Exhibit 99.7
================================================================================
Xxxxxx Brothers Bank, FSB,
Purchaser
and
Countrywide Home Loans, Inc.,
Company
------------------------------------------------
FLOW SELLER'S WARRANTIES AND SERVICING
AGREEMENT
Dated as of June 1, 2004
------------------------------------------------
Conventional Residential Fixed Rate Mortgage Loans
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; DELIVERY OF DOCUMENTS
Section 2.01 Conveyance of Mortgage Loans; Possession of Mortgage Files;
Maintenance of Servicing Files.................................................12
Section 2.02 Books and Records; Transfers of Mortgage Loans..................................13
Section 2.03 Delivery of Documents...........................................................14
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES AND BREACH
Section 3.01 Company Representations and Warranties..........................................15
Section 3.02 Representations and Warranties Regarding Individual Mortgage Loans..............17
Section 3.03 Remedies for Breach of Representations and Warranties...........................27
Section 3.04 Indemnification.................................................................29
Section 3.05 Restrictions and Requirements Applicable in the Event
that a Mortgage Loan is Acquired by a REMIC....................................30
Section 3.06 Review of Mortgage Loans........................................................31
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer......................................................31
Section 4.02 Liquidation of Mortgage Loans...................................................33
Section 4.03 Collection of Mortgage Loan Payments............................................34
Section 4.04 Establishment of and Deposits to Custodial Account..............................34
Section 4.05 Permitted Withdrawals From Custodial Account....................................36
Section 4.06 Establishment of and Deposits to Escrow Account.................................37
Section 4.07 Permitted Withdrawals From Escrow Account.......................................37
Section 4.08 Payment of Taxes, Insurance and Other Charges...................................38
Section 4.09 Protection of Accounts..........................................................38
Section 4.10 Maintenance of Hazard Insurance.................................................39
- i -
Section 4.11 Maintenance of Mortgage Impairment Insurance....................................41
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions Insurance.................41
Section 4.13 Inspections.....................................................................41
Section 4.14 Restoration of Mortgaged Property...............................................42
Section 4.15 Maintenance of LPMI Policy; Claims..............................................42
Section 4.16 Title, Management and Disposition of REO Property...............................43
Section 4.17 Real Estate Owned Reports.......................................................44
Section 4.18 Liquidation Reports.............................................................44
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged Property..................45
Section 4.20 Credit Reporting................................................................45
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances.....................................................................45
Section 5.02 Statements to Purchaser.........................................................46
Section 5.03 Monthly Advances by Company.....................................................46
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Transfers of Mortgaged Property.................................................47
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files.........................47
Section 6.03 Servicing Compensation..........................................................48
Section 6.04 Annual Statement as to Compliance...............................................48
Section 6.05 Annual Independent Public Accountants' Servicing Report.........................48
Section 6.06 Right to Examine Company Records................................................49
Section 6.07 Appointment and Designation of Master Servicer..................................49
ARTICLE VII
AGENCY TRANSFER; PASS-THROUGH TRANSFER
Section 7.01 Removal of Mortgage Loans from Inclusion Under this Agreement
Upon an Agency Transfer, or a Pass-Through Transfer on One or
More Reconstitution Dates......................................................49
ARTICLE VIII
COMPANY TO COOPERATE
Section 8.01 Provision of Information........................................................52
Section 8.02 Financial Statements; Servicing Facility........................................52
- ii -
ARTICLE IX
THE COMPANY
Section 9.01 Indemnification; Third Party Claims.............................................53
Section 9.02 Merger or Consolidation of the Company..........................................53
Section 9.03 Limitation on Liability of Company and Others...................................53
Section 9.04 Limitation on Resignation and Assignment by Company.............................54
ARTICLE X
DEFAULT
Section 10.01 Events of Default...............................................................55
Section 10.02 Waiver of Defaults..............................................................56
ARTICLE XI
TERMINATION
Section 11.01 Termination.....................................................................57
Section 11.02 Termination Without Cause.......................................................57
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Company............................................................57
Section 12.02 Amendment.......................................................................58
Section 12.03 Governing Law...................................................................58
Section 12.04 Duration of Agreement...........................................................58
Section 12.05 Notices.........................................................................58
Section 12.06 Severability of Provisions......................................................59
Section 12.07 Relationship of Parties.........................................................59
Section 12.08 Execution; Successors and Assigns...............................................59
Section 12.09 Recordation of Assignments of Mortgage..........................................59
Section 12.10 Assignment by Purchaser.........................................................60
Section 12.11 No Personal Solicitation........................................................60
- iii -
EXHIBITS
EXHIBIT A MORTGAGE LOAN SCHEDULE
EXHIBIT B CONTENTS OF EACH MORTGAGE FILE
EXHIBIT C MORTGAGE LOAN DOCUMENTS
EXHIBIT D-1 FORM OF CUSTODIAL ACCOUNT
CERTIFICATION
EXHIBIT D-2 FORM OF CUSTODIAL ACCOUNT
LETTER AGREEMENT
EXHIBIT E-1 FORM OF ESCROW ACCOUNT CERTIFICATION
EXHIBIT E-2 FORM OF ESCROW ACCOUNT
LETTER AGREEMENT
EXHIBIT F RESERVED
EXHIBIT G FORM OF ASSIGNMENT AND ASSUMPTION
EXHIBIT H RESERVED
EXHIBIT I FORM OF ASSIGNMENT AND CONVEYANCE
- iv -
This is a Flow Seller's Warranties and Servicing Agreement for
conventional residential first lien mortgage loans, dated and effective as of
June 1, 2004, and is executed between Xxxxxx Brothers Bank, FSB, as purchaser
(the "Purchaser"), and Countrywide Home Loans, Inc., as seller and servicer (the
"Company").
W I T N E S S E T H:
WHEREAS, from time to time, the Purchaser has agreed to purchase from
the Company and, from to time, the Company has agreed to sell to the Purchaser
certain Mortgage Loans (excluding the right to service the Mortgage Loans which
the Company expressly retains), which shall be delivered as a pool of whole
loans;
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of
trust or other security instrument creating a lien on a residential dwelling
located in the jurisdiction indicated on the Mortgage Loan Schedule; and
WHEREAS, the Purchaser and the Company wish to prescribe the manner of
purchase of the Mortgage Loans and the management, servicing and control of the
Mortgage Loans.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Purchaser and the Company agree as
follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.
Adjustable Rate Mortgage Loan: A Mortgage Loan purchased pursuant to
this Agreement, the Mortgage Interest Rate of which is adjusted from time to
time in accordance with the terms of the related Mortgage Note.
Agency Transfer: The sale or transfer by Purchaser of some or all of the
Mortgage Loans to Xxxxxx Xxx under its Cash Purchase Program or its MBS Swap
Program (Special Servicing Option) or to Xxxxxxx Mac under its Xxxxxxx Xxx Xxxx
Program or Gold PC Program, retaining the Company as "servicer thereunder".
Agreement: This Flow Seller's Warranties and Servicing Agreement and all
amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
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.
Approved Flood Certification Provider: Any provider acceptable to Xxxxxx
Xxx or Xxxxxxx Mac.
Assignment and Conveyance: An Assignment and Conveyance in the form of
Exhibit I hereto dated as of the related Closing Date, by and between the
Company and the Purchaser.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the sale of the Mortgage to the Purchaser.
BIF: The Bank Insurance Fund, or any successor thereto.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day
on which banking and savings and loan institutions in the States of New York,
Texas, or California are authorized or obligated by law or executive order to be
closed.
Closing Date: The date or dates set forth on the related Assignment and
Conveyance on which the Purchaser from time to time shall purchase and the
Company from time to time shall sell, the Mortgage Loans listed on the related
Mortgage Loan Schedule.
Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage Loan,
the sum of the original principal balance of such Mortgage Loan and the
outstanding principal balance of any related first lien as of the date of
origination of the Mortgage Loan, divided by the lower 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.
Code: The Internal Revenue Code of 1986, as it may be amended from time
to time or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.
Company: Countrywide Home Loans Inc., or its successor in interest or
assigns, or any successor to the Company under this Agreement appointed as
herein provided.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
- 2 -
Custodial Account: The separate account or accounts created and
maintained pursuant to Section 4.04.
Custodial Agreement: That certain Custodial Agreement, dated as of
September 1, 1999 by and between the Purchaser and U.S. Bank Trust National
Association, as amended.
Custodian: The Custodian under the Custodial Agreement, or its successor
in interest or assigns or any successor to the Custodian under the Custodial
Agreement as provided therein.
Cut-off Date: With respect to each Mortgage Loan in a Mortgage Loan
Package, the date set forth on the related Mortgage Loan Schedule.
Deleted Mortgage Loan: A Mortgage Loan which is repurchased by the
Company in accordance with the terms of this Agreement and which is, in the case
of a substitution pursuant to Section 3.03, replaced or to be replaced with a
Qualified Substitute Mortgage Loan.
