EXHIBIT 99.1
Exh. 99.1
EXECUTION COPY
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CWHEQ, INC.
Depositor
COUNTRYWIDE HOME LOANS, INC.
Sponsor and Master Servicer
CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 2007-A
Trust
THE BANK OF NEW YORK
Indenture Trustee
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SALE AND SERVICING AGREEMENT
Dated as of January 31, 2007
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REVOLVING HOME EQUITY LOAN ASSET BACKED NOTES,
SERIES 2007-A
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Table of Contents
Page
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ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01 Definitions...............................................................................1
Section 1.02 Other Terms...............................................................................1
Section 1.03 Rules of Construction.....................................................................1
Section 1.04 Interest Calculations.....................................................................3
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TAX TREATMENT
Section 2.01 Conveyance of Mortgage Loans; Retention of Obligation to Fund Advances Under
Credit Line Agreements.................................................................3
Section 2.02 Acceptance by Indenture Trustee...........................................................8
Section 2.03 Representations, Warranties, and Covenants Regarding the Master Servicer.................10
Section 2.04 Representations and Warranties Regarding the Mortgage Loans; Retransfer of
Certain Mortgage Loans................................................................12
Section 2.05 Covenants of the Depositor...............................................................14
Section 2.06 Transfers of Mortgage Loans at Election of the Holder of the Class R-1
Certificates..........................................................................15
Section 2.07 Retransfers and Transfer Deficiencies....................................................17
Section 2.08 Tax Reporting............................................................................17
Section 2.09 Representations and Warranties of the Depositor..........................................18
Section 2.10 Substitution and Repurchase Opinions.....................................................19
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 The Master Servicer......................................................................19
Section 3.02 Collection of Certain Mortgage Loan Payments; Establishment of Accounts..................23
Section 3.03 Deposits to Payment Account..............................................................25
Section 3.04 Maintenance of Hazard Insurance; Property Protection Expenses............................26
Section 3.05 Assumption and Modification Agreements...................................................26
Section 3.06 Realization Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage Loans;
Auction of Charged-off Mortgage Loans.................................................27
Section 3.07 Indenture Trustee to Cooperate...........................................................29
Section 3.08 Servicing Compensation; Payment of Certain Expenses by Master Servicer...................30
Section 3.09 Annual Statement as to Compliance........................................................30
Section 3.10 Access to Certain Documentation and Information Regarding the Mortgage Loans.............31
Section 3.11 Maintenance of Certain Servicing Insurance Policies......................................32
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01 Servicing Certificate....................................................................32
Section 4.02 Acknowledgement and Cooperation..........................................................34
Section 4.03 Optional Advances of the Master Servicer.................................................35
Section 4.04 Statements to Noteholders................................................................35
ARTICLE V
THE MASTER SERVICER, THE SPONSOR, AND THE DEPOSITOR
Section 5.01 Liability of the Sponsor, the Master Servicer, and the Depositor.........................36
Section 5.02 Merger or Consolidation of, or Assumption of the Obligations of, the Master
Servicer or the Depositor.............................................................36
Section 5.03 Limitation on Liability of the Master Servicer and Others................................36
Section 5.04 Master Servicer Not to Resign............................................................37
Section 5.05 Delegation of Duties.....................................................................38
Section 5.06 Indemnification by the Master Servicer...................................................38
ARTICLE VI
SERVICING TERMINATION
Section 6.01 Events of Servicing Termination..........................................................39
Section 6.02 Indenture Trustee to Act; Appointment of Successor.......................................41
Section 6.03 Notification to Noteholders and the Transferor...........................................42
ARTICLE VII
EXCHANGE ACT REPORTING
Section 7.01 Filing Obligations.......................................................................43
Section 7.02 Form 10-D Filings........................................................................43
Section 7.03 Form 8-K Filings.........................................................................44
Section 7.04 Form 10-K Filings........................................................................44
Section 7.05 Xxxxxxxx-Xxxxx Certification.............................................................45
Section 7.06 Form 15 Filing...........................................................................45
Section 7.07 Report on Assessment of Compliance and Attestation.......................................45
Section 7.08 Use of Subservicers and Subcontractors...................................................47
Section 7.09 Amendments...............................................................................48
ARTICLE VIII
TERMINATION
Section 8.01 Termination..............................................................................49
Section 8.02 Additional Termination Requirements......................................................50
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01 Amendment................................................................................50
Section 9.02 Governing Law............................................................................51
Section 9.03 Notices. 51
Section 9.04 Severability of Provisions...............................................................52
Section 9.05 Assignment...............................................................................52
Section 9.06 Third-Party Beneficiaries................................................................52
Section 9.07 Counterparts; Electronic Delivery........................................................52
Section 9.08 Effect of Headings and Table of Contents.................................................52
EXHIBIT A - MORTGAGE LOAN SCHEDULE...................................................................A-1
EXHIBIT B - FORM OF REQUEST FOR RELEASE..............................................................B-1
EXHIBIT C - FORM OF TRANSFER DOCUMENT................................................................C-1
EXHIBIT D - MONTHLY STATEMENT........................................................................D-1
EXHIBIT E-1 - FORM OF PERFORMANCE CERTIFICATION (SUBSERVICER)......................................E-1-1
EXHIBIT E-2 - FORM OF PERFORMANCE CERTIFICATION (INDENTURE TRUSTEE)................................E-2-1
EXHIBIT F - FORM OF SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE STATEMENT.........F-1
EXHIBIT G - XXXXXXXX-XXXXX CERTIFICATION (REPLACEMENT OF MASTER SERVICER)............................G-1
EXHIBIT H - FORM OF RELIANCE CERTIFICATE.............................................................H-1
This SALE AND SERVICING AGREEMENT, dated as of January 31, 2007, among
CWHEQ, INC., as depositor, COUNTRYWIDE HOME LOANS, INC., as sponsor and master
servicer, CWHEQ REVOLVING HOME EQUITY LOAN TRUST, SERIES 2007-A, and THE BANK OF
NEW YORK, as Indenture Trustee,
WITNESSETH THAT:
The parties agree as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01 Definitions.
Unless the context requires a different meaning, capitalized terms are
used in this Agreement as defined in the Master Glossary of Defined Terms
attached as Annex 1 to the Indenture dated as of the date hereof between CWHEQ
Revolving Home Equity Loan Trust, Series 2007-A and The Bank of New YORK, as
indenture trustee.
Section 1.02 Other Terms.
Defined terms used in this Agreement are sometimes defined after their
first use without a reference such as "(as hereinafter defined)."
Section 1.03 Rules of Construction.
Except as otherwise expressly provided in this Agreement or unless the
context clearly requires otherwise:
(a) Defined terms include, as appropriate, all genders and the plural
as well as the singular.
(b) References to designated articles, sections, subsections, exhibits,
and other subdivisions of this Agreement, such as "Section 6.12 (a)," refer to
the designated article, section, subsection, exhibit, or other subdivision of
this Agreement as a whole and to all subdivisions of the designated article,
section, subsection, exhibit, or other subdivision. The exhibits and other
attachments to this Agreement are a part of this Agreement. The words "herein,"
"hereof," "hereto," "hereunder," and other words of similar import refer to this
Agreement as a whole and not to any particular article, section, exhibit, or
other subdivision of this Agreement.
(c) Any term that relates to a document or a statute, rule, or
regulation includes any amendments, modifications, supplements, or any other
changes that may have occurred since the document, statute, rule, or regulation
came into being, including changes that occur after the date of this Agreement.
References to law are not limited to statutes. References to statutes include
any rules or regulations promulgated under them by a governmental authority
charged
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with the administration of the statute. Any reference to any person includes
references to its successors and assigns.
(d) Any party may execute any of the requirements under this Agreement
either directly or through others, and the right to cause something to be done
rather than doing it directly shall be implicit in every requirement under this
Agreement. Unless a provision is restricted as to time or limited as to
frequency, all provisions under this Agreement are implicitly available from
time to time.
(e) The term "including" and all its variations mean "including but not
limited to." Except when used in conjunction with the word "either," the word
"or" is always used inclusively (for example, the phrase "A or B" means "A or B
or both," not "either A or B but not both").
(f) A reference to "a [thing]" or "any [of a thing]" does not imply the
existence or occurrence of the thing referred to even though not followed by "if
any," and "any [of a thing]" is any and all of it. A reference to the plural of
anything as to which there could be either one or more than one does not imply
the existence of more than one (for instance, the phrase "the obligors on a
note" means "the obligor or obligors on a note"). "Until [something occurs]"
does not imply that it must occur, and will not be modified by the word
"unless." The word "due" and the word "payable" are each used in the sense that
the stated time for payment has passed. The word "accrued" is used in its
accounting sense, i.e., an amount paid is no longer accrued. In the calculation
of amounts of things, differences and sums may generally result in negative
numbers, but when the calculation of the excess of one thing over another
results in zero or a negative number, the calculation is disregarded and an
"excess" does not exist. Portions of things may be expressed as fractions or
percentages interchangeably. The word "shall" is used in its imperative sense,
as for instance meaning a party agrees to something or something must occur or
exist.
(g) All accounting terms used in an accounting context and not
otherwise defined, and accounting terms partly defined in this Agreement, to the
extent not completely defined, shall be construed in accordance with generally
accepted accounting principles in the United States. To the extent that the
definitions of accounting terms in this Agreement are inconsistent with their
meanings under generally accepted accounting principles, the definitions in this
Agreement shall control. Capitalized terms used in this Agreement without
definition that are defined in the Uniform Commercial Code of the relevant
jurisdiction are used in this Agreement as defined in that Uniform Commercial
Code.
(h) In the computation of a period of time from a specified date to a
later specified date or an open-ended period, the words "from" and "beginning"
mean "from and including," the word "after" means "from but excluding," the
words "to" and "until" mean "to but excluding," and the word "through" means "to
and including." Likewise, in setting deadlines or other periods, "by" means "on
or before." The words "preceding," "following," and words of similar import,
mean immediately preceding or following. References to a month or a year refer
to calendar months and calendar years.
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(i) Any reference to the enforceability of any agreement against a
party means that it is enforceable against the party in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, and other
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
Section 1.04 Interest Calculations.
All calculations of interest on the Asset Balance of a Mortgage Loan
under this Agreement are on a daily basis using a 365-day year. All calculations
of interest on the Notes are on the basis of the actual number of days in an
Interest Period and a year of 360 days. The calculation of the Servicing Fee is
on the basis of a 360-day year consisting of twelve 30-day months. All dollar
amounts calculated under this Agreement are rounded to the nearest cent with
one-half of one cent being rounded down.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TAX TREATMENT
Section 2.01 Conveyance of Mortgage Loans; Retention of Obligation to
Fund Advances Under Credit Line Agreements.
(a) Concurrently with the execution and delivery of this Agreement, the
Depositor hereby transfers to the Trust without recourse (subject to Sections
2.02 and 2.04) all of its right, title, and interest in
(1) each Initial Mortgage Loan, including its Asset Balance
(including all Additional Balances), the related Mortgage File, all
property that secures the Mortgage Loan, and all collections received
on it after the Cut-off Date (excluding payments due by the Cut-off
Date);
(2) property that secured an Initial Mortgage Loan that is
acquired by foreclosure or deed in lieu of foreclosure;
(3) the Depositor's rights under the Purchase Agreement;
(4) the Depositor's rights under the hazard insurance
policies;
(5) all rights under any guaranty executed in connection with
a Mortgage Loan;
(6) all other assets included or to be included in the Trust
for the benefit of the Secured Parties; and
(7) all proceeds of the foregoing.
This transfer to the Trust is to the Owner Trustee, on behalf of the Trust, and
each reference in this Agreement to this transfer shall be construed
accordingly. In addition, by the Closing Date, the Depositor shall cause the
Credit Enhancer to deliver the Policy to the Indenture Trustee for the benefit
of the Holders of the Insured Notes.
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(b) Additional Transfers; Conditions Precedent to Subsequent Additions.
(1) The Depositor may sell to the Trust Additional Home Equity
Loans on any Subsequent Closing Date designated by the Depositor by the
Latest Subsequent Closing Date. The Depositor shall notify the Owner
Trustee, the Indenture Trustee, the Credit Enhancer, and each Rating
Agency of its designation of a Subsequent Closing Date at least one
Business Day in advance. On each Subsequent Closing Date the Depositor
shall deliver a properly completed and executed Transfer Document to
the Owner Trustee and furnish to the Owner Trustee and the Indenture
Trustee
(A) the Officer's Certificate referred to in Section
2.01(b)(2)(H),
(B) the revised Mortgage Loan Schedule reflecting the
addition of the Additional Home Equity Loans covered by the
Transfer Document,
(C) an Opinion of Counsel relating to the Subsequent
Closing Date to the effect that a court in a bankruptcy
context addressing the transfer of the Additional Home Equity
Loans would characterize the transfer as a sale rather than as
a secured lending substantially in the form delivered on the
Closing Date and addressed to the same addressees,
(D) an Opinion of Counsel relating to the perfection
of security interest in the Additional Home Equity Loans
substantially in the form delivered on the Closing Date and
addressed to the same addressees, and
(E) an Opinion of Counsel to the effect that the
purchase of Additional Home Equity Loans will not result in
the imposition of the tax on prohibited transactions on the
Trust or contributions after the Startup Date, as defined in
Sections 860F(a)(2) and 860G(d) of the Code, respectively or
cause any REMIC created under the Trust Agreement to fail to
qualify as a REMIC,
and the Indenture Trustee shall pay, on behalf of the Trust, to the
order of the Depositor, from the Additional Loan Account, the purchase
price in an amount equal to the Cut-off Date Asset Balance specified in
the Transfer Document, up to the amount of funds remaining in that
Additional Loan Account.
Upon delivery of the Transfer Document and payment of the
purchase price, the Depositor hereby transfers to the Trust without
recourse (subject to Sections 2.02 and 2.04) all of its right, title,
and interest in each Additional Home Equity Loan identified in the
Transfer Document, including its Asset Balance (including all
Additional Balances) and all collections received on it after the
relevant Subsequent Cut-off Date (excluding payments due by the
Subsequent Cut-off Date) and all proceeds of the foregoing. This
transfer to the Trust is to the Owner Trustee, on behalf of the Trust,
and each reference in this Agreement to this transfer shall be
construed accordingly.
(2) The obligation of the Indenture Trustee on behalf of the
Trust to pay the purchase price from the relevant Additional Loan
Account for the benefit of the Depositor and the acceptance by the
Owner Trustee of the transfer of the Additional
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Home Equity Loans and the other property and rights relating to them on
the related Subsequent Closing Date are subject to the satisfaction of
each of the following conditions by the Subsequent Closing Date:
(A) as of the related Subsequent Closing Date,
neither the Sponsor nor the Depositor is insolvent nor shall
either of them be made insolvent by the transfer of the
Additional Home Equity Loans nor is either of them aware of
any pending insolvency;
(B) the addition shall not result in a material
adverse federal tax consequence to the Trust, the Transferor,
or the Noteholders; (C) the Subsequent Closing Date is not
after the Latest Subsequent Closing Date;
(D) neither the Depositor nor the Trust shall have
been advised in writing by any Rating Agency that the transfer
of the Additional Home Equity Loans would result in a
reduction or withdrawal of the Rating Agency's then current
rating of the Notes (without regard to the Policy).
(E) the Sponsor represents and warrants that on the
Subsequent Closing Date each of the representations and
warranties in Section 2.04(a) by virtue of repetition of
Section 3.02(a) of the Purchase Agreement (excluding clauses
(18), (30), (32), (33), and (34) of Section 3.02(a) of the
Purchase Agreement) are true with respect to the Additional
Home Equity Loans;
(F) the Sponsor represents and warrants that the
addition of the Additional Home Equity Loans will not result
in a significant variance as of the Subsequent Closing Date,
after taking into account the addition of the Additional Home
Equity Loans, from the Mortgage Loan pool characteristics
covered by the representations and warranties in Section
3.02(a)(18), (30), (32), (33), and (34) of the Purchase
Agreement;
(G) as of the relevant Subsequent Closing Date, the
Sponsor is not aware of any mechanics' or similar liens or
claims that have been filed for work, labor, or material
affecting the related Mortgaged Property that are, or may be,
liens prior or equal to the lien of the related mortgage,
except liens that are fully insured against by the title
insurance policy referred to in Section 3.02(a)(16) of the
Purchase Agreement; and
(H) the Depositor shall have delivered or caused the
Sponsor to deliver to the Owner Trustee, the Indenture
Trustee, and the Credit Enhancer an Officer's Certificate
confirming the satisfaction of each of these conditions
precedent.
Neither the Owner Trustee nor the Indenture Trustee need investigate or
otherwise verify compliance with these conditions, except for its
receipt of the documents
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specified to be delivered to it in Section 2.01(b)(1), and they may
rely on the Officer's Certificate specified in Section 2.01(b)(2)(H).
(c) Additional Balances; Future Fundings. Additional Balances shall be
part of the Asset Balance and are hereby transferred to the Trust on the Closing
Date for the Initial Mortgage Loans and on the relevant Subsequent Closing Date
for the Additional Home Equity Loans pursuant to this Section 2.01, and
therefore are part of the Trust property. Neither the Owner Trustee nor the
Trust nor the Indenture Trustee assumes the obligation under any Credit Line
Agreement that provides for the funding of future advances to the mortgagor
under it, and neither the Trust nor the Owner Trustee nor the Indenture Trustee
may fund these future advances.
(d) Delayed Delivery. In connection with the transfer under Section
2.01(a) by the Depositor, the Depositor shall effect delivery of the Mortgage
Loan Schedule to the Trust and the Indenture Trustee by the Closing Date and
delivery of the Mortgage Files to the Trust, and the Trust shall deliver them to
the Indenture Trustee,
(1) no later than the Closing Date, with respect to no less
than 50% of the Initial Mortgage Loans,
(2) no later than the twentieth day after the Closing Date,
with respect to no less than 40% of the Initial Mortgage Loans in
addition to those delivered on the Closing Date, and
(3) within thirty days following the Closing Date, with
respect to the remaining Initial Mortgage Loans.
In connection with the transfers by the Depositor under Section
2.01(b), the Depositor shall effect delivery of a revised Mortgage Loan Schedule
reflecting the addition of the Additional Home Equity Loans to the Indenture
Trustee following the relevant Subsequent Closing Date and of the delivery of
the relevant Mortgage Files to the Custodian,
(A) no later than the relevant Subsequent Closing
Date, with respect to no less than 10% of the relevant
Additional Home Equity Loans, and
(B) within twenty days following the relevant
Subsequent Closing Date, with respect to the remaining
relevant Additional Home Equity Loans.
In lieu of delivery of original documentation, the Depositor may
deliver documents that have been imaged optically on delivery of an opinion of
counsel to the Indenture Trustee and the Credit Enhancer that the imaged
documents are enforceable to the same extent as the originals and do not impair
the enforceability of the transfer to the Trust of the Mortgage Loans, if the
retention of the imaged documents in the delivered format will not result in a
reduction in the then current rating of the Notes without regard to the Policy.
(e) Xxxx Records. The Sponsor hereby confirms to the Owner Trustee and
the Indenture Trustee, on behalf of itself and any other Seller, that each
Seller has caused the portions of the Electronic Ledgers relating to the Initial
Mortgage Loans to be clearly and unambiguously marked, and has made the
appropriate entries in its general accounting records,
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to indicate that the Initial Mortgage Loans have been transferred to the Trust
at the direction of the Depositor. The Master Servicer hereby confirms to the
Owner Trustee and the Indenture Trustee that it has clearly and unambiguously
made appropriate entries in its general accounting records indicating that those
Initial Mortgage Loans constitute part of the Trust and are serviced by it on
behalf of the Trust in accordance with this Agreement.
By the relevant Subsequent Closing Date, the Sponsor shall cause the
portions of the Electronic Ledgers relating to the Additional Home Equity Loans
to be clearly and unambiguously marked, and shall make appropriate entries in
its general accounting records, to indicate that those Additional Home Equity
Loans have been transferred to the Trust at the direction of the Depositor. By
the relevant Subsequent Closing Date, the Master Servicer shall clearly and
unambiguously make appropriate entries in its general accounting records
indicating that those Additional Home Equity Loans constitute part of the Trust
and are serviced by it on behalf of the Trust in accordance with this Agreement.
(f) UCC Filings. The Depositor and the Trust agree (subject to Section
2.01(h)) to effect any actions and execute any documents necessary to perfect
and protect the Trust's, the Indenture Trustee's and the Secured Parties'
interests in each Cut-off Date Asset Balance and Additional Balances and their
proceeds, including filing all necessary Continuation Statements for the UCC1
Financing Statements filed in the State of Delaware (which shall have been filed
by the Closing Date) describing the Cut-off Date Asset Balances and Additional
Balances and naming the Depositor as debtor and the Trust as secured party or
naming the Trust as debtor and the Indenture Trustee as secured party and any
amendments to UCC1 Financing Statements required to reflect a change in the UCC
or in the name or organizational structure of the Depositor or the Trust or the
filing of any additional UCC1 Financing Statements due to the change in the
state of organization of the Depositor or the Trust (within 30 days of any event
necessitating the filing).
