EXECUTION COPY
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MASTER INTERIM SERVICING AGREEMENT
between
XXXXXX BROTHERS BANK, F.S.B,
Purchaser
and
FIRST NATIONAL BANK OF NEVADA
Seller
Dated as of September 24, 2004
CONVENTIONAL FIXED AND ADJUSTABLE RATE
RESIDENTIAL MORTGAGE LOANS
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Definitions...................................................................................1
ARTICLE II
SERVICING
Section 2.01 Seller to Act as Servicer.....................................................................9
Section 2.02 Liquidation of Mortgage Loans................................................................10
Section 2.03 Collection of Mortgage Loan Payments.........................................................11
Section 2.04 Establishment of and Deposits to Custodial Account...........................................11
Section 2.05 Permitted Withdrawals From Custodial Account.................................................12
Section 2.06 Establishment of and Deposits to Escrow Account..............................................13
Section 2.07 Permitted Withdrawals From Escrow Account....................................................14
Section 2.08 Payment of Taxes, Insurance and Other Charges................................................14
Section 2.09 PMI and LPMI Obligations.....................................................................15
Section 2.10 Protection of Accounts.......................................................................15
Section 2.11 Maintenance of Hazard Insurance..............................................................15
Section 2.12 Maintenance of Mortgage Impairment Insurance.................................................17
Section 2.13 Maintenance of Fidelity Bond and Errors and Omissions Insurance..............................17
Section 2.14 Inspections..................................................................................18
Section 2.15 Restoration of Mortgaged Property............................................................18
Section 2.16 Maintenance of PMI Policy and/or LPMI Policy; Claims.........................................18
Section 2.17 Title, Management and Disposition of REO Property............................................20
Section 2.18 Permitted Withdrawals with respect to REO Property...........................................21
Section 2.19 Real Estate Owned Reports....................................................................21
Section 2.20 Liquidation Reports..........................................................................21
Section 2.21 Reports of Foreclosures and Abandonments of Mortgaged Property...............................21
ARTICLE III
PAYMENTS TO PURCHASER
Section 3.01 Remittances..................................................................................21
Section 3.02 Statements to Purchaser......................................................................22
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ARTICLE IV
GENERAL SERVICING PROCEDURES
Section 4.01 Transfers of Mortgaged Property..............................................................22
Section 4.02 Satisfaction of Mortgages and Release of Mortgage Files......................................23
Section 4.03 Servicing Compensation.......................................................................23
Section 4.04 Annual Statement as to Compliance............................................................24
Section 4.05 Annual Independent Public Accountants' Servicing Report......................................24
Section 4.06 Right to Examine Seller Records..............................................................24
ARTICLE V
SELLER TO COOPERATE
Section 5.01 Provision of Information.....................................................................24
Section 5.02 Financial Statements; Servicing Facilities...................................................25
ARTICLE VI
TERMINATION
Section 6.01 Agency Suspension..................................................ERROR! BOOKMARK NOT DEFINED.
Section 6.02 Damages......................................................................................25
Section 6.03 Termination Upon Transfer of Servicing.......................................................25
Section 6.04 Servicing Transfer Provisions................................................................26
ARTICLE VII
BOOKS AND RECORDS
Section 7.01 Possession of Servicing Files Prior to the Transfer Date.....................................27
ARTICLE VIII
INDEMNIFICATION AND ASSIGNMENT
Section 8.01 Indemnification..............................................................................28
Section 8.02 Limitation on Liability of Seller and Others.................................................28
Section 8.03 Limitation on Resignation and Assignment by Seller...........................................28
Section 8.04 Assignment by Purchaser......................................................................29
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ARTICLE IX
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
Section 9.01 Authority and Capacity.......................................................................30
Section 9.02 Assistance...................................................................................30
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 10.01 Due Organization and Authority...............................................................30
Section 10.02 Ordinary Course of Business..................................................................30
Section 10.03 No Conflicts.................................................................................30
Section 10.04 Ability to Service...........................................................................31
Section 10.05 Ability to Perform...........................................................................31
Section 10.06 No Litigation Pending........................................................................31
Section 10.07 No Consent Required..........................................................................31
Section 10.08 No Untrue Information........................................................................31
ARTICLE XI
DEFAULT
Section 11.01 Events of Default............................................................................31
Section 11.02 Waiver of Defaults...........................................................................33
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Notices......................................................................................33
Section 12.02 Waivers......................................................................................33
Section 12.03 Entire Agreement; Amendment..................................................................33
Section 12.04 Execution; Binding Effect....................................................................34
Section 12.05 Headings.....................................................................................34
Section 12.06 Applicable Law...............................................................................34
Section 12.07 Relationship of Parties......................................................................34
Section 12.08 Severability of Provisions...................................................................34
Section 12.09 Recordation of Assignments of Mortgage.......................................................34
Section 12.10 Appointment and Designation of Master Servicer...............................................34
EXHIBITS
EXHIBIT 1 FORM OF MONTHLY REMITTANCE ADVICE
EXHIBIT 2 FORM OF CUSTODIAL ACCOUNT CERTIFICATION
EXHIBIT 3 FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
EXHIBIT 4 FORM OF ESCROW ACCOUNT CERTIFICATION
EXHIBIT 5 FORM OF ESCROW ACCOUNT LETTER AGREEMENT
EXHIBIT 6 MORTGAGE LOAN SCHEDULE
EXHIBIT 7 CONTENTS OF EACH MORTGAGE FILE
EXHIBIT 8 FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 9 FORM OF ACKNOWLEDGMENT AGREEMENT
EXHIBIT 10 FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
INTERIM SERVICING AGREEMENT
This Interim Servicing Agreement (the "Agreement") is entered
into as of the twenty-fourth day of September, 2004, by and between First
National Bank of Nevada (the "Seller"), a national banking association and
Xxxxxx Brothers Bank, F.S.B., a federal savings bank (the "Purchaser").
WHEREAS, the Purchaser and Seller entered into a Master
Mortgage Loan Purchase and Warranties Agreement dated as of the date hereof (the
"Purchase Agreement") pursuant to which from time to time the Purchaser shall
purchase from the Seller certain conventional, residential, fixed and adjustable
rate first lien mortgage loans and fixed rate second lien mortgage loans (the
"Mortgage Loans") delivered as whole loans servicing released; and
WHEREAS, the Purchaser desires to have the Seller service the
Mortgage Loans in each Mortgage Loan Package during the period between the
related Closing Date and the related Transfer Date (the "Interim Period"), the
Seller desires to service and administer such Mortgage Loans on behalf of the
Purchaser, or its designee or assignee, during the related Interim Period, and
the parties desire to provide the terms and conditions of such interim servicing
by the Seller.
NOW, THEREFORE, in consideration of the mutual covenants made
herein and for other good and valuable consideration the sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. The following terms are defined as
follows (except as otherwise agreed by the parties).
Accepted Servicing Practices: With respect to any Mortgage
Loan, those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage Loan
in the jurisdiction where the related Mortgaged Property is located.
Adequately Capitalized: Adequately Capitalized shall mean,
with respect to any Insured Depository Institution, the maintenance by such
Insured Depository Institution of capital ratios at or above the required
minimum levels for such capital category under the regulations promulgated
pursuant to Section 1831(o) of the United States Code, as amended from time to
time, by the Appropriate Federal Banking Agency for such institution, as such
regulation may be amended from time to time.
Agreement: This agreement between the Purchaser and the Seller
for the interim servicing and administration of the Mortgage Loans.
Ancillary Income: All income (other than principal and
interest) derived from the Mortgage Loans, including but not limited to, late
charges, prepayment penalties, fees received with respect to checks or bank
drafts returned by the related bank for non-sufficient funds, assumption fees,
optional insurance administrative fees and all other incidental fees and
charges. The Seller shall retain all Ancillary Income as part of the Servicing
Fee to the extent not required to be deposited into the Custodial Account.
Appraised Value: The value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value of the
Mortgaged Property.
Appropriate Federal Banking Agency: Appropriate Federal
Banking Agency shall have the meaning ascribed to it by Section 1813(q) of Title
12 of the United States Code, as amended from time to time.
BIF: The Bank Insurance Fund, or any successor thereto.
Business Day: Any day other than (i) a Saturday or Sunday, or
(ii) a federal holiday.
Closing Date: The date or dates on which the Purchaser from
time to time shall purchase and the Seller from time to time shall sell, the
Mortgage Loans listed on the related Mortgage Loan Schedule.
Condemnation Proceeds: All awards or settlements in respect of
a Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Custodial Account: The separate account or accounts created
and maintained pursuant to Section 2.04.
Cut-off Date: The first day of the month in which the related
Closing Date occurs.
Determination Date: The fifteenth (15th) day of the calendar
month immediately preceding the related Remittance Date (or if such day is not a
Business Day, the Business Day immediately preceding such day).
Due Date: The day of the month on which the Monthly Payment is
due on a Mortgage Loan, exclusive of any days of grace. With respect to the
Mortgage Loans for which payment from the Mortgagor is due on a day other than
the first day of the month, such Mortgage Loans will be treated as if the
Monthly Payment is due on the first day of the month following the actual Due
Date.
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Due Period: With respect to each Remittance Date, the period
commencing on the second day of the month preceding the month of the Remittance
Date and ending in the first day of the month preceding the Remittance Date.
Eligible Investments: Any one or more of the obligations and
securities listed below which investment provides for a date of maturity not
later than the Determination Date in each month:
(i) direct obligations of, and obligations fully guaranteed
by, the United States of America, or any agency or instrumentality of
the United States of America the obligations of which are backed by the
full faith and credit of the United States of America; and
(ii) federal funds, demand and time deposits in, certificates
of deposits of, or bankers' acceptances issued by, any depository
institution or trust company incorporated or organized under the laws
of the United States of America or any state thereof and subject to
supervision and examination by federal and/or state banking
authorities, so long as at the time of such investment or contractual
commitment providing for such investment the commercial paper or other
short-term debt obligations of such depository institution or trust
company (or, in the case of a depository institution or trust company
which is the principal subsidiary of a holding company, the commercial
paper or other short-term debt obligations of such holding company) are
rated "P-1" by Xxxxx'x Investors Service, Inc. and the long-term debt
obligations of such holding company) are rated "P-1" by Xxxxx'x
Investors Service, Inc. and the long-term debt obligations of such
depository institution or trust company (or, in the case of a
depository institution or trust company which is the principal
subsidiary of a holding company, the long-term debt obligations of such
holding company) are rated at least "Aa" by Xxxxx'x Investors Service,
Inc.
provided, however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (ii) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations.
Escrow Account: The separate account or accounts created and
maintained pursuant to Section 2.06.
Escrow Payments: With respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
Event of Default: Any one of the conditions or circumstances
enumerated in Section 11.01.
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Xxxxxx Mae: Xxxxxx Xxx, or any successor thereto.
Xxxxxx Mae Guides: The Xxxxxx Xxx Selling Guide and the Xxxxxx
Mae Servicing Guide and all amendments or additions thereto.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
Xxxxxxx Mac: Xxxxxxx Mac, or any successor thereto.
Fidelity Bond: A fidelity bond to be maintained by the Seller
pursuant to Section 2.13.
Insurance Proceeds: With respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
Insured Depository Institution: Insured Depository Institution
shall have the meaning ascribed to such term by Section 1813(c)(2) of Title 12
of the United States Code, as amended from time to time.
Interim Period: The period between the related Closing Date
and the related Transfer Date.
Liquidation Proceeds: Cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or assignment
of such Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the
sale of the related Mortgaged Property if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan,
the ratio of the outstanding principal amount of the Mortgage Loan as of the
related Cut-off Date (unless otherwise indicated) to the lesser of (a) the
Appraised Value of the Mortgaged Property and (b) if the Mortgage Loan was made
to finance the acquisition of the related Mortgaged Property, the purchase price
of the Mortgaged Property, expressed as a percentage.
LPMI Loan: A Mortgage Loan with a LPMI Policy.
LPMI Policy: A policy of primary mortgage guaranty insurance
issued by United Guaranty Corporation or another Qualified Insurer pursuant to
which the related premium is to be paid by the Servicer of the related Mortgage
Loan from payments of interest made by the Mortgagor in an amount as is set
forth in the related Terms Letter and Mortgage Loan Schedule.
LPMI Fee: With respect to each LPMI Loan, the portion of the
Mortgage Interest Rate as set forth on the related Mortgage Loan Schedule (which
shall be payable solely from the interest portion of Monthly Payments, Insurance
Proceeds, Condemnation Proceeds or Liquidation Proceeds), which, during such
period prior to the required cancellation of the LPMI Policy, shall be used to
pay the premium due on the related LPMI Policy.
Monthly Payment: The scheduled monthly payment of principal
and interest on a Mortgage Loan.
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Mortgage: The mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first lien on an unsubordinated estate
in fee simple in real property securing the Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage
Loan referred to in Exhibit 7 annexed hereto, and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
Mortgage Impairment Insurance Policy: A mortgage impairment or
blanket hazard insurance policy as described in Section 2.12.
