name:
Title:
Exh. 2.05-4
EXHIBIT 5.01
WORKOUT COMPENSATION
Exh. 5.01-1
EXHIBIT 5.03(a)
REPORT P4DL NOTICE FOR SPECIALLY SERVICED MORTGAGE LOANS
Exh. 5.03(a)-1
EXHIBIT 5.03(b)
FORM OF NOTICE OF FORECLOSURE
Exh. 5.03(b)-1
EXHIBIT 5.04-1
FORM OF COLLECTION ACCOUNT CERTIFICATION
Exh. 5.04-1-1
EXHIBIT 5.04-2
FORM OF COLLECTION ACCOUNT LETTER AGREEMENT
Exh. 5.04-2-1
EXHIBIT 5.06-1
FORM OF ESCROW ACCOUNT CERTIFICATION
Exh. 5.06-1-1
EXHIBIT 5.06-2
FORM OF ESCROW ACCOUNT LETTER AGREEMENT
Exh. 5.06-2-1
EXHIBIT 6.02(a)
REPORT P-139 - MONTHLY STATEMENT OF MORTGAGE ACCOUNTS
Exh. 6.02(a)-1
EXHIBIT 6.02(b)
REPORT S-50Y - PRIVATE POOL DETAIL REPORT
Exh. 6.02(b)-1
EXHIBIT 6.02(c)
REPORT S-213 - SUMMARY OF CURTAILMENTS MADE REMITTANCE REPORT
Exh. 6.02(c)-1
EXHIBIT 6.02(d)
REPORT S-214 - SUMMARY OF PAID IN FULL REMITTANCE REPORT
Exh. 6.02(d)-1
EXHIBIT 6.02(e)
REPORT S-215 - CONSOLIDATION OF REMITTANCE REPORT
Exh. 6.02(e)-1
EXHIBIT 6.02(f)
REPORT T-62C - MONTHLY ACCOUNTING REPORT
Exh. 6.02(f)-1
EXHIBIT 6.02(g)
REPORT T-62E - LIQUIDATION REPORT
Exh. 6.02(g)-1
EXHIBIT 8.01
REPORT P-195 - DELINQUENCY REPORT
Exh. 8.01-1
EXHIBIT 9
FORM OF OFFICER'S CERTIFICATE
Exh. 9-1
EXHIBIT 10
FORM OF WARRANTY XXXX OF SALE
On this _______ day of ________, 200__, [PHH Mortgage
Corporation] [Xxxxxx'x Gate Residential Mortgage Trust] ("Seller") as the
Seller under that certain Third Amended and Restated Mortgage Loan Flow
Purchase, Sale & Servicing Agreement, dated as of January 1, 2006 (the
"Agreement") does hereby sell, transfer, assign, set over and convey to
[______________] as Purchaser under the Agreement, without recourse, but
subject to the terms of the Agreement, all rights, title and interest of the
Seller in and to the Mortgage Loans listed on the Mortgage Loan Schedule
attached hereto, together with the related Mortgage Files and all rights and
obligations arising under the documents contained therein. Pursuant to
Section 2.01 of the Agreement, the Seller has delivered to the Purchaser or
its custodian the Legal Documents for each Mortgage Loan to be purchased as
set forth in the Agreement. The contents of each related Mortgage File
required to be retained by PHH Mortgage Corporation ("PHH Mortgage") to
service the Mortgage Loans pursuant to the Agreement and thus not delivered
to the Purchaser are and shall be held in trust by PHH Mortgage for the
benefit of the Purchaser as the owner thereof. PHH Mortgage's possession of
any portion of each such Mortgage File is at the will of the Purchaser for
the sole purpose of facilitating servicing of the related Mortgage Loan
pursuant to the Agreement, and such retention and possession by PHH Mortgage
shall be in a custodial capacity only. The ownership of each Mortgage Note,
Mortgage, and the contents of the Mortgage File and Mortgage File is vested
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
PHH Mortgage shall immediately vest in the Purchaser and shall be retained
and maintained, in trust, by PHH Mortgage at the will of the Purchaser in
such custodial capacity only.