(g) Sponsor Rating Downgrade. If the long term senior unsecured
corporate debt rating of Countrywide Home Loans, Inc. falls below "BBB" by
Standard & Poor's or "Baa2" by Xxxxx'x, then as promptly as practicable but in
any case within 90 days of the event, the Master Servicer shall, at its expense,
either
(x) request that the Indenture Trustee deliver to it the
original Assignment of Mortgage previously delivered to the Indenture
Trustee pursuant to Section 2.01(d) and then record the Assignment of
Mortgage in favor of the Indenture Trustee (which may be a blanket
assignment if permitted by applicable law) in the appropriate real
property or other records,
(y) deliver to the Indenture Trustee an Opinion of Counsel
addressed to the Indenture Trustee and the Credit Enhancer to the
effect that recording is not required to protect the Indenture
Trustee's interest in the related Mortgage Loan or, in case a court
should recharacterize the sale of the Mortgage Loans as a financing, to
perfect a first priority Security Interest in favor of the Indenture
Trustee in the related Mortgage Loan, which Opinion of Counsel also
shall be reasonably acceptable to each of the Rating Agencies (as
evidenced in writing) and the Credit Enhancer, or
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(z) cause the MERS(R) System to indicate (and provide evidence
to the Indenture Trustee that it has done so) that the Mortgage Loans
have been assigned by the Trust to the Indenture Trustee in accordance
with this Agreement for the benefit of the Noteholders and the Credit
Enhancer by including (or deleting, in the case of Mortgage Loans that
are repurchased in accordance with this Agreement) in the MERS computer
files (a) the appropriate code that identifies the Indenture Trustee in
the field for identifying the assignee and (b) the appropriate code
that has been assigned to identify the Notes to the MERS(R) System in
the field "Pool Field" identifying the Notes issued in connection with
the Mortgage Loans.
(h) Sale Treatment. The transfer of the Mortgage Loans is a sale by
each Seller to the Depositor and by the Depositor to the Trust of all of each
Seller's and then all the Depositor's interest in the Mortgage Loans and other
property described above. From the time the Notes are issued until such time as
all or a portion of the Notes are sold to one or more unaffiliated parties, each
Seller will report the transfer of the Mortgage Loans and the related Additional
Balances to the Depositor as a transfer of assets in exchange for beneficial
interests in the form of asset-backed securities and servicing rights. If the
transfer were to be characterized as a transfer for security and not as a sale,
however, then the Depositor hereby grants to the Trust a Security Interest in
all of the Depositor's right, title, and interest in the Mortgage Loans whether
existing now or in the future, all monies due or to become due on the Mortgage
Loans, and all their proceeds; and this Agreement shall constitute a Security
Agreement under applicable law.
Section 2.02 Acceptance by Indenture Trustee.
(a) On the Closing Date, the Custodian shall execute and deliver to the
Depositor, the Master Servicer, and the Sponsor (with a copy to the Credit
Enhancer) the Initial Certification pursuant to the Custodial Agreement. If
Mortgage Files with respect to either Initial Mortgage Loans have been delivered
after the Closing Date or Additional Home Equity Loans have been delivered after
the Subsequent Closing Date pursuant to Section 2.01(d), the Custodian shall
execute and deliver to the Depositor, the Master Servicer, and the Sponsor (with
a copy to the Credit Enhancer) a Delay Delivery Certification pursuant to the
Custodial Agreement within the period specified in the Custodial Agreement.
Within 180 days after the Closing Date the Custodian shall deliver to the
Depositor, the Master Servicer, and the Sponsor (with a copy to the Credit
Enhancer) a Final Certification pursuant to the Custodial Agreement. The Sponsor
shall correct any defect noted in the Final Certification within 90 days of its
receipt and in no event later than 270 days after the Closing Date.
(b) Upon the satisfaction of the requirements of Section 2.07, all
interest of the Trust in a Mortgage Loan shall automatically be retransferred no
later than the 270th day after the Closing Date without recourse,
representation, or warranty to the Sponsor and the Asset Balance of the Mortgage
Loan shall be deducted from the Loan Pool Balance, if
(1) the Indenture Trustee does not receive the Mortgage File
for any Mortgage Loan as required by Section 2.01(d),
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(2) the time to correct any defect in the Mortgage Loan noted
on the Final Certification has expired,
(3) the Trust ever incurs any loss on the Mortgage Loan
because any document in its Mortgage File is defective, or
(4) an Assignment of Mortgage to the Indenture Trustee has not
been recorded in accordance with Section 2.01(g) and the Mortgage Loan
is not registered on the MERS(R) System.
Subject to the prior satisfaction of the requirements of Section 2.07,
the Owner Trustee shall execute any documents of transfer presented by the
Sponsor, without recourse, representation, or warranty, and take any other
actions reasonably requested by the Sponsor to effect the transfer by the Trust
of the Defective Mortgage Loan pursuant to this Section as promptly as
practical.
The sole remedy of the Secured Parties, the Transferor, the Owner
Trustee, and the Indenture Trustee against the Sponsor for the transfer of a
Defective Mortgage Loan to the Trust is the Sponsor's obligation to accept a
transfer of a Defective Mortgage Loan and to convey an Eligible Substitute
Mortgage Loan or to make a deposit of any Transfer Deposit Amount into the
Collection Account in accordance with Section 2.07.
Promptly following the transfer of any Defective Mortgage Loan from the
Trust pursuant to this Section or Section 2.07, the Master Servicer shall amend
the Mortgage Loan Schedule, deliver the amended Mortgage Loan Schedule to the
Indenture Trustee, and make appropriate entries in its general account records
to reflect the transfer. Following the retransfer, the Master Servicer shall
appropriately xxxx its records to indicate that it is no longer servicing the
Mortgage Loan on behalf of the Trust. The Sponsor shall appropriately xxxx its
Electronic Ledger and make appropriate entries in its general account records to
reflect the transfer promptly following the transfer.
(c) The Sponsor shall deliver to the Indenture Trustee any documents
required to be held by the Indenture Trustee in accordance with Section 2.01
with respect to any Eligible Substitute Mortgage Loans. The Master Servicer
shall determine the Transfer Deposit Amount in any Collection Period during
which the Sponsor substitutes Eligible Substitute Mortgage Loans and the Sponsor
shall deposit that amount in the Collection Account at the time of substitution.
All amounts received on the Eligible Substitute Mortgage Loans during the
Collection Period in which the circumstances giving rise to their transfer to
the Trust occur shall not be a part of the Trust and shall not be deposited by
the Master Servicer in the Collection Account. All amounts received on a removed
Defective Mortgage Loan during the Collection Period in which the circumstances
giving rise to its transfer to the Trust occur shall be a part of the Trust and
shall be deposited by the Master Servicer in the Collection Account. An Eligible
Substitute Mortgage Loan will be subject to the terms of this Agreement in all
respects when transferred to the Trust, and the Sponsor hereby makes the
representations, warranties, and covenants in Section 2.04 with respect to the
Eligible Substitute Mortgage Loan as of the date of substitution.
9
(d) The Custodian shall retain possession of each Mortgage File on
behalf of the Indenture Trustee in accordance with the Custodial Agreement. The
Master Servicer shall promptly deliver to the Indenture Trustee the originals of
any other documents constituting the Mortgage File coming into its possession on
their execution or receipt. Any documents to be delivered to the Indenture
Trustee under this Agreement may be delivered to the Custodian acting on behalf
of the Indenture Trustee.
(e) If (x) the credit ratings of the Sponsor are reduced to below
"Baa1" by Xxxxx'x or "BBB+" by Standard & Poor's (a "Stamping Trigger Event")
and (y) the Credit Enhancer so instructs the Sponsor, the Indenture Trustee, and
the Custodian in writing, the Sponsor shall cause the Custodian, within 30 days
of such written instruction by the Credit Enhancer, to stamp on the blank
endorsement on each loan agreement the following: "CWHEQ Revolving Home Equity
Loan Trust, Series 0000-X, Xxx Xxxx xx Xxx Xxxx, as Indenture Trustee." After
the occurrence of a Stamping Trigger Event and after the earlier of (i) receipt
of confirmation from the Sponsor that the endorsements have been completed by
the Custodian as outlined above and (ii) 60 days after the Credit Enhancer
instructs the Custodian to stamp the loan agreements in accordance with this
Section 2.02(e), the Credit Enhancer shall have the right to inspect the loan
agreements upon 5 day's written notice to the Custodian, the Indenture Trustee
and the Sponsor. If the Custodian fails to stamp the loan agreements in
accordance with the requirements of this Section 2.02(e), the Custodian will
make the Mortgage Loans available for stamping by the Credit Enhancer or its
agent under the supervision (but not the direction) of the Custodian. All costs
in connection with any stamping in accordance with this Section 2.02(e) shall be
at the sole expense of the Credit Enhancer and shall not be charged to the
Sponsor, the Trust or the Custodian. If a Mortgage Loan is released from the
lien of the Indenture in accordance with the terms thereof the stamping shall be
removed from the related loan agreement at the sole expense of the Credit
Enhancer.
Section 2.03 Representations, Warranties, and Covenants Regarding the
Master Servicer.
The Master Servicer represents and warrants to the Indenture Trustee
and the Credit Enhancer that as of the Closing Date:
(1) The Master Servicer is a New York corporation, validly
existing and in good standing under the laws of the State of New York,
and has the corporate power to own its assets and to transact the
business in which it is currently engaged. The Master Servicer is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of its business 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 other) of
the Master Servicer.
(2) The Master Servicer has the power and authority to make,
execute, deliver, and perform this Agreement and all of the
transactions contemplated under this Agreement, and has taken all
necessary corporate action to authorize the execution, delivery, and
performance of this Agreement. When executed and delivered, this
10
Agreement will constitute a valid and legally binding obligation of the
Master Servicer enforceable in accordance with its terms.
(3) The Master Servicer is not required to obtain the consent
of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority,
bureau, or agency in connection with the execution, delivery,
performance, validity, or enforceability of this Agreement, except for
consents, licenses, approvals or authorizations, or registrations or
declarations that have been obtained or filed, as the case may be,
before the Closing Date.
(4) The execution, delivery, and performance of this Agreement
by the Master Servicer will not violate any existing law or regulation
or any order or decree of any court applicable to the Master Servicer
or the certificate of incorporation or bylaws of the Master Servicer,
or constitute a material breach of any mortgage, indenture, contract,
or other agreement to which the Master Servicer is a party or by which
the Master Servicer may be bound.
(5) No litigation or administrative proceeding of or before
any court, tribunal, or governmental body is currently pending, or to
the knowledge of the Master Servicer threatened, against the Master
Servicer or any of its properties or with respect to this Agreement,
the Indenture, or the Notes that in the opinion of the Master Servicer
has a reasonable likelihood of resulting in a material adverse effect
on the transactions contemplated by the Transaction Documents.
(6) If any Mortgage Loan has been registered on the MERS(R)
System, the Master Servicer is a member of MERS in good standing.
The Master Servicer covenants that it will fully furnish, in accordance
with the Fair Credit Reporting Act and its implementing regulations, accurate
and complete information (i.e., favorable and unfavorable) on its credit files
for the related Mortgagor for each Mortgage Loan to Equifax, Experian, and Trans
Union Credit Information Company on a monthly basis.
The representations, warranties, and covenants in this Section shall
survive the transfer of the Mortgage Loans to the Trust. Upon discovery of a
breach of any representation, warranty, or covenant that materially and
adversely affects the interests of the Transferor, the Noteholders, or the
Credit Enhancer, the person discovering the breach shall give prompt notice to
the other parties and to the Credit Enhancer. The Master Servicer shall cure in
all material respects any breach of any representation, warranty, or covenant
within 90 days of becoming aware of it or, if the Mortgage Loan represents a
"qualified mortgage" within the meaning of Section 860(a)(3) of the Code (but
without regard to the rule in Treasury Regulation ss. 1.860G-2(f)(2) that treats
a defective obligation as a qualified mortgage, or any substantially similar
successor provision) and if a Responsible Officer of the Indenture Trustee
consents, any longer period specified in the consent.
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Section 2.04 Representations and Warranties Regarding the Mortgage
Loans; Retransfer of Certain Mortgage Loans.
(a) The Sponsor by this reference repeats and incorporates in this
Agreement each representation and warranty made by it (as a Seller) in Section
3.02(a) and (b) of the Purchase Agreement (other than Section 3.02(a)(1) and
(2)) to the Indenture Trustee, the Credit Enhancer, and the Trust and, in
addition, represents and warrants to the Indenture Trustee, the Credit Enhancer,
and the Trust that as of the Cut-off Date, unless specifically stated otherwise:
(1) As of the Closing Date with respect to the Initial
Mortgage Loans, the relevant Subsequent Closing Date with respect to
any Additional Home Equity Loans, or the applicable date of
substitution with respect to any Eligible Substitute Mortgage Loan,
this Agreement constitutes a valid and legally binding obligation of
the Sponsor, enforceable against the Sponsor in accordance with its
terms.
(2) As of the Closing Date with respect to the Initial
Mortgage Loans, the relevant Subsequent Closing Date with respect to
any Additional Home Equity Loans, or the applicable date of
substitution with respect to any Eligible Substitute Mortgage Loan,
either
(A) the Purchase Agreement constitutes a valid
transfer to the Depositor of all right, title, and interest of
the Sellers in the applicable Mortgage Loans, all collections
received from the Mortgage Loans after the Cut-off Date
(excluding payments due by the Cut-off Date), all proceeds of
the applicable Mortgage Loans, and any funds from time to time
deposited in the Collection Account and in the Payment Account
and all other property specified in Section 2.01(a) or (b), as
applicable, and this Agreement constitutes a valid transfer to
the Trust of the foregoing property such that, on execution of
this Agreement, it is owned by the Trust free of all liens and
other encumbrances, and is part of the corpus of the Trust
conveyed to the Trust by the Depositor, and upon payment for
the Additional Balances, the Purchase Agreement and this
Agreement will constitute a valid transfer to the Trust of all
right, title, and interest of the Sellers in the Additional
Balances, all monies due or to become due on them, all
proceeds of the Additional Balances, and all other property
specified in Section 2.01(a) relating to the Additional
Balances free of all liens and other encumbrances, or
(B) the Purchase Agreement or this Agreement, as
appropriate, constitutes a Grant of a Security Interest to the
Owner Trustee on behalf of the Trust in the property described
in clause (A) above and the Indenture constitutes a Grant of a
Security Interest to the Indenture Trustee in the Collateral.
The Indenture Trustee has a first priority perfected Security
Interest in the Collateral, subject to the effect of Section
9-315 of the UCC with respect to collections on the Mortgage
Loans that are deposited in the Collection Account in
accordance with the next to last paragraph of Section 3.02(b),
and if this Agreement constitutes the Grant of a Security
Interest in the property
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described in clause (A) above to the Trust, the Trust has a
first priority perfected Security Interest in the property,
subject to the same limitations. This Security Interest is
enforceable as such against creditors of and purchasers from
the Trust, the Depositor, and each Seller.
(b) If the substance of any representation and warranty in this Section
made to the best of the Sponsor's knowledge or as to which the Sponsor has no
knowledge is inaccurate and the inaccuracy materially and adversely affects the
interest of the Trust, the Noteholders or the Credit Enhancer in the related
Mortgage Loan then, notwithstanding that the Sponsor did not know the substance
of the representation and warranty was inaccurate at the time the representation
or warranty was made, the inaccuracy shall be a breach of the applicable
representation or warranty.
(c) The representations and warranties in this Section shall survive
delivery of the respective Mortgage Files to the Custodian pursuant to the
Custodial Agreement and the termination of the rights and obligations of the
Master Servicer pursuant to Section 5.04 or 6.02. If the Sponsor, the Depositor,
the Master Servicer, the Credit Enhancer, or a Responsible Officer of the
Indenture Trustee discovers a breach of any of the foregoing representations and
warranties, without regard to any limitation concerning the knowledge of the
Sponsor, that materially and adversely affects the interests of the Trust, the
Indenture Trustee under the Indenture, the Noteholders, or the Credit Enhancer
in the Mortgage Loan, the party discovering the breach shall give prompt notice
to the other parties and the Credit Enhancer.
(d) The Sponsor shall use all reasonable efforts to cure in all
material respects any breach of any of the foregoing representations and
warranties (other than a breach of the representation and warranty in Section
2.04 by virtue of the repetition of Section 3.02(a)(5) of the Purchase
Agreement) within 90 days of becoming aware of it or, not later than the
Business Day before the Payment Date in the month following the Collection
Period in which the cure period expired (or any later date that the Indenture
Trustee and the Credit Enhancer consent to), all interest of the Trust in the
Defective Mortgage Loan shall, subject to the satisfaction of the requirements
of Section 2.07, automatically be retransferred without recourse,
representation, or warranty to the Sponsor and the Asset Balance of the Mortgage
Loan shall be deducted from the Loan Balance.
The cure for any breach of a representation and warranty relating to
the characteristics of the Mortgage Loans in the aggregate shall be a repurchase
of or substitution for only the Mortgage Loans necessary to cause the
characteristics to comply with the related representation and warranty.
Subject to the prior satisfaction of the requirements of Section 2.07,
the Owner Trustee shall execute any documents of transfer presented by the
Sponsor, without recourse, representation, or warranty, and take any other
actions reasonably requested by the Sponsor to effect the transfer by the Trust
of the Defective Mortgage Loan pursuant to this Section as promptly as
practical.
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Promptly following the transfer of any Defective Mortgage Loan from the
Trust pursuant to this Section, the Master Servicer shall amend the Mortgage
Loan Schedule, deliver the amended Mortgage Loan Schedule to the Indenture
Trustee, and make appropriate entries in its general account records to reflect
the transfer. Following the retransfer, the Master Servicer shall appropriately
xxxx its records to indicate that it is no longer servicing the Mortgage Loan on
behalf of the Trust. The Sponsor shall appropriately xxxx its Electronic Ledger
and make appropriate entries in its general account records to reflect the
transfer promptly following the transfer.
(e) The sole remedy of the Secured Parties, the Indenture Trustee on
behalf of Secured Parties, and the Owner Trustee against the Sponsor for the
breach of a representation or warranty (other than the representation and
warranty in Section 2.04(a) by virtue of the repetition of Section 3.02(a)(5) of
the Purchase Agreement) is the Sponsor's obligation to accept a transfer of a
Mortgage Loan as to which a breach has occurred and is continuing and to make
any required deposit in the Collection Account or to substitute an Eligible
Substitute Mortgage Loan.
(f) If the representation and warranty in Section 2.04(a) by virtue of
the repetition of Section 3.02(a)(5) of the Purchase Agreement is breached, the
transfer of the affected Mortgage Loans to the Trust shall be void and the
Sponsor shall pay to the Trust the sum of (i) the amount of the related Asset
Balances, plus accrued interest on each Asset Balance at the Loan Rate to the
date of payment and (ii) the amount of any loss or expense incurred by the
Transferor, the Noteholders, the Credit Enhancer, or the Trust with respect to
the affected Mortgage Loans. The Indenture Trustee may enforce the Sponsor's
obligations under this Section in its own right or as the owner of the Trust's
right to seek enforcement as the assignee of the Trust's rights under this
Agreement pursuant to the Indenture.
(g) A breach of any one of the representations in Sections 3.02(b) of
the Purchase Agreement will be considered to materially adversely affect the
interests of the Noteholders.
(h) The Sponsor shall defend and indemnify the Indenture Trustee, the
Owner Trustee, and the Secured Parties against all reasonable costs and
expenses, and all losses, damages, claims, and liabilities, including reasonable
fees and expenses of counsel and the amount of any settlement entered into with
the consent of the Sponsor (this consent not to be unreasonably withheld), that
may be asserted against or incurred by any of them as a result of any
third-party action arising out of any breach of a representation and warranty.
Section 2.05 Covenants of the Depositor.
The Depositor covenants that:
(a) Security Interests. Except for the transfer under this Agreement,
the Depositor will not transfer any Mortgage Loan to any other person, or create
or suffer to exist any Lien on any Mortgage Loan or any interest in one, whether
existing now or in the future; the Depositor will notify the Indenture Trustee
of the existence of any Lien on any Mortgage Loan immediately on its discovery;
and the Depositor will defend the right, title, and interest of the Trust in the
Mortgage Loans, whether existing now or in the future, against all claims of
third
14
parties claiming through the Depositor. Nothing in this Section shall prohibit
the Depositor from suffering to exist on any Mortgage Loan any Liens for
municipal or other local taxes and other governmental charges if the taxes or
governmental charges are not due at the time or if the Depositor is contesting
their validity in good faith by appropriate proceedings and has set aside on its
books adequate reserves with respect to them.