Mortgage Interest Rate: The annual rate of interest borne on a
Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the
subject of this Agreement, purchased by the Purchaser on a servicing released
basis, each Mortgage Loan being identified on the Mortgage Loan Schedule, which
Mortgage Loan includes without limitation the Mortgage File, the Monthly
Payments, Insurance Proceeds, Servicing Rights and all other rights, benefits,
proceeds and obligations arising from or in connection with such Mortgage Loan.
Mortgage Loan Documents: The documents contained in the
Mortgage File pertaining to each Mortgage Loan.
Mortgage Loan Package: A pool of Mortgage Loans sold to the
Purchaser on a Closing Date.
Mortgage Loan Remittance Rate: With respect to each Mortgage
Loan, the annual rate of interest remitted to the Purchaser, which shall be
equal to the Mortgage Interest Rate minus (i) the Interim Servicing Fee Rate,
and (ii) with respect to LPMI Loans, the LPMI Fee.
Mortgage Loan Schedule: A schedule of Mortgage Loans annexed
hereto as Exhibit 6, such schedule setting forth the following information with
respect to each Mortgage Loan: (1) the Company's Mortgage Loan identifying
number; (2) the Mortgagor's and Co-Mortgagor's (if applicable) names; (3) the
street address of the Mortgaged Property, including the city, state, zip code,
county, lot number, block number and section number; (4) a code indicating
whether the Mortgaged Property is a single family residence, a 2 family
dwelling, a 3-4 family dwelling, a manufactured home, a PUD, a townhouse, a unit
in a condominium project, a co-operative, a mixed-use property, land, or a
non-residential property (require current S&P coding convention from Purchaser);
(5) a code indicating the loan is a fixed rate or adjustable rate Mortgage Loan
(require current S&P coding convention from Purchaser); (6) Product Description
(require current S&P coding convention from Purchaser); (7) a code indicating
the lien status of the Mortgage Loan; (8) the original months to maturity or the
remaining months to maturity from the related Cut-off Date, in any case based on
the original amortization schedule, and if different, the maturity expressed in
the same manner but based on the actual amortization schedule; (9) the Loan to
Value Ratio at origination; (10) the combined Loan to Value Ratio at
origination; (11) the Mortgage Interest Rate as of the related Cut-off Date;
(12) the Payment and Rate Adjustment Frequencies (if applicable); (13) the Index
(if applicable); (14) the initial Interest Rate Adjustment Date (if applicable);
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(15) the initial Payment Adjustment Date (if applicable); (16) the next Interest
Rate Adjustment Date (if applicable); (17) the next Payment Adjustment Date (if
applicable); (18) the Gross Margin (if applicable); (19) the minimum Mortgage
Interest Rate under the terms of the Mortgage Note (if applicable); (20) a code
indicating Interest Only Loans (yes or no); (21) the maximum Mortgage Interest
Rate under the terms of the Mortgage Note (if applicable); (22) the Mortgage
Interest Rate adjustment cap at the initial Interest Rate Adjustment Date (if
applicable); (23) the Mortgage Interest Rate adjustment cap at all subsequent
Interest Rate Adjustment Dates (if applicable); (24) the Lifetime Mortgage
Interest Rate Cap (if applicable); (25) the rounding provisions under the terms
of the Mortgage Note (if applicable); (26) the lookback provisions (#of days)
under the terms of the Mortgage Note (if applicable); (27) negative amortization
indicator and limit; (28) the date on which the first payment is due; (29) the
original term of the Mortgage Loan; (30) the stated maturity date; (31) the
amount of the Monthly Payment; (32) the Annual Payment Cap expressed as a
percentage (for Arms only); (33) the next due date as of the related Cut-off
Date; (34) the original principal amount of the Mortgage Loan; (35) the Senior
and Subordinate balances (if applicable); (36) the closing date of the Mortgage
Loan; (37) the principal balance of the Mortgage Loan as of the close of
business on the related Cut-off Date; after deduction of payments of principal
actually received on or before the related Cut-off Date; (38) monthly payment
histories on current and prior mortgages (24 months if available); (39) prior
foreclosure history or a code indicating whether the Mortgagor or the
co-Mortgagor has been in foreclosure at any time during the previous twenty-four
months (to the extent available); (40) prior bankruptcy history or a code
indicating whether the Mortgage or the co-Mortgagor has been bankrupt in the
previous twenty-four months; (41) the loan purpose code; (42) the occupancy
code; (43) the loan documentation type, (to be provided in conformance with
Standard and Poor's documentation categories- Field 5); (44) Asset Verification
(Purchase Money loans only), (yes or no); (45) a code indicating the Credit
Grade of the Mortgage Loan (if applicable); (46) the debt to income ratio; (47)
the Mortgagor's and Co-Mortgagor's (if applicable) social security numbers; (48)
the Mortgagor's and Co-Mortgagor's (if applicable) original FICO score and the
Next Generation FICO score for new credit scores (if available); (49) a code
indicating Next Generation FICO (Y/N); (50) the Mortgagor's mailing address if
different from Number (3) above; (51) the Mortgagor's home telephone number;
(52) the Mortgagor's business telephone number; (53) the purchase price of the
Mortgaged Property (if a purchase); (54) the Appraisal date and the Appraisal
value of the Mortgaged Property; (55) the Mortgagor's and Co-Mortgagor's (if
applicable) race; (56) the Mortgagor's and Co-Mortgagor's (if applicable)
gender; (57) the Mortgagor's and Co-Mortgagor's (if applicable) date of birth;
(58) the number of bedrooms; (59) the combined annual income; (60) the
application date; (61) the broker's name (to the extent available); (62) the
broker's firm name (to the extent available); (63) the appraiser's name (to the
extent available); (64) the appraiser's firm name (to the extent available);
(65) the settlement agent (to the extent available); (66) the origination
channel (wholesale, retail, or correspondent); (67) flood insurance contract
provider; (68) tax service contract provider; (69) number of units; (70) as of
date; (71) amortization term; (72) balloon flag; (73) prepayment penalty flag;
(74) prepayment penalty term as well as the percentage amount and prepayment
penalty description (i.e.- 6 months interest, set percentage of UPB) (to the
extent available); (75) payment history current loan; (76) payment history
previous loan; (77) mortgage insurance provider, or code for LPMI; (78) mortgage
insurance coverage percentage; (79) mortgage insurance certificate number; (80)
number of borrowers; (81) first time home buyer flag; (82) the year in which the
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Mortgaged Property was built; (83) the monthly tax and insurance payment; (84)
the monthly servicing fee (if applicable); (85) the escrow balance as of the
Cut-off Date (to the extent available); (86) The MIN number assigned to each
Mortgage Loan, if applicable; (87) a code indicating the Appraisal Type (Tax
Assessment, BPO, Drive-By Form 704, URAR, Form 2065, Form 2055 (Exterior only),
Form 2055 (Interior Inspection), or AVM; (88) if the Appraisal Type in #87 is an
AVM, then a description of the AVM type; (89) a code indicating whether the
Borrower(s) is self-employed (yes or no); (90) a code indicating whether the
loan is High Cost or Covered (HC, CV, HL); (91) a section 32 flag and the
origination points and or fees; (92) a code indicating if a loan is assumable
(yes or no); (93) the APR on the Mortgage Loan and (94) any additional data
requested by purchaser to comply with Standard & Poor's LEVELS(R). With respect
to the Mortgage Loans in the aggregate, the Mortgage Loan Schedule shall set
forth the following information, as of the related Cut-off Date: (1) the number
of Mortgage Loans; (2) the current aggregate outstanding principal balance of
the Mortgage Loans; (3) the weighted average Mortgage Interest Rate of the
Mortgage Loans; and (4) the weighted average maturity of the Mortgage Loans.
Mortgage Note: The note or other evidence of the indebtedness
of a Mortgagor secured by a Mortgage.
Mortgaged Property: The real property securing repayment of
the debt evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Officer's Certificate: A certificate signed by the Chairman of
the Board or the Vice Chairman of the Board or the President or a Vice President
or an assistant Vice President and by the Treasurer or the Secretary or one of
the Assistant Treasurers or Assistant Secretaries of the Purchaser or Seller, as
applicable, and delivered as required by this Agreement.
Opinion of Counsel: Written opinion of counsel, who may be
salaried counsel for the Person on behalf of whom the opinion is being given,
reasonably acceptable to each Person to whom such opinion is addressed.
PMI Policy: A policy of primary mortgage guaranty insurance
issued by a Qualified Insurer, as required by this Agreement with respect to
certain Mortgage Loans.
Prime Rate: The prime rate announced to be in effect from time
to time, as published as the average rate in The Wall Street Journal.
Purchase Agreement: The Mortgage Loan Purchase and Warranties
Agreement between the Purchaser and the Seller related to the purchase of the
Mortgage Loans dated as of the Cut-off Date.
Purchaser: Xxxxxx Brothers Bank, F.S.B. and its assigns and or
successors in interest.
Qualified Depository: ______________________ or such other
depository the accounts of which are insured by the FDIC through the BIF or the
SAIF.
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Qualified Insurer: A mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by Xxxxxx Mae or Xxxxxxx Mac.
Remittance Date: The remittance date shall be the 18th day of
each calendar month (or if such 18th day is not a Business Day, the first
Business Day immediately following such 18th day).
REO Disposition: The final sale by the Seller of any REO
Property.
REO Disposition Proceeds: All amounts received with respect to
an REO Disposition pursuant to Section 2.17.
REO Property: A Mortgaged Property acquired by the Seller on
behalf of the Purchaser through foreclosure or by deed in lieu of foreclosure,
as described in Section 2.17.
Repurchase Price: With respect to any Mortgage Loan, a price
equal to (i) the Stated Principal Balance of the Mortgage Loan plus (ii)
interest on such Stated Principal Balance at the Mortgage Interest Rate from the
date on which interest has last been paid and distributed to the Purchaser to
the date of repurchase, less amounts received, if any, plus amounts advanced, if
any, by any servicer, in respect of such repurchased Mortgage Loan.
SAIF: The Savings Association Insurance Fund, or any successor
thereto.
Servicing Advances: All customary, reasonable and necessary
"out of pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred in the performance by the Seller of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or
judicial proceedings, including foreclosures, (c) the management and liquidation
of the Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage and (d) compliance with the obligations under Section 2.08.
Servicing Fee: With respect to each Mortgage Loan, an amount
equal to $12.00 per month. Such fee shall be payable monthly and shall be pro
rated for any portion of a month during which the Mortgage Loans is serviced
pursuant to this Agreement. The obligation of the Purchaser to pay the Servicing
Fee is limited to, and the Servicing Fee is payable solely from, the interest
portion (including recoveries with respect to interest from Liquidation
Proceeds, to the extent permitted by Section 2.05) of such Monthly Payment
collected by the Seller, or as otherwise provided under Section 2.05.
Servicing File: With respect to each Mortgage Loan, the file
retained by the Seller consisting of originals of all documents in the Mortgage
File which are not delivered to the Purchaser or the Purchaser's designee, and
copies of the Mortgage Loan Documents listed on Exhibit 7 attached hereto.
Servicing Officer: Any officer of the Seller involved in or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Seller to the
Purchaser upon request, as such list may from time to time be amended.
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Servicing Rights: Any and all of the following: (a) any and
all rights to service the Mortgage Loans; (b) any payments to or monies received
by the Seller for servicing the Mortgage Loans; (c) any late fees, penalties or
similar payments with respect to the Mortgage Loans; (d) all agreements or
documents creating, defining or evidencing any such servicing rights to the
extent they relate to such servicing rights and all rights of the Seller
thereunder; (e) Escrow Payments or other similar payments with respect to the
Mortgage Loans and any amounts actually collected by the Seller with respect
thereto; (f) all accounts and other rights to payment related to any of the
property described in this paragraph; and (g) any and all documents, files,
records, servicing files, servicing documents, servicing records, data tapes,
computer records, or other information pertaining to the Mortgage Loans or
pertaining to the past, present or prospective servicing of the Mortgage Loans.
Stated Principal Balance: As to each Mortgage Loan, (i) the
principal balance of the Mortgage Loan at the Cut-off Date after giving effect
to payments of principal received on or before such date, minus (ii) all amounts
previously distributed to the Purchaser with respect to the related Mortgage
Loan representing payments or recoveries of principal or advances in lieu
thereof.
Terms Letter: With respect to each purchase of a Mortgage Loan
Package, that certain Purchase Price and Terms Letter setting forth the general
terms and conditions of such transaction and identifying the Mortgage Loans to
be purchased thereunder, by and between the Seller, or its designee, and the
Purchaser.
Transfer Date: The date on which the Purchaser, or its
designee, shall receive the transfer of servicing responsibilities and begin to
perform the servicing of the Mortgage Loans, and the related Seller shall cease
all servicing responsibilities. Such Transfer Date shall occur on the date set
forth in the related Terms Letter.