The Seller confirms to the Purchaser that the representations and
warranties set forth in Sections 3.01, 3.02 and 3.03 of the Agreement are
true and correct as of the date hereof, and that all statements made in the
Sellers' Officer's Certificate and all attachments thereto remain complete,
true and correct in all respects as of the date hereof.
Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Agreement.
Exh. 10-1
[PHH MORTGAGE CORPORATION]
[XXXXXX'X GATE RESIDENTIAL
MORTGAGE TRUST]
(Seller)
By:____________________________________
Name:
Title:
-2-
EXHIBIT 11
FORM OF XXXXXXXX-XXXXX CERTIFICATION
Re: The [ ] agreement dated as of [ ], 200[ ] (the
"Agreement"), among [IDENTIFY PARTIES]
I, ________________________________, the _______________________
of [NAME OF COMPANY] (the "Servicer"), certify to [the Purchaser], [the
Depositor], and the [Master Servicer] [Securities Administrator] [Trustee],
and their officers, with the knowledge and intent that they will rely upon
this certification, that:
1. I have reviewed the servicer compliance statement of the
Servicer provided in accordance with Item 1123 of Regulation AB (the
"Compliance Statement"), the report on assessment of the Servicer's
compliance with the servicing criteria set forth in Item 1122(d) of
Regulation AB (the "Servicing Criteria"), provided in accordance with
Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934, as
amended (the "Exchange Act") and Item 1122 of Regulation AB (the
"Servicing Assessment"), the registered public accounting firm's
attestation report provided in accordance with Rules 13a-18 and 15d-18
under the Exchange Act and Section 1122(b) of Regulation AB (the
"Attestation Report"), and all servicing reports, officer's certificates
and other information relating to the servicing of the Mortgage Loans
by the Servicer during 200[ ] that were delivered by the Servicer to
the [Depositor] [Master Servicer] [Securities Administrator] [Trustee]
pursuant to the Agreement (collectively, the "Servicer Servicing
Information");
2. Based on my knowledge, the Servicer Servicing Information,
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 the light of the circumstances under which such statements
were made, not misleading with respect to the period of time covered by
the Servicer Servicing Information;
3. Based on my knowledge, all of the Servicer Servicing
Information required to be provided by the Servicer under the Agreement
has been provided to the [Depositor] [Master Servicer] [Securities
Administrator] [Trustee];
4. I am responsible for reviewing the activities performed by
the Servicer as servicer under the Agreement, and based on my knowledge
and the compliance review conducted in preparing the Compliance
Statement and except as disclosed in the Compliance Statement, the
Servicing Assessment or the Attestation Report, the Servicer has
fulfilled its obligations under the Agreement in all material respects;
and
5. The Compliance Statement required to be delivered by the
Servicer pursuant to the Agreement, and the Servicing Assessment and
Attestation Report required to be provided by the Servicer and by any
Subservicer or Subcontractor pursuant to the Agreement, have been
provided to the [Depositor] [Master Servicer]. Any material instances
of noncompliance described in such reports have been disclosed to the
Xxx. 00-0
[Xxxxxxxxx] [Master Servicer]. Any material instance of noncompliance
with the Servicing Criteria has been disclosed in such reports.
Date:__________________________________
By:____________________________________
Name:
Title:
Exh. 11-2
EXHIBIT 12
PROCESS GUIDELINES
I. Contract
The Purchaser must provide the Company with an Assignment &
Assumption Agreement or similar notice with respect to a transfer to Xxxxxx
Xxx no less than five (5) Business Days prior to the last Business Day of the
month of transfer. Such document will confirm that the Mortgage Loans will
be serviced in accordance with the Xxxxxx Mae Guide. Such document must also
confirm that Mortgage Loans were sold to Xxxxxx Xxx under the special
servicing option.