(b) Negative Pledge. The Depositor shall not transfer or grant a
Security Interest in the Transferor Certificates except in accordance with
Section 3.10 of the Trust Agreement.
(c) Additional Indebtedness. So long as the Notes are outstanding the
Depositor will not incur any debt other than debt that (i) is non-recourse to
the assets of the Depositor other than the mortgage loans specifically pledged
as security for the debt, (ii) is subordinated in right of payment to the rights
of the Noteholders, or (iii) is assigned a rating by each of the Rating Agencies
that is the same as the then current rating of the Notes.
(d) Downgrading. The Depositor will not engage in any activity that
would result in a downgrading of the Notes without regard to the Policy.
(e) Amendment to Certificate of Incorporation. The Depositor will not
amend its Certificate of Incorporation or state of incorporation without prior
notice to the Rating Agencies, the Indenture Trustee, and the Credit Enhancer.
Section 2.06 Transfers of Mortgage Loans at Election of the Holder of
the Class R-1 Certificates.
Subject to the conditions below, the holder of the Class R-1
Certificates may require the transfer of Mortgage Loans from the Trust to the
holder of the Class R-1 Certificates as of the close of business on a Payment
Date (the "Transfer Date") in an amount not in excess of the Net Draws. In
connection with any transfer, the related Net Draws shall be reduced by the
aggregate Asset Balances as of the Transfer Date of the Mortgage Loans
transferred. On the fifth Business Day (the "Transfer Notice Date") before the
Transfer Date designated in the notice, the holder of the Class R-1 Certificates
shall give the Owner Trustee, the Indenture Trustee, the Master Servicer, and
the Credit Enhancer a notice of the proposed transfer that contains a list of
the Mortgage Loans to be transferred. These transfers of Mortgage Loans shall be
permitted if the following conditions are satisfied:
(1) No Rapid Amortization Event has occurred,
(2) On the Transfer Date
(A) the Transferor Interest (after giving effect to
the removal of the Mortgage Loans proposed to be transferred)
exceeds
(B) the Required Transferor Subordinated Amount.
(3) The transfer of any Mortgage Loans on any Transfer Date
during the Managed Amortization Period shall not, in the reasonable
belief of the holder of the Class R-1 Certificates, cause a Rapid
Amortization Event to occur or an event that with notice or lapse of
time or both would constitute a Rapid Amortization Event.
15
(4) By the Transfer Date, the holder of the Class R-1
Certificates shall have delivered to the Indenture Trustee a revised
Mortgage Loan Schedule, reflecting the proposed transfer and the
Transfer Date, and the Master Servicer shall have marked the Electronic
Ledger to show that the Mortgage Loans transferred to the holder of the
Class R-1 Certificates are no longer owned by the Trust.
(5) The holder of the Class R-1 Certificates shall represent
and warrant that the Mortgage Loans to be removed from the Trust were
selected randomly.
(6) In connection with each transfer of Mortgage Loans
pursuant to this Section, each Rating Agency and the Credit Enhancer
shall have received by the related Transfer Notice Date notice of the
proposed transfer of Mortgage Loans and, before the Transfer Date, each
Rating Agency shall have notified in writing the holder of the Class
R-1 Certificates and the Indenture Trustee, and the Credit Enhancer
that the transfer of Mortgage Loans would not result in a reduction or
withdrawal of its then current rating of the Notes without regard to
the Policy.
(7) The holder of the Class R-1 Certificates shall have
delivered to the Owner Trustee, the Indenture Trustee, and the Credit
Enhancer an Officer's Certificate certifying that the items in
subparagraphs (1) through (6) inclusive, (8) and (9), have been
performed or are true, as the case may be. The Owner Trustee and the
Indenture Trustee may conclusively rely on the Officer's Certificate,
shall have no duty to make inquiries with regard to the matters in it,
and shall incur no liability in so relying.
(8) an Opinion of Counsel is furnished to the Indenture
Trustee that the transfer will not result in a tax on any REMIC created
under the Trust Agreement pursuant to the REMIC Provisions or cause any
REMIC created under the Trust Agreement to fail to qualify as a REMIC
at any time that any Securities are outstanding.
(9) On or after the Stepdown Date, the holder of the Class R-1
Certificates shall pay the purchase price of any transferred Mortgage
Loan allocated to the Transferor Interest for the benefit of the Class
C Certificates subject to the terms of the Trust Agreement.
Upon receiving the requisite information from the holder of the Class
R-1 Certificates, the Master Servicer shall perform in a timely manner those
acts required of it, as specified above. Upon satisfaction of the above
conditions, on the Transfer Date the Indenture Trustee shall effect delivery to
the holder of the Class R-1 Certificates the Mortgage File for each Mortgage
Loan being so transferred, and the Indenture Trustee shall execute and deliver
to the holder of the Class R-1 Certificates any other documents prepared by the
holder of the Class R-1 Certificates reasonably necessary to transfer the
Mortgage Loans to the holder of the Class R-1 Certificates. This transfer of the
Trust's interest in Mortgage Loans shall be without recourse, representation, or
warranty by the Indenture Trustee or the Trust to the holder of the Class R-1
Certificates.
16
Section 2.07 Retransfers and Transfer Deficiencies.
(a) The Indenture Trustee shall determine if reducing the Loan Pool
Balance by the Asset Balance of any retransferred Mortgage Loan pursuant to
Section 2.02(b) or 2.04(d) would cause a Transfer Deficiency. If so, the
Indenture Trustee shall notify the Sponsor of the deficiency, and the Sponsor
shall transfer to the Trust within five Business Days (but only if the transfer
occurs within two years of the Closing Date) Eligible Substitute Mortgage Loans
or deposit into the Collection Account an amount in immediately available funds
equal to the amount of the Transfer Deficiency reduced by the Asset Balance of
any Eligible Substitute Mortgage Loans transferred to the Trust (the "Transfer
Deposit Amount").
(b) The Sponsor shall deliver to the Indenture Trustee any documents
required to be held by the Indenture Trustee in accordance with Section 2.01
with respect to any Eligible Substitute Mortgage Loans.
(c) All amounts received on Eligible Substitute Mortgage Loans during
the Collection Period in which the circumstances giving rise to their transfer
to the Trust occur shall not be a part of the Trust and shall not be deposited
by the Master Servicer in the Collection Account.
All amounts received on a removed Defective Mortgage Loan during the
Collection Period in which the circumstances giving rise to its transfer to the
Trust occur shall be a part of the Trust and shall be deposited by the Master
Servicer in the Collection Account.
(d) An Eligible Substitute Mortgage Loan will be subject to the terms
of this Agreement in all respects when transferred to the Trust, and the Sponsor
hereby makes the representations, warranties, and covenants in Section 2.04 with
respect to the Eligible Substitute Mortgage Loan as of the date of its transfer
to the Trust.
(e) Promptly following the transfer of any Eligible Substitute Mortgage
Loan to the Trust pursuant to this Section, the Master Servicer shall amend the
Mortgage Loan Schedule, deliver the amended Mortgage Loan Schedule to the
Indenture Trustee, and make appropriate entries in its general account records
to reflect the transfer. The Sponsor shall appropriately xxxx its Electronic
Ledger and make appropriate entries in its general account records to reflect
the transfer promptly following the transfer.
Section 2.08 Tax Reporting.
(a) The Administrator pursuant to the Administration Agreement will
prepare and file all tax reports required under this Agreement on behalf of the
Trust, including tax reporting and withholding required by Sections 1445 and
6050J of the Code with respect to foreclosures and abandonments, the tax
reporting required by Section 6050H of the Code with respect to the receipt of
mortgage interest from individuals, and any tax reporting required by Section
6050P of the Code with respect to the cancellation of indebtedness by certain
financial entities, by preparing any tax and information returns required and
delivering them to the Owner Trustee for filing.
(b) The Indenture Trustee will act as agent on behalf of the Trust with
respect to certain tax matters pursuant to Section 9.06 of the Indenture.
17
(c) If any tax is imposed on "prohibited transactions" of any REMIC as
defined in Section 860F(a)(2) of the Code, on the "net income from foreclosure
property" of a REMIC as defined in section 860G(c) of the Code, on any
contribution to a REMIC after the Startup Day pursuant to Section 860G(d) of the
Code, or any other tax is imposed on any REMIC (including any federal, state, or
local tax), the tax shall be paid by
o the Indenture Trustee, if the tax arises out of a breach by
the Indenture Trustee of any of its obligations described in Section
9.06(b) of the Indenture,
o the Master Servicer, in the case of any minimum tax imposed
on any REMIC pursuant to Sections 23153 and 24874 of the California
Revenue and Taxation Code, or if the tax arises out of a breach by the
Master Servicer or a Seller of any of their obligations under any
Transaction Document,
o the Seller, if the tax arises out of the Seller's obligation
to repurchase a Mortgage Loan pursuant to Section 2.02(b) or 2.04(d),
or
o in all other cases, or if any liable party fails to honor
its obligations to pay the tax as provided above, the tax will be paid
FIRST, from amounts otherwise to be distributed on
the Class C Certificates pursuant to the Trust Agreement,
SECOND, from amounts otherwise to be distributed on
the Class R-1 Certificates pursuant to the Trust Agreement,
and
THIRD, from amounts otherwise to be distributed on
the Notes as provided in the Indenture.
Section 2.09 Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Indenture Trustee on
behalf of the Noteholders and the Credit Enhancer as follows:
(1) This Agreement constitutes a valid and legally binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms.
(2) Immediately before the sale and assignment by the
Depositor to the Trust of each Mortgage Loan, the Depositor was the
sole beneficial owner of each Mortgage Loan (insofar as the title was
conveyed to it by the Sellers) subject to no prior lien, claim,
participation interest, mortgage, Security Interest, pledge, charge, or
other encumbrance or other interest of any nature.
(3) As of the Closing Date with respect to the Initial
Mortgage Loans, the relevant Subsequent Closing Date with respect to
any Additional Home Equity Loans, or the applicable date of
substitution with respect to any Eligible Substitute Mortgage Loan, the
Depositor has transferred all right, title, and interest in the
Eligible Substitute Mortgage Loan to the Trust.
(4) The Depositor has not transferred the Mortgage Loans to
the Trust with any intent to hinder, delay, or defraud any of its
creditors.
18
Section 2.10 Substitution and Repurchase Opinions.
Notwithstanding any contrary provision of this Agreement, with respect
to any Mortgage Loan that is not in default or as to which default is not
imminent, no repurchase or substitution pursuant to Sections 2.02, 2.03, 2.04,
or 2.06 shall be made unless the party repurchasing or substituting delivers to
the Indenture Trustee an Opinion of Counsel to the effect that the repurchase or
substitution would not result in the imposition of the tax on prohibited
transactions of the Trust or contributions after the Startup Date, as defined in
Sections 860F(a)(2) and 860G(d) of the Code, respectively or cause any REMIC
created under the Trust Agreement to fail to qualify as a REMIC at any time that
any Notes or Certificates are outstanding. Any Mortgage Loan whose repurchase or
substitution was delayed pursuant to this Section shall be repurchased or
substituted for upon the earlier of the occurrence of a default or imminent
default with respect to the Mortgage Loan and satisfaction of the requirements
of this Section.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 The Master Servicer.
(a) The Master Servicer shall service and administer the Mortgage Loans
in a manner consistent with the terms of this Agreement and with general
industry practice and shall have full power and authority, acting alone or
through a subservicer,
o to execute and deliver, on behalf of the Secured Parties,
the Trust, and the Indenture Trustee, customary consents or waivers and
other instruments and documents,
o to consent to transfers of any Mortgaged Property and
assumptions of the Mortgage Notes and related Mortgages (but only in
the manner provided in this Agreement),
o to collect any Insurance Proceeds, Charged-off Loan
Proceeds, and other Liquidation Proceeds, and
o to effectuate foreclosure or other conversion of the
ownership of the Mortgaged Property securing any Mortgage Loan.
The Master Servicer shall remain responsible to the parties to this
Agreement and the Credit Enhancer for its obligations under this Agreement. Any
amounts received by any subservicer on a Mortgage Loan shall be considered to
have been received by the Master Servicer whether or not actually received by
it. Without limiting the generality of the foregoing, the Master Servicer may
execute and deliver, on behalf of itself, the Noteholders, and the Indenture
Trustee, or any of them, any instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Properties, in
each case to the extent not inconsistent with this Agreement. Notwithstanding
anything herein to the contrary, the Master Servicer shall not make or permit
any modification, waiver, or amendment of any term of any Mortgage Loan that
would cause any REMIC created under the Trust Agreement to fail to qualify as a
REMIC or result in the imposition of any tax under Section 860F(a) or Section
860G of the Code.
19
At the request of a Servicing Officer, the Indenture Trustee shall
furnish the Master Servicer with any powers of attorney and other documents
appropriate to enable the Master Servicer to carry out its servicing and
administrative duties under this Agreement.
(b) The Master Servicer in this capacity may consent to the placing of
a lien senior to that of any mortgage on the related Mortgaged Property, if
(1) the new senior lien secures a mortgage loan that
refinances an existing first mortgage loan; and
(2) either
(A) the Loan-to-Value Ratio of the new senior
mortgage loan (without taking into account any closing costs
that may be financed by the new mortgage loan) is equal to or
less than the Loan-to-Value Ratio of the first mortgage loan
to be replaced (for purposes of calculating the Loan-to-Value
Ratio, the Valuation of the Mortgaged Property will be
measured by the lesser of (A) the Valuation of the Mortgaged
Property as of the Cut-off Date and (B) the Valuation of the
Mortgaged Property as of the date of the refinancing
referenced in clause (1)) or
(B) the Combined Loan-to-Value Ratio of the new
mortgage loan (without taking into account any closing costs
that may be financed by the new mortgage loan) and the
existing Mortgage Loan is equal to less than 70% (for purposes
of calculating the Combined Loan-to-Value Ratio, the Valuation
of the Mortgaged Property will be measured as the lesser of
(A) the Valuation of the Mortgage Loan as of the Cut-off Date
and (B) the Valuation of the Mortgage Loan as of the date of
the refinancing referenced in clause (1)).
The aggregate Asset Balance of all the Mortgage Loans with respect to which the
senior lien may be so modified may not exceed 50% of the Original Note Principal
Balance.
(c) The Master Servicer may also, without approval from the Rating
Agencies or the Credit Enhancer, increase the Credit Limit on any Mortgage Loan
at any time if
(1) a new appraisal is obtained and the Combined Loan-to-Value
Ratio of the Mortgage Loan after giving effect to the increase is less
than or equal to the Combined Loan-to-Value Ratio of the Mortgage Loan
as of the Cut-off Date,
(2) the increases are consistent with the Master Servicer's
underwriting policies, and
(3) either:
(A) the Credit Line Agreement allows the mortgagee to
unilaterally increase the Credit Limit;
(B) the Credit Limit increase is made within 90 days
of the Cut-off Date; or
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(C) the Sponsor purchases the Mortgage Loan from the
Trust in the manner described below for rate reduction loans.
(d) In addition, the Master Servicer may increase the Credit Limits on
Mortgage Loans having aggregate Asset Balances of up to an additional 5.0% of
the Original Note Principal Balance at any time, if
(1) the increase does not cause the Combined Loan-to-Value
Ratio of the Mortgage Loans to exceed 100% or the Loan-to-Value of the
particular mortgage loan to exceed 100%,
(2) the increase in the Credit Limit of a Mortgage Loan does
not cause the Combined Loan-to-Value Ratio of the Mortgage Loan to
exceed 100%,
(3) the increase in the Credit Limit of a Mortgage Loan does
not cause the Combined Loan-to-Value Ratio of the Mortgage Loan to
increase by more than 25% (for example, a Combined Loan-to-Value Ratio
of 50% can be increased to 75%, a Combined Loan-to-Value Ratio of 60%
can be increased to 85%, and so forth),
(4) the increase is consistent with the Master Servicer's
underwriting policies, and
(5) either:
(A) the Credit Line Agreement allows the mortgagee to
unilaterally increase the Credit Limit;
(B) the Credit Limit increase is made within 90 days
of the Cut-off Date, or
(C) the Sponsor purchases the Mortgage Loan from the
Trust in the manner described below for rate reduction loans.
(e) Furthermore, the Sponsor, without prior approval from the Rating
Agencies or the Credit Enhancer, may solicit mortgagors for a reduction in Loan
Rates. The Loan Rates of Mortgage Loans having Asset Balances at the time of the
proposed modification that aggregate over time not more than 5.0% of the related
Original Note Principal Balance may be subject to reduction. If a mortgagor
notifies the Sponsor or the Master Servicer that it wants a reduction in Loan
Rate, the Sponsor shall purchase the Mortgage Loan from the Trust as described
below. Effective immediately on the same Business Day on which the Sponsor
delivers the Purchase Price for the relevant Mortgage Loan to the Master
Servicer, all interest of the Trust in the relevant Mortgage Loan shall
automatically be transferred and assigned to the Sponsor and all benefits and
burdens of ownership of the relevant Mortgage Loan, including the right to
accrued interest on it from the date of purchase and the risk of default on the
Mortgage Loan, shall pass to the Sponsor.
The Master Servicer shall promptly deliver to the Indenture Trustee a
certification signed by a Servicing Officer to the effect that all of the
requirements for a purchase of a Mortgage Loan in connection with a request by a
mortgagor for a reduction in Loan Rate have
21
been satisfied with respect to the relevant Mortgage Loan. The Sponsor shall
deliver the Purchase Price for the relevant Mortgage Loan to the Master Servicer
promptly after a mortgagor notifies the Sponsor or the Master Servicer that it
wants a reduction in Loan Rate, and the Master Servicer shall deposit the
Purchase Price for the modified Mortgage Loan in the Collection Account pursuant
to Section 3.02 within one Business Day after its receipt of the Purchase Price
for the modified Mortgage Loan. Upon receipt by the Indenture Trustee of written
notification of the deposit signed by a Servicing Officer, the Indenture Trustee
shall release to the Sponsor the related Mortgage File and shall execute and
deliver any instruments of transfer or assignment delivered to it for execution
and reasonably acceptable to it, in each case without recourse, representation,
or warranty, necessary to release the Mortgage Loan from the lien of the
Indenture and vest in the Sponsor the Mortgage Loan previously transferred and
assigned pursuant to this provision. The certification and written notification
of the deposit each from a Servicing Officer may be delivered to the Indenture
Trustee electronically, and to the extent the transmission originates on its
face from a Servicing Officer, need not be manually signed.
(f) In addition, the Master Servicer may agree to changes in the terms
of a Mortgage Loan (other than changes referred to above in this Section) at the
request of the mortgagor at any time if the changes
o do not materially and adversely affect the interests of the Secured
Parties or the Holders of the Class C Certificates,
o are consistent with prudent and customary business practice as
evidenced by a certificate signed by a Servicing Officer delivered to the
Indenture Trustee and the Credit Enhancer,
o do not extend the maturity date of the Mortgage Loan beyond the final
maturity date of the Notes, and
o the Master Servicer has received an Opinion of Counsel to the effect
that such action will not cause any REMIC created under the Trust
Agreement to fail to qualify as a REMIC or result in the imposition of any
tax under Section 860F(a) or Section 860G of the Code.
(g) In addition, the Master Servicer may solicit mortgagors to change
any other terms of the related Mortgage Loans at any time if the changes (i) do
not materially and adversely affect the interests of the Noteholders, the
Transferor, or the Credit Enhancer (ii) are consistent with prudent and
customary business practice as evidenced by a certificate signed by a Servicing
Officer delivered to the Indenture Trustee and the Credit Enhancer, and (iii)
the Master Servicer has received an Opinion of Counsel to the effect that such
action will not cause any REMIC created under the Trust Agreement to fail to
qualify as a REMIC or result in the imposition of any tax under Section 860F(a)
or Section 860G of the Code. Nothing in this Agreement shall limit the right of
the Master Servicer to solicit mortgagors with respect to new loans (including
mortgage loans) that are not Mortgage Loans.
(h) The Master Servicer may register any Mortgage Loan on the MERS(R)
System, or cause the removal from registration of any Mortgage Loan on the
MERS(R) System, and execute and deliver, on behalf of the Owner Trustee, any
instruments of assignment and other
22
comparable instruments with respect to the assignment or re-recording of a
mortgage in the name of MERS, solely as nominee for the Owner Trustee and its
successors and assigns.