ARTICLE II
SERVICING
Section 2.01 Seller to Act as Servicer. With respect to the
Mortgage Loans in each Mortgage Loan Package purchased by the Purchaser, from
and after the related Closing Date, the Seller, as an independent contractor,
shall, from time to time, service and administer the Mortgage Loans, during the
related Interim Period, by execution and delivery of (a) the related
Acknowledgement Agreement, in the form attached hereto as Exhibit 9, and (b) the
related Assignment and Assumption Agreement, in the form attached hereto as
Exhibit 10, and shall have full power and authority, acting alone, to do any and
all things in connection with such servicing and administration which the Seller
may deem necessary or desirable, consistent with the terms of this Agreement and
with Accepted Servicing Practices.
9
Consistent with the terms of this Agreement, the Seller may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Seller's reasonable and prudent
determination such waiver, modification, postponement or indulgence is not
materially adverse to the Purchaser, provided, however, that unless the Seller
has obtained the prior written consent of the Purchaser, the Seller shall not
permit any modification with respect to any Mortgage Loan that would change the
Mortgage Interest Rate, defer or forgive the payment of principal or interest,
reduce or increase the outstanding principal balance (except for actual payments
of principal) or change the final maturity date on such Mortgage Loan. In the
event of any such modification which permits the deferral of interest or
principal payments on any Mortgage Loan, the Seller shall, on the Business Day
immediately preceding the Remittance Date in any month in which any such
principal or interest payment has been deferred, deposit in the Custodial
Account from its own funds, in accordance with Section 2.04, the difference
between (a) such month's principal and one month's interest at the Mortgage Loan
Remittance Rate on the unpaid principal balance of such Mortgage Loan and (b)
the amount paid by the Mortgagor. The Seller shall be entitled to reimbursement
for such advances to the same extent as for all other advances made pursuant to
Section 2.05 or upon the related Transfer Date. Without limiting the generality
of the foregoing, the Seller shall continue, and is hereby authorized and
empowered, to execute and deliver on behalf of itself and the Purchaser, all
instruments of satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments, with respect to the Mortgage
Loans and with respect to the Mortgaged Properties. If reasonably required by
the Seller, the Purchaser shall furnish the Seller with any powers of attorney
and other documents necessary or appropriate to enable the Seller to carry out
its servicing and administrative duties under this Agreement.
In servicing and administering the Mortgage Loans, the Seller
shall employ procedures (including collection procedures) and exercise the same
care that it customarily employs and exercises in servicing and administering
mortgage loans for its own account, giving due consideration to Accepted
Servicing Practices where such practices do not conflict with the requirements
of this Agreement, and the Purchaser's reliance on the Seller.
The Seller shall keep at its servicing office books and
records in which, subject to such reasonable regulations as it may prescribe,
the Seller shall note transfers of Mortgage Loans. No transfer of a Mortgage
Loan may be made unless such transfer is in compliance with the terms hereof.
For the purposes of this Agreement, the Seller shall be under no obligation to
deal with any Person with respect to this Agreement or the Mortgage Loans unless
the Seller has been notified of such transfers as provided in this Section 2.01.
The Purchaser may sell and transfer, in whole or in part, the Mortgage Loans,
provided that no such sale and transfer shall be binding upon Seller unless such
transferee shall agree in writing in the form of the Assignment and Assumption
Agreement attached hereto Exhibit 8, to be bound by the terms of this Agreement,
and an executed copy of the same shall have been delivered to the Seller. Upon
receipt thereof, the Seller shall xxxx its books and records to reflect the
ownership of the Mortgage Loans by such assignee, and the previous Purchaser
shall be released from its obligations hereunder. This Agreement shall be
binding upon and inure to the benefit of the Purchaser and Seller and their
permitted successors, assignees and designees.
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Section 2.02 Liquidation of Mortgage Loans. In the event that
any payment due under any Mortgage Loan and not postponed pursuant to Section
2.01 is not paid when the same becomes due and payable, or in the event the
Mortgagor fails to perform any other covenant or obligation under the Mortgage
Loan and such failure continues beyond any applicable grace period, the Seller
shall take such action as (1) the Seller would take under similar circumstances
with respect to a similar mortgage loan held for its own account for investment,
(2) shall be consistent with Accepted Servicing Practices, (3) the Seller shall
determine prudently to be in the best interest of Purchaser, and (4) is
consistent with any related PMI Policy or LPMI Policy. In the event that any
payment due under any Mortgage Loan is not postponed pursuant to Section 2.01
and remains delinquent for a period of 90 days or any other default continues
for a period of 90 days beyond the expiration of any grace or cure period, the
Seller shall commence foreclosure proceedings, provided that, prior to
commencing foreclosure proceedings, the Seller shall notify the Purchaser in
writing of the Seller's intention to do so, and the Seller shall not commence
foreclosure proceedings if the Purchaser objects to such action within 10
Business Days of receiving such notice. In such connection, the Seller shall
from its own funds make all necessary and proper Servicing Advances, provided,
however, that the Seller shall not be required to expend its own funds in
connection with any foreclosure or towards the restoration or preservation of
any Mortgaged Property, unless it shall determine (a) that such preservation,
restoration and/or foreclosure will increase the proceeds of liquidation of the
Mortgage Loan to Purchaser after reimbursement to itself for such expenses and
(b) that such expenses will be recoverable by it either through Liquidation
Proceeds (respecting which it shall have priority for purposes of withdrawals
from the Custodial Account pursuant to Section 2.05) or through Insurance
Proceeds (respecting which it shall have similar priority).
Section 2.03 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the related Transfer Date, the Seller
shall proceed diligently to collect all payments due under each of the Mortgage
Loans when the same shall become due and payable and shall take special care in
ascertaining and estimating Escrow Payments and all other charges that will
become due and payable with respect to the Mortgage Loans and each related
Mortgaged Property, to the end that the installments payable by the Mortgagors
will be sufficient to pay such charges as and when they become due and payable.
Section 2.04 Establishment of and Deposits to Custodial
Account. The Seller shall segregate and hold all funds collected and received
pursuant to the Mortgage Loans separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand accounts, titled "First National Bank of
Nevada in trust for Purchasers of Residential Fixed and Adjustable Rate Mortgage
Loans, Group No. 2004-1 and various Mortgagors". The Custodial Account shall be
established with a Qualified Depository acceptable to the Purchaser. Any funds
deposited in the Custodial Account shall at all times be fully insured to the
full extent permitted under applicable law. Funds deposited in the Custodial
Account may be drawn on by the Seller in accordance with Section 2.05. The
creation of any Custodial Account shall be evidenced by a certification in the
form of Exhibit 2 hereto, in the case of an account established with the Seller,
or by a letter agreement in the form of Exhibit 3 hereto, in the case of an
account held by a depository other than the Seller. A copy of such certification
or letter agreement shall be furnished to the Purchaser and, upon request, to
any subsequent Purchaser.
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The Seller shall deposit in the Custodial Account on a daily
basis, and retain therein, the following collections received by the Seller
after the related Cut-off Date:
(i) all payments on account of principal on the Mortgage
Loans;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be
deposited pursuant to Section 2.11 (other than proceeds to be held in
the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with
Section 2.15), Section 2.12 and Section 2.16;
(v) all Condemnation Proceeds which are not applied to the
restoration or repair of the Mortgaged Property or released to the
Mortgagor in accordance with Section 2.15;
(vi) any amount required to be deposited in the Custodial
Account pursuant to Section 2.01, 2.10, 2.17, 4.01 or 4.02;
(vii) any amounts payable in connection with the repurchase of
any Mortgage Loan pursuant to Section 7 of the Purchase Agreement; and
(viii) any amounts required to be deposited by the Seller
pursuant to Section 2.12 in connection with the deductible clause in
any blanket hazard insurance policy.
The foregoing requirements for deposit into the Custodial
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of assumption
fees, to the extent permitted by Section 4.01, need not be deposited by the
Seller into the Custodial Account. Any interest paid on funds deposited in the
Custodial Account by the depository institution shall accrue to the benefit of
the Seller and the Seller shall be entitled to retain and withdraw such interest
from the Custodial Account pursuant to Section 2.05.
Section 2.05 Permitted Withdrawals From Custodial Account. The
Seller shall, from time to time, withdraw funds from the Custodial Account for
the following purposes:
(i) to make payments to the Purchaser in the amounts and in
the manner provided for in Section 3.01;
(ii) with respect to each LPMI Loan, in the amount of the LPMI
Fee, to make payments with respect to premiums for LPMI Policies;
(iii) to reimburse itself for unreimbursed Servicing Advances,
any unpaid Servicing Fees and for unreimbursed advances of Seller funds
made pursuant to Section 2.17, the Seller's right to reimburse itself
pursuant to this subclause (iii) with respect to any Mortgage Loan
being limited to related Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds and such other amounts as may be collected by the
Seller from the Mortgagor or otherwise relating to the Mortgage Loan,
it being understood that, in the case of any such reimbursement, the
Seller's right thereto shall be prior to the rights of the Purchaser
except that, where the Seller is required to repurchase a Mortgage Loan
pursuant to Section 4.02 of this Agreement, the Seller's right to such
reimbursement shall be subsequent to the payment to the Purchaser of
the Repurchase Price pursuant to such sections and all other amounts
required to be paid to the Purchaser with respect to such Mortgage
Loan;
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(iv) to pay itself interest on funds deposited in the
Custodial Account;
(v) to reimburse itself for expenses incurred and reimbursable
to it pursuant to Section 4.03;
(vi) to clear and terminate the Custodial Account upon the
termination of this Agreement; and
(vii) to withdraw funds deposited in error.
In the event that the Custodial Account is interest bearing,
on each Remittance Date, the Seller shall withdraw all funds from the Custodial
Account except for those amounts which, pursuant to Section 3.01, the Seller is
not obligated to remit on such Remittance Date. The Seller may use such
withdrawn funds only for the purposes described in this Section 2.05.
Section 2.06 Establishment of and Deposits to Escrow Account.
The Seller shall segregate and hold all funds collected and received pursuant to
a Mortgage Loan constituting Escrow Payments separate and apart from any of its
own funds and general assets and shall establish and maintain one or more Escrow
Accounts, in the form of time deposit or demand accounts, titled, "First
National Bank of Nevada in trust for Purchasers of Residential Fixed and
Adjustable Rate Mortgage Loans, Group No. 2004-1 and various Mortgagors". The
Escrow Accounts shall be established with a Qualified Depository, in a manner
which shall provide maximum available insurance thereunder. Funds deposited in
the Escrow Account may be drawn on by the Seller in accordance with Section
2.07. The creation of any Escrow Account shall be evidenced by a certification
in the form of Exhibit 4 hereto, in the case of an account established with the
Seller, or by a letter agreement in the form of Exhibit 5 hereto, in the case of
an account held by a depository other than the Seller. A copy of such
certification shall be furnished to the Purchaser and, upon request, to any
subsequent Purchaser.
The Seller shall deposit in the Escrow Account or Accounts on
a daily basis, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage
Loans, for the purpose of effecting timely payment of any such items as
required under the terms of this Agreement;
(ii) all amounts representing Insurance Proceeds or
Condemnation Proceeds which are to be applied to the restoration or
repair of any Mortgaged Property.
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The Seller shall make withdrawals from the Escrow Account only
to effect such payments as are required under this Agreement, as set forth in
Section 2.07. The Seller shall be entitled to retain any interest paid on funds
deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Seller shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or
that interest paid thereon is insufficient for such purposes.
Section 2.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the Seller only:
(i) to effect timely payments of ground rents, taxes,
assessments, water rates, mortgage insurance premiums, condominium
charges, fire and hazard insurance premiums or other items constituting
Escrow Payments for the related Mortgage;
(ii) to reimburse the Seller for any Servicing Advance made by
the Seller pursuant to Section 2.08 with respect to a related Mortgage
Loan, but only from amounts received on the related Mortgage Loan which
represent late collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in
excess of the amounts required under the terms of the related Mortgage
Loan;
(iv) for transfer to the Custodial Account and application to
reduce the principal balance of the Mortgage Loan in accordance with
the terms of the related Mortgage and Mortgage Note;
(v) for application to restoration or repair of the Mortgaged
Property in accordance with the procedures outlined in Section 2.15;
(vi) to pay to the Seller, or any Mortgagor to the extent
required by law, any interest paid on the funds deposited in the Escrow
Account;
(vii) to clear and terminate the Escrow Account on the
termination of this Agreement; and
(viii) to withdraw funds deposited in error.
Section 2.08 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Seller shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, water rates, sewer
rents, and other charges which are or may become a lien upon the Mortgaged
Property and the status of PMI Policy premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date, employing for such purpose deposits
of the Mortgagor in the Escrow Account which shall have been estimated and
accumulated by the Seller in amounts sufficient for such purposes, as allowed
under the terms of the Mortgage. To the extent that a Mortgage does not provide
for Escrow Payments, the Seller shall determine that any such payments are made
by the Mortgagor at the time they first become due. The Seller assumes full
responsibility for the timely payment of all such bills and shall effect timely
payment of all such charges irrespective of each Mortgagor's faithful
performance in the payment of same or the making of the Escrow Payments, and the
Seller shall make advances from its own funds to effect such payments.