II. Requirements for Xxxxxx Mae sales
A. The Servicing Fee less the Xxxxxx Xxx guaranty fee (the "Net
Servicing Fee") under the Xxxxxx Mae sale must be equal to or
greater than the current Servicing Fee being paid to the Servicer
by the Purchaser. Should the Net Servicing Fee exceed the
current Servicing Fee, any excess will be retained by the
Servicer.
B. Preparation and recording of any Assignments of Mortgage with
respect to the Mortgage Loans, other than as required by the
underlying Purchase, Sale & Servicing Agreement, will be the
responsibility of the Purchaser.
C. Information required to transfer the loans into Xxxxxx Xxx must
be received no less than five (5) Business Days prior to the last
Business Day of the transaction month.
D. Information regarding the transfer of the loans must be in an
Excel file format with the following data fields:
(i) servicer number; (ii) PHH Mortgage loan number; (iii) balance
sold to Xxxxxx Mae; (iv) Pass-through rate; (v) interest rate;
(vi) interest rate net of the servicing fee rate and guarantee
fee rate; (vii) Xxxxxx Xxx loan number; (viii) contract or pool
number; (ix) if the transaction is an "actual/actual" sale -
contract number; and (x) if the transaction is an "actual/actual"
sale - date of first payment to Xxxxxx Mae.
E. Balances must be verified with the Servicer before any Mortgage
Loan is sold to Xxxxxx Xxx.
F. The servicer number used to deliver any Mortgage Loan to Xxxxxx
Mae must be approved by the Servicer before such Mortgage Loan is
sold. The Servicer will assess a $500 correction penalty for
each pool sold under a different seller/servicer number than what
was provided.
Xxx. 00-0
X. Final purchase advices and/or the 2006 forms must be received by
the Servicer prior to the last Business Day of the transaction
month.
H. Purchaser must provide name and contact information of individual
authorized to discuss the sale terms. Investor name and broker
names need to be provided to the Servicer.
III. Fees
Should the Purchaser sell loans to Xxxxxx Xxx or Xxxxxxx Mac
(standard, not REMIC), an additional setup fee may be charged. The Servicer
will establish one investor number on each of the Servicer's related Alltel
clients for the those Mortgage Loans sold by Purchaser to Xxxxxx Mae.
IV. Process Guidelines
A. Monthly reporting to the Purchaser on the status of loans will be
limited to existing Alltel delinquency and trial balance reports.
Reports will be as of each month-end and will be provided to the
Purchaser no later than the twenty (20) days following the
related month-end. The Purchaser will provide contact
information for monthly reporting, repurchase funding and claim
settlement processes.
B. For any Mortgage Loans required to be repurchased by the
Purchaser from Xxxxxx Xxx due to mortgagor credit defaults
(rather than administrative, legal or documentation issues), the
Servicer will notify the Purchaser of the total amount due to
Xxxxxx Mae for the Mortgage Loan to be repurchased no later than
the 3rd Business Day prior to the end of the month of
repurchase. The Purchaser will remit same amount, plus a $100
repurchase processing fee to the Servicer no later than the last
Business Day of the repurchase month. A late remittance penalty
of prime + 2% will be assessed from the date such remittance was
due through the date such remittance was actually made.
C. Wiring instructions for repurchases by the Purchaser:
[ ]
Account Number: [ ]
Account Name: [ ]
ATTN: [ ], Xxxxxx Xxx
Telephone: [ ]
D. An additional investor number will be established for Mortgage
Loans repurchased by the Purchaser. Such investor number will be
actual/actual remittance with month-end cutoff. Reports and
remittances will be due on the tenth calendar day of each month.