For so long as any Mortgage Loan is registered on the MERS(R) System,
the Master Servicer shall maintain in good standing its membership in MERS and
shall comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Mortgage Loans that are registered with
MERS. If any Mortgage Loans are registered on the MERS(R) System, the Master
Servicer may cause MERS to execute and deliver an assignment of mortgage in
recordable form to transfer any of the Mortgage Loans registered on the MERS(R)
System from MERS to the Owner Trustee. The Master Servicer shall promptly notify
MERS of any transfer of beneficial ownership or release of any Security Interest
in any MOM Loan.
The relationship of the Master Servicer to the Trust and the Indenture
Trustee under this Agreement is intended by the parties to be that of an
independent contractor and not that of a joint venturer, partner, or agent of
the Trust or the Indenture Trustee.
(i) If the rights and obligations of the Master Servicer are terminated
under this Agreement, any successor to the Master Servicer in its sole
discretion may terminate the existing subservicer arrangements with any
subservicer or assume the terminated Master Servicer's rights under those
subservicing arrangements to the extent permitted by applicable law and the
subservicing agreements.
(j) The Sponsor agrees to indemnify the Trust against any liability for
any prohibited transaction taxes and any related interest, additions, and
penalties imposed on the Trust as a result of any modification of a Mortgage
Loan effected pursuant to this Section, the holding of any Mortgage Loan
modified pursuant to this Section by the Trust, any purchase of a modified
Mortgage Loan by the Sponsor pursuant to this Section, or the removal of any
Mortgage Loan pursuant to Section 2.06 (but such obligation shall not prevent
the Sponsor or any other appropriate person from in good faith contesting any
such tax in appropriate proceedings and shall not prevent the Sponsor from
withholding payment of the tax, if permitted by law, pending the outcome of the
proceedings). The Sponsor shall have no right of reimbursement for any amount
paid pursuant to the foregoing indemnification, except to the extent that the
amount of any tax, interest, and penalties, together with interest thereon, is
refunded to the Trust or the Sponsor.
Section 3.02 Collection of Certain Mortgage Loan Payments;
Establishment of Accounts.
(a) The Master Servicer shall make reasonable efforts to collect all
payments called for under the Mortgage Loans, and shall follow the collection
procedures it follows for mortgage loans in its servicing portfolio comparable
to the Mortgage Loans, to the extent consistent with this Agreement. Consistent
with the foregoing, and without limiting the generality of the foregoing, the
Master Servicer may in its discretion (i) waive any late payment charge or any
assumption fees or other fees that may be collected in the ordinary course of
servicing the Mortgage Loans and (ii) arrange with a mortgagor a schedule for
the payment of interest due and unpaid if the arrangement is consistent with the
Master Servicer's policies with respect to the mortgage loans it owns or
services. Notwithstanding any arrangement, the
23
Mortgage Loans will be included in the information regarding delinquent Mortgage
Loans in the Servicing Certificate and monthly statement to Noteholders pursuant
to Section 7.04 of the Indenture.
(b) The Master Servicer shall establish and maintain a trust account
(the "Collection Account") with the title specified in the Adoption Annex. The
Collection Account shall be an Eligible Account and will initially be
established by the Master Servicer at Countrywide Bank, N.A., which is an
affiliate of the Master Servicer. The Master Servicer or the Sponsor, as the
case may be, shall deposit or cause to be deposited in the Collection Account
within two Business Days following its receipt the following payments and
collections received or made by it (without duplication):
(1) all collections on the Mortgage Loans;
(2) the amounts deposited to the Collection Account pursuant
to Section 4.03;
(3) Net Liquidation Proceeds net of any related Foreclosure
Profit;
(4) Insurance Proceeds; and
(5) any amounts required to be deposited pursuant to Section
8.01.
No other amounts are to be deposited to the Collection Account,
including amounts representing Foreclosure Profits, fees (including annual fees)
or late charge penalties payable by mortgagors, or amounts received by the
Master Servicer for the accounts of mortgagors for application towards the
payment of taxes, insurance premiums, assessments, excess pay off amounts, and
similar items. The Master Servicer shall remit all Foreclosure Profits to the
Sponsor. The Master Servicer shall retain, from payments of interest on the
Mortgage Loans in each Collection Period, the related Servicing Fee for the
Collection Period and any unreimbursed optional advance made by the Master
Servicer pursuant to Section 4.03.
The Master Servicer may make a net deposit in the Collection Account of
the amounts required by this Section.
Upon delivery of an Officer's Certificate to the Indenture Trustee, the
Master Servicer may withdraw funds from the Collection Account for the following
purposes (to the extent that the payment has not been otherwise retained
pursuant this Section 3.02(b)):
(1) to pay to the Master Servicer its Servicing Fee;
(2) to pay to the Master Servicer net earnings on amounts on
deposit in the Collection Account;
(3) to pay from Principal Collections the amounts provided for
the purchase of Additional Balances pursuant to Section 2.01; and
(4) to pay to the Master Servicer amounts deposited by the
Master Servicer that are not required to be deposited or any amount
deposited by the Master Servicer representing payments by mortgagors
made by checks subsequently returned uncollected.
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On the Business Day before each Payment Date to the extent on deposit
in the Collection Account, the Master Servicer shall withdraw from the
Collection Account and remit to the Indenture Trustee, the amount to be applied
on that Payment Date by the Indenture Trustee pursuant to Section 8.03 of the
Indenture, and the Indenture Trustee will deposit that amount in the Payment
Account pursuant to the Indenture.
The Indenture Trustee shall hold amounts deposited in the Payment
Account as trustee for the Noteholders, the Transferor, and the Credit Enhancer.
In addition, the Master Servicer shall notify the Indenture Trustee and the
Credit Enhancer on each Determination Date of the amount of collections in the
Collection Account to be transferred to the Payment Account and their allocation
to Interest Collections and Principal Collections for the Mortgage Loans for the
related Payment Date. Following this notification, the Master Servicer may
withdraw from the Collection Account and retain any amounts that constitute
income realized from the investment of the collections. The Master Servicer will
be entitled to receive, as additional servicing compensation, income earned on
the collections in the Payment Account.
Amounts on deposit in the Collection Account will be invested in
Eligible Investments maturing no later than the day before the next Payment Date
at the direction of the Master Servicer. All income realized from any investment
in Eligible Investments of funds in the Collection Account shall be the property
of the Master Servicer and may be withdrawn from time to time from the
Collection Account. Any losses incurred on these investments that reduce their
principal amount shall be deposited in the Collection Account by the Master
Servicer out of its own funds immediately as realized.
(c) Upon its receipt of the deliveries specified in Section 2.01(b)(1)
to be delivered to it, including the Officer's Certificate specified in Section
2.01(b)(2)(H) confirming satisfaction of the conditions precedent to subsequent
additions in Section 2.01(b)(2) on a Subsequent Closing Date designated by the
Depositor, the Indenture Trustee shall withdraw from the Additional Loan Account
and deliver to the order of the Depositor an amount equal to the Cut-off Date
Asset Balance in the Transfer Document to purchase the Additional Home Equity
Loans covered by the Transfer Document.
Section 3.03 Deposits to Payment Account.
The Master Servicer shall
(1) on the Business Day before each of the first two Payment
Dates, deposit in the Payment Account any shortfall in the amount
required to pay the Note Interest on those Payment Dates for the Notes
resulting solely from the failure of any Mortgage Loans to be fully
indexed and
(2) on the Business Day before the first Payment Date, deposit
in the Payment Account
(A) an amount equal to the excess of the aggregate
amount payable pursuant to Sections 8.03(a)(i) and (ii) of the
Indenture on the first Payment Date over what the Available
Interest Collections would be if the Minimum
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Monthly Payments due during the first Collection Period were
made on each Mortgage Loan and
(B) any amounts representing payments on, and any
collections in respect of, the Mortgage Loans received after
the Cut-off Date and before the Closing Date (exclusive of
payments of accrued interest due by the Cut-off Date).
Section 3.04 Maintenance of Hazard Insurance; Property Protection
Expenses.
The Master Servicer shall cause to be maintained for each Mortgage Loan
hazard insurance naming the Master Servicer or the related subservicer as loss
payee under it providing extended coverage in an amount that is at least equal
to the lesser of (i) the maximum insurable value of the improvements securing
the Mortgage Loan from time to time or (ii) the combined principal balance owing
on the Mortgage Loan and any mortgage loan senior to the Mortgage Loan from time
to time. The Master Servicer shall also maintain on property acquired through
foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value from time to time of the improvements that are a part of the
property or (ii) the combined principal balance owing on the Mortgage Loan and
any mortgage loan senior to the Mortgage Loan at the time of the foreclosure or
deed in lieu of foreclosure plus accrued interest and the good-faith estimate of
the Master Servicer of related Liquidation Expenses to be incurred.
Amounts collected by the Master Servicer under these policies shall be
deposited in the Collection Account to the extent called for by Section 3.02.
The hazard insurance to be maintained for the related Mortgage Loan shall
include flood insurance when the Mortgaged Property is located in a federally
designated flood area. The flood insurance shall be in the amount required under
applicable guidelines of the Federal Flood Emergency Act. No other insurance
need be carried on any Mortgaged Properties pursuant to this Agreement.
Section 3.05 Assumption and Modification Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
mortgagor, the Master Servicer shall exercise its right to accelerate the
maturity of the Mortgage Loan consistent with the then current practice of the
Master Servicer and without regard to the inclusion of the Mortgage Loan in the
Trust. If it elects not to enforce its right to accelerate or if it is prevented
from doing so by applicable law, the Master Servicer (so long as its action
conforms with the underwriting standards generally acceptable in the industry at
the time for new origination) may enter into an assumption and modification
agreement with the person to whom the Mortgaged Property has been or is about to
be conveyed, pursuant to which that person becomes liable under the Credit Line
Agreement and, to the extent permitted by applicable law, the mortgagor remains
liable on it. The Master Servicer shall notify the Indenture Trustee that any
assumption and modification agreement has been completed by delivering to the
Indenture Trustee an Officer's Certificate certifying that the agreement is in
compliance with this Section and by forwarding the original copy of the
assumption and modification agreement to the Indenture Trustee. Any assumption
and modification agreement shall be a part of the related Mortgage File. No
change in the terms of the related Credit Line
26
Agreement may be made by the Master Servicer in connection with the assumption
to the extent that the change would not be permitted to be made in the original
Credit Line Agreement pursuant to Section 3.01. Any fee collected by the Master
Servicer for entering into the assumption and modification agreement will be
retained by the Master Servicer as additional servicing compensation.
Section 3.06 Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans; Auction of Charged-off Mortgage Loans.
The Master Servicer shall foreclose or otherwise comparably convert to
ownership Mortgaged Properties securing defaulted Mortgage Loans when, in the
opinion of the Master Servicer based on normal and usual practices and
procedures, no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.02. Alternatively, the Master Servicer
may forego foreclosure and charge off a defaulted Mortgage Loan if in the Master
Servicer's opinion the net proceeds of foreclosure and liquidation are likely to
produce an amount less than the unpaid principal balance of senior liens on the
Mortgaged Property and statutory liens. If the Master Servicer has actual
knowledge or reasonably believes that any Mortgaged Property is affected by
hazardous or toxic wastes or substances and that the acquisition of the
Mortgaged Property would not be commercially reasonable, then the Master
Servicer will not cause the Trust to acquire title to the Mortgaged Property in
a foreclosure or similar proceeding. In connection with foreclosure or other
conversion (or a decision to forego foreclosure and charge off a defaulted
Mortgage Loan), the Master Servicer shall follow the practices and procedures it
deems appropriate and that are normal and usual in its general mortgage
servicing activities, including advancing funds to correct a default on a
related senior mortgage loan. However, the Master Servicer need not expend its
own funds in connection with any foreclosure or towards the correction of any
default on a related senior mortgage loan or restoration of any property unless
it determines, in its sole discretion, that the expenditure will increase Net
Liquidation Proceeds and the Master Servicer acts in accordance with the
servicing standards in this Agreement.
If title to any Mortgaged Property is acquired in foreclosure or by
deed in lieu of foreclosure, the deed or certificate of sale shall be issued to
the Indenture Trustee, or to its nominee on behalf of Noteholders. The Master
Servicer shall dispose of the Mortgaged Property as soon as practicable in a
manner that maximizes its Liquidation Proceeds.
The Master Servicer, in its sole discretion, may purchase for its own
account from the Trust any Mortgage Loan that is 151 days or more delinquent.
The price for any Mortgage Loan purchased shall be 100% of its Asset Balance
plus accrued interest on it at the applicable Loan Rate from the date through
which interest was last paid by the related mortgagor to the first day of the
month in which the purchase price is to be distributed to the Noteholders. The
purchase price shall be deposited in the Collection Account. The Master Servicer
may only exercise this right on or before the penultimate day of the month in
which the Mortgage Loan became 151 days delinquent. Any delinquent Mortgage Loan
that becomes current but thereafter again becomes 151 days or more delinquent
may be purchased by the Master Servicer pursuant to this Section.
27
The Master Servicer shall use reasonable efforts to solicit bids from
at least two unaffiliated third parties for the purchase of a Charged-off
Mortgage Loan during the related Auction Period. If more than one Charged-off
Mortgage Loan exists, the Master Servicer may solicit bids for a single
Charged-off Mortgage Loan, a portion of the outstanding Charged-off Mortgage
Loans, or all of the outstanding Charged-off Mortgage Loans. If fewer than two
bids from unaffiliated third parties with respect to a Charged-off Mortgage Loan
or a group of Charged-off Mortgage Loans are received during the related Auction
Period, the Master Servicer shall use reasonable efforts to foreclose the
related Mortgaged Properties to the extent that the Master Servicer determines
that the proceeds of foreclosure would exceed the costs and expenses of bringing
a foreclosure proceeding. If two or more bids with respect to a Charged-off
Mortgage Loan or a group of Charged-off Mortgage Loans are received during the
related Auction Period, the Master Servicer shall arrange for the sale of the
Charged-off Mortgage Loans to the highest bidder. The Master Servicer shall
prepare any necessary documentation required to transfer title to the
Charged-off Mortgage Loans to the related purchaser. The Master Servicer shall
deduct from the proceeds of the sale or foreclosure of the Charged-off Mortgage
Loans the related Auction Fee and any optional advances with respect to the
Charged-off Mortgage Loans. The Master Servicer and its affiliates shall not
purchase Charged-off Mortgage Loans in any auction described in this paragraph.
Upon receipt of a certificate from the Master Servicer in the form of
Exhibit C, the Indenture Trustee shall release to the Master Servicer the
related Mortgage File and shall execute and deliver any instruments of transfer
prepared by the Master Servicer, without recourse, necessary to vest in the
purchaser of the Mortgage Loan any Mortgage Loan released to it and the Master
Servicer shall succeed to all the Trust's interest in the Mortgage Loan and all
related security and documents. This assignment shall be an assignment outright
and not for security. The Master Servicer shall then own the Mortgage Loan, and
all security and documents, free of any further obligation to the Trust, the
Owner Trustee, the Indenture Trustee, the Credit Enhancer, the Transferor, or
the Noteholders with respect to it. The certification by the Master Servicer may
be delivered to the Indenture Trustee electronically, and if it is, its form may
differ from Exhibit C so long as it contains the information required by Exhibit
C (that is, the relevant loan number, at least one of the five reasons for
requesting file as found in Exhibit C, and the acknowledgment that the Mortgage
File will be held in accordance with this Agreement and will promptly be
returned to the Indenture Trustee when the need for it by the Master Servicer no
longer exists unless the Mortgage Loan has been liquidated or retransferred),
and to the extent the transmission originates on its face from a Servicing
Officer, need not be manually signed.
If the Trust acquires any Mortgaged Property in connection with a
default or imminent default on a Mortgage Loan, the Master Servicer shall
dispose of the Mortgaged Property as soon as practicable in a manner that
maximizes the liquidation proceeds, but in no event later than three years after
its acquisition by the Trust or, at the expense of the Trust, the Master
Servicer shall request, more than 60 days before the day on which the three-year
period would otherwise expire, an extension of the three-year grace period. If
the Indenture Trustee is supplied with an Opinion of Counsel to the effect that
the Trust's holding the Mortgaged
28
Property after the three-year period will not result in the imposition of taxes
on prohibited transactions of the Trust as defined in section 860F of the Code
or cause any REMIC created under the Trust Agreement to fail to qualify as a
REMIC at any time that any Notes or Certificates are outstanding, and the Trust
may continue to hold the Mortgaged Property (subject to any conditions in the
Opinion of Counsel) after the expiration of the three-year period.
Notwithstanding any other provision of this Agreement, no Mortgaged Property
acquired by the Trust shall be rented (or allowed to continue to be rented) or
otherwise used for the production of income by or on behalf of the Trust in such
a manner or pursuant to any terms that would cause the Mortgaged Property to
fail to qualify as foreclosure property within the meaning of section 860G(a)(8)
of the Code or subject the Trust to the imposition of any federal, state, or
local income taxes on the income earned from the Mortgaged Property under
section 860G(c) of the Code or otherwise, unless the Master Servicer has agreed
to indemnify and hold harmless the Trust with respect to the imposition of any
such taxes.
If a default occurs on a Mortgage Loan one or more of whose obligors is
not a United States Person, as defined in Section 7701(a)(30) of the Code, in
connection with any foreclosure of the Mortgage Loan (including the acquisition
of a deed in lieu of foreclosure), the Master Servicer will cause compliance
with the provisions of Treasury Regulation Section 1.1445-2(d)(3) (or any
successor) necessary to assure that no withholding tax obligation arises with
respect to the proceeds of the foreclosure except to the extent that proceeds of
the foreclosure are required to be remitted to the obligors on the Mortgage
Loan.
Section 3.07 Indenture Trustee to Cooperate.
By each Payment Date, the Master Servicer will notify the Indenture
Trustee whenever the Asset Balance of any Mortgage Loan has been paid in full
during the preceding Collection Period. A Servicing Officer shall certify that
the Mortgage Loan has been paid in full and that all amounts received in
connection with the payment that are required to be deposited in the Collection
Account pursuant to Section 3.02 have been so deposited or credited. Upon
payment in full pursuant to Section 3.01, the Master Servicer is authorized to
execute an instrument of satisfaction regarding the related mortgage, which
instrument of satisfaction shall be recorded by the Master Servicer if required
by applicable law and be delivered to the person entitled to it.
If the mortgage has been registered on the MERS(R) System, the Master
Servicer shall cause the removal of the mortgage from registration on the
MERS(R) System and execute and deliver, on behalf of the Indenture Trustee and
the Noteholders, any instruments of satisfaction or cancellation or of partial
or full release. No expenses incurred in connection with the instrument of
satisfaction or transfer shall be reimbursed from amounts deposited in the
Collection Account or the Payment Account.
As appropriate for the servicing or foreclosure of any Mortgage Loan,
or in connection with the payment in full of the Asset Balance of any Mortgage
Loan, upon request of the Master Servicer and delivery to the Indenture Trustee
of a Request for Release substantially in the form of Exhibit C signed by a
Servicing Officer, the Indenture Trustee shall release the related Mortgage File
to the Master Servicer and the Indenture Trustee shall execute any documents
provided by the Master Servicer necessary to the prosecution of any proceedings
or the taking
29
of other servicing actions. The Request for Release by a Servicing Officer may
be delivered to the Indenture Trustee electronically, and if it is, its form may
differ from Exhibit C so long as it contains the information required by Exhibit
C (that is, the relevant loan number, at least one of the five reasons for
requesting file as found in Exhibit C, and the acknowledgment that the Mortgage
File will be held in accordance with this Agreement and will promptly be
returned to the Indenture Trustee when the need for it by the Master Servicer no
longer exists unless the Mortgage Loan has been liquidated or retransferred),
and to the extent the transmission originates on its face from a Servicing
Officer, need not be manually signed. The Master Servicer shall return the
Mortgage File to the Indenture Trustee when the need for it by the Master
Servicer no longer exists, unless the Mortgage Loan is liquidated, in which
case, upon receipt of a certificate of a Servicing Officer similar to that
specified above, the Request for Release shall be released by the Indenture
Trustee to the Master Servicer.
To facilitate the foreclosure of the mortgage securing any Mortgage
Loan that is in default following recordation of the assignments of mortgage in
accordance with this Agreement, if so requested by the Master Servicer, the
Indenture Trustee shall execute an appropriate assignment in the form provided
to the Indenture Trustee by the Master Servicer to assign the Mortgage Loan for
the purpose of collection to the Master Servicer or a subservicer. The
assignment shall unambiguously indicate that the assignment is for the purpose
of collection only. The Master Servicer will then bring all required actions in
its own name and otherwise enforce the terms of the Mortgage Loan and deposit
the Net Liquidation Proceeds, exclusive of Foreclosure Profits, in the
Collection Account. If all delinquent payments due under the Mortgage Loan are
paid by the mortgagor and any other defaults are cured, then the Master Servicer
shall promptly reassign the Mortgage Loan to the Indenture Trustee and return
the related Mortgage File to the place where it was being maintained.