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Section 2.09 PMI and LPMI Obligations. The Seller shall comply
with all provisions of applicable state and federal law relating to the
cancellation of, or collection of premiums with respect to, PMI Policies and
LPMI Policies, including, but not limited to, the provisions of the Homeowners
Protection Act of 1998, and all regulations promulgated thereunder, as amended
from time to time. The Seller shall be obligated to make premium payments with
respect to (a) LPMI Policies, and (b) if the Mortgagor fails to pay any PMI
Policy premium, such PMI Policy.
Section 2.10 Protection of Accounts. The Seller may transfer
the Custodial Account or the Escrow Account to a different Qualified Depository
from time to time. Such transfer shall be made only upon obtaining the consent
of the Purchaser, which consent shall not be withheld unreasonably.
The Seller shall bear any expenses, losses or damages
sustained by the Purchaser because the Custodial Account and/or the Escrow
Account are not demand deposit accounts.
Amounts on deposit in the Custodial Account and the Escrow
Account may at the option of the Seller be invested in Eligible Investments;
provided that in the event that amounts on deposit in the Custodial Account or
the Escrow Account exceed the amount fully insured by the FDIC (the "Insured
Amount") the Seller shall be obligated to invest the excess amount over the
Insured Amount in Eligible Investments on the same Business Day as such excess
amount becomes present in the Custodial Account or the Escrow Account. Any such
Eligible Investment shall mature no later than the Determination Date next
following the date of such Eligible Investment, provided, however, that if such
Eligible Investment is an obligation of a Qualified Depository (other than the
Seller) that maintains the Custodial Account or the Escrow Account, then such
Eligible Investment may mature on such Remittance Date. Any such Eligible
Investment shall be made in the name of the Seller in trust for the benefit of
the Purchaser. All income on or gain realized from any such Eligible Investment
shall be for the benefit of the Seller and may be withdrawn at any time by the
Seller. Any losses incurred in respect of any such investment shall be deposited
in the Custodial Account or the Escrow Account, by the Seller out of its own
funds immediately as realized.
Section 2.11 Maintenance of Hazard Insurance. The Seller shall
cause to be maintained for each Mortgage Loan, hazard insurance such that all
buildings upon the Mortgaged Property are insured by a generally acceptable
insurer rated A:VI or better in the current Best's Key Rating Guide ("Best's")
against loss by fire, hazards of extended coverage and such other hazards as are
customary in the area where the Mortgaged Property is located, in an amount
which is at least equal to the lesser of (i) the maximum insurable value of the
improvements securing such Mortgage Loan and (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan and (b) an amount such that
the proceeds thereof shall be sufficient to prevent the Mortgagor or the loss
payee from becoming a co-insurer.
15
If upon origination of the Mortgage Loan, the related
Mortgaged Property was located in an area identified in the Federal Register by
the Flood Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
is in effect with a generally acceptable insurance carrier rated A:VI or better
in Best's in an amount representing coverage equal to the lesser of (i) the
minimum amount required, under the terms of coverage, to compensate for any
damage or loss on a replacement cost basis (or the unpaid balance of the
mortgage if replacement cost coverage is not available for the type of building
insured) and (ii) the maximum amount of insurance which is available under the
Flood Disaster Protection Act of 1973, as amended. If at any time during the
term of the Mortgage Loan, the Seller determines in accordance with applicable
law and Accepted Servicing Practices that a Mortgaged Property is located in a
special flood hazard area and is not covered by flood insurance or is covered in
an amount less than the amount required by the Flood Disaster Protection Act of
1973, as amended, the Seller shall notify the related Mortgagor that the
Mortgagor must obtain such flood insurance coverage, and if said Mortgagor fails
to obtain the required flood insurance coverage within forty-five (45) days
after such notification, the Seller shall immediately force place the required
flood insurance on the Mortgagor's behalf.
If a Mortgage is secured by a unit in a condominium project,
the Seller shall verify that the coverage required of the owner's association,
including hazard, flood, liability, and fidelity coverage, is being maintained
in accordance with then current Accepted Servicing Practices, and secure from
the owner's association its agreement to notify the Seller promptly of any
change in the insurance coverage or of any condemnation or casualty loss that
may have a material effect on the value of the Mortgaged Property as security.
The Seller shall cause to be maintained on each Mortgaged
Property earthquake or such other or additional insurance as may be required
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance, or pursuant to the
requirements of any private mortgage guaranty insurer, or as may be required to
conform with Accepted Servicing Practices.
In the event that any Purchaser or the Seller shall determine
that the Mortgaged Property should be insured against loss or damage by hazards
and risks not covered by the insurance required to be maintained by the
Mortgagor pursuant to the terms of the Mortgage, the Seller shall, in accordance
with Accepted Servicing Practices, provide notice of such to the Mortgagor.
All policies required hereunder shall name the Seller as loss
payee and shall be endorsed with standard or New York mortgagee clauses, without
contribution, which shall provide for at least 30 days prior written notice of
any cancellation, reduction in amount or material change in coverage.
The Seller shall not interfere with the Mortgagor's freedom of
choice in selecting either his insurance carrier or agent, provided, however,
that the Seller shall not accept any such insurance policies from insurance
companies unless such companies are rated A:VI or better in Best's and are
licensed to do business in the jurisdiction in which the Mortgaged Property is
located. The Seller shall determine that such policies provide sufficient risk
coverage and amounts, that they insure the property owner, and that they
properly describe the property address. The Seller shall furnish to the
Mortgagor a formal notice of expiration of any such insurance in sufficient time
for the Mortgagor to arrange for renewal coverage by the expiration date.
16
Pursuant to Section 2.04, any amounts collected by the Seller
under any such policies (other than amounts to be deposited in the Escrow
Account and applied to the restoration or repair of the related Mortgaged
Property, or property acquired in liquidation of the Mortgage Loan, or to be
released to the Mortgagor, in accordance with the Seller's normal servicing
procedures as specified in Section 2.15) shall be deposited in the Custodial
Account subject to withdrawal pursuant to Section 2.05.
Section 2.12 Maintenance of Mortgage Impairment Insurance. In
the event that the Seller shall obtain and maintain a blanket policy insuring
against losses arising from fire and hazards covered under extended coverage on
all of the Mortgage Loans, then, to the extent such policy provides coverage in
an amount equal to the amount required pursuant to Section 2.11 and otherwise
complies with all other requirements of Section 2.11, it shall conclusively be
deemed to have satisfied its obligations as set forth in Section 2.11. Any
amounts collected by the Seller under any such policy relating to a Mortgage
Loan shall be deposited in the Custodial Account subject to withdrawal pursuant
to Section 2.05. Such policy may contain a deductible clause, in which case, in
the event that there shall not have been maintained on the related Mortgaged
Property a policy complying with Section 2.11, and there shall have been a loss
which would have been covered by such policy, the Seller shall deposit in the
Custodial Account at the time of such loss the amount not otherwise payable
under the blanket policy because of such deductible clause, such amount to be
deposited from the Seller's funds, without reimbursement therefor. Upon request
of the Purchaser, the Seller shall cause to be delivered to the Purchaser a
certified true copy of such policy and a statement from the insurer thereunder
that such policy shall in no event be terminated or materially modified without
30 days' prior written notice to the Purchaser.
Section 2.13 Maintenance of Fidelity Bond and Errors and
Omissions Insurance. The Seller shall maintain with responsible companies, at
its own expense, a blanket Fidelity Bond and an Errors and Omissions Insurance
Policy, with broad coverage on all officers, employees or other persons acting
in any capacity requiring such persons to handle funds, money, documents or
papers relating to the Mortgage Loans ("Seller Employees"). Any such Fidelity
Bond and Errors and Omissions Insurance Policy shall be in the form of the
Mortgage Banker's Blanket Bond and shall protect and insure the Seller against
losses, including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such Seller Employees. Such Fidelity Bond and Errors and
Omissions Insurance Policy also shall protect and insure the Seller against
losses in connection with the release or satisfaction of a Mortgage Loan without
having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 2.13 requiring such Fidelity Bond and Errors and
Omissions Insurance Policy shall diminish or relieve the Seller from its duties
and obligations as set forth in this Agreement. The minimum coverage under any
such bond and insurance policy shall be at least equal [$5,000,000]. Upon the
request of the Purchaser, the Seller shall cause to be delivered to the
Purchaser a certified true copy of such fidelity bond and insurance policy and a
statement from the surety and the insurer that such fidelity bond and insurance
policy shall in no event be terminated or materially modified without 30 days'
prior written notice to the Purchaser.
17
Section 2.14 Inspections. The Seller shall inspect the
Mortgaged Property as often as deemed necessary by the Seller to assure itself
that the value of the Mortgaged Property is being preserved. In addition, if any
Mortgage Loan is more than 60 days delinquent, the Seller immediately shall
inspect the Mortgaged Property and shall conduct subsequent inspections in
accordance with Accepted Servicing Practices or as may be required by the
primary mortgage guaranty insurer. The Seller shall keep a written report of
each such inspection.
Section 2.15 Restoration of Mortgaged Property. The Seller
need not obtain the approval of the Purchaser prior to releasing any Insurance
Proceeds or Condemnation Proceeds to the Mortgagor to be applied to the
restoration or repair of the Mortgaged Property if such release is in accordance
with Accepted Servicing Practices. At a minimum, the Seller shall comply with
the following conditions in connection with any such release of Insurance
Proceeds or Condemnation Proceeds:
(i) the Seller shall receive satisfactory independent
verification of completion of repairs and issuance of any required
approvals with respect thereto;
(ii) the Seller shall take all steps necessary to preserve the
priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to mechanics' and materialmen's liens;
(iii) the Seller shall verify that the Mortgage Loan is not in
default; and
(iv) pending repairs or restoration, the Seller shall place
the Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
If the Purchaser is named as an additional loss payee, the
Seller is hereby empowered to endorse any loss draft issued in respect of such a
claim in the name of the Purchaser.
Section 2.16 Maintenance of PMI Policy and/or LPMI Policy;
Claims. With respect to each Mortgage Loan with a LTV in excess of 80%, the
Seller shall:
(i) with respect to Mortgage Loans which are not LPMI Loans,
without any cost to the Owner, maintain or cause the Mortgagor to
maintain in full force and effect a PMI Policy insuring that portion of
the Mortgage Loan in excess of 75% (or such other percentage as stated
in the related Acknowledgment Agreement) of value, and shall pay or
shall cause the Mortgagor to pay the premium thereon on a timely basis,
until the LTV of such Mortgage Loan is reduced to 80%. In the event
that such PMI Policy shall be terminated, the Seller shall obtain from
another Qualified Insurer a comparable replacement policy, with a total
coverage equal to the remaining coverage of such terminated PMI Policy,
at substantially the same fee level. If the insurer shall cease to be a
Qualified Insurer, the Seller shall determine whether recoveries under
the PMI Policy are jeopardized for reasons related to the financial
condition of such insurer, it being understood that the Seller shall in
no event have any responsibility or liability for any failure to
18
recover under the PMI Policy for such reason. If the Seller determines
that recoveries are so jeopardized, it shall notify the Purchaser and
the Mortgagor, if required, and obtain from another Qualified Insurer a
replacement insurance policy. The Seller shall not take any action
which would result in noncoverage under any applicable PMI Policy of
any loss which, but for the actions of the Seller would have been
covered thereunder. In connection with any assumption or substitution
agreement entered into or to be entered into pursuant to Section 4.01,
the Seller shall promptly notify the insurer under the related PMI
Policy, if any, of such assumption or substitution of liability in
accordance with the terms of such PMI Policy and shall take all actions
which may be required by such insurer as a condition to the
continuation of coverage under such PMI Policy. If such PMI Policy is
terminated as a result of such assumption or substitution of liability,
the Seller shall obtain a replacement PMI Policy as provided above.
(ii) with respect to LPMI Loans, maintain in full force and
effect an LPMI Policy insuring that portion of the Mortgage Loan in
excess of 75% (or such other percentage as stated in the related
Acknowledgment Agreement) of value, and from time to time, withdraw the
LPMI Fee with respect to such LPMI Loan from the Custodial Account in
order to pay the premium thereon on a timely basis, until the LTV of
such Mortgage Loan is reduced to 80%. In the event that the interest
payments made with respect to any LPMI Loan are less than the LPMI Fee,
the Seller shall advance from its own funds the amount of any such
shortfall in the LPMI Fee, in payment of the premium on the related
LPMI Policy. Any such advance shall be a Servicing Advance subject to
reimbursement pursuant to the provisions on Section 2.05. In the event
that such LPMI Policy shall be terminated, the Seller shall obtain from
another Qualified Insurer a comparable replacement policy, with a total
coverage equal to the remaining coverage of such terminated LPMI
Policy, at substantially the same fee level. If the insurer shall cease
to be a Qualified Insurer, the Seller shall determine whether
recoveries under the LPMI Policy are jeopardized for reasons related to
the financial condition of such insurer, it being understood that the
Seller shall in no event have any responsibility or liability for any
failure to recover under the LPMI Policy for such reason. If the Seller
determines that recoveries are so jeopardized, it shall notify the
Purchaser and the Mortgagor, if required, and obtain from another
Qualified Insurer a replacement insurance policy. The Seller shall not
take any action which would result in noncoverage under any applicable
LPMI Policy of any loss which, but for the actions of the Seller would
have been covered thereunder. In connection with any assumption or
substitution agreement entered into or to be entered into pursuant to
Section 4.01, the Seller shall promptly notify the insurer under the
related LPMI Policy, if any, of such assumption or substitution of
liability in accordance with the terms of such LPMI Policy and shall
take all actions which may be required by such insurer as a condition
to the continuation of coverage under such PMI Policy. If such LPMI
Policy is terminated as a result of such assumption or substitution of
liability, the Seller shall obtain a replacement LPMI Policy as
provided above.