Determination Date: The 15th day (or if such 15th day is not a Business
Day, the Business Day immediately following such 15th day) of the month of the
related Remittance Date.
Disqualified Organization: An organization defined as such in Section
860E(e) of the Code.
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 of such Due Date.
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 of 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
- 3 -
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.;
(iii) investments and securities otherwise acceptable to Xxxxxx Mae
and Xxxxxxx Mac.
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.
Errors and Omissions Insurance Policy: An errors and omissions insurance
policy to be maintained by the Company pursuant to Section 4.12.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 4.06.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, if applicable, and any other payments required to
be escrowed by the Mortgagor with the mortgagee pursuant to the Mortgage or any
other related document.
Event of Default: Any one of the conditions or circumstances enumerated
in Section 10.01.
Xxxxxx Mae: The Federal National Mortgage Association, or any successor
thereto.
Xxxxxx Xxx Guides: The Xxxxxx Xxx Xxxxxxx' Guide and the Xxxxxx Xxx
Servicers' Guide and all amendments or additions thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FICO Score: A statistical credit score obtained by mortgage lenders in
connection with the loan application to help assess a borrower's credit
worthiness.
- 4 -
Fidelity Bond: A fidelity bond to be maintained by the Company pursuant
to Section 4.12.
Xxxxxxx Mac: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
Gross Margin: With respect to each Adjustable Rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note which amount is
added to the Index in accordance with the terms of the related Mortgage Note to
determine on each Interest Rate Adjustment Date the Mortgage Interest Rate for
such Mortgage Loan.
Index: The index indicated in the related Mortgage Note for each
Adjustable Rate Mortgage Loan.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Interest Only Mortgage Loan: A Mortgage Loan that requires payments of
interest only during its term and the entire original principal balance at
maturity, and that does not amortize during its term.
Interest Rate Adjustment Date: With respect to each Adjustable Rate
Mortgage Loan, the date as specified in the related Mortgage Note with respect
to the initial Interest Rate Adjustment Date, or the related Mortgage Loan
Schedule, with respect to subsequent Interest Rate Adjustment Dates.
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 Stated Principal Balance 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 a
Qualified Insurer pursuant to which the related premium is to be paid by the
Company of the related Mortgage Loan from payments of interest made by the
Mortgagor.
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.
- 5 -
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS Mortgage Loan: Any Mortgage Loan registered with MERS on the MERS
System.
MERS System: The system of recording transfers of mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for any MERS Mortgage Loan.
Monthly Advance: The portion of Monthly Payment delinquent with respect
to each Mortgage Loan at the close of business on the Determination Date
required to be advanced by the Company pursuant to Section 5.03 on the Business
Day immediately preceding the Remittance Date of the related month.
Monthly Payment: The scheduled monthly payment of principal and interest
on a Mortgage Loan.
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 B 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 4.11.
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, each Mortgage Loan originally sold and subject to this Agreement
being identified on the related Mortgage Loan Schedule, which Mortgage Loan
includes without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO Disposition Proceeds and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan.
Mortgage Loan Documents: The documents listed in Exhibit B hereto.
Mortgage Loan Package: A pool of Mortgage Loans sold to the Purchaser by
the Company 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 Servicing Fee Rate and (ii) with respect to
LPMI Loans, the LPMI Fee.
- 6 -
Mortgage Loan Schedule: With respect to each Mortgage Loan Package, a
schedule of Mortgage Loans annexed to the Assignment and Conveyance, each such
schedule setting forth the information delineated in Exhibit A, with respect to
each Mortgage Loan. 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 (a) an assistant Vice
President or higher ranking officer and (b) by the Treasurer or the Secretary or
one of the Assistant Treasurers or Assistant Secretaries of the Company, and
delivered to the Purchaser as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an employee
of the Company, reasonably acceptable to the Purchaser, provided that any
Opinion of Counsel relating to (a) qualification of the Mortgage Loans in a
REMIC or (b) compliance with the REMIC Provisions, must be an opinion of counsel
who (i) is in fact independent of the Company and any master servicer of the
Mortgage Loans, (ii) does not have any material direct or indirect financial
interest in the Company or any master servicer of the Mortgage Loans or in an
affiliate of either and (iii) is not connected with the Company or any master
servicer of the Mortgage Loans as an officer, employee, director or person
performing similar functions.
Pass-Through Transfer: The sale or transfer of some or all of the
Mortgage Loans to a trust to be formed as part of a publicly-issued and/or
privately placed, rated or unrated, mortgage pass-through transaction, retaining
the Company as "servicer" (with or without a master servicer) thereunder.
Periodic Rate Cap: With respect to each Adjustable Rate Mortgage Loan,
the provision of each Mortgage Note which provides for an absolute maximum
amount by which the Mortgage Interest Rate therein may increase or decrease on
an Interest Rate Adjustment Date above or below the Mortgage Interest Rate
previously in effect.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof.
PMI: PMI Mortgage Insurance Co., or any successor thereto.
- 7 -
Prepayment Interest Shortfall Amount: With respect to any Mortgage Loan
that was subject to a Principal Prepayment in full or in part during any Due
Period, which Principal Prepayment was applied to such Mortgage Loan prior to
such Mortgage Loan's Due Date in such Due Period, the amount of interest (net
the related Servicing Fee) that would have accrued on the amount of such
Principal Prepayment during the period commencing on the date as of which such
Principal Prepayment was applied to such Mortgage Loan and ending on the day
immediately preceding such Due Date, inclusive.
Prime Rate: The prime rate announced to be in effect from time to time,
as published as the average rate in the "Money Rates" section of The Wall Street
Journal.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, excluding
any prepayment penalty or premium thereon and which is not accompanied by an
amount of interest representing scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.
Principal Prepayment Period: The second day of the month preceding the
month in which the related Remittance Date occurs through the first day of the
month in which the related Remittance Date occurs.
Purchase Price and Terms Letter: With respect to each purchase of a
Mortgage Loan Package hereunder, that certain letter agreement setting forth the
general terms and conditions of such transaction consummated herein and
identifying the Mortgage Loans to be purchased hereunder, by and between the
Company and the Purchaser.
Purchaser: Xxxxxx Brothers Bank, FSB or its successor in interest or any
successor to the Purchaser under this Agreement as herein provided.
Qualified Depository: A depository the accounts of which are insured by
the FDIC through the BIF or the SAIF and the debt obligations of which are rated
AA or better by Standard & Poor's Corporation.
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.
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Company for a Deleted Mortgage Loan which must, on the date
of such substitution, (i) have an outstanding principal balance, after deduction
of all scheduled payments due in the month of substitution (or in the case of a
substitution of more than one mortgage loan for a Deleted Mortgage Loan, an
aggregate principal balance), not in excess of the Stated Principal Balance of
the Deleted Mortgage Loan; (ii) have a Mortgage Loan Remittance Rate not less
than and not more than 2% greater than the Mortgage Loan Remittance Rate of the
Deleted Mortgage Loan; (iii) have a remaining term to maturity not greater than
and not more than one year less than that of the Deleted Mortgage Loan; (iv)
have a Gross Margin not less than that of the Deleted Mortgage Loan; (v) have a
Lifetime Rate Cap not less than that of the Deleted Mortgage Loan; (vi) have a
Periodic Rate Cap not less than that of the Deleted Mortgage Loan;
- 8 -
(vii) comply with each representation and warranty set forth in Sections 3.01
and 3.02; and (viii) be a REMIC Eligible Mortgage Loan.
Rating Agency: Any of Fitch, Moody's or Standard & Poor's or their
respective successors.
Reconstitution: A Pass-Through Transfer, a Whole Loan Transfer or an
Agency Transfer.
Reconstitution Agreements: The agreement or agreements entered into by
the Purchaser, the Company, Xxxxxx Xxx or Xxxxxxx Mac or certain third parties
on the Reconstitution Date(s) with respect to any or all of the Mortgage Loans
serviced hereunder, in connection with a Pass-Through Transfer or an Agency
Transfer as set forth in Section 7.01, including, but not limited to, (i) a
Xxxxxx Mae Mortgage Selling and Servicing Contract, a Pool Purchase Contract,
and any and all servicing agreements and tri-party agreements reasonably
required by Xxxxxx Xxx with respect to a Xxxxxx Mae Transfer, (ii) a Purchase
Contract and all purchase documents associated therewith as set forth in the
Xxxxxxx Xxx Xxxxxxx' & Servicers' Guide, and any and all servicing agreements
and tri-party agreements reasonably required by Xxxxxxx Mac with respect to a
Xxxxxxx Mac Transfer, and (iii) a Pooling and Servicing Agreement and/or a
subservicing/master servicing agreement and related custodial/trust agreement
and related documents with respect to a Pass-Through Transfer. Such agreement or
agreements shall prescribe the rights and obligations of the Company in
servicing the related Mortgage Loans and shall provide for servicing
compensation to the Company (calculated on a weighted average basis for all the
related Mortgage Loans as of the Reconstitution Date), net of any guarantee fees
due Xxxxxx Mae or Xxxxxxx Mac, if applicable, at least equal to the Servicing
Fee due the Company in accordance with this Agreement. The form of relevant
Reconstitution Agreement to be entered into by the Purchaser and/or master
servicer or trustee and the Company with respect to Pass-Through Transfers shall
be reasonably satisfactory in form and substance to the Purchaser and the
Company (giving due regard to any rating or master servicing requirements),
shall not materially increase the Company's obligations or materially diminish
the Company's rights under this Agreement, and the representations and
warranties and servicing provisions contained therein shall be substantially
similar to those contained in this Agreement as of the related Closing Date,
unless otherwise mutually agreed by the parties.