Exh. 12-2
EXHIBIT 13
FORM OF INDEMNIFICATION AND CONTRIBUTION AGREEMENT
This INDEMNIFICATION AND CONTRIBUTION AGREEMENT ("Agreement"),
dated as of [_______], 200_, among [________________] (the "Depositor"), a
[______________] corporation (the "Depositor"), Xxxxxx Xxxxxxx Mortgage
Capital Inc., a New York corporation ("Xxxxxx") and [_____________], a
[_______________] (the "Seller").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Depositor is acting as depositor and registrant with
respect to the Prospectus, dated [________________], and the Prospectus
Supplement to the Prospectus, [________________] (the "Prospectus
Supplement"), relating to [________________] Certificates (the "Certificates")
to be issued pursuant to a Pooling and Servicing Agreement, dated as of
[________________] (the "P&S"), among the Depositor, as depositor,
[________________], as servicer (the "Servicer"), and [________________], as
trustee (the "Trustee");
WHEREAS, as an inducement to the Depositor to enter into the P&S,
and [____________________] (the "Underwriter[s]") to enter into the
Underwriting Agreement, dated [____________________] (the "Underwriting
Agreement"), between the Depositor and the Underwriter[s], and
[_______________] (the "Initial Purchaser[s]") to enter into the Certificate
Purchase Agreement, dated [____________] (the "Certificate Purchase
Agreement"), between the Depositor and the Initial Purchaser[s], Seller has
agreed to provide for indemnification and contribution on the terms and
conditions hereinafter set forth;
WHEREAS, Xxxxxx purchased from Seller certain of the Mortgage
Loans underlying the Certificates (the "Mortgage Loans") pursuant to a Third
Amended and Restated Flow Purchase, Sale and Servicing Agreement, dated as of
[DATE] (the "Sale and Servicing Agreement"), by and between Xxxxxx and
Seller; and
WHEREAS, pursuant to Subsection 3.05 of the Sale and Servicing
Agreement, the Seller has agreed to indemnify the Depositor, Xxxxxx, the
Underwriter[s], the Initial Purchaser[s] and their respective affiliates,
present and former directors, officers, employees and agents.
NOW THEREFORE, in consideration of the agreements contained
herein, and other valuable consideration the receipt and sufficiency of which
are hereby acknowledged, the Depositor, Xxxxxx and the Seller agree as
follows:
1. Indemnification and Contribution.
(a) The Seller agrees to indemnify and hold harmless the
Depositor, Xxxxxx, the Underwriter[s], the Initial Purchaser[s] and their
respective affiliates and their respective present and former directors,
officers, employees and agents and each person, if any, who
Exh. 13-1
controls the Depositor, Xxxxxx, the Underwriter[s] , the Initial Purchaser[s]
or such affiliate within the meaning of either Section 15 of the Securities
Act of 1933, as amended (the "1933 Act"), or Section 20 of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), against any and all
losses, claims, damages or liabilities, joint or several, to which they or
any of them may become subject under the 1933 Act, the 1934 Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based in whole or in part upon (i) a breach of
Section 2(vii) below or (ii) any untrue statement or alleged untrue statement
of a material fact contained in the Prospectus Supplement, the Offering
Circular, the ABS Informational and Computational Materials or in the Free
Writing Prospectus or any omission or alleged omission to state in the
Prospectus Supplement, the Offering Circular, the ABS Informational and
Computational Materials or in the Free Writing Prospectus a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any
such untrue statement or omission or alleged untrue statement or alleged
omission made in any amendment of or supplement to the Prospectus Supplement,
the Offering Circular, the ABS Informational and Computational Materials or
the Free Writing Prospectus and agrees to reimburse the Depositor, Xxxxxx,
the Underwriter[s], the Initial Purchaser[s] or such affiliates and each such
officer, director, employee, agent and controlling person promptly upon
demand for any legal or other expenses reasonably incurred by any of them in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that Seller shall be liable in any such case only to the
extent that any such loss, claim, damage, liability or action arises out of,
or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity with the
Seller Information. The foregoing indemnity agreement is in addition to any
liability which Seller may otherwise have to the Depositor, Xxxxxx, the
Underwriter[s], the Initial Purchaser[s] their affiliates or any such
director, officer, employee, agent or controlling person of the Depositor,
Xxxxxx, the Underwriter[s], the Initial Purchaser[s] or their respective
affiliates.