In connection with its activities as servicer, the Seller
agrees to prepare and present, on behalf of itself and the Owner, claims to the
insurer under any PMI Policy or LPMI Policy in a timely fashion in accordance
with the terms of such PMI Policy or LPMI Policy and, in this regard, to take
such action as shall be necessary to permit recovery under any PMI Policy or
LPMI Policy respecting a defaulted Mortgage Loan. Pursuant to Section 3.04, any
amounts collected by the Seller under any PMI Policy or LPMI Policy shall be
deposited in the Custodial Account, subject to withdrawal pursuant to Section
2.05.
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Section 2.17 Title, Management and Disposition of REO
Property. In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser, or in the event the Purchaser is
not authorized or permitted to hold title to real property in the state where
the REO Property is located, or would be adversely affected under the "doing
business" or tax laws of such state by so holding title, the deed or certificate
of sale shall be taken in the name of such Person or Persons as shall be
consistent with an Opinion of Counsel obtained by the Seller from any attorney
duly licensed to practice law in the state where the REO Property is located.
The Person or Persons holding such title other than the Purchaser shall
acknowledge in writing that such title is being held as nominee for the
Purchaser.
The Seller shall manage, conserve, protect and operate each
REO Property for the Purchaser solely for the purpose of its prompt disposition
and sale. The Seller, either itself or through an agent selected by the Seller,
shall manage, conserve, protect and operate the REO Property in the same manner
that it manages, conserves, protects and operates other foreclosed property for
its own account, and in the same manner that similar property in the same
locality as the REO Property is managed. The Seller shall attempt to sell the
same (and may temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the Seller
deems to be in the best interest of the Purchaser.
The Seller shall use its best efforts to dispose of the REO
Property as soon as possible and shall sell such REO Property in any event
within one year after title has been taken to such REO Property, unless the
Seller determines, and gives an appropriate notice to the Purchaser to such
effect, that a longer period is necessary for the orderly liquidation of such
REO Property. If a period longer than one year is permitted under the foregoing
sentence and is necessary to sell any REO Property, (i) the Seller shall report
monthly to the Purchaser as to the progress being made in selling such REO
Property and (ii) if, with the written consent of the Purchaser, a purchase
money mortgage is taken in connection with such sale, such purchase money
mortgage shall name the Seller as mortgagee, and such purchase money mortgage
shall not be held pursuant to this Agreement, but instead a separate
participation agreement among the Seller and Purchaser shall be entered into
with respect to such purchase money mortgage.
The Seller shall also maintain on each REO Property fire and
hazard insurance with extended coverage in an amount which is at least equal to
the maximum insurable value of the improvements which are a part of such
property, liability insurance and, to the extent required and available under
the Flood Disaster Protection Act of 1973, as amended, flood insurance in the
amount required above.
The disposition of REO Property shall be carried out by the
Seller at such price, and upon such terms and conditions, as the Seller deems to
be in the best interests of the Purchaser. The proceeds of sale of the REO
Property shall be promptly deposited in the Custodial Account. As soon as
practical thereafter the expenses of such sale shall be paid and the Seller
shall reimburse itself for any related unreimbursed Servicing Advances, unpaid
Servicing Fees and unreimbursed advances made pursuant to this Section, and on
the Remittance Date immediately following the Principal Prepayment Period in
which such sale proceeds are received the net cash proceeds of such sale
remaining in the Custodial Account shall be distributed to the Purchaser.
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With respect to each REO Property, the Seller shall hold all
funds collected and received in connection with the operation of the REO
Property in the Custodial Account. The Seller shall cause to be deposited on a
daily basis upon the receipt thereof in each Custodial Account all revenues
received with respect to the conservation and disposition of the related REO
Property.
Notwithstanding the foregoing, at any time and from time to
time, the Purchaser may at its election terminate this Agreement with respect to
one or more REO Properties as provided by Section 6.03(c).
Section 2.18 Permitted Withdrawals with respect to REO
Property. The Seller shall withdraw REO funds on deposit in the Custodial
Account with respect to each related REO Property necessary for the proper
operation, management and maintenance of the REO Property, including the cost of
maintaining any hazard insurance pursuant to Section 2.11 and the fees of any
managing agent acting on behalf of the Seller. The Seller shall make monthly
distributions on each Remittance Date to the Purchaser of the net cash flow from
the REO Property (which shall equal the revenues from such REO Property net of
the expenses described in Section 2.17 and of any reserves reasonably required
from time to time to be maintained to satisfy anticipated liabilities for such
expenses).
Section 2.19 Real Estate Owned Reports. Together with the
statement furnished pursuant to Section 2.20, the Seller shall furnish to the
Purchaser on or before the 15th day of each month a statement with respect to
any REO Property covering the operation of such REO Property for the previous
month and the Seller's efforts in connection with the sale of such REO Property
and any rental of such REO Property incidental to the sale thereof for the
previous month. That statement shall be accompanied by such other information as
the Purchaser shall reasonably request.
Section 2.20 Liquidation Reports. Upon the foreclosure sale of
any Mortgaged Property or the acquisition thereof by the Purchaser pursuant to a
deed in lieu of foreclosure, the Seller shall submit to the Purchaser a
liquidation report with respect to such Mortgaged Property.
Section 2.21 Reports of Foreclosures and Abandonments of
Mortgaged Property. Following the foreclosure sale or abandonment of any
Mortgaged Property, the Seller shall report such foreclosure or abandonment as
required pursuant to Section 6050J of the Code.
ARTICLE III
PAYMENTS TO PURCHASER
Section 3.01 Remittances. On each Remittance Date the Seller
shall remit by wire transfer of immediately available funds to the Purchaser (a)
all amounts deposited in the Custodial Account as of the close of business on
the Determination Date (net of charges against or withdrawals from the Custodial
Account pursuant to Section 2.05), plus (b) all amounts, if any, which the
Seller is obligated to distribute pursuant to Section 2.03.
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With respect to any remittance received by the Purchaser after
the second Business Day following the Business Day on which such payment was
due, the Seller shall pay to the Purchaser interest on any such late payment at
an annual rate equal to the Prime Rate, adjusted as of the date of each change,
plus three percentage points, but in no event greater than the maximum amount
permitted by applicable law. Such interest shall be deposited in the Custodial
Account by the Seller on the date such late payment is made and shall cover the
period commencing with the day following such second Business Day and ending
with the Business Day on which such payment is made, both inclusive. Such
interest shall be remitted along with the distribution payable on the next
succeeding Remittance Date. The payment by the Seller of any such interest shall
not be deemed an extension of time for payment or a waiver of any Event of
Default by the Seller.
Section 3.02 Statements to Purchaser. Not later than the fifth
Business Day of each month, the Seller shall furnish to the Purchaser a Monthly
Remittance Advice, with a trial balance report attached thereto, in the form of
Exhibit 1 annexed hereto in hard copy and electronic medium mutually acceptable
to the parties as to the preceding remittance and the period ending on the
preceding Determination Date.
In addition, not more than 60 days after the end of each
calendar year, the Seller shall furnish to each Person who was a Purchaser at
any time during such calendar year an annual statement in accordance with the
requirements of applicable federal income tax law as to the aggregate of
remittances for the applicable portion of such year.
Such obligation of the Seller shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Seller pursuant to any requirements of the Internal Revenue Code
as from time to time are in force.
The Seller shall prepare and file any and all tax returns,
information statements or other filings required to be delivered to any
governmental taxing authority or to the Purchaser pursuant to any applicable law
with respect to the Mortgage Loans and the transactions contemplated hereby. In
addition, the Seller shall provide the Purchaser with such information
concerning the Mortgage Loans as is necessary for the Purchaser to prepare its
federal income tax return as the Purchaser may reasonably request from time to
time.
ARTICLE IV
GENERAL SERVICING PROCEDURES
Section 4.01 Transfers of Mortgaged Property. The Seller shall
use its best efforts to enforce any "due-on-sale" provision contained in any
Mortgage or Mortgage Note and to deny assumption by the person to whom the
Mortgaged Property has been or is about to be sold whether by absolute
conveyance or by contract of sale, and whether or not the Mortgagor remains
liable on the Mortgage and the Mortgage Note. When the Mortgaged Property has
been conveyed by the Mortgagor, the Seller shall, to the extent it has knowledge
of such conveyance, exercise its rights to accelerate the maturity of such
Mortgage Loan under the "due-on-sale" clause applicable thereto, provided,
however, that the Seller shall not exercise such rights if prohibited by law
from doing so or if the exercise of such rights would impair or threaten to
impair any recovery under the related PMI Policy or LPMI Policy, if any.
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If the Seller reasonably believes it is unable under
applicable law to enforce such "due-on-sale" clause, the Seller shall enter into
(i) an assumption and modification agreement with the person to whom such
property has been conveyed, pursuant to which such person becomes liable under
the Mortgage Note and the original Mortgagor remains liable thereon or (ii) in
the event the Seller is unable under applicable law to require that the original
Mortgagor remain liable under the Mortgage Note and the Seller has the prior
consent of the primary mortgage guaranty insurer, a substitution of liability
agreement with the purchaser of the Mortgaged Property pursuant to which the
original Mortgagor is released from liability and the purchaser of the Mortgaged
Property is substituted as Mortgagor and becomes liable under the Mortgage Note.
If an assumption fee is collected by the Seller for entering into an assumption
agreement, a portion of such fee, up to an amount equal to one-half of one
percent (0.5%) of the outstanding principal balance of the related Mortgage
Loan, will be retained by the Seller as additional servicing compensation, and
any portion thereof in excess of one-half of one percent (0.5%) shall be
deposited in the Custodial Account for the benefit of the Purchaser. In
connection with any such assumption, neither the Mortgage Interest Rate borne by
the related Mortgage Note, the term of the Mortgage Loan nor the outstanding
principal amount of the Mortgage Loan shall be changed.
To the extent that any Mortgage Loan is assumable, the Seller
shall inquire diligently into the creditworthiness of the proposed transferee,
and shall use the underwriting criteria for approving the credit of the proposed
transferee which are used by the Seller with respect to underwriting mortgage
loans of the same type as the Mortgage Loans. If the credit of the proposed
transferee does not meet such underwriting criteria, the Seller diligently
shall, to the extent permitted by the Mortgage or the Mortgage Note and by
applicable law, accelerate the maturity of the Mortgage Loan.
Section 4.02 Satisfaction of Mortgages and Release of Mortgage
Files. Upon the payment in full of any Mortgage Loan, or the receipt by the
Seller of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Seller shall notify the Purchaser in the
Monthly Remittance Advice as provided in Section 3.02, and may request the
release of any Mortgage Loan Documents from the Purchaser in accordance with
this Section 4.02 hereof.
If the Seller satisfies or releases a Mortgage without first
having obtained payment in full of the indebtedness secured by the Mortgage or
should the Seller otherwise prejudice any rights the Purchaser may have under
the mortgage instruments, upon written demand of the Purchaser, the Seller shall
repurchase the related Mortgage Loan at the Repurchase Price by deposit thereof
in the Custodial Account within 2 Business Days of receipt of such demand by the
Purchaser. The Seller shall maintain the Fidelity Bond and Errors and Omissions
Insurance Policy as provided for in Section 2.13 insuring the Seller against any
loss it may sustain with respect to any Mortgage Loan not satisfied in
accordance with the procedures set forth herein.
Section 4.03 Servicing Compensation. As consideration for
servicing the Mortgage Loans during the Interim Period, the Seller shall retain
a Servicing Fee with respect to each Mortgage Loan, which amount shall be
prorated for any portion of a month during which the Mortgage Loan is serviced
by the Seller pursuant to this Agreement. The obligation of the Purchaser to pay
the Servicing Fee is limited to, and the Servicing Fee is payable solely from,
the interest portion (including recoveries with respect to interest from
Liquidation Proceeds, to the extent permitted by Section 2.05) of such Monthly
Payment collected by the Seller, or as otherwise provided under Section 2.05.
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Additional servicing compensation in the form of assumption
fees, to the extent provided in Section 4.01 and Ancillary Income, shall be
retained by the Seller to the extent not required to be deposited in the
Custodial Account. The Seller shall be required to pay all expenses incurred by
it in connection with its servicing activities hereunder and shall not be
entitled to reimbursement thereof except as specifically provided for herein.
Section 4.04 Annual Statement as to Compliance. The Seller
shall deliver to the Purchaser, on or before March 31 each year beginning March
31, 2005, and on the Transfer Date an Officer's Certificate, stating that (i) a
review of the activities of the Seller during the preceding calendar year and of
performance under this Agreement has been made under such officer's supervision,
and (ii) the Seller has complied fully with the provisions of Article II and
Article IV, and (iii) to the best of such officer's knowledge, based on such
review, the Seller has fulfilled all its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof and the action being taken by the Seller to cure such
default.