Reconstitution Date: The date or dates on which any or all of the
Mortgage Loans serviced under this Agreement shall be removed from this
Agreement and reconstituted as part of an Agency Transfer or a Pass-Through
Transfer pursuant to Section 7.01 hereof. On such date or dates, the Mortgage
Loans transferred shall cease to be covered by this Agreement and the Company's
servicing responsibilities shall cease under this Agreement (but not its
obligations as Company and originator for representations made as of the related
Closing Date hereunder or its servicing obligations prior to the Reconstitution
Date) with respect to the related transferred Mortgage Loans.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
- 9 -
REMIC Documents: The document or documents creating and governing the
administration of a REMIC.
REMIC Eligible Mortgage Loan: A Mortgage Loan held by a REMIC which
satisfies and/or complies with all applicable REMIC Provisions.
REMIC Provisions: Provisions of the federal income tax law relating to a
REMIC, which appear at Section 860A through 86OG of Subchapter M of Chapter 1,
Subtitle A of the Code, and related provisions, and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The 18th day (or if such 18th day is not a Business
Day, the first Business Day immediately following) of any month.
REO Disposition: The final sale by the Company of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 4.16.
REO Property: A Mortgaged Property acquired by the Company on behalf of
the Purchasers through foreclosure or by deed in lieu of foreclosure, as
described in Section 4.16.
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 Loan Remittance Rate from the date on
which interest has last been paid and distributed to the Purchaser to the date
of repurchase, less amounts received or advanced in respect of such repurchased
Mortgage Loan which are being held in the Custodial Account for distribution in
the month of repurchase plus (iii) any costs and damages incurred by the
Purchaser or trust with respect to any securitization of the Mortgage Loan in
connection with any violation by such Mortgage Loan of any predatory- or
abusive-lending law plus (iv) all reasonable costs and expenses incurred by the
Purchaser in the enforcement of the Company's repurchase obligation hereunder.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
Securities Act of 1933 or the 1933 Act: The Securities Act of 1933, as
amended.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses other than Monthly Advances (including reasonable
attorneys' fees and disbursements) incurred in the performance by the Company of
its servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the management
and liquidation of any REO Property, (d) in connection with the liquidation of a
Mortgage Loan, any expenditures relating to the purchase or maintenance of any
Superior Lien pursuant to Section 4.21 hereof, and (e) compliance with the
obligations under Section 4.08.
- 10 -
Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual fee the Purchaser shall pay to the Company, which shall, for a period of
one full month, be equal to one-twelfth of the product of (a) the Servicing Fee
Rate and (b) the outstanding principal balance of such Mortgage Loan. Such fee
shall be payable monthly, computed on the basis of the same principal amount and
period respecting which any related interest payment on a Mortgage Loan is
computed. The obligation of the Purchaser to pay the Servicing Fee is limited
to, and the Servicing Fee is payable solely from, the interest portion
(including recoveries with respect to interest from Liquidation Proceeds, to the
extent permitted by Section 4.05) of such Monthly Payment collected by the
Company, or as otherwise provided under Section 4.05.
Servicing Fee Rate: With respect to each Mortgage Loan and each Mortgage
Loan Package, the Servicing Fee Rate set forth in the related Assignment and
Conveyance.
Servicing File: With respect to each Mortgage Loan, the file retained by
the Company consisting of originals of all documents in the Mortgage File which
are not delivered to the Custodian and copies of the Mortgage Loan Documents
listed in Exhibit B the originals of which are delivered to the Custodian
pursuant to Section 2.01.
Servicing LP: Countrywide Home Loans Servicing LP, or any successor
thereto
Servicing Officer: Any officer of the Company involved in or responsible
for, the administration and servicing of the Mortgage Loans whose name appears
on a list of servicing officers furnished by the Company to the Purchaser upon
request, as such list may from time to time be amended.
Stated Principal Balance: As to each Mortgage Loan, (i) the principal
balance of the Mortgage Loan at the related Cut-off Date after giving effect to
payments of principal due on or before such date, whether or not received, minus
(ii) all amounts previously distributed to the Purchaser with respect to the
related Mortgage Loan representing payments or recoveries of principal or
advances in lieu thereof.
Subservicer: Any Subservicer which is subservicing the Mortgage Loans
pursuant to a Subservicing Agreement. Any subservicer shall meet the
qualifications set forth in Section 4.01.
Subservicing Agreement: An agreement between the Company and a
Subservicer for the servicing of the Mortgage Loans.
Tax Returns: The federal income tax return on Internal Revenue Service
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return,
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed
on behalf of any REMIC under the REMIC Provisions, together with any and all
other information, reports or returns that may be required to be furnished to
the certificate holders under a REMIC or filed with the Internal Revenue Service
or any other governmental taxing authority under any applicable provisions of
federal, state or local tax laws.
- 11 -
Underwriting Guidelines: The applicable underwriting guidelines of the
Company attached to the related Assignment and Conveyance.
Whole Loan Transfer: The sale or transfer of some or all of the Mortgage
Loans to a third party purchaser in a whole loan transaction pursuant to a
seller's warranties and servicing agreement or a participation and servicing
agreement, retaining the Company as "servicer" thereunder.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; DELIVERY OF DOCUMENTS
Section 2.01 Conveyance of Mortgage Loans; Possession of Mortgage
Files; Maintenance of Servicing Files.
The Company, on the related Closing Date, does hereby sell, transfer,
assign, set over and convey to the Purchaser, without recourse, but subject to
the terms of this Agreement, on a servicing retained basis, all the right, title
and interest of the Company in and to the Mortgage Loans in the related Mortgage
Loan Package, and Mortgage Files and all rights and obligations arising under
the documents contained therein for each Mortgage Loan in the related Mortgage
Loan Package. Pursuant to Section 2.03, the Company shall deliver the Mortgage
Loan Documents for each Mortgage Loan to the Custodian prior to the related
Closing Date.
The contents of each Mortgage File not delivered to the Custodian are
and shall be held in trust by the Company for the benefit of the Purchaser as
the owner thereof. The Company shall maintain a Servicing File consisting of a
copy of the contents of each Mortgage File and the originals of the documents in
each Mortgage File not delivered to the Custodian. The possession of each
Servicing File by the Company is at the will of the Purchaser for the sole
purpose of servicing the related Mortgage Loan, and such retention and
possession by the Company is in a custodial capacity only. Upon the sale of the
Mortgage Loans the ownership of each Mortgage Note, the related Mortgage and the
related Mortgage File and Servicing File shall vest immediately in the
Purchaser, and the ownership of all records and documents with respect to the
related Mortgage Loan prepared by or which come into the possession of the
Company shall vest immediately in the Purchaser and shall be retained and
maintained by the Company, in trust, at the will of the Purchaser and only in
such custodial capacity. Each Servicing File shall be segregated from the other
books and records of the Company and shall be marked appropriately to reflect
clearly the sale of the related Mortgage Loan to the Purchaser. The Company
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 Company's servicing of the Mortgage Loans or is in
connection with a repurchase of any Mortgage Loan pursuant to Section 3.03,
3.06, or 6.02.
- 12 -
Section 2.02 Books and Records; Transfers of Mortgage Loans.
From and after the sale of the Mortgage Loans to the Purchaser all
rights arising out of the Mortgage Loans including but not limited to all funds
received on or in connection with the Mortgage Loans, shall be received and held
by the Company in trust for the benefit of the Purchaser as owner of the
Mortgage Loans, and the Company shall retain record title to the related
Mortgages for the sole purpose of facilitating the servicing and the supervision
of the servicing of the Mortgage Loans.
The sale of each Mortgage Loan shall be reflected on the Company's
balance sheet and other financial statements as a sale of assets by the Company.