Section 3.08 Servicing Compensation; Payment of Certain Expenses by
Master Servicer.
The Master Servicer may retain the Servicing Fee pursuant to Section
3.02 as compensation for its services in servicing the Mortgage Loans. Moreover,
additional servicing compensation in the form of late payment charges or other
receipts not required to be deposited in the Collection Account (other than
Foreclosure Profits) shall be retained by the Master Servicer. The Master
Servicer must pay all expenses incurred by it in connection with its activities
under this Agreement (including payment of all other fees and expenses not
expressly stated under this Agreement to be for the account of another person)
and shall not be entitled to reimbursement under this Agreement except as
specifically provided in this Agreement. Liquidation Expenses are reimbursable
to the Master Servicer
FIRST, from related Liquidation Proceeds and
SECOND, from the Payment Account from funds pursuant to Section
8.03(a)(vii) of the Indenture.
Section 3.09 Annual Statement as to Compliance.
(a) The Master Servicer will deliver to the Indenture Trustee, the
Credit Enhancer, and the Rating Agencies, by the date in each year specified in
the Adoption Annex, beginning
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on the date specified in the Adoption Annex, an Officer's Certificate stating
that (i) a review of the activities of the Master Servicer during the preceding
fiscal year (or the applicable shorter period for the first report) and of its
performance under this Agreement has been made under the officer's supervision
and (ii) to the best of the officer's knowledge, based on the review, the Master
Servicer has fulfilled all of its obligations under this Agreement in all
material respects throughout the fiscal year, or, if there has been a default in
the fulfillment of those obligations in any material respect, specifying each
default known to the officer and its nature and status.
(b) Within five Business Days after obtaining knowledge of it, the
Master Servicer shall notify the Indenture Trustee, the Credit Enhancer, and
each of the Rating Agencies of any event that with the giving of notice or the
lapse of time would become an Event of Servicing Termination by delivering an
Officer's Certificate describing the event.
(c) The Master Servicer shall cause each subservicer to deliver to the
Depositor, the Credit Enhancer, and the Indenture Trustee on or before March 15
of each year, beginning with its 2007 fiscal year, an Officer's Certificate
stating, as to the signing officer, that a review of the activities of the
subservicer during the preceding year and of the performance of the subservicer
under the applicable subservicing agreement or primary servicing agreement has
been made under the signing officer's supervision and to the best of the signing
officer's knowledge, based on such review, the subservicer has fulfilled all its
obligations under the applicable subservicing agreement or primary servicing
agreement in all material respects throughout its fiscal year, or, if there has
been a failure to fulfill any of its obligations in any material respect,
specifying each failure known to the signing officer and its nature and status.
(d) Copies of the statement shall be provided by the Indenture Trustee
to any Noteholder or Note Owner on request at the Master Servicer's expense.
Section 3.10 Access to Certain Documentation and Information Regarding
the Mortgage Loans.
(a) The Master Servicer shall provide to the Indenture Trustee, the
Credit Enhancer, any Noteholders or Note Owners that are federally insured
savings and loan associations, the Office of Thrift Supervision, successor to
the Federal Home Loan Bank Board, the FDIC, and the supervisory agents and
examiners of the Office of Thrift Supervision access to the documentation
regarding the Mortgage Loans required by applicable regulations of the Office of
Thrift Supervision and the FDIC (acting as operator of the Savings Association
Insurance Fund or the Bank Insurance Fund). The Master Servicer will provide
access without charge but only after reasonable notice and during normal
business hours at the offices of the Master Servicer. Nothing in this Section
shall derogate from the obligation of the Master Servicer to observe any
applicable law prohibiting disclosure of information regarding the mortgagors
and the failure of the Master Servicer to provide access as provided in this
Section as a result of this obligation shall not constitute a breach of this
Section.
(b) The Master Servicer shall supply the information needed to make
required payments and to furnish required reports to Noteholders and to make any
claim under the Policy, in the form the Indenture Trustee reasonably requests,
to the Indenture Trustee and any Paying Agent by the start of the Determination
Date preceding the related Payment Date.
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Section 3.11 Maintenance of Certain Servicing Insurance Policies.
The Master Servicer shall during the term of its service as master
servicer maintain in force (i) policies of insurance covering errors and
omissions in the performance of its obligations as master servicer under this
Agreement and (ii) a fidelity bond covering its officers, employees, or agents.
Each policy and bond together shall comply with the requirements from time to
time of Xxxxxx Xxx for persons performing servicing for mortgage loans purchased
by Xxxxxx Mae.
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01 Servicing Certificate.
Not later than each Determination Date, the Master Servicer shall
deliver (a) to the Indenture Trustee, the data necessary to prepare the
statement for Noteholders required to be prepared pursuant to Section 4.04 and
(b) to the Indenture Trustee, the Owner Trustee, the Sponsor, the Depositor, the
Paying Agent, the Credit Enhancer, and each Rating Agency a Servicing
Certificate (in written form or the form of computer readable media or such
other form as may be agreed to by the Indenture Trustee and the Master
Servicer), together with an Officer's Certificate to the effect that the
Servicing Certificate is correct in all material respects, stating the related
Collection Period, Payment Date, the series number of the Notes, the date of
this Agreement, and
(1) the aggregate amount of collections received on the
Mortgage Loans by the Determination Date for the related Collection
Period;
(2) the aggregate amount of (a) Interest Collections for the
related Collection Period and (b) Principal Collections for the related
Collection Period;
(3) any accrued Servicing Fees for the Mortgage Loans for
previous Collection Periods and the Servicing Fee for the related
Collection Period;
(4) the Liquidation Loss Amount for the related Collection
Period;
(5) the aggregate Asset Balance of the Mortgage Loans as of
the end of the preceding Collection Period and as of the end of the
second preceding Collection Period;
(6) the Credit Enhancement Draw Amount for the Notes for the
related Payment Date;
(7) the amount to be distributed to the Credit Enhancer
pursuant to Section 8.03(a)(iv) and Section 8.03(a)(vi) of the
Indenture, stated separately;
(8) the Guaranteed Principal Payment Amount for the Notes for
the Payment Date;
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(9) the aggregate amount of Additional Balances created on the
Mortgage Loans during the previous Collection Period;
(10) the number and aggregate Asset Balances of Mortgage Loans
(x) as to which the Minimum Monthly Payment is delinquent for 30-59
days, 60-89 days, and 90 or more days, respectively and (y) that have
become REO, in each case as of the end of the preceding Collection
Period;
(11) the Weighted Average Gross Loan Rate for the Mortgage
Loans;
(12) the amount of any optional advances pursuant to Section
4.03 by the Master Servicer on the Mortgage Loans remaining unpaid at
the end of the Collection Period preceding the related Collection
Period;
(13) the amount of any optional advances pursuant to Section
4.03 by the Master Servicer on the Mortgage Loans made during the
related Collection Period and included in the payment on the Payment
Date;
(14) the aggregate amount of optional advances pursuant to
Section 4.03 by the Master Servicer on the Mortgage Loans that will
remain outstanding as of the close of business on the Payment Date;
(15) the number and principal balances of any Mortgage Loans
transferred to the Transferor pursuant to Section 2.06;
(16) with respect to the Collection Account during the
Collection Period related to the Payment Date:
(A) its balance at the beginning of the
Collection Period;
(B) deposits of the aggregate Transfer Deposit
amount for retransferred Mortgage Loans
pursuant to Section 2.06;
(C) deposits of the aggregate Purchase Price for
delinquent Mortgage Loans purchased by the
Sponsor pursuant to Section 3.06;
(D) deposits of the aggregate Purchase Price
made by the Sponsor in connection with
modification of Mortgage Loans pursuant to
Section 3.01;
(E) deposits by the Master Servicer to account
for losses accrued on Eligible Investments;
(F) income accrued on Eligible Investments;
(G) deposits of the termination purchase price
in connection with termination pursuant to
Section 8.01;
(H) other deposits;
(I) withdrawals of investment income on Eligible
Investments;
(J) withdrawals for the purchase of Additional
Balances;
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(K) transfers to the Payment Account;
(L) other withdrawals; and
(M) its balance at the end of the Collection
Period;
(17) with respect to the first and second Payment Dates,
deposits by the Master Servicer to account for shortfalls in interest
collections resulting from the failure of the Mortgage Loans to be
fully indexed pursuant to Section 3.03;
(18) with respect to the first Payment Date, deposits by the
Master Servicer to account for shortfalls in interest collections
resulting from the prefunding mechanism and the longer first Interest
Period, pursuant to Section 3.03;
(19) with respect to the first Payment Date, the amount of
collections on the Mortgage Loans for the period between the initial
Cut-off Date and the Closing Date, specifying the interest and
principal portions thereof;
(20) Liquidation Expenses and indemnification payments paid to
the Master Servicer for the related Collection Period;
(21) Liquidation Expenses and indemnification payments payable
to the Master Servicer on the Payment Date from Available Interest
Collections pursuant to Section 8.03(a)(vii) of the Indenture;
(22) the weighted average remaining term of the Mortgage
Loans; and
(23) in the Servicing Certificates for the first and second
Payment Dates, the number and Cut-off Date Asset Balance of Mortgage
Loans for which the Mortgage Loan File was not delivered to the
Custodian acting on behalf of the Indenture Trustee within 30 days of
the Closing Date.
The Indenture Trustee and the Owner Trustee shall conclusively rely on
the information in a Servicing Certificate for purposes of making distributions
pursuant to Section 8.03 of the Indenture or distributions on the Transferor
Certificates, shall have no duty to inquire into this information, and shall
have no liability in so relying. The format and content of the Servicing
Certificate may be modified by the mutual agreement of the Master Servicer, the
Indenture Trustee, and the Credit Enhancer. The Master Servicer shall give
notice of any changes to the Rating Agencies.
Section 4.02 Acknowledgement and Cooperation.
The Depositor, the Master Servicer, and the Indenture Trustee
acknowledge that without the need for any further action on the part of the
Credit Enhancer, the Depositor, the Master Servicer, the Indenture Trustee, or
the Note Registrar (a) to the extent the Credit Enhancer makes payments,
directly or indirectly, on account of principal of or interest or other amounts
on any Notes to the Holders of the Notes, the Credit Enhancer will be fully
subrogated to the rights of these Holders to receive the principal and interest
from the Trust and (b) the Credit Enhancer shall be paid the principal and
interest or other amounts but only from the sources and in the manner provided
in this Agreement for the payment of the principal and
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interest or other amounts. The Indenture Trustee and the Master Servicer shall
cooperate in all respects at the Issuer's expense with any reasonable request by
the Credit Enhancer for action to preserve or enforce the Credit Enhancer's
rights or interests under this Agreement and the Indenture without limiting the
rights or affecting the interests of the Holders as otherwise stated in this
Agreement and the Indenture.
Section 4.03 Optional Advances of the Master Servicer.
The Master Servicer, in its sole discretion, may advance the interest
component of any delinquent Minimum Monthly Payment (or any portion of it) by
depositing the amount into the Collection Account by the related Determination
Date. The Master Servicer shall not make an advance with respect to any
Charged-off Mortgage Loan after the related Charge-off Date.
Section 4.04 Statements to Noteholders.
Pursuant to Section 4.01, the Master Servicer shall deliver to the
Indenture Trustee the data necessary to prepare a statement (the "Monthly
Statement") for each Payment Date with the information in Exhibit D. Such
statement shall be based solely on the information provided to the Indenture
Trustee by the Master Servicer pursuant to the preceding sentence upon which
information the Indenture Trustee may conclusively rely.
If the Monthly Statement is not accessible to any of the Noteholders,
the Master Servicer, the Credit Enhancer, or either Rating Agency on the
Indenture Trustee's internet website, the Indenture Trustee shall forward a hard
copy of it to each Noteholder, the Master Servicer, the Credit Enhancer, and
each Rating Agency immediately after the Indenture Trustee becomes aware that
the Monthly Statement is not accessible to any of them via the Indenture
Trustee's internet website. The address of the Indenture Trustee's internet
website where the Monthly Statement will be accessible is
xxxxx://xxx.xxxxxxxx.xxx/xxx. Assistance in using the Indenture Trustee's
internet website may be obtained by calling the Indenture Trustee's customer
service desk at (000) 000-0000. The Indenture Trustee shall notify each
Noteholder, the Credit Enhancer, the Master Servicer, and each Rating Agency in
writing of any change in the address or means of access to the internet website
where the Monthly Statement is accessible.
Within 60 days after the end of each year, the Master Servicer shall
prepare and forward to the Indenture Trustee the information in clauses (5),
(6), (7) and (8) of the Monthly Statement aggregated for the year. This
requirement of the Master Servicer shall be satisfied if substantially
comparable information is provided by the Master Servicer or a Paying Agent
pursuant to any requirements of the Code.
The Indenture Trustee shall prepare (in a manner consistent with the
treatment of the Notes as indebtedness of the Transferor, or as may be otherwise
required by Section 3.14) Internal Revenue Service Form 1099 (or any successor
form) and any other tax forms required to be filed or furnished to Noteholders
for payments by the Indenture Trustee (or the Paying Agent) on the Notes and
shall file and distribute such forms as required by law.
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ARTICLE V
THE MASTER SERVICER, THE SPONSOR, AND THE DEPOSITOR
Section 5.01 Liability of the Sponsor, the Master Servicer, and the
Depositor.
The Sponsor, the Depositor, and the Master Servicer shall be liable
only for their express agreements under this Agreement.
Section 5.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Master Servicer or the Depositor.
Any corporation into which the Master Servicer or the Depositor may be
merged or consolidated, or any corporation resulting from any merger,
conversion, or consolidation to which the Master Servicer or the Depositor is a
party, or any corporation succeeding to the business of the Master Servicer or
the Depositor, shall be the successor of the Master Servicer or the Depositor,
as the case may be, under this Agreement, without the execution or filing of any
paper or any further act on the part of any of the parties to this Agreement,
notwithstanding anything in this Agreement to the contrary.
As a condition to the effectiveness of any merger or consolidation, at
least 15 days before the effective date of any merger or consolidation of the
Master Servicer, the Master Servicer shall provide written notice to the
Depositor of any successor pursuant to this Section and in writing and in form
and substance reasonably satisfactory to the Depositor, all information
reasonably requested by the Depositor to comply with its reporting obligation
under Item 6.02 of Form 8-K with respect to a replacement Master Servicer.
Section 5.03 Limitation on Liability of the Master Servicer and Others.
Neither the Master Servicer nor any of its directors, officers,
employees, or agents is liable to the Trust, the Owner Trustee, the Transferor,
or the Noteholders for the Master Servicer's taking any action or refraining
from taking any action in good faith pursuant to this Agreement, or for errors
in judgment. This provision shall not protect the Master Servicer or any of its
directors, officers, employees, or agents against any liability that would
otherwise be imposed for misfeasance, bad faith, or gross negligence in the
performance of the duties of the Master Servicer or for reckless disregard of
the obligations of the Master Servicer. The Master Servicer and any of its
directors, officers, employees, or agents may rely in good faith on any document
of any kind prima facie properly executed and submitted by any person about
anything arising under this Agreement.
The Master Servicer and each of its directors, officers, employees, and
agents shall be indemnified by the Trust (but only from funds available) and
held harmless against any loss, liability, or expense incurred in connection
with any legal action relating to this Agreement, the Transferor Certificates,
or the Notes, other than any loss, liability, or expense related to any specific
Mortgage Loan that is otherwise not reimbursable pursuant to this Agreement and
any loss, liability, or expense incurred due to its willful misfeasance, bad
faith, or gross negligence in the performance of duties under this Agreement or
due to its reckless disregard of its obligations under this Agreement.
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The Master Servicer need not appear in, prosecute, or defend any legal
action that is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement, and that in its opinion may involve it in any
expense or liability. The Master Servicer may in its sole discretion undertake
any action that it deems appropriate with respect to this Agreement and the
interests of the Noteholders. If so, the reasonable legal expenses and costs of
the action and any resulting liability shall be expenses, costs, and liabilities
of the Trust, and the Master Servicer shall only be entitled to be reimbursed
pursuant to Section 8.03(a)(vii) of the Indenture (but only from funds
available). The Master Servicer's right to indemnity or reimbursement pursuant
to this Section shall survive any resignation or termination of the Master
Servicer pursuant to Section 5.04 or 6.01 with respect to any losses, expenses,
costs, or liabilities arising before its resignation or termination (or arising
from events that occurred before its resignation or termination).
Section 5.04 Master Servicer Not to Resign.
Subject to Section 5.02, the Master Servicer shall not resign as Master
Servicer under this Agreement except
(1) if the performance of its obligations under this Agreement
are no longer permissible under applicable law or due to applicable law
are in material conflict with any other activities carried on by it or
its subsidiaries or Affiliates that are of a type and nature carried on
by the Master Servicer or its subsidiaries or Affiliates at the date of
this Agreement or
(2) if
(a) the Master Servicer has proposed a successor
Master Servicer to the Indenture Trustee and the proposed
successor Master Servicer is reasonably acceptable to the
Indenture Trustee;
(b) each Rating Agency has delivered a letter to the
Indenture Trustee before the appointment of the successor
Master Servicer stating that the proposed appointment of the
successor Master Servicer as Master Servicer under this
Agreement will not result in the reduction or withdrawal of
the then current rating of the Notes without regard to the
Policy; and
(c) the proposed successor Master Servicer is
reasonably acceptable to the Credit Enhancer in its sole
discretion, as evidenced by a letter to the Indenture Trustee.
No resignation by the Master Servicer shall become effective unless the
Master Servicer has notified the Depositor at least 15 days before the effective
date of the resignation of the successor pursuant to this Section and has
provided all information reasonably requested by the Depositor to comply with
its reporting obligation under Item 6.02 of Form 8-K with respect to the
resignation of the Master Servicer in form and substance reasonably satisfactory
to the Depositor.
No resignation by the Master Servicer shall become effective until the
Indenture Trustee or successor Master Servicer designated by the Master Servicer
has assumed the Master
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Servicer's obligations under this Agreement or the Indenture Trustee has
designated a successor Master Servicer in accordance with Section 6.02. Any
resignation shall not relieve the Master Servicer of responsibility for any of
the obligations specified in Sections 6.01 and 6.02 as obligations that survive
the resignation or termination of the Master Servicer. Any determination
permitting the resignation of the Master Servicer pursuant to clause (1) above
shall be evidenced by an Opinion of Counsel to that effect delivered to the
Indenture Trustee and the Credit Enhancer. The Master Servicer shall have no
claim (whether by subrogation or otherwise) or other action against the
Transferor, any Noteholder, or the Credit Enhancer for any amounts paid by the
Master Servicer pursuant to any provision of this Agreement.
Section 5.05 Delegation of Duties.
In the ordinary course of business, the Master Servicer may delegate
any of its duties under this Agreement at any time to any person who agrees to
act in accordance with standards comparable to those with which the Master
Servicer complies pursuant to Section 3.01, including any of its Affiliates or
any subservicer referred to in Section 3.01. This delegation shall not relieve
the Master Servicer of its obligations under this Agreement and shall not
constitute a resignation within the meaning of Section 5.04.
Section 5.06 Indemnification by the Master Servicer.
The Master Servicer shall indemnify the Trust, the Owner Trustee, and
the Indenture Trustee against any loss, liability, expense, damage, or injury
suffered or sustained due to the Master Servicer's actions or omissions in
servicing or administering the Mortgage Loans that are not in accordance with
this Agreement, including any judgment, award, settlement, reasonable attorneys'
fees, and other costs or expenses incurred in connection with the defense of any
actual or threatened action, proceeding, or claim. This indemnification is not
payable from the assets of the Trust. This indemnity shall run directly to and
be enforceable by an injured party subject to any applicable limitations.
The Indenture Trustee and any director, officer, employee, or agent of
the Indenture Trustee shall be indemnified by the Master Servicer and held
harmless against any loss, liability or expense incurred in connection with any
legal action relating to this Agreement, the Indenture, the Custodial Agreement,
the Administration Agreement, the Notes, or the Transferor Certificates, or in
connection with the performance of any of the Indenture Trustee's duties
thereunder, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of any of the
Indenture Trustee's duties under this Agreement, the Indenture, or the Custodial
Agreement or by reason of reckless disregard of the Indenture Trustee's
obligations and duties under this Agreement.
The indemnity provisions of this Section shall survive the termination
of this Agreement or the resignation or removal of the Indenture Trustee under
the Indenture.
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ARTICLE VI
SERVICING TERMINATION
Section 6.01 Events of Servicing Termination.