Section 4.05 Annual Independent Public Accountants' Servicing
Report. On or before March 31st of each year beginning March 31, 2005, the
Seller, at its expense, shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to each Purchaser to the effect that such firm has examined
certain documents and records relating to the servicing of the Mortgage Loans
and this Agreement and that such firm is of the opinion that the provisions of
Article II and Article III have been complied with, and that, on the basis of
such examination conducted substantially in compliance with the Single Audit
Program for Mortgage Bankers, nothing has come to their attention which would
indicate that such servicing has not been conducted in compliance therewith,
except for (i) such exceptions as such firm shall believe to be immaterial, and
(ii) such other exceptions as shall be set forth in such statement.
Section 4.06 Right to Examine Seller Records. The Purchaser
shall have the right to examine and audit any and all of the books, records, or
other information of the Seller, whether held by the Seller or by another on its
behalf, with respect to or concerning this Agreement or the Mortgage Loans,
during business hours or at such other times as may be reasonable under
applicable circumstances, upon reasonable advance notice.
ARTICLE V
SELLER TO COOPERATE
Section 5.01 Provision of Information. During the term of this
Agreement, the Seller shall furnish to the Purchaser such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
necessary, reasonable, or appropriate with respect to the Purchaser or the
purposes of this Agreement. All such reports or information shall be provided by
and in accordance with all reasonable instructions and directions which the
Purchaser may give.
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The Seller shall execute and deliver all such instruments and
take all such action as the Purchaser may reasonably request from time to time,
in order to effectuate the purposes and to carry out the terms of this
Agreement.
Section 5.02 Financial Statements; Servicing Facilities. In
connection with marketing the Mortgage Loans, the Purchaser may make available
to a prospective Purchaser a Financial Consolidated Statement of Operations of
the Seller for the most recently completed three fiscal years for which such a
statement is available, as well as a Consolidated Statement of Condition at the
end of the last two fiscal years covered by such Consolidated Statement of
Operations. The Seller also shall make available any comparable interim
statements to the extent any such statements have been prepared by or on behalf
of the Seller (and are available upon request to members or stockholders of the
Seller or to the public at large). If it has not already done so, the Seller
shall furnish promptly to the Purchaser copies of the statement specified above.
The Seller shall make available to the Purchaser or any
prospective Purchaser a knowledgeable financial or accounting officer for the
purpose of answering questions respecting recent developments affecting the
Seller or the financial statements of the Seller, and to permit any prospective
Purchaser to inspect the Seller's servicing facilities for the purpose of
satisfying such prospective Purchaser that the Seller have the ability to
service the Mortgage Loans as provided in this Agreement.
ARTICLE VI
TERMINATION
Section 6.01 Damages. The Purchaser shall have the right at
any time to seek and recover from the Seller any damages or losses suffered by
it as a result of any failure by the Seller to observe or perform any duties,
obligations, covenants or agreements herein contained or contained in the
Purchase Agreement.
Section 6.02 Termination Upon Transfer of Servicing.
(a) Termination Procedures. This Agreement shall terminate
with respect to the Mortgage Loans or portion thereof transferred on the related
Transfer Date set forth in the related Terms Letter; provided that the Purchaser
shall have the option to extend the related Transfer Date for 2 months from the
original related Transfer Date upon written notice to the Seller at least 15
days prior to the related Transfer Date of its intent to extend the related
Transfer Date for 2 months.
The Purchaser may elect to terminate this Agreement and
transfer the servicing from the Seller prior to the Transfer Date with respect
to all or any portion of the Mortgage Loans by providing written notice to the
Seller of its intent to transfer servicing at least 30 days prior to the date on
which it intends to transfer the servicing from the Seller. On or before the
date specified by the Purchaser in accordance with this paragraph (a) for the
transfer of servicing from the Seller, the Seller shall prepare, execute and
25
deliver to the successor entity designated by the Purchaser any and all
documents and other instruments, place in such successor's possession all
Mortgage Loan Documents necessary or appropriate to effect the purposes of such
notice of termination, including but not limited to the transfer and endorsement
or assignment of the Mortgage Loans and related documents, at the Seller's sole
expense. The Seller shall cooperate with the Purchaser and such successor in
effecting the termination of the Seller's responsibilities and rights hereunder.
Section 6.03 Servicing Transfer Provisions. On or prior to the
related Transfer Date the Seller shall, at its sole cost and expense take such
steps as may be necessary or appropriate to effectuate and evidence the transfer
of the servicing of the Mortgage Loans to the Purchaser, or its designee,
including but not limited to the following:
On the Transfer Date, the Seller shall comply with all of the
provisions of Section 14 of the Purchase Agreement to effect a complete transfer
of the Servicing Rights. On the related Transfer Date for each Mortgage Loan,
this Agreement, except for Articles VI, VIII, IX and X which shall survive the
Transfer Date, shall terminate.
(a) Mortgage Loans in Foreclosure. The servicing with respect
to Mortgage Loans in foreclosure on or before the Transfer Date shall not be
transferred from the Seller to the Purchaser or the successor servicer, as the
case may be, and such Mortgage Loans shall continue to be serviced by the Seller
pursuant to the terms of this Agreement. However, if the Purchaser so elects,
the Purchaser may waive the provisions of this paragraph (a) and accept transfer
of servicing of such Mortgage Loans and all amounts received by the Seller
thereunder.
(b) Servicing Advances. Notwithstanding the fact that the
Transfer Date has occurred, the Seller shall not be reimbursed for any Servicing
Advances with respect to any Mortgage Loan until the Seller or the successor
servicer receives a Monthly Payment or Liquidation Proceeds with respect to such
Mortgage Loan. At such time, the Seller shall be entitled to be reimbursed for
all unreimbursed Servicing Advances with respect to such Mortgage Loan on a
first priority basis (but subject to any successor servicer's rights to
reimbursement with respect to Servicing Advances) from the Monthly Payment or
Liquidation Proceeds received with respect to such Mortgage Loan. This Section
6.03(b) shall survive the Transfer Date.
(c) Additional Termination Provisions. Notwithstanding and in
addition to the foregoing, in the event that (i) a Mortgage Loan becomes
delinquent for a period of 120 days or more (a "Delinquent Mortgage Loan") or
(ii) a Mortgage Loan becomes an REO Property, the Purchaser may at its election
terminate this Agreement with respect to such Delinquent Mortgage Loan or REO
Property, upon 15 days' written notice to the Seller.
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ARTICLE VII
BOOKS AND RECORDS
Section 7.01 Possession of Servicing Files Prior to the
Transfer Date. Prior to the Transfer Date, the contents of each Servicing File
are and shall be held in trust by the Seller for the benefit of the Purchaser as
the owner thereof. The Seller shall maintain in the Servicing File a copy of the
contents of each Mortgage File and the originals of the documents in each
Mortgage File not delivered to the Purchaser. The possession of the Servicing
File by the Seller is at the will of the Purchaser for the sole purpose of
servicing the related Mortgage Loan, pursuant to this Agreement, and such
retention and possession by the Seller is in its capacity as Seller only and at
the election of the Purchaser. The Seller shall release its custody of the
contents of any Servicing File only in accordance with written instructions from
the Purchaser, unless such release is required as incidental to the Seller's
servicing of the Mortgage Loans pursuant to this Agreement or is in connection
with a repurchase of any Mortgage Loan pursuant to Section 7 of the Purchase
Agreement.
The Seller shall be responsible for maintaining, and shall
maintain, a complete set of books and records for each Mortgage Loan which shall
be marked clearly to reflect the ownership of each Mortgage Loan by the
Purchaser. In particular, the Seller shall maintain in its possession, available
for inspection by the Purchaser or its designee, and shall deliver to the
Purchaser or its designee upon demand, evidence of compliance with all federal,
state and local laws, rules and regulations, including but not limited to
documentation as to the method used in determining the applicability of the
provisions of the Flood Disaster Protection Act of 1973, as amended, to the
Mortgaged Property, documentation evidencing insurance coverage and eligibility
of any condominium project for approval by Xxxxxx Xxx and periodic inspection
reports as required by Section 2.14.
The Seller shall keep at its servicing office books and
records in which, subject to such reasonable regulations as it may prescribe,
the Seller shall note transfers of Mortgage Loans. No transfer of a Mortgage
Loan may be made unless such transfer is in compliance with the terms hereof.
For the purposes of this Agreement, the Seller shall be under no obligation to
deal with any person with respect to this Agreement or the Mortgage Loans unless
the books and records show such person as the owner of the Mortgage Loan. The
Purchaser may, subject to the terms of this Agreement, sell or transfer one or
more of the Mortgage Loans, provided, however, that the transferee will not be
deemed to be a Purchaser hereunder binding upon the Seller unless such
transferee shall agree in writing to be bound by the terms of this Agreement and
an original counterpart of the instrument of transfer and an assignment and
assumption of this Agreement executed by the transferee shall have been
delivered to the Seller. The Purchaser also shall advise the Seller of the
transfer. Upon receipt of notice of the transfer, the Seller shall xxxx its
books and records to reflect the ownership of the Mortgage Loans of such
assignee, and shall release the previous Purchaser from its obligations
hereunder with respect to the Mortgage Loans sold or transferred.
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ARTICLE VIII
INDEMNIFICATION AND ASSIGNMENT
Section 8.01 Indemnification. The Seller shall indemnify the
Purchaser and hold it harmless against any and all claims, losses, damages,
penalties, fines, and forfeitures, including, but not limited to reasonable and
necessary legal fees and related costs, judgments, and any other costs, fees and
expenses that the Purchaser may sustain in any way related to the failure of the
Seller to (a) perform its duties and service the Mortgage Loans in strict
compliance with the terms of this Agreement, and/or (b) comply with applicable
law. The Seller immediately shall notify the Purchaser if a claim is made by a
third party with respect to this Agreement, assume (with the prior written
consent of the Purchaser) the defense of any such claim and pay all expenses in
connection therewith, including counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or the Purchaser
in respect of such claim. The Seller shall follow any written instructions
received from the Purchaser in connection with such claim. The Purchaser
promptly shall reimburse the Seller for all amounts advanced by it pursuant to
the preceding sentence except when the claim is in any way related to the
Seller's indemnification pursuant to Section 8 of the Purchase Agreement, or the
failure of the Seller to (a) service and administer the Mortgage Loans in strict
compliance with the terms of this Agreement and/or (b) comply with applicable
law.
Section 8.02 Limitation on Liability of Seller and Others.
Neither the Seller nor any of the directors, officers, employees or agents of
the Seller shall be under any liability to the Purchaser for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment, provided, however, that this provision
shall not protect the Seller or any such person against any breach of warranties
or representations made herein, or failure to perform its obligations in strict
compliance with any standard of care set forth in this Agreement, or any
liability which would otherwise be imposed by reason of any breach of the terms
and conditions of this Agreement. The Seller and any director, officer, employee
or agent of the Seller may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Seller shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its duties to
service the Mortgage Loans in accordance with this Agreement and which in its
opinion may involve it in any expense or liability, provided, however, that the
Seller may, with the consent of the Purchaser, undertake any such action which
it may deem necessary or desirable in respect to this Agreement and the rights
and duties of the parties hereto. In such event, the Seller shall be entitled to
reimbursement from the Purchaser of the reasonable legal expenses and costs of
such action.
Section 8.03 Limitation on Resignation and Assignment by
Seller. The Purchaser has entered into this Agreement with the Seller and
subsequent Purchasers will purchase the Mortgage Loans in reliance upon the
independent status of the Seller, and the representations as to the adequacy of
its servicing facilities, plant, personnel, records and procedures, its
integrity, reputation and financial standing, and the continuance thereof.
Therefore, the Seller shall neither assign this Agreement or the servicing
hereunder or delegate its rights or duties hereunder or any portion hereof or
sell or otherwise dispose of all or substantially all of its property or assets
without the prior written consent of the Purchaser, which consent shall be
granted or withheld in the sole discretion of the Purchaser.
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The Seller shall not resign from the obligations and duties
hereby imposed on it except by mutual consent of the Seller and the Purchaser or
upon the determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Seller. Any such
determination permitting the resignation of the Seller shall be evidenced by an
Opinion of Counsel to such effect delivered to the Purchaser which Opinion of
Counsel shall be in form and substance acceptable to the Purchaser. No such
resignation shall become effective until a successor shall have assumed the
Seller's responsibilities and obligations hereunder in the manner provided in
Section 6.03.
Without in any way limiting the generality of this Section
8.03, in the event that the Seller either shall assign this Agreement or the
servicing responsibilities hereunder or delegate its duties hereunder or any
portion thereof or sell or, subject to the provisions of the following
paragraph, otherwise dispose of all or substantially all of its property or
assets, without the prior written consent of the Purchaser, then the Purchaser
shall have the right to terminate this Agreement upon notice given as set forth
in Section 6.03, without any payment of any penalty or damages and without any
liability whatsoever to the Seller or any third party.