The Company shall be responsible for maintaining, and shall maintain, a complete
set of books and records for each Mortgage Loan which shall be marked clearly to
reflect the ownership of each Mortgage Loan by the Purchaser. In particular, the
Company shall maintain in its possession, available for inspection by the
Purchaser, or its designee and shall deliver to the Purchaser upon demand,
evidence of compliance with all federal, state and local laws, rules and
regulations, including but not limited to documentation as to the method used in
determining the applicability of the provisions of the Flood Disaster Protection
Act of 1973, as amended, to the Mortgaged Property, documentation evidencing
insurance coverage and eligibility of any condominium project for approval by
Xxxxxx Mae and periodic inspection reports as required by Section 4.13. To the
extent that original documents are not required for purposes of realization of
Liquidation Proceeds or Insurance Proceeds, documents maintained by the Company
may be in the form of microfilm or microfiche or such other reliable means of
recreating original documents, including but not limited to, optical imagery
techniques.
The Company shall maintain with respect to each Mortgage Loan and shall
make available for inspection by any Purchaser or its designee the related
Servicing File during the time the Purchaser retains ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and regulations.
The Company shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the Company
shall note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be
made unless such transfer is in compliance with the terms hereof. For the
purposes of this Agreement, the Company shall be under no obligation to deal
with any person with respect to this Agreement or the Mortgage Loans unless the
books and records show such person as the owner of the Mortgage Loan. The
Purchaser may, subject to the terms of this Agreement, sell and transfer one or
more of the Mortgage Loans, provided, however, that (i) the transferee will not
be deemed to be a Purchaser hereunder binding upon the Company unless (a) 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 in the form of Exhibit G hereto executed by the
transferee shall have been delivered to the Company, or (b) the transferee is an
affiliate of the Purchaser, a depositor, a trustee or any other appropriate
party in a Pass-through Transfer and (ii) in no event shall there be more than
five Persons at any given time having the status of "Purchaser" hereunder. The
Purchaser also shall advise the Company of the transfer. Upon receipt of notice
of the transfer, the Company shall xxxx its books and records to reflect the
- 13 -
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.
Section 2.03 Delivery of Documents.
On or before the date which is agreed upon by the Purchaser and the
Company in the Purchase Price and Terms Letter, the Company shall deliver to the
Custodian in escrow for the benefit of the Seller, those Mortgage Loan Documents
as required by this Agreement with respect to each Mortgage Loan in the related
Mortgage Loan Package.
On or prior to the related Closing Date, the Custodian shall certify its
receipt of all such Mortgage Loan Documents required to be delivered pursuant to
the Custodial Agreement, as evidenced by the Initial Certification of the
Custodian in the form annexed to the Custodial Agreement. Purchaser shall pay
all fees and expenses of the Custodian.
The Company shall forward to the Custodian original documents evidencing
an assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with Section 4.01 or 6.01 within two weeks of their
execution, provided, however, that the Company shall provide the Custodian with
a certified true copy of any such document submitted for recordation within two
weeks of its execution, and shall provide the original of any document submitted
for recordation or a copy of such document certified by the appropriate public
recording office to be a true and complete copy of the original within 270 days
of its submission for recordation.
In the event an Officer's Certificate of the Company is delivered to the
Custodian because of a delay caused by the public recording office in returning
any recorded document, the Company shall deliver to the Custodian, within 270
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 the Custodian. The Company shall be required to deliver to the
Custodian the applicable recorded document by the date specified in (iv) above.
An extension of the date specified in (iv) above may be requested from the
Purchaser, which consent shall not be unreasonably withheld. Notwithstanding the
foregoing, the Company shall not be in breach of this Agreement due to a delay
caused by the recording office.
The Company shall deliver the Mortgage Loan Schedule with respect to the
related Mortgage Loan Package to the Purchaser on a best efforts basis, within 3
Business Days prior to the related Closing Date but in no event later than the
date 2 Business Days prior to the related Closing Date.
- 14 -
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES AND BREACH
Section 3.01 Company Representations and Warranties.
The Company represents and warrants to the Purchaser that as of each
Closing Date:
(a) Due Organization and Authority. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has all licenses necessary to carry on its business as now being
conducted and is licensed, qualified and in good standing in each state where a
Mortgaged Property is located if the laws of such state require licensing or
qualification in order to conduct business of the type conducted by the Company,
and in any event the Company is in compliance with the laws of any such state to
the extent necessary to ensure the enforceability of the related Mortgage Loan
and the servicing of such Mortgage Loan in accordance with the terms of this
Agreement; the Company has the full 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 of
transfer to be delivered pursuant to this Agreement) by the Company and the
consummation of the transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and enforceable
obligation of the Company; and all requisite corporate action has been taken by
the Company to make this Agreement valid and binding upon the Company in
accordance with its terms;
(b) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Company, and the transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Company pursuant to this Agreement are not subject to the
bulk transfer or any similar statutory provisions in effect in any applicable
jurisdiction;
(c) No Conflicts. Neither the execution and delivery of this Agreement,
the acquisition of the Mortgage Loans by the Company, the sale of the Mortgage
Loans to the Purchaser or the transactions contemplated hereby, nor the
fulfillment of or compliance with the terms and conditions of this Agreement,
will conflict with or result in a breach of any of the terms, conditions or
provisions of the Company's charter or by-laws or any legal restriction or any
agreement or instrument to which the Company is now a party or by which it is
bound, or constitute a default or result in an acceleration under any of the
foregoing, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Company or its property is subject, or impair
the ability of the Purchaser to realize on the Mortgage Loans, or impair the
value of the Mortgage Loans;
(d) Ability to Service. The Company is an approved seller/servicer of
conventional residential mortgage loans for Xxxxxx Mae or Xxxxxxx Mac, with the
facilities, procedures, and experienced personnel necessary for the sound
servicing of mortgage loans of the same type as the Mortgage Loans. The Company
is in good standing to sell mortgage loans to
- 15 -
and service mortgage loans for Xxxxxx Mae or Xxxxxxx Mac, and no event has
occurred, including but not limited to a change in insurance coverage, which
would make the Company unable to comply with Xxxxxx Mae or Xxxxxxx Mac
eligibility requirements or which would require notification to either Xxxxxx
Mae or Xxxxxxx Mac;
(e) Reasonable Servicing Fee. The Company acknowledges and agrees that
the Servicing Fee, as calculated at the Servicing Fee Rate, represents
reasonable compensation for performing such services and that the entire
Servicing Fee shall be treated by the Company, for accounting and tax purposes,
as compensation for the servicing and administration of the Mortgage Loans
pursuant to this Agreement.
(f) Ability to Perform. The Company does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement. The Company is solvent and the sale of the Mortgage
Loans is not undertaken to hinder, delay or defraud any of the Company's
creditors;
(g) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or to the best of the Company's knowledge threatened
against the Company which, either in any one instance or in the aggregate, may
result in any material adverse change in the business, operations, financial
condition, prospects, properties or assets of the Company, or in any material
impairment of the right or ability of the Company to carry on its business
substantially as now conducted, or in any material liability on the part of the
Company, or which would draw into question the validity of this Agreement or the
Mortgage Loans or of any action taken or to be taken in connection with the
obligations of the Company contemplated herein, or which would be likely to
impair materially the ability of the Company to perform under the terms of this
Agreement;
(h) No Consent Required. No consent, approval, authorization or order of
any court or governmental agency or body is required for the execution, delivery
and performance by the Company of or compliance by the Company with this
Agreement or the sale of the Mortgage Loans as evidenced by the consummation of
the transactions contemplated by this Agreement, or if required, such approval
has been obtained prior to the related Closing Date;
(i) Selection Process. The Mortgage Loans were selected from among the
one- to four-family mortgage loans in the Company's portfolio at the related
Closing Date as to which the representations and warranties set forth in Section
3.02 could be made and such selection was not made in a manner so as to affect
adversely the interests of the Purchaser;
(j) Pool Characteristics. The Mortgage Loans in the related Mortgage
Loan Package have the characteristics as set forth on Exhibit 2 to the related
Assignment and Conveyance.
(k) 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;
- 16 -
(l) Sale Treatment. The Company has determined that the disposition of
the Mortgage Loans pursuant to this Agreement will be afforded sale treatment
for accounting and tax purposes;
(m) Financial Statements. There has been no change in the business,
operations, financial condition, properties or assets of the Company since the
date of the Company's most recent financial statements that would have a
material adverse effect on its ability to perform its obligations under this
Agreement;
(n) No Brokers' Fees. The Company has not dealt with any broker,
investment banker, agent or other person that may be entitled to any commission
or compensation in connection with the sale of the Mortgage Loans;
(o) Origination. The Company's decision to originate any mortgage loan
or to deny any mortgage loan application is an independent decision based upon
Company's Underwriting Guidelines, and is in no way made as a result of
Purchaser's decision to purchase, or not to purchase, or the price Purchaser may
offer to pay for, any such mortgage loan, if originated; and
(p) MERS. The Company is a member of MERS in good standing, and will
comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the MERS Mortgage Loans for as long as such
Mortgage Loans are registered with MERS.