As used herein:
"Seller Information" means any information relating to Seller,
the Mortgage Loans and/or the underwriting guidelines relating to the
Mortgage Loans set forth in the Prospectus Supplement, the Offering Circular,
the ABS Informational and Computational Materials or the Free Writing
Prospectus [and static pool information regarding mortgage loans originated
or acquired by the Seller [and included in the Prospectus Supplement, the
Offering Circular, the ABS Informational and Computational Materials or the
Free Writing Prospectus] [incorporated by reference from the website located
at ______________].
"Free Writing Prospectus" means any written communication that
constitutes a "free writing prospectus," as defined in Rule 405 under the
1933 Act.
"ABS Informational and Computational Material" means any written
communication as defined in Item 1101(a) of Regulation AB under the 1933 Act
and the 1934 Act, as amended from time to time.
Exh. 13-2
"Offering Circular" means the offering circular, dated
[__________] relating to the private offering of the [_______________]
Certificates.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from
time to time, and subject to such clarification and interpretation as have
been provided by the Commission in the adopting release (Asset-Backed
Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531
(Jan. 7, 2005)) or by the staff of the Commission, or as may be provided by
the Commission or its staff from time to time.
(b) Promptly after receipt by any indemnified party under this
Section 1 of notice of any claim or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
any indemnifying party under this Section 1, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however,
that the failure to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 1 except to the extent it has
been materially prejudiced by such failure; and provided, further, however,
that the failure to notify any indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 1.
If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the
extent that it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense thereof with counsel reasonably satisfactory to
the indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or
action, except as provided in the following paragraph, the indemnifying party
shall not be liable to the indemnified party under this Section 1 for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.
Any indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless: (i) the employment thereof has been specifically authorized by
the indemnifying party in writing; (ii) such indemnified party shall have
been advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to
the indemnifying party and in the reasonable judgment of such counsel it is
necessary or appropriate for such indemnified party to employ separate
counsel; or (iii) the indemnifying party has failed to assume the defense of
such action and employ counsel reasonably satisfactory to the indemnified
party, in which case, if such indemnified party notifies the indemnifying
party in writing that it elects to employ separate counsel at the expense of
the indemnifying party, the indemnifying party shall not have the right to
assume the defense of such action on behalf of such indemnified party, it
being understood, however, the indemnifying party shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys (in addition to local counsel) at any time for
all such indemnified parties.
Exh. 13-3
Each indemnified party, as a condition of the indemnity
agreements contained in this Section 1, shall cooperate with the indemnifying
party in the defense of any such action or claim. No indemnifying party
shall be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of
the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement.
(a) If the indemnification provided for in this Section 1 is
unavailable to an indemnified party, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages
or liabilities, in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and the indemnified party, respectively, in
connection with the statements or omissions that result in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the indemnified party and indemnifying
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
such parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission and any other
equitable considerations.
(b) The indemnity and contribution agreements contained in this
Section 1 and the representations and warranties set forth in Section 2 shall
remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by the Depositor,
Xxxxxx, the Underwriter[s], the Initial Purchaser[s], their respective
affiliates, directors, officers, employees or agents or any person
controlling the Depositor, Xxxxxx, the Underwriter[s], the Initial
Purchaser[s] or any such affiliate, and (iii) acceptance of and payment for
any of the Offered Certificates or Private Certificates.
2. Representations and Warranties. Seller represents and
warrants that:
(i) Seller is validly existing and in good standing under the
laws of its jurisdiction of formation or incorporation, as applicable,
and has full power and authority to own its assets and to transact the
business in which it is currently engaged. Seller is duly qualified to
do business and is in good standing in each jurisdiction in which the
character of the business transacted by it or any properties owned or
leased by it requires such qualification and in which the failure so to
qualify would have a material adverse effect on the business,
properties, assets or condition (financial or otherwise) of Seller;
(ii) Seller is not required to obtain the consent of any other
person or any consent, license, approval or authorization from, or
registration or declaration with, any
Exh. 13-4
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement;
(iii) the execution, delivery and performance of this Agreement
by Seller will not violate any provision of any existing law or
regulation or any order decree of any court applicable to Seller or any
provision of the charter or bylaws of Seller, or constitute a material
breach of any mortgage, indenture, contract or other agreement to which
Seller is a party or by which it may be bound;
(iv) (a) no proceeding of or before any court, tribunal or
governmental body is currently pending or, (b) to the knowledge of
Seller, threatened against Seller or any of its properties or with
respect to this Agreement or the Offered Certificates, in either case,
which would have a material adverse effect on the business, properties,
assets or condition (financial or otherwise) of Seller;
(v) Seller has full power and authority to make, execute,
deliver and perform this Agreement and all of the transactions
contemplated hereunder, and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement.