Any Person into which the Seller may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Seller shall be a party, or any Person succeeding to
the business of the Seller, shall be the successor of the Seller hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor or surviving Person shall be an
institution whose deposits are insured by FDIC or a company whose business is
the origination and servicing of mortgage loans and shall satisfy any
requirements of this Agreement with respect to the qualifications of a successor
to the Seller; provided however, that the successor or surviving Person shall
have a net worth of at least $25,000,000.
Section 8.04 Assignment by Purchaser. The Purchaser shall have
the right, without the consent of the Seller, to assign, in whole or in part,
its interest under this Agreement with respect to some or all of the Mortgage
Loans, and designate any person to exercise any rights of the Purchaser
hereunder, by executing an Assignment and Assumption Agreement in the form of
Exhibit 8 hereto. Upon such assignment of rights and assumption of obligations,
the assignee or designee shall accede to the rights and obligations hereunder of
the Purchaser with respect to such Mortgage Loans and the Purchaser as assignor
shall be released from all obligations hereunder with respect to such Mortgage
Loans from and after the date of such assignment and assumption. All references
to the Purchaser in this Agreement shall be deemed to include its assignee or
designee.
29
ARTICLE IX
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
The Purchaser warrants and represents to, and covenants and
agrees with, the Seller as follows:
Section 9.01 Authority and Capacity. The execution, delivery
and performance by the Purchaser of this Agreement has been and will remain duly
and validly authorized by all necessary corporate action. This Agreement
constitutes and will continue to constitute a legal, valid and enforceable
obligation of the Purchaser.
Section 9.02 Assistance. To the extent possible, the Purchaser
shall cooperate with and assist the Seller as requested by the Seller, in
carrying out Seller's covenants, agreements duties and responsibilities under
this Agreement and in connection therewith shall execute and deliver all such
papers, documents and instruments as may be necessary and appropriate in
furtherance thereof.
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller warrants and represents to, and covenants and
agrees with, the Purchaser as follows:
Section 10.01 Due Organization and Authority. The Seller is a
national association duly organized, validly existing and in good standing under
the laws of the United States of America and has all licenses necessary to carry
on its business as now being conducted and is licensed, qualified and in good
standing in each state where a Mortgaged Property is located if the laws of such
state require licensing or qualification in order to conduct business of the
type conducted by the Seller, and in any event the Seller is in compliance with
the laws of any such state to the extent necessary to ensure the enforceability
of the related Mortgage Loan in accordance with the terms of this Agreement; the
Seller has the full corporate power and authority to execute and deliver this
Agreement and to perform in accordance herewith; the execution, delivery and
performance of this Agreement (including all instruments or transfer to be
delivered pursuant to this Agreement) by the Seller and the consummation of the
transactions contemplated hereby have been duly and validly authorized; this
Agreement evidences the valid, binding and enforceable obligation of the Seller;
and all requisite corporate action has been taken by the Seller to make this
Agreement valid and binding upon the Seller in accordance with its terms;
Section 10.02 Ordinary Course of Business. The consummation of
the transactions contemplated by this Agreement are in the ordinary course of
business of the Seller;
Section 10.03 No Conflicts. Neither the execution and delivery
of this Agreement, nor the fulfillment of or compliance with the terms and
conditions of this Agreement, will conflict with or result in a breach of any of
the terms, conditions or provisions of the Seller's charter or by-laws or any
30
legal restriction or any agreement or instrument to which the Seller is now a
party or by which it is bound, or constitute a default or result in an
acceleration under any of the foregoing, or result in the violation of any law,
rule, regulation, order, judgment or decree to which the Seller or its property
is subject, or impair the ability of the Purchaser to realize on the Mortgage
Loans, or impair the value of the Mortgage Loans;
Section 10.04 Ability to Service. The Seller has the
facilities, procedures, and experienced personnel necessary for the sound
servicing of mortgage loans of the same type as the Mortgage Loans;
Section 10.05 Ability to Perform. The Seller does not believe,
nor does it have any reason or cause to believe, that it cannot perform each and
every covenant contained in this Agreement;
Section 10.06 No Litigation Pending. There is no action, suit,
proceeding or investigation pending or, to the Seller's knowledge, threatened
against the Seller which, either in any one instance or in the aggregate, may
result in any material adverse change in the business, operations, financial
condition, properties or assets of the Seller, or in any material impairment of
the right or ability of the Seller to carry on its business substantially as now
conducted, or in any material liability on the part of the Seller, or which
would draw into question the validity of this Agreement or the Mortgage Loans or
of any action taken or to be taken in connection with the obligations of the
Seller contemplated herein, or which would be likely to impair materially the
ability of the Seller to perform under the terms of this Agreement;
Section 10.07 No Consent Required. No consent, approval,
authorization or order of any court or governmental agency or body is required
for the execution, delivery and performance by the Seller of or compliance by
the Seller with this Agreement or the Servicing of the Mortgage Loans as
evidenced by the consummation of the transactions contemplated by this
Agreement, or if required, such approval has been obtained prior to the related
Closing Date;
Section 10.08 No Untrue Information. Neither this Agreement
nor any statement, report or other document furnished or to be furnished
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains any untrue statement of fact or omits to state a fact necessary
to make the statements contained therein not misleading.
ARTICLE XI
DEFAULT
Section 11.01 Events of Default. The following shall
constitute an Event of Default under this Agreement on the part of the Seller:
(a) any failure by the Seller to remit to the Purchaser any
payment required to be made under the terms of this Agreement which continues
unremedied for a period of five days after the date upon which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Seller by the Purchaser; or
(b) the failure by the Seller duly to observe or perform in
any material respect any other of the covenants or agreements on the part of the
Seller set forth in this Agreement which continues unremedied for a period of 30
days after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Seller by the Purchaser; or
31
(c) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Seller and such decree or order
shall have remained in force undischarged or unstayed for a period of 60 days;
or
(d) the Seller shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
the Seller or of or relating to all or substantially all of its property; or
(e) the Seller shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(f) the Seller and its Affiliates fail to maintain a minimum
net worth of $25,000,000; or
(g) the Seller, if it is an Insured Depository Institution,
shall become the subject of a cease and desist order of the Appropriate Federal
Banking Agency or enters into a memorandum of understanding, consent agreement
or any similar agreement with the Appropriate Federal Banking Agency, any of
which, would have or is purportedly the result of, any condition which would
have a material adverse effect on the Mortgage Loans, or the Seller's ability to
service the Mortgage Loans as provided hereunder; or
(h) the Seller shall fail to maintain its status as Adequately
Capitalized; or
(i) the Seller attempts to assign its right to servicing
compensation hereunder or the Seller attempts, without the consent of the
Purchaser, to sell or otherwise dispose of all or substantially all of its
property or assets or to assign this Agreement or the servicing responsibilities
hereunder or to delegate its duties hereunder or any portion thereof.
In each and every such case, so long as an Event of Default
shall not have been remedied, in addition to whatever rights the Purchaser may
have at law or equity to damages, including injunctive relief and specific
performance, the Purchaser, by notice in writing to the Seller, may terminate
all the rights and obligations of the Seller under this Agreement and in and to
the Mortgage Loans and the proceeds thereof.
Upon receipt by the Seller of such written notice, all
authority and power of the Seller under this Agreement, whether with respect to
the Mortgage Loans or otherwise, shall pass to and be vested in the successor
appointed pursuant to Section 6.03.
32
Section 11.02 Waiver of Defaults. By a written notice, the
Purchaser may waive any default by the Seller in the performance of its
obligations hereunder and its consequences. Upon any waiver of a past default,
such default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been remedied for every purpose of this Agreement. No
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon except to the extent expressly so waived.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Notices. All notices, requests, demands and
other communications which are required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given upon
the delivery or mailing thereof, as the case may be, sent by registered or
certified mail, return receipt requested:
(a) If to Purchaser to:
Xxxxxx Brothers Bank, F.S.B.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Manager Contract Finance
(b) If to Seller to:
First National Bank of Nevada
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx XX 00000
Attention: Secondary Marketing
Facsimile: (000) 000-0000
Section 12.02 Waivers. Either the Seller or Purchaser may upon
consent of all parties, by written notice to the others:
(a) Waive compliance with any of the terms, conditions or
covenants required to be complied with by the others hereunder; and
(b) Waive or modify performance of any of the obligations of
the others hereunder.
The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any other
subsequent breach.
Section 12.03 Entire Agreement; Amendment. This Agreement and
the Purchase Agreement constitute the entire agreement between the parties with
respect to servicing of the Mortgage Loans during the Interim Period. This
Agreement may be amended and any provision hereof waived, but, only in writing
signed by the party against whom such enforcement is sought.
33
Section 12.04 Execution; Binding Effect. This Agreement may be
executed in one or more counterparts and by the different parties hereto on
separate counterparts, each of which, when so executed, shall be deemed to be an
original; such counterparts, together, shall constitute one and the same
agreement. Subject to Section 8.03, this Agreement shall inure to the benefit of
and be binding upon the Seller and the Purchaser and their respective successors
and assigns.
Section 12.05 Headings. Headings of the Articles and Sections
in this Agreement are for reference purposes only and shall not be deemed to
have any substantive effect.
Section 12.06 Applicable Law. This Agreement shall be
construed in accordance with the laws of the State of New York.
Section 12.07 Relationship of Parties. Nothing herein
contained shall be deemed or construed to create a partnership or joint venture
between the parties. The duties and responsibilities of the Seller shall be
rendered by them as independent contractors and not as an agent of Purchaser.
The Seller shall have full control of all of its acts, doings, proceedings,
relating to or requisite in connection with the discharge of its duties and
responsibilities under this Agreement.
Section 12.08 Severability of Provisions. If any one or more
of the covenants, agreements, provisions or terms of this Agreement shall be
held invalid for any reason whatsoever, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect the
validity or enforceability of the other provisions of this Agreement.
Section 12.09 Recordation of Assignments of Mortgage. To the
extent permitted by applicable law, each of the Assignments of Mortgage is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the Mortgaged Properties are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected at the
Seller's expense in the event recordation is either necessary under applicable
law or requested by the Purchaser at its sole option.
Section 12.10 Appointment and Designation of Master Servicer.
The Purchaser hereby appoints and designates Aurora Loan Services, Inc. as its
master servicer (the "Master Servicer") for the Mortgage Loans subject to this
Agreement. The Seller is hereby authorized and instructed to take any and all
instructions with respect to servicing the Mortgage Loans hereunder as if the
Master Servicer were the Purchaser hereunder. The authorization and instruction
set forth herein shall remain in effect until such time as the Seller shall
receive written instruction from the Purchaser that such authorization and
instruction is terminated.
34
IN WITNESS WHEREOF, the parties have executed this Agreement
under seal as of the date and year first above written.
XXXXXX BROTHERS BANK, F.S.B.
(the Purchaser)
By:
-------------------------------------
Name:
Title:
FIRST NATIONAL BANK OF NEVADA
(the Seller)
By:
-------------------------------------
Name:
Title:
EXHIBIT 1
FORM OF MONTHLY REMITTANCE ADVICE
LRSLNM LHACCT LHNTCD LHPRIN INT LHTTOT LHRPDT LHTRDT
------ ------ ------ ------ --- ------ ------ ------
$ - $ -
1ST NATIONAL BANK OF ARIZONA MORTGAGE LOANS PROCESSING DATE 8/31/2004
INVESTOR REMITTANCE PROCESSING THRU 8/31/2004
SUMMARY REPORT SYSTEM DATE 9/1/2004
INVESTOR #
INVESTOR SERVICER NOTE INV. P & I PERCT PD TO INVESTOR INVESTOR INTERIM INVESTOR NET INVESTOR S
LOAN NBR. LOAN NBR. RATE RATE PAYMENT OWNED DATE PRINCIPAL INTEREST REMITTANCE DISBURSEMENT ESCROW T
GROUP TOTAL 0 0 0 0 0
EXHIBIT 2
FORM OF CUSTODIAL ACCOUNT CERTIFICATION
_______ __, 200_
_____________________________________________ hereby certifies
that it has established the account described below as a Custodial Account
pursuant to Section 2.04 of the Interim Servicing Agreement, dated as of
September 24, 2004, Fixed and Adjustable Rate Mortgage Loans, Group 2004-1.
Title of Account: "First National Bank of Nevada, in trust for
the registered Purchaser, Group 2004-1."
Account Number:
-----------------------------------
Address of office or branch
of the Seller at
which Account is maintained:
----------------------
-----------------------------------------
-----------------------------------------
FIRST NATIONAL BANK OF NEVADA
Seller
By:
--------------------------------------
Name:
Title:
EXHIBIT 3
FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
_______ __, 200_
To:
-----------------------------------------
-----------------------------------------
-----------------------------------------
(the "Depository")
As Seller under the Interim Servicing Agreement, dated as of
September 24, 2004, Fixed and Adjustable Rate Mortgage Loans, Group 2004-1 (the
"Agreement"), we hereby authorize and request you to establish an account, as a
Custodial Account pursuant to Section 2.04 of the Agreement, to be designated as
"First National Bank of Nevada, in trust for the Purchaser of the Fixed and
Adjustable Rate Mortgage Loans - Group 2004-1". All deposits in the account
shall be subject to withdrawal therefrom by order signed by the Seller. You may
refuse any deposit which would result in violation of the requirement that the
account be fully insured as described below. This letter is submitted to you in
duplicate. Please execute and return one original to us.