Section 3.02 Representations and Warranties Regarding Individual
Mortgage Loans.
With respect to each Mortgage Loan, or the Mortgage Loans in a Mortgage
Loan Package the aggregate, as applicable, the Company hereby represents and
warrants to the Purchaser that as of the related Closing Date on which such
Mortgage Loan is sold:
(a) Mortgage Loans as Described. The information set forth in each
Mortgage Loan Schedule is complete, true and correct;
(b) Payments Current. All payments required to be made up to the related
Closing Date for the Mortgage Loan under the terms of the Mortgage Note have
been made and credited. No payment required under the Mortgage Loan has been
delinquent thirty days or more at any time in the twelve months prior to the
related Cut-off Date;
(c) No Outstanding Charges. There are no defaults in complying with the
terms of the Mortgages, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable. The
Company has not advanced funds, or induced, solicited or knowingly received any
advance of funds by a party other than the Mortgagor, directly or indirectly,
for the payment of any amount required under the Mortgage Loan, except for
interest accruing from the date of the Mortgage Note or date of disbursement of
the Mortgage Loan proceeds, whichever is greater, to
- 17 -
the day which precedes by one month the Due Date of the first installment of
principal and interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
except by a written instrument which has been recorded, if necessary to protect
the interests of the Purchaser and which has been delivered to the Custodian.
The substance of any such waiver, alteration or modification has been approved
by the issuer of any related LPMI Policy and the title insurer, to the extent
required by the policy, and its terms are reflected on the related Mortgage Loan
Schedule. No Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement approved by the issuer of any related
LPMI Policy and the title insurer, to the extent required by the policy, and
which assumption agreement is part of the Mortgage Loan File delivered to the
Custodian and the terms of which are reflected in the related Mortgage Loan
Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part, or subject to
any right of rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto, and no Mortgagor
(a) was a debtor in any state or federal bankruptcy or insolvency proceeding or
(b) had a foreclosure proceeding commenced again him, in each case, at the time
the Mortgage Loan was originated or in the twelve months preceding the related
origination date.
(f) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are customary in the area where the Mortgaged Property
is located pursuant to insurance policies conforming to the requirements of
Section 4.10. If upon origination of the Mortgage Loan, the Mortgaged Property
was in an area identified in the Federal Register by the Federal 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 Flood Insurance Administration is in effect
which policy conforms to the requirements of Section 4.10. All individual
insurance policies contain a standard mortgagee clause naming the Company and
its successors and assigns as mortgagee, and all premiums thereon have been
paid. The Mortgage obligates the Mortgagor thereunder to maintain the hazard
insurance policy at the Mortgagor's cost and expense, and on the Mortgagor's
failure to do so, authorizes the holder of the Mortgage to obtain and maintain
such insurance at such Mortgagor's cost and expense, and to seek reimbursement
therefor from the Mortgagor. Where required by state law or regulation, the
Mortgagor has been given an opportunity to choose the carrier of the required
hazard insurance, provided the policy is not a "master" or "blanket" hazard
insurance policy covering the common facilities of a planned unit development.
The hazard insurance policy is the valid and binding obligation of the insurer,
is in full force and effect, and will be in full force and effect and inure to
the benefit of the Purchaser upon the consummation of the transactions
contemplated by this Agreement. The Company has not engaged in, and has no
knowledge of the Mortgagor's or any
- 18 -
Subservicer's having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement provided for
herein, or the validity and binding effect of either, including without
limitation, no unlawful fee, unlawful commission, unlawful kickback or other
unlawful compensation or value of any kind has been or will be received,
retained or realized by any attorney, firm or other person or entity, and no
such unlawful items have been received, retained or realized by the Company;
(g) Compliance with Applicable Laws. Each Mortgage Loan at the time it
was made complied in all material respects with applicable local, state, and
federal laws, including, but not limited to all applicable predatory and abusive
lending laws and any and all requirements of any federal, state or local law
(including, without limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity, disclosure
laws, all applicable predatory and abusive lending laws or unfair and deceptive
practices laws) applicable to the Mortgage Loan have been complied with, and the
Company shall maintain in its possession, available for the Purchaser's
inspection, and shall deliver to the Purchaser upon demand, evidence of
compliance with all such requirements.
(h) No Satisfaction of Mortgage. The Mortgage has not been satisfied,
canceled, subordinated or rescinded, in whole or in part, and the Mortgaged
Property has not been released from the lien of the Mortgage, in whole or in
part, nor has any instrument been executed that would effect any such release,
cancellation, subordination or rescission. The Company has not waived the
performance by the Mortgagor of any action, if the Mortgagor's failure to
perform such action would cause the Mortgage Loan to be in default, nor has the
Company waived any default resulting from any action or inaction by the
Mortgagor;
(i) Location and Type of Mortgaged Property. The Mortgaged Property is a
fee simple property located in the state identified in the Mortgage Loan
Schedule and consists of a parcel of real property with a detached single family
residence erected thereon, two-to-four family dwelling, an individual
condominium unit in a low-rise condominium project, or an individual unit in a
planned unit development, provided, however, that any condominium project or
planned unit development shall conform with the Company's Underwriting
Guidelines regarding such dwellings, and no residence or dwelling is a mobile
home, a manufactured dwelling, a modular home or rural property. No portion of
the Mortgaged Property is used for commercial purposes;
(j) Valid Lien. The Mortgage is a valid, subsisting enforceable and
perfected first lien and first priority security interest on the Mortgaged
Property, including all buildings and improvements on the Mortgaged Property,
and all additions, alterations and replacements made at any time with respect to
the foregoing. The lien of the Mortgage is subject only to:
(1) the lien of current real property taxes and assessments not yet due
and payable;
(2) covenants, conditions and restrictions, rights of way, easements and
other matters of the public record as of the date of recording
acceptable to mortgage lending institutions generally and specifically
referred to in the lender's title insurance policy delivered to the
originator of the Mortgage Loan and (i) referred
- 19 -
to or to otherwise considered in the appraisal made for the originator
of the Mortgage Loan or (ii) which do not adversely affect the Appraised
Value of the Mortgaged Property set forth in such appraisal; and
(3) other matters to which like properties are commonly subject which do
not materially interfere with the benefits of the security intended to
be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document related
to and delivered in connection with the Mortgage Loan establishes and creates a
valid, subsisting and enforceable first lien and first priority security
interest on the property described therein and the Company has full right to
sell and assign the same to the Purchaser;
(k) Validity of Mortgage Documents. The Mortgage Note and the Mortgage
are genuine, and each is the legal, valid and binding obligation of the maker
thereof enforceable in accordance with its terms. All parties to the Mortgage
Note and the Mortgage and any other related agreement had legal capacity to
enter into the Mortgage Loan and to execute and deliver the Mortgage Note and
the Mortgage and any other related agreement, and the Mortgage Note and the
Mortgage have been duly and properly executed by such parties;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed and
the proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances thereunder, and any and all requirements as to
completion of any on-site or off-site improvement and as to disbursements of any
escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of the
Mortgage were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(m) Ownership. The Company is the sole owner of record and holder of the
Mortgage Loan. The Mortgage Loan is not assigned or pledged, and the Company has
good and marketable title thereto, and has full right to transfer and sell the
Mortgage Loan therein to the Purchaser free and clear of any encumbrance,
equity, participation interest, lien, pledge, charge, claim or security
interest, and has full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell and assign each
Mortgage Loan pursuant to this Agreement;
(n) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (1) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2) organized under the
laws of such state, or (3) qualified to do business in such state, or (4)
federal savings and loan associations or national banks having principal offices
in such state, or (5) not doing business in such state;
- 20 -
(o) Title Insurance. The Mortgage Loan is covered by either (i) an
attorney's opinion of title and abstract of title the form and substance of
which is acceptable to mortgage lending institutions making mortgage loans in
the area where the Mortgaged Property is located or (ii) an ALTA lender's title
insurance policy or other generally acceptable form of policy of insurance
acceptable to Xxxxxx Xxx or Xxxxxxx Mac, issued by a title insurer acceptable to
Xxxxxx Mae or Xxxxxxx Mac and qualified to do business in the jurisdiction where
the Mortgaged Property is located, insuring the Company, its successors and
assigns, as to the second priority lien of the Mortgage in the original
principal amount of the Mortgage Loan (or to the extent that a Mortgage Note
provides for negative amortization, the maximum amount of negative amortization
in accordance with the Mortgage), subject only to the exceptions contained in
clauses (1), (2) and (3) of paragraph (j) of this Section 3.02. Where required
by state law or regulation, the Mortgagor has been given the opportunity to
choose the carrier of the required mortgage title insurance. Additionally, such
lender's title insurance policy affirmatively insures ingress and egress, and
against encroachments by or upon the Mortgaged Property or any interest therein.