When executed and delivered, this Agreement will constitute the legal,
valid and binding obligation of each of Seller enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, by the
availability of equitable remedies, and by limitations of public policy
under applicable securities law as to rights of indemnity and
contribution thereunder;
(vi) this Agreement has been duly executed and delivered by
Seller; and
(vii) the Seller Information satisfies the requirements of Items
[insert applicable Items] of Regulation AB.
3. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to Seller, will be mailed,
delivered or faxed or emailed and confirmed by mail
[______________________]; if sent to Xxxxxx, xxxx be mailed, delivered or
faxed or emailed and confirmed by mail to Xxxxxx Xxxxxxx Mortgage
Capital Inc., 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx
Xxxxxxxxxx - Whole Loans Operations Manager, Fax: [_______], Email:
xxxxx.xxxxxxxxxx@xxxxxxxxxxxxx.xxx, with copies to (i) Xxxxxxxx Xxxxx, Xxxxxx
Xxxxxxx - Legal Counsel, Securities, Xxxxxx Xxxxxxx, 0000 Xxxxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Fax [_____], Email:
xxxxxxxx.xxxxx@xxxxxxxxxxxxx.xxx, and (ii) Xxxxxx Xxxxxxx, Xxxxxx Xxxxxxx -
SPG Finance, Xxxxxx Xxxxxxx, 0000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Fax [_____],Email: xxxxxx.xxxxxxx@xxxxxxxxxxxxx.xxx; if to the
Depositor, will be mailed, delivered or telegraphed and confirmed to
[____________________]; or if to the Underwriter[s], will be mailed,
delivered or telegraphed and confirmed to [_____________________]; or if to
the Initial Purchaser[s], will be mailed, delivered or telegraphed and
confirmed to [_____________________].
4. Miscellaneous. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without
giving effect to the conflict of laws provisions thereof. This Agreement
shall inure to the benefit of and be binding upon the parties
Xxx. 00-0
hereto and their successors and assigns and the controlling persons referred
to herein, and no other person shall have any right or obligation hereunder.
Neither this Agreement nor any term hereof may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the
party against whom enforcement of the change, waiver, discharge or
termination is sought. This Agreement may be executed in counterparts, each
of which when so executed and delivered shall be considered an original, and
all such counterparts shall constitute one and the same instrument.
Capitalized terms used but not defined herein shall have the meanings
provided in the P&S.
[SIGNATURE PAGE FOLLOWS]
Exh. 13-6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective officers hereunto duly authorized,
this __th day of [_____________].
[DEPOSITOR]
By:___________________________________
Name:
Title:
XXXXXX XXXXXXX MORTGAGE CAPITAL INC.
By:____________________________________
Name:
Title:
[SELLER]
By:____________________________________
Name:
Title:
Xxx. 00-0
XXXXXXX 00
XXXXXXXXX XXXXXXXX TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by [the SELLER]
[Name of Subservicer] shall address, at a minimum, the criteria identified as
below as "Applicable Servicing Criteria":
-------------------------------------------------------------------------------
Applicable
Servicing
Servicing Criteria Criteria
-------------------------------------------------------------------------------
Reference Criteria
-------------------------------------------------------------------------------
General Servicing Considerations
-------------------------------------------------------------------------------
1122(d)(1)(i) Policies and procedures are instituted to
monitor any performance or other triggers and
events of default in accordance with the
transaction agreements.