If any one of the following events ("Events of Servicing Termination")
shall occur and be continuing:
(1) any failure by the Master Servicer to deposit in the
Collection Account any deposit required to be made under this Agreement
or to remit to the Indenture Trustee amounts required to be deposited
to the Payment Account that continues unremedied either beyond the
relevant Payment Date or for five Business Days after the date when
notice of the failure has been given to the Master Servicer by the
Indenture Trustee or to the Master Servicer and the Indenture Trustee
by the Credit Enhancer or Holders of Notes representing not less than
25% of the Outstanding Amount of the Notes; or
(2) failure by the Master Servicer duly to observe or perform
in any material respect any other covenants or agreements of the Master
Servicer in the Notes or in this Agreement (except with respect to a
failure related to a Limited Exchange Act Reporting Obligation) that
materially and adversely affects the interests of the Noteholders or
the Credit Enhancer and continues unremedied for 60 days after the date
on which notice of the failure, requiring it to be remedied, and
stating that the notice is a "Notice of Default" under this Agreement,
has been given to the Master Servicer by the Indenture Trustee or to
the Master Servicer and the Indenture Trustee by the Credit Enhancer or
the Holders of Notes representing not less than 25% of the Outstanding
Amount of the Notes; or
(3) an Insolvency Event occurs with respect to the Master
Servicer;
then, until the Event of Servicing Termination has been remedied by the Master
Servicer, either the Indenture Trustee (with the consent of the Credit
Enhancer), the Credit Enhancer, or the Holders of Notes representing not less
than 51% of the Outstanding Amount of the Notes with the consent of the Credit
Enhancer by notice then given to the Master Servicer (and to the Indenture
Trustee if given by the Credit Enhancer or the Holders of Notes) may terminate
all of the rights and obligations of the Master Servicer as servicer under this
Agreement.
In addition, if during the period that the Depositor is required to
file Exchange Act Reports with respect to the Trust, the Master Servicer fails
to perform any of the obligations that constitute a Limited Exchange Act
Reporting Obligation or the obligations in Section 3.09(a) or Section 7.07(a)(1)
and (2), and the failure continues for the lesser of 10 days or the period in
which the applicable Exchange Act Report can be filed timely (without taking
into account any extensions), so long as the failure has not been remedied, the
Indenture Trustee shall, but only at the direction of the Depositor (who shall
designate a successor to the Master Servicer other than the Indenture Trustee
with the consent of the Credit Enhancer (which shall not unreasonably withheld
or delayed), terminate all of the rights and obligations of the Master Servicer
under
39
this Agreement and in the Mortgage Loans and their proceeds, other than its
rights as a Certificateholder or Noteholder. The Depositor will not be entitled
to terminate the rights and obligations of the Master Servicer if a failure of
the Master 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 the Subcontractor with respect to mortgage
loans other than the Mortgage Loans.
Any notice of termination provided to the Master Servicer shall also be
given by the party providing that notice to the Depositor and each Rating Agency
and the Credit Enhancer.
Within five Business Days after obtaining knowledge of it, the Master
Servicer shall notify the Indenture Trustee and each Rating Agency and the
Credit Enhancer of any event that with the giving of notice or the lapse of time
would become an Event of Servicing Termination by delivering an Officer's
Certificate describing the event.
From the receipt by the Master Servicer of the notice, all the rights
and obligations of the Master Servicer under this Agreement, whether with
respect to the Notes or the Mortgage Loans or otherwise, shall pass to and be
vested in the Indenture Trustee pursuant to this Section; and the Indenture
Trustee is authorized to execute and deliver, on behalf of the Master Servicer,
as attorney-in-fact or otherwise, any documents, and to do anything else
appropriate to effect the purposes of the notice of termination, whether to
complete the transfer and endorsement of each Mortgage Loan and related
documents, or otherwise. The Master Servicer agrees to cooperate with the
Indenture Trustee in effecting the termination of the rights and obligations of
the Master Servicer under this Agreement, including the transfer to the
Indenture Trustee for the administration by it of all cash amounts that are held
by the Master Servicer and are to be deposited by it in the Collection Account,
or that have been deposited by the Master Servicer in the Collection Account or
are subsequently received by the Master Servicer with respect to the Mortgage
Loans. All reasonable costs and expenses (including attorneys' fees) incurred in
connection with transferring the Mortgage Files to the successor Master Servicer
and amending this Agreement to reflect the succession as Master Servicer
pursuant to this Section shall be paid by the predecessor Master Servicer (or if
the predecessor Master Servicer is the Indenture Trustee, the initial Master
Servicer) on presentation of reasonable documentation of the costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 6.01(1) for five or more Business Days or under Section 6.01(2)
for 60 or more days, shall not constitute an Event of Servicing Termination if
the delay or failure could not be prevented by the exercise of reasonable
diligence by the Master Servicer and the delay or failure was caused by an act
of God or the public enemy, acts of declared or undeclared war, public disorder,
rebellion or sabotage, epidemics, landslides, lightning, fire, hurricanes,
earthquakes, floods, or similar causes. The preceding sentence shall not relieve
the Master Servicer from using its best efforts to perform its obligations in a
timely manner in accordance with the terms of this Agreement, and the Master
Servicer shall provide the Indenture Trustee, the Depositor, the Transferor, the
Credit Enhancer, and the Noteholders with an Officers' Certificate giving prompt
notice of its failure or delay, together with a description of its efforts to
perform its
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obligations. The Master Servicer shall immediately notify the Indenture Trustee
of any Events of Servicing Termination.
In connection with the termination of the Master Servicer if any
mortgage is registered on the MERS(R) System, then, either (i) the successor
Master Servicer, including the Indenture Trustee if the Indenture Trustee is
acting as successor Master 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 Mortgage Loans that are registered with MERS, or (ii) the predecessor
Master Servicer shall cooperate with the successor Master Servicer in causing
MERS to execute and deliver an assignment of mortgage in recordable form to
transfer all the mortgages registered on the MERS(R) System from MERS to the
Indenture Trustee and to execute and deliver any other notices and documents
appropriate to effect a transfer of those mortgages or the servicing of the
Mortgage Loan on the MERS(R) System to the successor Master Servicer. The
predecessor Master Servicer shall file the assignment in the appropriate
recording office. The successor Master Servicer shall deliver the assignment to
the Indenture Trustee promptly upon receipt of the original with evidence of
recording on it or a copy certified by the public recording office in which the
assignment was recorded.
If the Master Servicer is terminated, the Indenture Trustee will
provide the Depositor all information, in form and substance reasonably
satisfactory to the Depositor, reasonably requested by the Depositor to comply
with its reporting obligation under Item 6.02 of Form 8-K with respect to a
successor master servicer if the Indenture Trustee succeeds to the duties of the
Master Servicer as provided in this Agreement.
Section 6.02 Indenture Trustee to Act; Appointment of Successor.
(a) From the time the Master Servicer receives a notice of termination
pursuant to Section 6.01 or resigns pursuant to Section 5.04, the Indenture
Trustee shall be the successor in all respects to the Master Servicer in its
capacity as Master Servicer under this Agreement and the transactions
contemplated by this Agreement and shall be subject to all the obligations of
the Master Servicer under this Agreement except (i) the obligation to repurchase
or substitute for any Mortgage Loan, (ii) with respect to any representation or
warranty of the Master Servicer, or (iii) for any act or omission of either a
predecessor or successor Master Servicer other than the Indenture Trustee. As
its compensation under this Agreement, the Indenture Trustee shall be entitled
to the compensation the Master Servicer would have been entitled to under this
Agreement if no notice of termination had been given. In addition, the Indenture
Trustee will be entitled to compensation with respect to its expenses in
connection with conversion of certain information, documents, and record
keeping, as provided in Section 6.01.
Notwithstanding the above, (i) if the Indenture Trustee is unwilling to
act as successor Master Servicer, or (ii) if the Indenture Trustee is legally
unable to so act, the Indenture Trustee may (in the situation described in
clause (i)) or shall (in the situation described in clause (ii)) appoint, or
petition a court of competent jurisdiction to appoint, any established housing
and home finance institution, bank, or other mortgage loan or home equity loan
servicer having a net worth of not less than $15,000,000 as the successor to the
Master Servicer under this
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Agreement to assume of any obligations of the Master Servicer under this
Agreement. The successor Master Servicer must be acceptable to the Credit
Enhancer in its sole discretion, as evidenced by the Credit Enhancer's prior
consent, as applicable, which consent shall not be unreasonably withheld. The
appointment of the successor Master Servicer must not result in the
qualification, reduction, or withdrawal of the ratings assigned to the Notes by
the Rating Agencies without regard to the Policy.
No appointment of a successor to the Master Servicer will be effective
unless at least 15 days before the effective date of the appointment, the
Indenture Trustee notifies the Depositor of the successor pursuant to this
Section 6.02 and the successor Master Servicer provides to the Depositor all
information, in form and substance reasonably satisfactory to the Depositor,
reasonably requested by the Depositor to comply with its reporting obligation
under Item 6.02 of Form 8-K with respect to a replacement master servicer.
Pending appointment of a successor to the Master Servicer, unless the
Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act as Master Servicer. In connection with this appointment and
assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Loans in an amount equal to the compensation that the
Master Servicer would otherwise have received pursuant to Section 3.08 (or any
lesser compensation the Indenture Trustee and the successor agree to). The
Indenture Trustee and the successor shall take any action, consistent with this
Agreement, necessary to effectuate the succession.
(b) The appointment of a successor Master Servicer shall not affect any
liability of the predecessor Master Servicer that may have arisen under this
Agreement before its termination as Master Servicer (including any deductible
under an insurance policy pursuant to Section 3.04), nor shall any successor
Master Servicer be liable for any acts or omissions of the predecessor Master
Servicer or for any breach by the predecessor Master Servicer of any of its
representations or warranties in this Agreement. Except for any compensation
agreement with the Indenture Trustee, any successor Master Servicer shall be
subject to all the terms of this Agreement from the time that it accepts its
appointment to the same extent as if it were originally named as Master
Servicer.
Section 6.03 Notification to Noteholders and the Transferor.
Upon any termination or appointment of a successor to the Master
Servicer pursuant to this Article or Section 5.04, the Indenture Trustee shall
give prompt notice of it to the Noteholders at their respective addresses
appearing in the Note Register, the Transferor, the Credit Enhancer, and each
Rating Agency.
42
ARTICLE VII
EXCHANGE ACT REPORTING
Section 7.01 Filing Obligations.
The Master Servicer, the Indenture Trustee, the Owner Trustee, and each
Seller shall reasonably cooperate with the Depositor in connection with the
satisfaction of the Depositor's reporting requirements under the Exchange Act
with respect to the Trust. In addition to the information specified below, if so
requested by the Depositor to satisfy its reporting obligation under the
Exchange Act, the Master Servicer, the Indenture Trustee, the Owner Trustee, and
each Seller shall (and the Master Servicer shall cause each subservicer to)
provide the Depositor (a) with any information available to such person without
unreasonable effort or expense and within the timeframe reasonably requested by
the Depositor to comply with the Depositor's reporting obligations under the
Exchange Act, and (b) to the extent the Master Servicer, the Indenture Trustee,
the Owner Trustee, or a Seller is a party (and the Depositor is not a party) to
any agreement or amendment required to be filed, copies of the agreement or
amendment in XXXXX-compatible form.
Section 7.02 Form 10-D Filings.
(a) The Indenture Trustee shall prepare for filing and file reports on
Form 10-D as required by Section 7.03(a) of the Indenture.
(b) No later than each Payment Date, each of the Master Servicer, the
Indenture Trustee, and the Owner Trustee shall notify (and the Master Servicer
shall cause any subservicer to notify) the Depositor, the Master Servicer and
the Indenture Trustee of any Form 10-D Disclosure Item, together with a
description of the Form 10-D Disclosure Item in form and substance reasonably
acceptable to the Depositor. In addition to the information the Master Servicer
and the Indenture Trustee are obligated to provide pursuant to other provisions
of this Agreement, if so requested by the Depositor, each of the Master Servicer
and the Indenture Trustee shall provide any information available to it without
unreasonable effort or expense regarding the performance or servicing of the
Mortgage Loans (in the case of the Indenture Trustee, based on the information
provided by the Master Servicer) reasonably required to facilitate preparation
of distribution reports in accordance with Item 1121 of Regulation AB. This
information shall be provided concurrently with the information provided
pursuant to Section 4.01 in the case of the Master Servicer and the Monthly
Statement in the case of the Indenture Trustee, beginning with the first report
due not less than five Business Days following the request.
(c) The Indenture Trustee shall not have any responsibility to file any
items (other than those generated by it) that have not been received in a format
suitable (or readily convertible into a format suitable) for electronic filing
via the XXXXX system and shall not have any responsibility to convert any such
items to a format suitable (or readily convertible into a format suitable) for
electronic filing via the XXXXX system. The Indenture Trustee shall have no
liability to the Noteholders, the Certificateholders, the Trust, the Master
Servicer, the Depositor, or the Credit Enhancer with respect to any failure to
properly prepare or file any of
43
Form 10-D to the extent that the failure is not the result of any negligence,
bad faith, or willful misconduct on its part.
Section 7.03 Form 8-K Filings.
(a) The Master Servicer shall prepare and file on behalf of the Trust
any Form 8-K required by the Exchange Act. Each Form 8-K must be signed by the
Master Servicer. Each of the Master Servicer (and the Master Servicer shall
cause any subservicer to promptly notify) and the Indenture Trustee shall
promptly notify the Depositor and the Master Servicer (if the notifying party is
not the Master Servicer), but in no event later than two Business Days after its
occurrence, of any Reportable Event relating to it of which it (in the case of
the Indenture Trustee, a Responsible Officer of the Indenture Trustee, or in the
case of the Owner Trustee, any officer of the Owner Trustee with direct
responsibility for the administration of the Trust or with knowledge or
familiarity with the particular subject) has actual knowledge. A person has
actual knowledge of a Reportable Event to the extent that it relates to it or
any action or failure to act by it.
(b) Concurrently with any sale of Additional Home Equity Loans to the
Trust, the Sponsor shall notify the Depositor and the Master Servicer, if any
material pool characteristic of the actual asset pool at the time of issuance of
the Notes differs by 5% or more (other than as a result of the pool assets
converting into cash in accordance with their terms) from the description of the
asset pool in the Prospectus Supplement.
Section 7.04 Form 10-K Filings.
(a) Before March 30th of each year, beginning in 2007 (or any earlier
date required by the Exchange Act), the Depositor shall prepare and file on
behalf of the Trust a Form 10-K, in form and substance as required by the
Exchange Act. A senior officer in charge of the servicing function of the Master
Servicer shall sign each Form 10-K filed on behalf of the Trust. The Form 10-K
shall include as exhibits each
(1) annual compliance statement described under Section 3.09,
(2) annual Servicing Criteria Compliance Assessment Report
described under Section 7.07, and
(3) annual Accountant's Attestation described under Section
7.07.
Each Form 10-K shall also include any Xxxxxxxx-Xxxxx Certification
required to be included with it, as described in Section 7.05.
(b) If the Item 1119 Parties have changed since the Closing Date, by no
later than March 1 of each year, the Master Servicer shall provide each of the
Indenture Trustee and the Owner Trustee with an updated list of the Item 1119
Parties.
(c) No later than March 15 of each year, beginning in 2007, the Master
Servicer, the Indenture Trustee, and the Owner Trustee shall notify (and the
Master Servicer shall cause any subservicer to notify) the Depositor and the
Master Servicer of any Form 10-K Disclosure Item, together with a description of
it in form and substance reasonably acceptable to the Depositor. Additionally,
each of the Master Servicer, the Indenture Trustee, and the Owner
44
Trustee shall provide, and shall cause each Reporting Subcontractor retained by
the Master Servicer or the Indenture Trustee, and in the case of the Master
Servicer shall cause each subservicer, to provide the following information no
later than March 15 of each year in which a Form 10-K is required to be filed on
behalf of the Trust:
(1) if the report on assessment of compliance with servicing
criteria described under Section 7.07 or related registered public
accounting firm attestation report described under Section 7.07
relating to the relevant person identifies any material instance of
noncompliance, notification of the instance of noncompliance and
(2) if the report on assessment of compliance with servicing
criteria or related registered public accounting firm attestation
report relating to the relevant person is not provided to be filed as
an exhibit to the Form 10-K, information detailing the explanation why
the report is not included.
Section 7.05 Xxxxxxxx-Xxxxx Certification.
(a) Each Form 10-K shall include a Xxxxxxxx-Xxxxx Certification. No
later than March 15 of each year, beginning in 2007, the Master Servicer and the
Indenture Trustee shall (unless it is the Certifying Person), and the Master
Servicer shall cause each subservicer and Reporting Subcontractor and the
Indenture Trustee shall cause each Reporting Subcontractor to, provide to the
Certifying Person a Performance Certification on which the Certification Parties
may reasonably rely.
(b) The senior officer in charge of the servicing function of the
Master Servicer shall serve as the Certifying Person on behalf of the Trust.
Neither the Master Servicer nor the Depositor will request delivery of a
certification under this Section unless the Depositor is required under the
Exchange Act to file an annual report on Form 10-K with respect to the Trust. If
before the filing date of the Form 10-K in March of each year, a Responsible
Officer of the Indenture Trustee or the Depositor has actual knowledge of
information material to the Xxxxxxxx-Xxxxx Certification, the Indenture Trustee
or the Depositor, as the case may be, shall promptly notify the Master Servicer
and the Depositor. The respective parties to this Agreement agree to cooperate
with all reasonable requests made by any Certifying Person or Certification
Party in connection with the Certifying Person's or Certification Party's
attempt to conduct any due diligence that it reasonably believes to be
appropriate to allow it to deliver any Xxxxxxxx-Xxxxx Certification with respect
to the Trust.
Section 7.06 Form 15 Filing.
Before January 30 of the first year in which the Depositor is able to
do so under applicable law, the Depositor shall file a Form 15 relating to the
automatic suspension of reporting in respect of the Trust under the Exchange
Act.
Section 7.07 Report on Assessment of Compliance and Attestation.
(a) On or before March 15 of each year, beginning in 2007 and
continuing until the year in which a Form 15 is file pursuant to Section 7.06:
(1) Each of the Master Servicer and the Indenture Trustee
shall deliver to the Depositor and the Master Servicer a Servicing
Criteria Compliance Assessment
45
Report for the previous year so long as a Servicing Criteria Compliance
Assessment Report is required by Regulation AB. The Servicing Criteria
Compliance Assessment Report shall be signed by an authorized officer
of the Master Servicer or the Indenture Trustee, as applicable, and
shall address each of the Servicing Criteria specified on a
certification substantially in the form of Exhibit F delivered to the
Depositor concurrently with the execution of this Agreement. To the
extent any of the Servicing Criteria are not applicable to the Master
Servicer or the Indenture Trustee, as applicable, with respect to
asset-backed securities transactions taken as a whole involving it and
that are backed by the same asset type backing the Notes, the report
shall include a statement to that effect. The Depositor and the Master
Servicer, and each of their respective officers and directors, will be
entitled to rely on each Servicing Criteria Compliance Assessment
Report.
(2) Each of the Master Servicer and the Indenture Trustee
shall deliver to the Depositor and the Master Servicer an Accountant's
Attestation with respect to the Servicing Criteria Compliance
Assessment Report furnished by Master Servicer or the Indenture
Trustee, as applicable. To the extent any of the Servicing Criteria are
not applicable to the Master Servicer or the Indenture Trustee, as
applicable, with respect to asset-backed securities transactions taken
as a whole involving it and that are backed by the same asset type
backing the Notes, the Accountant's Attestation shall include a
statement that that effect.
(3) The Master Servicer shall cause each subservicer and each
Reporting Subcontractor to deliver to the Depositor a Servicing
Criteria Compliance Assessment Report and an Accountant's Attestation
as and when provided in Section 7.07(a)(1) and (2).
(4) The Indenture Trustee shall cause each Reporting
Subcontractor to deliver to the Depositor and the Master Servicer a
Servicing Criteria Compliance Assessment Report and an Accountant's
Attestation as and when provided in Section 7.07(a)(1) and (2).
(5) The Master Servicer and the Indenture Trustee shall
execute (and the Master Servicer shall cause each subservicer to
execute, and the Master Servicer and the Indenture Trustee shall cause
each Reporting Subcontractor to execute) a reliance certificate in the
form of Exhibit H to enable the Certification Parties to rely on each
(A) annual compliance statement provided pursuant to
Section 3.09, if applicable,
(B) Servicing Criteria Compliance Assessment Report
provided pursuant to this Section 7.07, and
(C) Accountant's Attestation provided pursuant to
this Section 7.07,
and shall include a certification that each Servicing Criteria
Compliance Assessment Report discloses any deficiencies or defaults
described to the applicable registered
46
public accountants to enable them to render the Accountant's
Attestation provided for in this Section 7.07.