FIRST NATIONAL BANK OF NEVADA
Seller
By:
--------------------------------------
Name:
Title:
Date:
The undersigned, as Depository, hereby certifies that the
above described account has been established under Account Number __________, at
the office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance Corporation through the
Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
--------------------------------------
Depository
By:
--------------------------------------
Name:
Title:
Date:
EXHIBIT 4
FORM OF ESCROW ACCOUNT CERTIFICATION
_________ ___, 200_
__________________________________ hereby certifies that it
has established the account described below as an Escrow Account pursuant to
Section 2.06 of the Interim Servicing Agreement, dated as of September 24, 2004,
Fixed and Adjustable Rate Mortgage Loans, Group 2004-1.
Title of Account:_"First National Bank of Nevada in trust for
the Purchaser of the Fixed and Adjustable Rate Mortgage Loans, Group 2004-1, and
various Mortgagors."
Account Number:
-----------------------------------
Address of office or branch
of the Seller at
which Account is maintained:
----------------------
-----------------------------------------
-----------------------------------------
FIRST NATIONAL BANK OF NEVADA
Seller
By:
--------------------------------------
Name:
Title:
Date:
4-1
EXHIBIT 5
FORM OF ESCROW ACCOUNT LETTER AGREEMENT
_______ __, 200_
To:
-----------------------------------------
-----------------------------------------
-----------------------------------------
(the "Depository")
As Seller under the Interim Servicing Agreement, dated as of
September 24, 2004, Fixed and Adjustable Rate Mortgage Loans, Group 2004-1 (the
"Agreement"), we hereby authorize and request you to establish an account, as an
Escrow Account pursuant to Section 2.06 of the Agreement, to be designated as
First National Bank of Nevada in trust for the Purchasers of Fixed and
Adjustable Rate Mortgage Loans - Group 2004-1". All deposits in the account
shall be subject to withdrawal therefrom by order signed by the Seller. You may
refuse any deposit which would result in violation of the requirement that the
account be fully insured as described below. This letter is submitted to you in
duplicate. Please execute and return one original to us.
FIRST NATIONAL BANK OF NEVADA
Seller
By:
--------------------------------------
Name:
Title:
Date:
5-1
The undersigned, as Depository, hereby certifies that the
above described account has been established under Account Number ______, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance Corporation through the
Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
--------------------------------------
Depository
By:
--------------------------------------
Name:
Title:
Date:
5-2
EXHIBIT 6
MORTGAGE LOAN SCHEDULE
[Intentionally Omitted]
6-1
EXHIBIT 7
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall
include each of the following items, which shall be available for inspection by
the Purchaser and any prospective Purchaser:
1) The original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of _________ without recourse" and signed in
the name of [Originator] by an authorized officer.
2) The original of any guarantee executed in connection with the Mortgage
Note.
3) The original Mortgage, with evidence of recording thereon. If in
connection with any Mortgage Loan, the Seller cannot deliver or cause
to be delivered the original Mortgage with evidence of recording
thereon on or prior to the related Closing Date because of a delay
caused by the public recording office where such Mortgage has been
delivered for recordation or because such Mortgage has been lost or
because such public recording office retains the original recorded
Mortgage, the Seller shall deliver or cause to be delivered to the
Purchaser, a photocopy of such Mortgage, together with (i) in the case
of a delay caused by the public recording office, an Officer's
Certificate of the Seller stating that such Mortgage has been
dispatched to the appropriate public recording office for recordation
and that the original recorded Mortgage or a copy of such Mortgage
certified by such public recording office to be a true and complete
copy of the original recorded Mortgage will be promptly delivered to
the Purchaser upon receipt thereof by the Seller; or (ii) in the case
of a Mortgage where a public recording office retains the original
recorded Mortgage or in the case where a Mortgage is lost after
recordation in a public recording office, a copy of such Mortgage
certified by such public recording office to be a true and complete
copy of the original recorded Mortgage.
4) The originals of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon.
5) The original Assignment of Mortgage for each Mortgage Loan, in blank,
in form and substance acceptable for recording.
6) Originals of all intervening assignments of the Mortgage with evidence
of recording thereon, or if any such intervening assignment has not
been returned from the applicable recording office or has been lost or
if such public recording office retains the original recorded
assignments of mortgage, the Seller shall deliver or cause to be
delivered to the Purchaser, a photocopy of such intervening assignment,
together with (i) in the case of a delay caused by the public recording
office, an Officer's Certificate of the Seller stating that such
intervening assignment of mortgage has been dispatched to the
7-1
appropriate public recording office for recordation and that such
original recorded intervening assignment of mortgage or a copy of such
intervening assignment of mortgage certified by the appropriate public
recording office to be a true and complete copy of the original
recorded intervening assignment of mortgage will be promptly delivered
to the Purchaser upon receipt thereof by the Seller; or (ii) in the
case of an intervening assignment where a public recording office
retains the original recorded intervening assignment or in the case
where an intervening assignment is lost after recordation in a public
recording office, a copy of such intervening assignment certified by
such public recording office to be a true and complete copy of the
original recorded intervening assignment.
7) The original mortgagee policy of title insurance.
8) Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
9) The original hazard insurance policy and, if required by law, flood
insurance policy, in accordance with Section 2.11 of the Agreement.
10) The PMI Policy or certificate of insurance or an electronic notation of
the existence of such policy and the LPMI Policy, if applicable.
11) Residential loan application.
12) Mortgage Loan closing statement.
13) Verification of employment and income except for Mortgage Loans
originated under a Limited Documentation Program.
14) Verification of acceptable evidence of source and amount of downpayment
except for Mortgage Loans originated under a Limited Documentation
Program.
15) Credit report on the Mortgagor.
16) Residential appraisal report.
17) Photograph of the Mortgaged Property.
18) Survey of the Mortgaged Property, if any.
19) Copy of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy,
i.e., map or plat, restrictions, easements, sewer agreements, home
association declarations, etc.
20) All required disclosure statements.
21) If available, termite report, structural engineer's report, water
potability and septic certification.
22) Sales contract, if applicable.
7-2
23) Tax receipts, insurance premium receipts, ledger sheets, payment
history from date of origination, insurance claim files,
correspondence, current and historical computerized data files, and all
other processing, underwriting and closing papers and records which are
customarily contained in a mortgage loan file and which are required to
document the Mortgage Loan or to service the Mortgage Loan.
24) Amortization schedule.
In the event an Officer's Certificate of the Seller is
delivered to the Purchaser because of a delay caused by the public recording
office in returning any recorded document, the Seller shall deliver to the
Purchaser, within 120 days of the related Closing Date, an Officer's Certificate
which shall (i) identify the recorded document, (ii) state that the recorded
document has not been delivered to the Custodian due solely to a delay caused by
the public recording office, (iii) state the amount of time generally required
by the applicable recording office to record and return a document submitted for
recordation, and (iv) specify the date the applicable recorded document will be
delivered to Custodian. An extension of the date specified in (iv) above may be
requested from the Purchaser, which consent shall not be unreasonably withheld.
7-3
EXHIBIT 8
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
-------------------------------------------
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated __________ __,
200_, between __________________________________, a ___________________
corporation ("Assignor") and ____________________., a _____________ corporation
("Assignee"):
For and in consideration of the sum of TEN DOLLARS ($10.00)
and other valuable consideration the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to
Assignee, as Purchaser, all of the right, title and interest of
Assignor under that certain Interim Servicing Agreement, Conventional
Residential Fixed and Adjustable Rate Mortgage Loans, Group 2004-1 (the
"Interim Servicing Agreement"), dated as of September 24, 2004, by and
between Xxxxxx Brothers Bank, F.S.B (the "Purchaser"), and First
National Bank of Nevada (the "Interim Servicer").
2. The Assignor warrants and represents to, and covenants
with, the Assignee that:
a. The Assignor has not received notice of, and has
no knowledge of, any offsets, counterclaims or other defenses
available to the Interim Servicer with respect to the Interim
Servicing Agreement or the Mortgage Loans;
b. The Assignor has not waived or agreed to any
waiver under, or agreed to any amendment or other modification
of, the Interim Servicing Agreement, including without
limitation, the transfer of the servicing obligations under
the Interim Servicing Agreement. The Assignor has no knowledge
of, and has not received notice of, any waivers under or
amendments or other modifications of, or assignments of rights
or obligations under, the Interim Servicing Agreement; and
3. That Assignee warrants and represents to, and covenants
with, the Assignor and the Interim Servicer pursuant to the Interim
Servicing Agreement that the Assignee agrees to be bound, as Purchaser,
by all of the terms, covenants and conditions of the Interim Servicing
Agreement and from and after the date hereof, the Assignee assumes for
the benefit of each of the Interim Servicer and the Assignor all of the
Assignor's obligations as Purchaser thereunder;
IN WITNESS WHEREOF, the parties have caused this Assignment
and Assumption Agreement to be executed by their duly authorized officers as of
the date first above written.
8-1
---------------------------------- ----------------------------------
Assignor Assignee
By: By:
------------------------------- ------------------------------
Its: Its:
------------------------------- ------------------------------
Taxpayer Taxpayer
Identification No. Identification No.
---------------- ----------------
8-2
EXHIBIT 9
ACKNOWLEDGMENT AGREEMENT
On this ____ day of ____________, 200_, Xxxxxx Brothers Bank,
F.S.B, (the "Purchaser") as the Purchaser under that certain Interim Servicing
Agreement dated as of September 24, 2004, (the "Agreement"), does hereby
contract with the First National Bank of Nevada (the "Seller") as Seller under
the Agreement, for the servicing responsibilities related to the Mortgage Loans
listed on the Mortgage Loan Schedule attached hereto. The Seller hereby accepts
the servicing responsibilities transferred hereby and on the date hereof assumes
all servicing responsibilities related to the Mortgage Loans identified on the
attached Mortgage Loan Schedule all in accordance with the Agreement. The
contents of each Servicing File required to be delivered to service the Mortgage
Loans pursuant to the Agreement have been or shall be delivered to the Seller by
the Purchaser in accordance with the terms of the Agreement.
With respect to the Mortgage Loans made subject to the
Agreement hereby, the Closing Date shall
be ___________________.
All other terms and conditions of this transaction shall be
governed by the Agreement.
Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Agreement.
9-1
This Acknowledgment Agreement may be executed simultaneously
in any number of counterparts. Each counterpart shall be deemed to be an
original, and all such counterparts shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Purchaser and the Seller have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
PURCHASER:
XXXXXX BROTHERS BANK. F.S.B.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
SELLER:
FIRST NATIONAL BANK OF NEVADA
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
9-2
EXHIBIT 10
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION, dated as of _______, 2000 between
Xxxxxx Brothers Bank, F.S.B. having an office at 000 Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 ("Assignor") and First National Bank of Nevada, having an office
at 0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx X-000, Xxxxxxxxxx XX 00000 ("Assignee"):
For and in consideration of the sum of TEN DOLLARS ($10.00)
and other valuable consideration the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to Assignee, all
of the right, title and interest of Assignor, as "Servicer", with respect to the
mortgage loans identified on Exhibit A (the "Mortgage Loans"), under that
certain Custodial Agreement, dated as of July 13, 1999 (the "Agreement"), by and
between Assignor as owner and servicer, and LaSalle National Bank (the
"Custodian").
The Assignor specifically reserves any and all right, title
and interest and all obligations of the Assignor with respect to any mortgage
loans subject to the Agreement which are not the Mortgage Loans set forth on
Exhibit A hereto and are not the subject of this Assignment and Assumption
Agreement.
2. The Assignor warrants and represents to, and covenants with, the
Assignee that with respect to the Mortgage Loans:
a._______The Assignor is assigning its interest as Servicer
under the Agreement for the sole purpose of permitting the Assignee as Servicer
of the Mortgage Loans, to act as Servicer under the Agreement; and
b._______The Assignor has not waived or agreed to any waiver
under, or agreed to any amendment or other modification of, the Agreement. The
Assignor has no knowledge of, and has not received notice of, any waivers under
or amendments or other modifications of, or assignments of rights or obligations
under the Agreement.
3. The Assignee warrants and represents to, and covenants with, the
Assignor and the Custodian pursuant to the Agreement that the Assignee agrees to
be bound, as Servicer, by all of the terms, covenants and conditions of the
Agreement and from and after the date hereof, the Assignee assumes for the
benefit of the Assignor all of the Assignor's obligations as Servicer
thereunder.
10-1
IN WITNESS WHEREOF, the parties have caused this Assignment
and Assumption Agreement to be executed by their duly authorized officers as of
the date first above written.
FIRST NATIONAL BANK OF NEVADA XXXXXX BROTHERS BANK, F.S.B.
Assignor
Assignee
By: By:
------------------------------- ----------------------------------
Its: Its:
------------------------------ ----------------------------------
10-2
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[Intentionally Omitted]