-------------------------------------------------------------------------------
1122(d)(1)(ii) If any material servicing activities are
outsourced to third parties, policies and
procedures are instituted to monitor the
third party's performance and compliance with
such servicing activities.
-------------------------------------------------------------------------------
1122(d)(1)(iii) Any requirements in the transaction
agreements to maintain a back-up servicer for
the mortgage loans are maintained.
-------------------------------------------------------------------------------
1122(d)(1)(iv) A fidelity bond and errors and omissions
policy is in effect on the party
participating in the servicing function
throughout the reporting period in the amount
of coverage required by and otherwise in
accordance with the terms of the transaction
agreements.
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Cash Collection and Administration
-------------------------------------------------------------------------------
1122(d)(2)(i) Payments on mortgage loans are deposited into
the appropriate custodial bank accounts and
related bank clearing accounts no more than
two business days following receipt, or such
other number of days specified in the
transaction agreements.
-------------------------------------------------------------------------------
1122(d)(2)(ii) Disbursements made via wire transfer on
behalf of an obligor or to an investor are
made only by authorized personnel.
-------------------------------------------------------------------------------
1122(d)(2)(iii) Advances of funds or guarantees regarding
collections, cash flows or distributions, and
any interest or other fees charged for such
advances, are made, reviewed and approved as
specified in the transaction agreements.
-------------------------------------------------------------------------------
Exh. 14-1
-------------------------------------------------------------------------------
Applicable
Servicing
Servicing Criteria Criteria
-------------------------------------------------------------------------------
Reference Criteria
-------------------------------------------------------------------------------
1122(d)(2)(iv) The related accounts for the transaction,
such as cash reserve accounts or accounts
established as a form of
overcollateralization, are separately
maintained (e.g., with respect to commingling
of cash) as set forth in the transaction
agreements.
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1122(d)(2)(v) Each custodial account is maintained at a
federally insured depository institution as
set forth in the transaction agreements. For
purposes of this criterion, "federally
insured depository institution" with respect
to a foreign financial institution means a
foreign financial institution that meets the
requirements of Rule 13k-1(b)(1) of the
Securities Exchange Act.
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1122(d)(2)(vi) Unissued checks are safeguarded so as to
prevent unauthorized access.
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1122(d)(2)(vii) Reconciliations are prepared on a monthly
basis for all asset-backed securities related
bank accounts, including custodial accounts
and related bank clearing accounts. These
reconciliations are (A) mathematically
accurate; (B) prepared within 30 calendar
days after the bank statement cutoff date, or
such other number of days specified in the
transaction agreements; (C) reviewed and
approved by someone other than the person who
prepared the reconciliation; and (D) contain
explanations for reconciling items. These
reconciling items are resolved within 90
calendar days of their original
identification, or such other number of days
specified in the transaction agreements.
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Investor Remittances and Reporting
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1122(d)(3)(i) Reports to investors, including those to be
filed with the Commission, are maintained in
accordance with the transaction agreements
and applicable Commission requirements.
Specifically, such reports (A) are prepared
in accordance with timeframes and other terms
set forth in the transaction agreements; (B)
provide information calculated in accordance
with the terms specified in the transaction
agreements; (C) are filed with the Commission
as required by its rules and regulations; and
(D) agree with investors' or the trustee's
records as to the total unpaid principal
balance and number of mortgage loans serviced
by the Servicer.
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Exh. 14-2
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Applicable
Servicing
Servicing Criteria Criteria
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Reference Criteria
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1122(d)(3)(ii) Amounts due to investors are allocated and
remitted in accordance with timeframes,
distribution priority and other terms set
forth in the transaction agreements.
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1122(d)(3)(iii) Disbursements made to an investor are posted
within two business days to the Servicer's
investor records, or such other number of
days specified in the transaction agreements.
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1122(d)(3)(iv) Amounts remitted to investors per the
investor reports agree with cancelled checks,
or other form of payment, or custodial bank
statements.
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Pool Asset Administration
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1122(d)(4)(i) Collateral or security on mortgage loans is
maintained as required by the transaction
agreements or related mortgage loan documents.