(b) If the Master Servicer, any subservicer, the Indenture Trustee, or
any Reporting Subcontractor is terminated or resigns during the term of this
Agreement, that person shall provide documents and information required by this
Section 7.07 with respect to the period it was subject to this Agreement or
provided services with respect to the Trust, the Notes, or the Mortgage Loans.
(c) Each Servicing Criteria Compliance Assessment Report provided by a
subservicer pursuant to Section 7.07(a)(3) shall address each of the Servicing
Criteria specified on a certification substantially in the form of Exhibit G
delivered to the Depositor concurrently with the execution of this Agreement or,
in the case of a subservicer subsequently appointed as such, on or before the
date of its appointment. An assessment of compliance provided by a Subcontractor
pursuant to Section 7.07(a)(3) or (4) need not address any elements of the
Servicing Criteria other than those specified by the Master Servicer or the
Indenture Trustee, as applicable, pursuant to Section 7.07(a)(1).
Section 7.08 Use of Subservicers and Subcontractors.
(a) The Master Servicer shall cause any subservicer used by the Master
Servicer (or by any subservicer) for the benefit of the Depositor to comply with
the provisions of Section 3.09(b) and this Article VII to the same extent as if
it were the Master Servicer (except with respect to the Master Servicer's duties
with respect to preparing and filing any Exchange Act Reports or as the
Certifying Person). The Master Servicer shall be responsible for obtaining from
each subservicer and delivering to the Depositor any servicer compliance
statement required to be delivered by the subservicer under Section 3.09, any a
Servicing Criteria Compliance Assessment Report and Accountant's Attestation
required to be delivered by the subservicer under Section 7.07, and any
certification required to be delivered to the Certifying Person under Section
7.05 as and when required to be delivered.
No person may become a successor subservicer in connection with this
Agreement (whether by merger or consolidation with an existing subservicer or by
appointment as a successor to any subservicer) unless the Master Servicer has
notified the Depositor at least 15 days before the effective date of the
succession or appointment of the successor and has provided all information
reasonably requested by the Depositor to comply with its reporting obligation
under Item 6.02 of Form 8-K with respect to the succession or appointment of the
successor subservicer in form and substance reasonably satisfactory to the
Depositor.
(b) It shall not be necessary for the Master Servicer, any subservicer,
or the Indenture Trustee to seek the consent of the Depositor or any other party
to the use of any Subcontractor. The Master Servicer or the Indenture Trustee,
as applicable, shall promptly on request provide to the Depositor (or any
designee of the Depositor, such as the Master Servicer or administrator) a
description (in form and substance reasonably satisfactory to the Depositor) of
the role and function of each Subcontractor used by the Master Servicer or the
Indenture Trustee (or in the case of the Master Servicer, any Subservicer). The
description shall specify for each Subcontractor
47
(1) its identity,
(2) whether it is "participating in the servicing function"
within the meaning of Item 1122 of Regulation AB, and
(3) which elements of the Servicing Criteria will be addressed
in Servicing Criteria Compliance Assessment Reports provided by it if
it is "participating in the servicing function" within the meaning of
Item 1122 of Regulation AB.
(c) Neither the Master Servicer nor the Indenture Trustee shall use any
Subcontractor (or in the case of the Master Servicer, any subservicer) that
would be a Reporting Subcontractor unless the Subcontractor (or subservicer)
agrees for the benefit of the Depositor to comply with Sections 7.07 and 7.09 to
the same extent as if the Subcontractor (or subservicer) were the Master
Servicer (except with respect to the Master Servicer's duties with respect to
preparing and filing any Exchange Act Reports or as the Certifying Person) or
the Indenture Trustee with respect to the actions being performed by the
Subcontractor (or subservicer), as applicable. The Master Servicer or the
Indenture Trustee, as applicable, shall be responsible for obtaining from each
Subcontractor and delivering to the Depositor and the Master Servicer any
Servicing Criteria Compliance Assessment Report and Accountant's Attestation
required to be delivered by the Subcontractor under Section 7.05 and Section
7.07, in each case as and when required to be delivered.
Section 7.09 Amendments.
(a) If the parties to this Agreement desire to further clarify or amend
any provision of this Article VII, this Agreement shall be amended to reflect
the new agreement between the parties covering matters in this Article VII,
which amendment shall not require any Opinion of Counsel or the satisfaction of
the Rating Agency Condition or the consent of any Noteholder.
(b) The Depositor shall assume the obligations and responsibilities of
the Master Servicer in this Article VII with respect to the preparation and
filing of the Exchange Act Reports and acting as the Certifying Person if
(1) during the period that the Depositor is required to file
Exchange Act Reports with respect to the Trust, the Master Servicer is
no longer an Affiliate of the Depositor,
(2) the successor Master Servicer has agreed to provide a
Xxxxxxxx-Xxxxx Certification to the Depositor substantially in the form
of Exhibit I,
(3) the successor Master Servicer has agreed to provide the
Servicing Criteria Compliance Assessment Reports and Accountant's
Attestations as provided in Section 7.07(a)(1) and (2) and the reliance
certificate as provided in Section 7.07(a)(5),
(4) the successor Master Servicer has agreed to cause each
subservicer and each Reporting Subcontractor used by it to provide the
Servicing Criteria Compliance Assessment Reports and Accountant's
Attestations as provided in Section 7.07(a)(3), and
48
(5) the Depositor has received indemnity from the successor
Master Servicer satisfactory to the Depositor.
ARTICLE VIII
TERMINATION
Section 8.01 Termination.
(a) The respective obligations and responsibilities of the Sponsor, the
Master Servicer, the Depositor, the Trust, and the Indenture Trustee created by
this Agreement (other than the obligation of the Master Servicer to send certain
notices) shall terminate on the earlier of
(1) the transfer of all the Mortgage Loans pursuant to Section
8.01(b),
(2) the termination of the Trust Agreement or the Indenture,
and
(3) the final payment or other liquidation of the last
Mortgage Loan remaining in the Trust or the disposition of all property
acquired in foreclosure or by deed in lieu of foreclosure of any
Mortgage Loan.
Upon termination in accordance with this Section, the Indenture Trustee
shall execute any documents and instruments of transfer presented by the
Transferor, in each case without recourse, representation, or warranty, and take
any other actions the Transferor reasonably requests to effect the transfer of
the Mortgage Loans to the Transferor. Notwithstanding the termination of this
Agreement, the Master Servicer shall comply with this Agreement in winding up
activities under this Agreement after termination if necessary.
(b) With the consent of the Credit Enhancer, the Master Servicer may
effect the transfer of all the Mortgage Loans at their termination purchase
price on any Payment Date on or after the Optional Termination Date and require
the Trust to redeem the Notes pursuant to Section 10.01 of the Indenture with
the proceeds. The termination purchase price is the greater of (x) the sum of:
(1) the aggregate Note Principal Balance for the Principal
Amount Notes,
(2) accrued aggregate Note Interest through the day preceding
the final Payment Date, and
(3) interest accrued on any aggregate Unpaid Investor Interest
Shortfall, to the extent legally permissible,
and (y) the sum of the amounts in Section 8.02(c)(1), (2), and (3) below.
(c) The Master Servicer must notify the Trust, the Indenture Trustee,
and the Credit Enhancer of any election to effect the transfer of the Mortgage
Loans pursuant to Section 8.01(b) no later than the first day of the month
before the month in which the transfer is to occur. The proceeds from the
purchase of the Mortgage Loans, for purposes of payments on the Notes, shall be
considered to have been received in the Collection Period before the Collection
Period in which the Payment Date on which the purchase takes place occurs.
49
Section 8.02 Additional Termination Requirements.
(a) If the Master Servicer exercises its redemption option in Section
8.01(b), the Mortgage Loans then remaining in the Trust shall be liquidated in
accordance with the following additional requirements, unless the Indenture
Trustee has been supplied with an Opinion of Counsel to the effect that the
failure to comply with the requirements of this Section will not result in the
imposition of taxes on prohibited transactions on any REMIC as defined in
Section 860F of the Code, or cause any REMIC created under the Trust Agreement
to fail to qualify as a REMIC at any time that any Notes are outstanding:
(b) Within 90 days before the final Payment Date in the notice given by
the Indenture Trustee under Section 10.01(b) of the Indenture, the Master
Servicer shall prepare and the Indenture Trustee, at the expense of the tax
matters person, shall adopt a plan of complete liquidation within the meaning of
Section 860F(a)(4) of the Code that, as evidenced by an Opinion of Counsel,
meets the requirements of a qualified liquidation; and
(c) Within 90 days after the time of adoption of a plan of complete
liquidation, the Issuer shall sell all of the assets of the Trust to the Master
Servicer for cash greater than or equal to the sum of:
(1) 100% of the principal balance of each Mortgage Loan plus
one month's accrued interest thereon at the applicable Loan Rate,
(2) for each such property, the lesser of the appraised value
of any Mortgaged Property that has been acquired by the Trust in
foreclosure or by deed in lieu of foreclosure as determined by the
higher of two appraisals completed by two independent appraisers
selected by the Master Servicer at the expense of the Master Servicer
and the principal balance of the related Mortgage Loan, and
(3) any remaining unpaid costs and damages incurred by the
Trust that arise out of an actual violation of any predatory or abusive
lending law that also constitutes an actual breach of a representation
and warranty in Section 2.04, in all cases plus accrued and unpaid
interest thereon at the Loan Rate.
The Indenture Trustee as agent for any REMIC created under the Trust
Agreement shall adopt and sign such a plan of complete liquidation upon the
written request of the Master Servicer and the receipt of the Opinion of Counsel
referred to in Section 8.02(a) and take any other action in connection therewith
reasonably requested by the Master Servicer.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01 Amendment.
This Agreement may be amended from time to time by the Sponsor, the
Master Servicer, the Depositor, the Owner Trustee, and the Indenture Trustee, if
the Rating Agency Condition is satisfied (in connection with which the consent
of the Credit Enhancer shall not be
50
unreasonably withheld). However, no amendment that significantly changes the
permitted activities of the Trust may be promulgated without the consent of a
majority of the aggregate Outstanding Amount of the Notes. For this purpose no
Notes owned by the Sponsor or any of its affiliates may vote, nor shall their
Notes be considered outstanding. This Agreement may also be amended from time to
time by the Sponsor, the Master Servicer, the Depositor, the Owner Trustee, and
the Indenture Trustee, with the consent of the Credit Enhancer (which consent
shall not be unreasonably withheld) and Holders of not less than 66 2/3% of the
aggregate Outstanding Amount of the Principal Amount Notes.
The Indenture Trustee may enter into any amendment of this Agreement as
to which the Rating Agency Condition is satisfied, and when so requested by an
Issuer Request, the Indenture Trustee shall enter into any amendment of this
Agreement
(1) that does not impose further obligations or liabilities on
the Indenture Trustee, and
(2) as to which either the Rating Agency Condition is
satisfied or Holders of not less than 66 2/3% of the aggregate
Outstanding Amount of the Principal Amount Notes and the Credit
Enhancer have consented.
Following the execution and delivery of any amendment to this Agreement
or to the Policy to which the Credit Enhancer was required to consent, either
the Transferor, if the Transferor requested the amendment, or the Master
Servicer, if the Master Servicer requested the amendment, shall reimburse the
Credit Enhancer for the reasonable out-of-pocket costs and expenses incurred by
them in connection with the amendment.
Before the execution of the amendment, the party to this Agreement
requesting the amendment shall notify each Rating Agency of the substance of the
amendment. The Indenture Trustee shall deliver fully executed original
counterparts of the instruments effecting the amendment to the Credit Enhancer.
Section 9.02 Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS PROVISIONS THAT
WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER STATE.
Section 9.03 Notices.
All notices, demands, instructions, consents, and other communications
required or permitted under this Agreement shall be in writing and signed by the
party giving the same and shall be personally delivered or sent by first-class
or express mail (postage prepaid), national overnight courier service, or by
facsimile transmission or other electronic communication device capable of
transmitting or creating a written record (confirmed by first-class mail) and
shall be considered to be given for purposes of this Agreement on the day that
the writing is delivered when personally delivered or sent by facsimile or
overnight courier or three Business Days after it was sent to its intended
recipient if sent by first-class mail. A facsimile has been delivered when the
sending machine issues an electronic confirmation of transmission. Unless
otherwise specified in a notice sent or delivered in accordance with the
provisions of this
51
Section, notices, demands, instructions, consents, and other communications in
writing shall be given to or made on the respective parties at their respective
addresses indicated in the Adoption Annex.
Whenever a notice or other communication to the Credit Enhancer refers
to an Event of Servicing Termination or with respect to which failure on the
part of the Credit Enhancer to respond would constitute consent or acceptance,
then a copy of the notice or other communication shall also be sent to the
attention of the General Counsel of the Credit Enhancer and shall be marked to
indicate "URGENT MATERIAL ENCLOSED."
Section 9.04 Severability of Provisions.
Any provisions of this Agreement that are held invalid for any reason
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of the invalidity or unenforceability without
invalidating the remaining provisions of this Agreement, and the prohibition or
unenforceability in a jurisdiction shall not invalidate or render unenforceable
that provision in any other jurisdiction.
Section 9.05 Assignment.
Except as provided in Sections 5.02 and 5.04, this Agreement may not be
assigned by the Depositor or the Master Servicer without the prior consent of
the Credit Enhancer.
Section 9.06 Third-Party Beneficiaries.
This Agreement will be binding on the parties to this Agreement, and
inure to the benefit of the parties to this Agreement, the Noteholders, the
Transferor, the Note Owners, the Owner Trustee and the Credit Enhancer, and
their respective successors and permitted assigns. . The Credit Enhancer is a
third party beneficiary of this Agreement. No other person will have any rights
under this Agreement.
Section 9.07 Counterparts; Electronic Delivery.
This Agreement may be executed in any number of copies, and by the
different parties on the same or separate counterparts, each of which shall be
considered to be an original instrument. Any signature page to this Agreement
containing a manual signature may be delivered by facsimile transmission or
other electronic communication device capable of transmitting or creating a
printable written record, and when so delivered shall have the effect of
delivery of an original manually signed signature page.
Section 9.08 Effect of Headings and Table of Contents.
The Article and Section headings in this Agreement and the Table of
Contents are for convenience only and shall not affect the construction of this
Agreement.
52
IN WITNESS WHEREOF, the Depositor, the Sponsor and Master Servicer, the
Trust, and the Indenture Trustee have caused this Agreement to be duly executed
by their respective officers all as of the day and year first above written.
CWHEQ, INC.
Depositor
By: /s/ Xxxxxx Xxxxx
--------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.
Sponsor and Master Servicer
By: /s/ Xxxxxx Xxxxx
--------------------------------------
Name: Xxxxxx Xxxxx
Title: Executive Vice President
THE BANK OF NEW YORK
Not in its individual capacity,
but solely as Indenture Trustee
By: /s/ Xxxxxxxx X. Xxxxxxxxxxx
--------------------------------------
Name: Xxxxxxxx X. Xxxxxxxxxxx
Title: Vice President
CWHEQ REVOLVING HOME EQUITY LOAN TRUST,
SERIES 2007-A
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Sr. Financial Services Officer
53
State of CALIFORNIA )
) ss.:
County of LOS ANGELES )
On the 31st day of January, 2007 before me, a notary public in and for
the State of California, personally appeared Xxxxxx Xxxxx, known to me who,
being by me duly sworn, did depose and say that he resides at Calabasas,
California; that he is the Vice President of CWHEQ, Inc. a Delaware corporation,
one of the parties that executed the foregoing instrument; that he signed his
name thereto by order of the Board of Directors of said corporation.
/s/ Xxxxxx X. Xxxxxx
-----------------------------
Notary Public
Xxxxxx X. Xxxxxx
Commission # 1609859
Notary Public - California
Los Angeles County
My Comm. Expires October 15, 2009.
1
State of CALIFORNIA )
) ss.:
County of LOS ANGELES )
On the 31st day of January, 2007 before me, a notary public in and for
the State of California, personally appeared Xxxxxx Xxxxx known to me who, being
by me duly sworn, did depose and say that he resides at Calabasas, California;
that he is the Executive Vice President of Countrywide Home Loans, Inc., a New
York corporation, one of the parties that executed the foregoing instrument; and
that he signed his name thereto by order of the Board of Directors of said
corporation.
/s/ Xxxxxx X. Xxxxxx
-----------------------------
Notary Public
Xxxxxx X. Xxxxxx
Commission # 1609859
Notary Public - California
Los Angeles County
My Comm. Expires October 15, 2009.
2
State of NEW YORK )
) ss.:
County of NEW YORK )
On the 31st day of January, 2007 before me, a notary public in and for
the State of Illinois, personally appeared Xxxxxxxx Xxxxxxxxxxx, known to me
who, being by me duly sworn, did depose and say that she resides at New York,
New York; that she is the Vice President of The Bank of New York, one of the
parties that executed the foregoing instrument; that he signed his name thereto
by order of the Board of Directors of said corporation.
/s/ Xxxx Xxxxxxxxx Xxxxxxx
-----------------------------
Notary Public
OFFICIAL SEAL
Notary Public, State of New York
No. 01HE6135079
My Commission Expires: Oct. 11, 2009
3
State of DELAWARE )
) ss.:
County of NEW CASTLE )
On the 36th day of January, 2007 before me, a notary public in and for
the State of Delaware, personally appeared Xxxxxx X. Xxxxxxx, known to me who,
being by me duly sworn, did depose and say that he/she resides at Wilmington,
Delaware; that he/she is a Sr. Financial Services Officer of Wilmington Trust
Company, not in its individual capacity but in its capacity as Owner Trustee of
CWHEQ Revolving Home Equity Loan Trust, Series 2007-A, one of the parties that
executed the foregoing instrument; that she signed her name thereto by order of
the Board of Directors of said corporation.
/s/ Xxxxxxx X. Xxxxxx
-----------------------------
Notary Public
Xxxxxxx X. Xxxxxx
Notary Public - State of Delaware
My Commission Expires October 20, 2007
4
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[Delivered to Indenture Trustee Only]
A-1
EXHIBIT B
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
[DATE]
The Bank of New York
as Indenture Trustee
000 Xxxxxxx Xxxxxx, 0 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Corporate Trust MBS Administration
cc:
The Bank of New York Trust Company. N.A.,
600 Xxxxxx, 9th Fl
Xxxxxxx, XX 00000
Attn: Structured Finance Services
Re: CWHEQ, Inc. Revolving Home Equity Loan
Asset Backed Notes, Series 2007-A
---------------------------------
Gentlemen:
In connection with the administration of the Mortgage Loans held by you
as Indenture Trustee under the Sale and Servicing Agreement, dated as of January
31, 2007, among CWHEQ, Inc. as Depositor, Countrywide Home Loans, Inc., as
Sponsor and Master Servicer, CWHEQ Revolving Home Equity Loan Trust, Series
2007-A and you, as Indenture Trustee (the "Agreement"), we hereby request a
release of the Mortgage File held by you as Indenture Trustee with respect to
the following described Mortgage Loan for the reason indicated below.
Loan No.:
---------
[MIN No.]
---------
Reason for requesting file:
---------------------------
---------------- 1. Mortgage Loan paid in full. (The Master
Servicer hereby certifies that all amounts
received in connection with the payment in
full of the Mortgage Loan which are
required to be deposited in the Collection
Account pursuant to Section 3.02 of the
Agreement have been so deposited).
---------------- 2. Retransfer of Mortgage Loan. (The Master
Servicer hereby certifies that the Transfer
Deposit Amount has been deposited in the
Collection Account pursuant to the
Agreement).
---------------- 3. The Mortgage Loan is being foreclosed.
---------------- 4. The Mortgage Loan is being re-financed by
another depository institution. (The Master
Servicer hereby certifies that all amounts
received in connection with the payment in
full of the Mortgage Loan which are
required to be deposited in the Collection
Account pursuant
B-1
to Section 3.02 of the Agreement have been
so deposited).
---------------- 5. Other (Describe).
The undersigned acknowledges that the above Mortgage File will be held
by the undersigned in accordance with the provisions of the Agreement and will
promptly be returned to the Indenture Trustee when the need therefor by the
Master Servicer no longer exists unless the Mortgage Loan has been liquidated or
retransferred.
Capitalized terms used herein shall have the meanings ascribed to them
in the Agreement.
COUNTRYWIDE HOME LOANS, INC.
By:_______________________________
Name:
Title: Servicing Officer
B-2
EXHIBIT C
FORM OF TRANSFER DOCUMENT
The Sponsor hereby transfers to the Depositor, and the Depositor hereby
transfers to the Owner Trustee for the benefit of CWHEQ Revolving Home Equity
Loan Trust, Series 200[o]-[o] the below identified Additional Home Equity Loans.