The Company is the sole insured of such lender's title insurance policy, and
such lender's title insurance policy is in full force and effect and will be in
force and effect upon the consummation of the transactions contemplated by this
Agreement. No claims have been made under such lender's title insurance policy,
and no prior holder of the Mortgage, including the Company, has done, by act or
omission, anything which would impair the coverage of such lender's title
insurance policy including without limitation, no unlawful fee, commission,
kickback or other unlawful compensation or value of any kind has been or will be
received, retained or realized by any attorney, firm or other person or entity,
and no such unlawful items have been received, retained or realized by the
Company;
(p) No Defaults. There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation or event of
acceleration, and neither the Company nor its predecessors have waived any
default, breach, violation or event of acceleration;
(q) No Mechanics' Liens. There are no mechanics' or similar liens or
claims which have been filed for work, labor or material (and no rights are
outstanding that under the law could give rise to such liens) affecting the
related Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(r) Location of Improvements; No Encroachments. All improvements which
were considered in determining the Appraised Value of the Mortgaged Property lay
wholly within the boundaries and building restriction lines of the Mortgaged
Property and no improvements on adjoining properties encroach upon the Mortgaged
Property. No improvement located on or being part of the Mortgaged Property is
in violation of any applicable zoning law or regulation;
(s) Origination: Payment Terms. At the time the Mortgage Loan was
originated, the originator was a mortgagee approved by the Secretary of Housing
and Urban Development pursuant to Sections 203 and 211 of the National Housing
Act or a savings and loan association, a savings bank, a commercial bank or
similar banking institution which is supervised and
- 21 -
examined by a Federal or State authority or a Xxxxxx Xxx or Xxxxxxx Mac approved
mortgagee. The Mortgage Interest Rate is as set forth in the related Mortgage
Note. As stated in the related Mortgage Note, the Mortgage Interest Rate is
adjusted, with respect to Adjustable Rate Mortgage Loans, on each Interest Rate
Adjustment Date to equal the Index plus the Gross Margin, subject to the
Periodic Rate Cap. Except with respect to Interest Only Mortgage Loans, the
Mortgage Note is payable in equal monthly installments of principal and
interest, which installments of interest, with respect to Adjustable Rate
Mortgage Loans, are subject to change due to the adjustments to the Mortgage
Interest Rate on each Interest Rate Adjustment Date, with interest calculated
and payable in arrears, sufficient to amortize the Mortgage Loan fully by the
stated maturity date, over an original term of not more than thirty years from
commencement of amortization. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgage Loan is payable on the first day of each month. The
Mortgage Loan by its original terms or any modification thereof, does not
provide for amortization beyond its scheduled maturity;
(t) Customary Provisions. The Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby, including, (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure. Upon default by a Mortgagor on a Mortgage Loan and
foreclosure on, or trustee's sale of, the Mortgaged Property pursuant to the
proper procedures, the holder of the Mortgage Loan will be able to deliver good
and merchantable title to the Mortgaged Property. There is no homestead or other
exemption available to a Mortgagor which would interfere with the right to sell
the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage;
(u) Conformance with Underwriting Guidelines. The Mortgage Loan was
underwritten in accordance with the Company's Underwriting Guidelines in effect
at the time the Mortgage Loan was originated;
(v) Occupancy of the Mortgaged Property. As of the related Closing Date
the Mortgaged Property is lawfully occupied under applicable law. All
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property and, with respect to
the use and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained from
the appropriate authorities. The Mortgagor represented at the time of
origination of the Mortgage Loan that the Mortgagor would occupy the Mortgaged
Property as the Mortgagor's primary residence;
(w) No Additional Collateral. The Mortgage Note is not and has not been
secured by any collateral except the lien of the corresponding Mortgage and the
security interest of any applicable security agreement or chattel mortgage
referred to in (j) above;
(x) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in the Mortgage, and no
fees or expenses are or will become payable by the Purchasers to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;
- 22 -
(y) Acceptable Investment. The Company has no knowledge of any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that can reasonably
be expected to cause private institutional investors to regard the Mortgage Loan
as an unacceptable investment, cause the Mortgage Loan to become delinquent, or
adversely affect the value or marketability of the Mortgage Loan;
(z) Delivery of Mortgage Documents. The Mortgage Note, the Mortgage, the
Assignment of Mortgage and any other documents required to be delivered for the
Mortgage Loan by the Company under this Agreement as set forth in Exhibit C
attached hereto have been delivered to the Custodian. The Company is in
possession of a complete, true and accurate Mortgage File in compliance with
Exhibit B, except for such documents the originals of which have been delivered
to the Custodian;
(aa) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimus planned unit development) such condominium or planned unit development
project meets Company's Underwriting Guidelines with respect to such condominium
or planned unit development;
(bb) Transfer of Mortgage Loans. The Assignment of Mortgage is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located;
(cc) Due on Sale. The Mortgage contains an enforceable provision for
the acceleration of the payment of the unpaid principal balance of the Mortgage
Loan in the event that the Mortgaged Property is sold or transferred without the
prior written consent of the Mortgagor thereunder;
(dd) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Company, the Mortgagor or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
any other similar provisions currently in effect which may constitute a
"buydown" provision. The Mortgage Loan is not a graduated payment mortgage loan
and the Mortgage Loan does not have a shared appreciation or other contingent
interest feature;
(ee) Consolidation of Future Advances. Any future advances made prior
to the related Cut-off Date have been consolidated with the outstanding
principal amount secured by the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term. The lien
of the Mortgage securing the consolidated principal amount is expressly insured
as having first lien priority by a title insurance policy, an endorsement to the
policy insuring the mortgagee's consolidated interest or by other title evidence
acceptable to Xxxxxx Xxx or Xxxxxxx Mac. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan;
- 23 -
(ff) Mortgaged Property Undamaged. There is no proceeding pending or,
to the best of the Company's knowledge, threatened for the total or partial
condemnation of the Mortgaged Property. The Mortgaged Property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were intended;
(gg) Collection Practices; Escrow Deposits. The origination and
collection practices used with respect to the Mortgage Loan have been in
accordance with Accepted Servicing Practices, and have been in all respects in
compliance with all applicable laws and regulations. With respect to escrow
deposits and Escrow Payments, all such payments are in the possession of the
Company and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made. All Escrow
Payments have been collected in full compliance with state and federal law. An
escrow of funds is not prohibited by applicable law and has been established in
an amount sufficient to pay for every item which remains unpaid and which has
been assessed but is not yet due and payable. No escrow deposits or Escrow
Payments or other charges or payments due the Company have been capitalized
under the Mortgage or the Mortgage Note. With respect to escrow deposits and
Escrow Payments, any interest required to be paid pursuant to state and local
law has been properly paid and credited;
(hh) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a qualified appraiser, duly appointed by the Company, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof; and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of Xxxxxx Mae, Xxxxxxx Mac or Title XI of the Federal
Institutions Reform, Recovery, and Enforcement Act of 1989 and the regulations
promulgated thereunder, all as in effect on the date the Mortgage Loan was
originated;
(ii) Servicemembers Civil Relief Act. The Mortgagor has not notified
the Company, and the Company has no knowledge of any relief requested or allowed
to the Mortgagor under the Servicemembers Civil Relief Act of 2003;
(jj) Environmental Matters. As of the origination date and to the
best of the Company's knowledge as of the Closing Date, the Mortgaged Property
is free from any and all toxic or hazardous substances and there exists no
violation of any local, state or federal environmental law, rule or regulation.
At the time of origination and to the best of the Company's knowledge as of the
related Closing Date, there is no pending action or proceeding directly
involving any Mortgaged Property of which the Company is aware in which
compliance with any environmental law, rule or regulation is an issue; and to
the best of the Company's knowledge, nothing further remains to be done to
satisfy in full all requirements of each such law, rule or regulation consisting
a prerequisite to use and enjoyment of said property;
(kk) No Construction Loans. No Mortgage Loan was made in connection
with (i) the construction or rehabilitation of a Mortgaged Property or (ii)
facilitating the trade-in or exchange of a Mortgaged Property;
- 24 -
(ll) Insurance. The Company has caused or will cause to be performed
any and all acts required to preserve the rights and remedies of the Purchaser
in any insurance policies applicable to the Mortgage Loans including, without
limitation, any necessary notifications of insurers, assignments of policies or
interests therein, and establishments of coinsured, joint loss payee and
mortgagee rights in favor of the Purchaser; No action, inaction, or event has
occurred and no state of fact exists or has existed that has resulted or will
result in the exclusion from, denial of, or defense to coverage under any
applicable pool insurance policy, special hazard insurance policy, LPMI Policy
or bankruptcy bond, irrespective of the cause of such failure of coverage. In
connection with the placement of any such insurance, no commission, fee, or
other compensation has been or will be received by the Company or any designee
of the Company or any corporation in which the Company or any officer, director,
or employee had a financial interest at the time of placement of such insurance;
(mm) Regarding the Mortgagor. The Mortgagor is one or more natural
persons and/or trustees for an Illinois land trust or a trustee under a "living
trust" and such "living trust" is in compliance with Xxxxxx Xxx guidelines for
such trusts.