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1122(d)(4)(ii) Mortgage loan and related documents are
safeguarded as required by the transaction
agreements
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1122(d)(4)(iii) Any additions, removals or substitutions to
the asset pool are made, reviewed and
approved in accordance with any conditions or
requirements in the transaction agreements.
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1122(d)(4)(iv) Payments on mortgage loans, including any
payoffs, made in accordance with the related
mortgage loan documents are posted to the
Servicer's obligor records maintained no more
than two business days after receipt, or such
other number of days specified in the
transaction agreements, and allocated to
principal, interest or other items (e.g.,
escrow) in accordance with the related
mortgage loan documents.
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1122(d)(4)(v) The Servicer's records regarding the mortgage
loans agree with the Servicer's records with
respect to an obligor's unpaid principal
balance.
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1122(d)(4)(vi) Changes with respect to the terms or status
of an obligor's mortgage loans (e.g., loan
modifications or re-agings) are made,
reviewed and approved by authorized personnel
in accordance with the transaction agreements
and related pool asset documents.
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Exh. 14-3
-------------------------------------------------------------------------------
Applicable
Servicing
Servicing Criteria Criteria
-------------------------------------------------------------------------------
Reference Criteria
-------------------------------------------------------------------------------
1122(d)(4)(vii) Loss mitigation or recovery actions (e.g.,
forbearance plans, modifications and deeds in
lieu of foreclosure, foreclosures and
repossessions, as applicable) are initiated,
conducted and concluded in accordance with
the timeframes or other requirements
established by the transaction agreements.
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1122(d)(4)(viii) Records documenting collection efforts are
maintained during the period a mortgage loan
is delinquent in accordance with the
transaction agreements. Such records are
maintained on at least a monthly basis, or
such other period specified in the
transaction agreements, and describe the
entity's activities in monitoring delinquent
mortgage loans including, for example, phone
calls, letters and payment rescheduling plans
in cases where delinquency is deemed
temporary (e.g., illness or unemployment).
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1122(d)(4)(ix) Adjustments to interest rates or rates of
return for mortgage loans with variable rates
are computed based on the related mortgage
loan documents.
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1122(d)(4)(x) Regarding any funds held in trust for an
obligor (such as escrow accounts): (A) such
funds are analyzed, in accordance with the
obligor's mortgage loan documents, on at
least an annual basis, or such other period
specified in the transaction agreements; (B)
interest on such funds is paid, or credited,
to obligors in accordance with applicable
mortgage loan documents and state laws; and
(C) such funds are returned to the obligor
within 30 calendar days of full repayment of
the related mortgage loans, or such other
number of days specified in the transaction
agreements.
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1122(d)(4)(xi) Payments made on behalf of an obligor (such
as tax or insurance payments) are made on or
before the related penalty or expiration
dates, as indicated on the appropriate bills
or notices for such payments, provided that
such support has been received by the
servicer at least 30 calendar days prior to
these dates, or such other number of days
specified in the transaction agreements.
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1122(d)(4)(xii) Any late payment penalties in connection with
any payment to be made on behalf of an
obligor are paid from the servicer's funds
and not charged to the obligor, unless the
late payment was due to the obligor's error
or omission.
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Exh. 14-4
-------------------------------------------------------------------------------
Applicable
Servicing
Servicing Criteria Criteria
-------------------------------------------------------------------------------
Reference Criteria
-------------------------------------------------------------------------------
1122(d)(4)(xiii) Disbursements made on behalf of an obligor
are posted within two business days to the
obligor's records maintained by the servicer,
or such other number of days specified in the
transaction agreements.
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1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible
accounts are recognized and recorded in
accordance with the transaction agreements.
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1122(d)(4)(xv) Any external enhancement or other support,
identified in Item 1114(a)(1) through (3) or
Item 1115 of Regulation AB, is maintained as
set forth in the transaction agreements.
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[NAME OF SELLER] [NAME OF
SUBSERVICER]
Date:__________________________________
By:____________________________________
Name:
Title:
Xxx. 00-0