Subsequent Closing Date: _________________
Subsequent Cut-off Date: __________________
Cut-off Date Asset Balance: $ ______________
Additional Home Equity Loans:
This Transfer Document is delivered pursuant to the Mortgage Loan
Purchase Agreement, dated as of [ o ] [ o ], 200[o], among Countrywide Home
Loans, Inc., as a seller, Park Monaco Inc., as a seller, and the Depositor, as
purchaser and pursuant to the Sale and Servicing Agreement, dated as of [ o ][ o
], 200[o] (the "Sale and Servicing Agreement"), among CWHEQ, Inc., as Depositor,
Countrywide Home Loans, Inc., as Sponsor and Master Servicer, CWHEQ Revolving
Home Equity Loan Trust, Series 200[o]-[o], and The Bank of New York, as
Indenture Trustee. Capitalized terms used in this document have the meanings
given to them in the Sale and Servicing Agreement.
Dated: __________ , 200[o].
COUNTRYWIDE HOME LOANS, INCCWHEQ, INC.
By: ___________________ By: ________________________
Name: Name:
Title: Title:
C-1
EXHIBIT D
MONTHLY STATEMENT
The following information is required in each Monthly Statement. The
format of the Monthly Statement is on file with the Indenture Trustee.
(1) the Floating Allocation Percentage for the related Collection
Period;
(2) the Available Interest Collections and the Investor Principal
Collections for the related Collection Period;
(3) the Interest Collections that are not Available Interest
Collections, the Net Draws Principal Payment, and Interest Collections allocated
to the Net Draws, and Transferor Principal Collections, for the related
Collection Period;
(4) the aggregate amount to be paid to the Notes;
(5) the amount of Note Interest for the Notes for the related Interest
Period, and the Note Rate for the Notes for the related Interest Period;
(6) the amount of the Note Interest that is not payable to the Holders
of the Class of Notes on the Payment Date because of insufficient Available
Interest Collections and Subordinated Transferor Collections;
(7) the amount of the Investor Loss Amount not covered by the
applications of Available Interest Collections to pay down the Notes, after
giving effect to the payments on the Notes on that Payment Date;
(8) the amount of the remaining Unpaid Investor Interest Shortfall for
the Notes after giving effect to the payment;
(9) the amount of principal in the payment for the Notes, separately
stating its components;
(10) the amount of the Investor Loss Amounts for the Payment Date and
the amount of Investor Loss Amounts that will be reimbursed in the payment;
(11) the aggregate unreimbursed Investor Loss Amounts after giving
effect to the payment;
(12) the amount of any Basis Risk Carryforward the Principal Amount
Notes in the payment and the amount of Rate Cap Shortfalls for the Notes and any
amounts due to the trust, and the amounts received, in respect of each Cap
Contract;
(13) the amount of the remaining Basis Risk Carryforward for the
Principal Amount Notes giving effect to the payment;
(14) the Accelerated Principal Payment Amount and the portion of it
that will be distributed as principal on the Notes pursuant to Section
8.03(a)(v) of the Indenture on the Payment Date;
(15) the amount of any Transfer Deposit Amount paid by the Sponsor or
the Depositor during the related Collection Period in connection with retransfer
of Mortgage Loans pursuant to Section 2.07 of this Sale and Servicing Agreement;
(16) the Servicing Fee for the Payment Date;
D-1
(17) the Note Principal Balance or Notional Balance of the Notes and
the factor to seven decimal places obtained by dividing the Note Principal
Balance of the Principal Amount Notes for the Payment Date by the Original Note
Principal Balance of the Principal Amount Notes after giving effect to all
payments on the Payment Date;
(18) the Allocated Transferor Interest after giving effect to the
payment and to any reduction in with respect to the Investor Loss Amount on the
Payment Date;
(19) whether a Rapid Amortization Event has occurred since the prior
Determination Date, specifying the Rapid Amortization Event if one has occurred;
(20) whether an Event of Servicing Termination has occurred since the
prior Determination Date, specifying the Event of Servicing Termination if one
has occurred;
(21) whether the Stepdown Date has occurred since the prior
Determination Date;
(22) whether the Stepup Trigger Date has occurred since the prior
Determination Date;
(23) the amount to be distributed on the Mortgage Loans to the Issuer
pursuant to Section 8.03(a)(ix) of the Indenture;
(24) the amount to be paid to the Master Servicer from Available
Interest Collections pursuant to Section 8.03(a)(vii) of the Indenture;
(25) the Maximum Rate for the related Collection Period and the
Weighted Average Net Loan Rate for the Mortgage Loans for the related Collection
Period;
(26) the Loan Pool Balance as of the end of the preceding Collection
Period;
(27) the number and aggregate Asset Balances of Mortgage Loans as to
which the Minimum Monthly Payment is delinquent for 30-59 days, 60-89 days, and
90 or more days, respectively, as of the end of the preceding Collection Period;
(28) the book value (within the meaning of 12 C.F.R. ss. 571.13 or
comparable provision) of any reaL estate acquired through foreclosure or grant
of a deed in lieu of foreclosure;
(29) the number and aggregate Asset Balances of any Mortgage Loans that
were charged-off during the Collection Period immediately before that Payment
Date, and any amount of Charged-off Mortgage Loan Proceeds included in the
payments to the noteholders on that Payment Date;
(30) the amount of any optional advances on the Mortgage Loans pursuant
to Section 4.03 by the Master Servicer included in the payment on the Payment
Date and the aggregate amount of optional advances pursuant to Section 4.03 on
Mortgage Loans by the Master Servicer outstanding as of the close of business on
the Payment Date;
(31) the number and principal balances of any Mortgage Loans
retransferred to the Sponsor pursuant to each of Section 2.04 and to the Class
R-1 Certificate Holder pursuant to Section 2.06;
(32) the amount of Subordinated Transferor Collections included in the
payment for the Notes;
D-2
(33) for the first Payment Date, the number and Cut-off Date Asset
Balance of Mortgage Loans for which the Mortgage Loan File was not delivered to
the Custodian acting on behalf of the Indenture Trustee within 30 days of the
Closing Date or Subsequent Closing Date, as applicable;
(34) the amount being paid to the Class R-1 Certificates,
(35) the Net Draws for the Payment Date;
(36) the Net Draws Principal Payment for the Payment Date;
(37) the Record Date for that Payment Date;
(38) the Determination Date;
(39) the Payment Date;
(40) the amount of funds received into any of the Collection Account,
Payment Account, and any other account or fund established under the Transaction
Documents, and the sources of the funds;
(41) fees paid to any party under the Transaction Documents, other than
the Servicing Fee;
(42) the premium payable to the Credit Enhancer on the Policy included
in the payments;
(43) the Mortgage Rate;
(44) the beginning and ending balance of any of the Collection Account,
Payment Account, and any other account or fund established under the Transaction
Documents;
(45) the number and principal balance of the Mortgage Loans at the
beginning and the end applicable period, and the following information for the
Mortgage Loans: the weighted average Mortgage Rate, the weighted average
remaining term to maturity, and the weighted average loan age;
(46) the pool factor;
(47) amount of prepayments;
(48) amount of prepayment charges;
(49) delinquency and loss information for the Mortgage Loans;
(50) any material modifications, extensions, or waiver to any terms of
Mortgage Loan during the applicable period;
(51) any material breaches by any party to the Transaction Documents of
any representation, warranty, or covenant;
(52) any repurchase or substitution of a Mortgage Loan; and
(53) any material changes to the underwriting, originating, acquisition
or pool selection criteria of any Seller.
The amounts furnished pursuant to clauses (4), (5) (for Note Interest),
(7), (8), (9), (10), and (11) above shall be expressed as a dollar amount per
$1,000 increment of Notes.
D-3
EXHIBIT E-1
FORM OF PERFORMANCE CERTIFICATION
(SUBSERVICER)
Re: The Sale and Servicing Agreement dated as of [________] (the "Sale and
Servicing Agreement") among CWHEQ, Inc., as Depositor, Countrywide Home
Loans, Inc., as Sponsor and Master Servicer, CWHEQ Revolving Home
Equity Loan Trust, Series 200[ ]-[ ], as the Trust, and the
undersigned, as Indenture Trustee and [Subservicing Agreement] dated as
of [ ] (the "Agreement")
I, ________________________________, the _______________________ of
[NAME OF COMPANY] (the "Company"), certify to the Depositor and the Master
Servicer, 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
Company provided in accordance with Item 1123 of Regulation AB (the
"Compliance Statement"), the report on assessment of the Company'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"), all servicing reports, officer's certificates
and other information relating to the servicing of the Mortgage Loans
by the Company during 200[ ] that were delivered by the Company to the
Depositor, the Master Servicer or the Indenture Trustee pursuant to the
Agreement (collectively, the "Company Servicing Information");
(2) Based on my knowledge, the Company 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 Company Servicing Information;
(3) Based on my knowledge, all of the Company Servicing
Information required to be provided by the Company under the Agreement
has been provided to the Depositor, the Master Servicer or the
Indenture Trustee, as applicable;
(4) I am responsible for reviewing the activities performed by
the Company as a 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
Company has fulfilled its obligations under the Agreement in all
material respects; and
(5) The Compliance Statement required to be delivered by the
Company pursuant to the Agreement, and the Servicing Assessment and
Attestation Report required
E-1-1
to be provided by the Company and by any Subservicer or Subcontractor
pursuant to the Agreement, have been provided to the Master Servicer.
Any material instances of noncompliance described in such reports have
been disclosed to the Master Servicer. Any material instance of
noncompliance with the Servicing Criteria has been disclosed in such
reports.
Date:_______________________________
By:_______________________________
Name:
Title:
E-1-2
EXHIBIT E-2
FORM OF PERFORMANCE CERTIFICATION
(INDENTURE TRUSTEE)
Re: The Sale and Servicing Agreement dated as of [________], (the "Sale and
Servicing Agreement") among CWHEQ, Inc., as Depositor, Countrywide Home
Loans, Inc., as Sponsor and Master Servicer, CWHEQ Revolving Home
Equity Loan Trust, Series 200[ ]-[ ], as the Trust, and the
undersigned, as Indenture Trustee
I, ________________________________, the _______________________ of
[NAME OF COMPANY] (the "Company"), certify to the Depositor and the Master
Servicer, and their officers, with the knowledge and intent that they will rely
upon this certification, that:
(1) I have reviewed the report on assessment of the Company'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"), [all reports on Form 10-D containing statements
to certificateholders filed in respect of the period included in the
year covered by the annual report of the Trust Fund] (collectively, the
"Distribution Date Statements");
(2) Assuming the accuracy and completeness of the information
delivered to the Company by the Master Servicer as provided in the Sale
and Servicing Agreement and subject to paragraph (4) below, the
distribution information determined by the Company and set forth in the
Distribution Date Statements contained in all Form 10-D's included in
the year covered by the annual report of such Trust on Form 10-K for
the calendar year 200[ ], is complete and does not contain any material
misstatement of fact as of the last day of the period covered by such
annual report;
(3) Based solely on the information delivered to the Company
by the Master Servicer as provided in the Sale and Servicing Agreement,
(i) the distribution information required under the Sale and Servicing
Agreement to be contained in the Trust Fund's Distribution Date
Statements and (ii) the servicing information required to be provided
by the Master Servicer to the Indenture Trustee for inclusion in the
Trust Fund's Distribution Date Statements, to the extent received by
the Indenture Trustee from the Master Servicer in accordance with the
Sale and Servicing Agreement, is included in such Distribution Date
Statements;
(4) The Company is not certifying as to the accuracy,
completeness or correctness of the information which it received from
the Master Servicer and did not independently verify or confirm the
accuracy, completeness or correctness of the information provided by
the Master Servicer;
E-2-1
(5) I am responsible for reviewing the activities performed by
the Company as a person "performing a servicing function" under the
Sale and Servicing Agreement, and based on my knowledge and the
compliance review conducted in preparing the Servicing Assessment and
except as disclosed in the Servicing Assessment or the Attestation
Report, the Company has fulfilled its obligations under the Sale and
Servicing Agreement; and
(6) The Servicing Assessment and Attestation Report required
to be provided by the Company and by Subcontractor pursuant to the Sale
and Servicing Agreement, have been provided to the Master Servicer and
the Depositor. Any material instances of noncompliance described in
such reports have been disclosed to the Master Servicer and the
Depositor. Any material instance of noncompliance with the Servicing
Criteria has been disclosed in such reports.
Date:_______________________________
By:_______________________________
Name:
Title:
E-2-2
EXHIBIT F
FORM OF SERVICING CRITERIA TO BE ADDRESSED IN
ASSESSMENT OF COMPLIANCE STATEMENT
The assessment of compliance to be delivered by the Trustee
shall address, at a minimum, the criteria identified as below as "Applicable
Servicing Criteria":
------------------- --------------------------------------------------------------------------------------------- ------------------
Reference Servicing Criteria Applicable
Servicing Criteria
------------------- --------------------------------------------------------------------------------------------- ------------------
General Servicing Considerations
------------------- --------------------------------------------------------------------------------------------- ------------------
Policies and procedures are instituted to monitor any performance or other triggers and X
1122(d)(1)(i) events of default in accordance with the transaction agreements.
------------------- --------------------------------------------------------------------------------------------- ------------------
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
1122(d)(1)(ii) servicing activities.
------------------- --------------------------------------------------------------------------------------------- ------------------
Any requirements in the transaction agreements to maintain a back-up servicer for the pool
1122(d)(1)(iii) assets are maintained.
------------------- --------------------------------------------------------------------------------------------- ------------------
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
1122(d)(1)(iv) by and otherwise in accordance with the terms of the transaction agreements.
------------------- --------------------------------------------------------------------------------------------- ------------------
Cash Collection and Administration
------------------- --------------------------------------------------------------------------------------------- ------------------
Payments on pool assets are deposited into the appropriate custodial bank accounts and X (as to accounts
related bank clearing accounts no more than two business days following receipt, or such held by Trustee)
1122(d)(2)(i) other number of days specified in the transaction agreements.
------------------- --------------------------------------------------------------------------------------------- ------------------
Disbursements made via wire transfer on behalf of an obligor or to an investor are made X ( as to
1122(d)(2)(ii) only by authorized personnel. investors only)
------------------- --------------------------------------------------------------------------------------------- ------------------
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
1122(d)(2)(iii) specified in the transaction agreements.
------------------- --------------------------------------------------------------------------------------------- ------------------
The related accounts for the transaction, such as cash reserve accounts or accounts X (as to accounts
established as a form of over collateralization, are separately maintained (e.g., with held by Trustee)
1122(d)(2)(iv) respect to commingling of cash) as set forth in the transaction agreements.
------------------- --------------------------------------------------------------------------------------------- ------------------
Each custodial account is maintained at a federally insured depository institution as set X (1) (subject to
forth in the transaction agreements. For purposes of this criterion, "federally insured SEC clarification)
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
1122(d)(2)(v) Exchange Act.
------------------- --------------------------------------------------------------------------------------------- ------------------
F-1
------------------- --------------------------------------------------------------------------------------------- ------------------
Reference Servicing Criteria Applicable
Servicing Criteria
------------------- --------------------------------------------------------------------------------------------- ------------------
Exchange Act.
------------------- --------------------------------------------------------------------------------------------- ------------------
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent unauthorized access.
------------------- --------------------------------------------------------------------------------------------- ------------------
Reconciliations are prepared on a monthly basis for all asset-backed securities related X
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
1122(d)(2)(vii) of days specified in the transaction agreements.
------------------- --------------------------------------------------------------------------------------------- ------------------
F-2
------------------- --------------------------------------------------------------------------------------------- ------------------
Investor Remittances and Reporting
------------------- --------------------------------------------------------------------------------------------- ------------------
Reports to investors, including those to be filed with the Commission, are maintained in X
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 pool assets serviced by the
1122(d)(3)(i) servicer.
------------------- --------------------------------------------------------------------------------------------- ------------------
Amounts due to investors are allocated and remitted in accordance with timeframes, X
1122(d)(3)(ii) distribution priority and other terms set forth in the transaction agreements.
------------------- --------------------------------------------------------------------------------------------- ------------------
Disbursements made to an investor are posted within two business days to the servicer's X
1122(d)(3)(iii) investor records, or such other number of days specified in the transaction agreements.
------------------- --------------------------------------------------------------------------------------------- ------------------
Amounts remitted to investors per the investor reports agree with cancelled checks, or X
1122(d)(3)(iv) other form of payment, or custodial bank statements.
------------------- --------------------------------------------------------------------------------------------- ------------------
Pool Asset Administration
------------------- --------------------------------------------------------------------------------------------- ------------------
Collateral or security on pool assets is maintained as required by the transaction
1122(d)(4)(i) agreements or related pool asset documents.
------------------- --------------------------------------------------------------------------------------------- ------------------
1122(d)(4)(ii) Pool assets and related documents are safeguarded as required by the transaction agreements.
------------------- --------------------------------------------------------------------------------------------- ------------------
Any additions, removals or substitutions to the asset pool are made, reviewed and approved X
1122(d)(4)(iii) in accordance with any conditions or requirements in the transaction agreements.
------------------- --------------------------------------------------------------------------------------------- ------------------
Payments on pool assets, including any payoffs, made in accordance with the related pool
asset 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
1122(d)(4)(iv) accordance with the related pool asset documents.
------------------- --------------------------------------------------------------------------------------------- ------------------
The servicer's records regarding the pool assets agree with the servicer's records with
1122(d)(4)(v) respect to an obligor's unpaid principal balance.
------------------- --------------------------------------------------------------------------------------------- ------------------
Changes with respect to the terms or status of an obligor's pool assets (e.g., loan
modifications or re-agings) are made, reviewed and approved by authorized personnel in
1122(d)(4)(vi) accordance with the transaction agreements and related pool asset documents.
------------------- --------------------------------------------------------------------------------------------- ------------------
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
1122(d)(4)(vii) by the transaction agreements.
------------------- --------------------------------------------------------------------------------------------- ------------------
Records documenting collection efforts are maintained during the period a pool asset 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
1122(d)(4)(viii) describe the entity's activities in monitoring delinquent pool assets including, for
------------------- --------------------------------------------------------------------------------------------- ------------------
F-3
------------------- --------------------------------------------------------------------------------------------- ------------------
example, phone calls, letters and payment rescheduling plans in cases where delinquency is
deemed temporary (e.g., illness or unemployment).
------------------- --------------------------------------------------------------------------------------------- ------------------
Adjustments to interest rates or rates of return for pool assets with variable rates are
1122(d)(4)(ix) computed based on the related pool asset documents.
------------------- --------------------------------------------------------------------------------------------- ------------------
Regarding any funds held in trust for an obligor (such as escrow accounts): (A) such funds
are analyzed, in accordance with the obligor's pool asset 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 pool asset documents
and state laws; and (C) such funds are returned to the obligor within 30 calendar days of
full repayment of the related pool assets, or such other number of days specified in the
1122(d)(4)(x) transaction agreements.
------------------- --------------------------------------------------------------------------------------------- ------------------
F-4
------------------- --------------------------------------------------------------------------------------------- ------------------
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
1122(d)(4)(xi) transaction agreements.
------------------- --------------------------------------------------------------------------------------------- ------------------
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
1122(d)(4)(xii) payment was due to the obligor's error or omission.
------------------- --------------------------------------------------------------------------------------------- ------------------
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
1122(d)(4)(xiii) transaction agreements.
------------------- --------------------------------------------------------------------------------------------- ------------------
Delinquencies, charge-offs and uncollectible accounts are recognized and recorded in
1122(d)(4)(xiv) accordance with the transaction agreements.
------------------- --------------------------------------------------------------------------------------------- ------------------
Any external enhancement or other support, identified in Item 1114(a)(1) through (3) or X
1122(d)(4)(xv) Item 1115 of Regulation AB, is maintained as set forth in the transaction agreements.
------------------- --------------------------------------------------------------------------------------------- ------------------
[NAME OF MASTER SERVICER] [NAME OF
INDENTURE TRUSTEE] [NAME OF SUBSERVICER]
Date:_______________________________
By:_________________________________
Name:
Title:
F-5
Exhibit G
Xxxxxxxx-Xxxxx Certification
(Replacement of Master Servicer)
G-1
Exhibit H
Form of Reliance Certificate
[on file with Indenture Trustee]
--------------------------------
(1) This will only be provided by the Trustee if it is deemed that such accounts
maintained by the Trustee are custodial accounts for purposes of these servicing
criteria and is subject to further clarification from the SEC. Transaction
agreements currently do not require custodial accounts to be established at
federally insured depository institutions; however, if the criteria is further
clarified such that custodial accounts are to be established at federally
insured depository institutions OR as set forth in transaction agreements, then
the criteria would be applicable.
H-1