(nn) Predatory Lending Regulations; High Cost Loans. None of the
Mortgage Loans are classified as (a) "high cost" loans under the Home Ownership
and Equity Protection Act of 1994 or (b) "high cost," "threshold," "predatory"
or "covered" loans or "High Cost Home Loans" under any other applicable state,
federal or local law (or a similarly classified loan using different terminology
under a law imposing heightened regulatory scrutiny or additional legal
liability for residential mortgage loans having high interest rates, points
and/or fees);
(oo) Georgia Loans. No Mortgage Loan is a "High Cost Home Loan" as
defined in the Georgia Fair Lending Act, as amended (the "Georgia Act"). No
Mortgage Loan subject to the Georgia Act and secured by owner occupied real
property or an owner occupied manufactured home located in the State of Georgia
was originated (or modified) on or after October 1, 2002 through and including
March 6, 2003;
(pp) Simple Interest Mortgage Loans. None of the Mortgage Loans are
simple interest Mortgage Loans.
(qq) Single Premium Credit Life Insurance. No Mortgagor was required
to purchase any credit life, disability, accident or health insurance product as
a condition of obtaining the extension of credit. No Mortgagor obtained a
single-premium credit life insurance policy in connection with the origination
of the Mortgage Loan;
(rr) Tax Service Contract. The Company has obtained a life of loan,
transferable real estate Tax Service Contract on each Mortgage Loan and such
contract is assignable without penalty, premium or cost to the Purchaser;
(ss) Flood Certification Contract. The Company has obtained a life of
loan, transferable flood certification contract with a Approved Flood
Certification Provider for each Mortgage Loan and such contract is assignable
without penalty, premium or cost to the Purchaser;
- 25 -
(tt) FICO Scores. Except as set forth in the Underwriting Guidelines,
each Mortgage Loan has a non-zero FICO score;
(uu) Prepayment Fee. With respect to each Mortgage Loan that has a
prepayment fee feature, each such prepayment fee is enforceable, and each
prepayment penalty in permitted pursuant to federal, state and local law. No
Mortgage Loan will impose a prepayment penalty for a term in excess of five
years from the date such Mortgage Loan was originated;
(vv) Recordation. Each original Mortgage was recorded and, except for
those Mortgage Loans subject to the MERS identification system, all subsequent
assignments of the original Mortgage (other than the assignment to the
Purchaser) have been recorded in the appropriate jurisdictions wherein such
recordation is necessary to perfect the lien thereof as against creditors of the
Company, or is in the process of being recorded;
(ww) Compliance with Anti-Money Laundering Laws. The Company has
complied with all applicable anti-money laundering laws and regulations,
including without limitation the USA Patriot Act of 2001 (collectively, the
"Anti-Money Laundering Laws"); the Company has established an anti-money
laundering compliance program as required by the Anti-Money Laundering Laws, has
conducted the requisite due diligence in connection with the origination of each
Mortgage Loan for purposes of the Anti-Money Laundering Laws, including with
respect to the legitimacy of the applicable Mortgagor and the origin of the
assets used by the said Mortgagor to purchase the property in question, and
maintains, and will maintain, sufficient information to identify the applicable
Mortgagor for purposes of the Anti-Money Laundering Laws;
(xx) Credit Reporting. For each Mortgage Loan, the Company or its
designee has accurately and fully furnished, in accordance with the Fair Credit
Reporting Act and its implementing regulations, accurate and complete
information on its borrower credit files to each of the following credit
repositories: Equifax Credit Information Services, Inc., Trans Union, LLC and
Experian Information Solution, Inc., on a monthly basis. Prior to the Closing
Date, the Company shall have transmitted full-file credit reporting data for
each Mortgage Loan pursuant to Xxxxxx Mae Guide Announcement 95-19, and, for
each Mortgage Loan, prior to the related Closing Date, the Company shall have
reported one of the following statuses each month as follows: new origination,
current, delinquent (30-, 60-, 90-days, etc.), foreclosed, or charged-off;
(yy) Reserved;
(zz) Origination: No error, omission, misrepresentation, negligence,
fraud or similar occurrence with respect to the origination or servicing of a
Mortgage Loan has taken place on the part of the Company or, to the best of the
Company's knowledge, any person including without limitation the Mortgagor, any
appraiser, any builder or developer, or any other party involved in the
origination of the Mortgage Loan or, in the application of any insurance in
relation to such Mortgage Loan; no predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to the
ability of the borrower to repay and the extension of credit which has no
apparent benefit to the borrower, were employed in the origination of the
Mortgage Loan;
- 26 -
(aaa) Qualified Mortgage. The Mortgage Loan is a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code;
(bbb) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs objective mathematical
principles which relate the Mortgagor's income, assets and liabilities to the
proposed payment and such underwriting methodology does not rely on the extent
of the Mortgagor's equity in the collateral as the principal determining factor
in approving such credit extension. Such underwriting methodology confirmed that
at the time of origination (application/approval) the Mortgagor had a reasonable
ability to make timely payments on the Mortgage Loan
(ccc) Higher Cost Products. No Mortgagor was encouraged or required to
select a Mortgage Loan product offered by the Company or, to the best of
Company's knowledge, a third party originator which is a higher cost product
designed for less creditworthy borrowers, unless at the time of the Mortgage
Loan's origination, such Mortgagor did not qualify taking into account credit
history and debt to income ratios for a lower cost credit product then offered
by the Mortgage Loan's originator or any affiliate of the Mortgage Loan's
originator. If, at the time of loan application, the Mortgagor may have
qualified for a lower cost credit product then offered by any mortgage lending
affiliate of the Company or, to the best of Company's knowledge, a third party
originator, the Mortgage Loan's originator referred the Mortgagor's application
to such affiliate for underwriting consideration;
(ddd) Texas Home Equity Loans. With respect to any Mortgage Loan which
is a Texas Home Equity Loan, any and all requirements of Section 50, Article XVI
of the Texas Constitution applicable to Texas Home Equity Loans which were in
effect at the time of the origination of the Mortgage Loan have been complied
with. Specifically, without limiting the generality of the foregoing, any fees
paid in connection with such Mortgage Loan in order for the Mortgagor to receive
a reduced interest rate are not required to be included in the calculation of
the aggregate fees pursuant to Section 50(a)(6)(E) of the Texas Constitution;
and
(eee) Mortgagor Disclosure. All points, fees and charges (including
finance charges), whether or not financed, assessed, collected or to be
collected in connection with the origination and servicing of each Mortgage Loan
has been disclosed in writing to the Mortgagor in accordance with applicable
state and federal law and regulation. The Company shall maintain in the Mortgage
File all statements related to any points, fees and charges assessed to the
Mortgagor including but not limited to GFE, HUD Settlement Statement, TIL, or
any such other disclosure document required by any law applicable to the
origination of the Mortgage Loan.
Section 3.03 Remedies for Breach of Representations and Warranties.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans to
the Purchaser and the delivery of the Mortgage Loan Documents to the Custodian
and shall inure to the benefit of the Purchaser, notwithstanding any restrictive
or qualified endorsement on any Mortgage Note or Assignment of Mortgage or the
examination or failure to examine any Mortgage File. Upon discovery by either
the Company or the Purchaser of a breach of any of the foregoing representations
and warranties which materially and adversely affects the value of the Mortgage
- 27 -
Loans or the interest of the Purchaser, or which materially and adversely
affects the interests of Purchaser in the related Mortgage Loan in the case of a
representation and warranty relating to a particular Mortgage Loan (in the case
of any of the foregoing, a "Breach"), the party discovering such Breach shall
give prompt written notice to the other.
With respect to those representations and warranties in Section 3.02,
except for (zz), which are made to the best of the Company's knowledge, if it is
discovered by the Company or the Purchaser that the substance of such
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan or the interest of the
Purchaser (or which materially and adversely affects the value of a Mortgage
Loan or the interests of the Purchaser in the related Mortgage Loan in the case
of a representation and warranty relating to a particular Mortgage Loan),
notwithstanding the Company's lack of knowledge with respect to the substance of
such representation and warranty, such inaccuracy shall be deemed a breach of
the applicable representation and warranty.
Within 60 days of the earlier of either discovery by or notice to the
Company of any Breach of a representation or warranty, the Company shall use its
best efforts promptly to cure such Breach in all material respects and, if such
Breach cannot be cured, the Company shall, at the Purchaser's option and subject
to Section 3.05, repurchase such Mortgage Loan at the Repurchase Price. In the
event that a Breach shall involve any representation or warranty set forth in
Section 3.01, and such Breach cannot be cured within 60 days of the earlier of
either discovery by or notice to the Company of such Breach, all of the Mortgage
Loans shall, at the Purchaser's option and subject to Section 3.05, be
repurchased by the Company at the Repurchase Price. However, if the Breach shall
involve a representation or warranty set forth in Section 3.02 and the Company
discovers or receives notice of any such Breach within 120 days of the related
Closing Date, the Company shall, at the Purchaser's option and provided that the
Company has a Qualified Substitute Mortgage Loan, rather than repurchase the
Mortgage Loan as provided above, remove such Mortgage Loan (a "Deleted Mortgage
Loan") and substitute in its place a Qualified Substitute Mortgage Loan or
Loans, provided that any such substitution shall be effected not later than 120
days after the related Closing Date. If the Company has no Qualified Substitute
Mortgage Loan, it shall repurchase the deficient Mortgage Loan. Any repurchase
of a Mortgage Loan or Loans pursuant to the foregoing provisions of this Section
3.03 shall be accomplished by deposit in the Custodial Account of the amount of
the Repurchase Price for distribution to Purchaser on the next scheduled
Remittance Date, after deducting therefrom any amount received in respect of
such repurchased Mortgage Loan or Loans and being held in the Custodial Account
for future distribution.
At the time of repurchase or substitution, the Purchaser and the Company
shall arrange for the reassignment of the Deleted Mortgage Loan to the Company
and the delivery to the Company of any documents held by the Custodian relating
to the Deleted Mortgage Loan. In the event of a repurchase or substitution, the
Company shall, simultaneously with such reassignment, give written notice to the
Purchaser that such repurchase or substitution has taken place, amend the
related Mortgage Loan Schedule to reflect the withdrawal of the Deleted Mortgage
Loan from this Agreement, and, in the case of substitution, identify a Qualified
Substitute Mortgage Loan and amend the related Mortgage Loan Schedule to reflect
the addition of such Qualified Substitute
- 28 -
Mortgage Loan to this Agreement. In connection with any such substitution, the
Company shall be deemed to have made as to such Qualified Substitute Mortgage
Loan the representations and warranties set forth in this Agreement except that
all such representations and warranties set forth in this Agreement shall be
deemed made as of the date of such substitution. The Company shall effect such
substitution by delivering to the Custodian for such Qualified Substitute
Mortgage Loan the documents required by Section 2.03, with the Mortgage Note
endorsed as required by Section 2.03. No substitution will be made in any
calendar month after the Determination Date for such month. The Company shall
deposit in the Custodial Account the Monthly Payment less the Servicing Fee due
on such Qualified Substitute Mortgage Loan or Loans in the month following the
date of such substitution. Monthly Payments due with respect to Qualified
Substitute Mortgage Loans in the month of substitution shall be retained by the
Company. For the month of substitution, distributions to Purchaser shall include
the Monthly Payment due on any Deleted Mortgage Loan in the month of
substitution, and the Company shall thereafter be entitled to retain all amounts
subsequently received by the Company in respect of such Deleted Mortgage Loan.
For any month in which the Company substitutes a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan, the Company shall determine the
amount (if any) by which the aggregate principal balance of all Qualified
Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all Deleted Mortgage Loans (after
application of scheduled principal payments due in the month of substitution).
The amount of such shortfall shall be distributed by the Company in the month of
substitution pursuant to Section 5.01. Accordingly, on the date of such
substitution, the Company shall deposit from its own funds into the Custodial
Account an amount equal to the amount of such shortfall.
Any cause of action against the Company relating to or arising out of
the Breach of any representations and warranties made in Sections 3.01 and 3.02
shall accrue as to any Mortgage Loan upon (i) discovery of such Breach by the
Purchaser or notice thereof by the Company to the Purchaser, (ii) failure by the
Company to cure such Breach or repurchase such Mortgage Loan as specified above,
and (iii) demand upon the Company by the Purchaser for compliance with this
Agreement.
Section 3.04 Indemnification.
The Company agrees to indemnify the Purchaser and hold it harmless from
and against any and all claims, losses, damages, penalties, fines, forfeitures,
legal fees and related costs, judgments, and any other costs, fees and expenses
that the Purchaser may sustain in any way related any assertion based on,
grounded upon resulting from a Breach of any of the Company's representations
and warranties contained herein. The provisions of this Section 3.04 shall
survive termination of this Agreement.
It is understood and agreed that the obligations of the Company set
forth in Sections 3.03 and 3.04 to cure, substitute for or repurchase a
defective Mortgage Loan and to indemnify the Purchaser constitute the sole
remedies of the Purchaser respecting a Breach of the foregoing representations
and warranties.
- 29 -
Section 3.05 Restrictions and Requirements Applicable in the Event
that a Mortgage Loan is Acquired by a REMIC.
In the event that any Mortgage Loan is held by a REMIC, notwithstanding
any contrary provision of this Agreement, the following provisions shall be
applicable to such Mortgage Loan:
(A) Repurchase of Mortgage Loans.
With respect to any Mortgage Loan that is not in default or as to which
no default is imminent, no repurchase or substitution pursuant to Subsection
3.03, shall be made, unless, if so required by the applicable REMIC Documents,
the Company has obtained an Opinion of Counsel to the effect that such
repurchase will not (i) result in the imposition of taxes on "prohibited
transactions" of such REMIC (as defined in Section 860F of the Code) or
otherwise subject the REMIC to tax, or (ii) cause the REMIC to fail to qualify
as a REMIC at any time.
(B) General Servicing Obligations.
The Company shall sell any REO Property within two years after its
acquisition by the REMIC unless (i) the Company applies for an extension of such
two-year period from the Internal Revenue Service pursuant to the REMIC
Provisions and Code Section 856(e)(3), in which event such REO Property shall be
sold within the applicable extension period, or (ii) the Company obtains for the
Purchaser an Opinion of Counsel, addressed to the Purchaser and the Company, to
the effect that the holding by the REMIC of such REO Property subsequent to such
two year period will not result in the imposition of taxes on "prohibited
transactions" as defined in Section 860F of the Code or cause the REMIC to fail
to qualify as a REMIC under the REMIC Provisions or comparable provisions of
relevant state laws at any time. The Company shall manage, conserve, protect and
operate each REO Property for the Purchaser solely for the purpose of its prompt
disposition and sale in a manner which does not cause such REO Property to fail
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8) or
result in the receipt by the REMIC of any "income from non-permitted assets"
within the meaning of Section 860F(a)(2)(B) of the Code or any "net income from
foreclosure property" which is subject to taxation under Section 860G(a)(1) of
the Code. Pursuant to its efforts to sell such REO Property, the Company shall
either itself or through an agent selected by the Company protect and conserve
such REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Purchaser, rent the same, or
any part thereof, as the Company deems to be in the best interest of the Company
and the Purchaser for the period prior to the sale of such REO Property;
provided, however, that any rent received or accrued with respect to such REO
Property qualifies as "rents from real property" as defined in Section 856(d) of
the Code.
(C) Additional Covenants.
In addition to the provision set forth in this Section 3.05, if a REMIC
election is made with respect to the arrangement under which any of the Mortgage
Loans or REO Properties are held, then, with respect to such Mortgage Loans
and/or REO Properties, and notwithstanding the terms of this Agreement, the
Company shall not take any action, cause the REMIC to take
- 30 -
any action or fail to take (or fail to cause to be taken) any action that, under
the REMIC Provisions, if taken or not taken, as the case may be, could (i)
endanger the status of the REMIC as a REMIC or (ii) result in the imposition of
a tax upon the REMIC (including but not limited to the tax on "prohibited
transactions" as defined in Section 860F(a)(2) of the Code and the tax on
"contributions" to a REMIC set forth in Section 860G(d) of the Code) unless the
Company has received an Opinion of Counsel (at the expense of the party seeking
to take such action) to the effect that the contemplated action will not
endanger such REMIC status or result in the imposition of any such tax.
Section 3.06 Review of Mortgage Loans.
The review of the Mortgage Loans shall be conducted pursuant to the
applicable provisions of the related Purchase Price and Terms Letter at the
Company's offices or such other location mutually agreed upon by the parties,
for the purpose of determining whether each Mortgage Loan conforms in all
material respects to the applicable terms contained in the related Purchase
Price and Terms Letter, which determination shall be made in the Purchaser's
reasonable and good faith discretion.
Without limiting the generality of the foregoing, in the event that the
Purchaser rejects Mortgage Loans comprising more than ten percent (10%) of the
related Mortgage Loan Package (as measured by unpaid principal balance),
provided, however, a rejection of a Mortgage Loan for credit deficiencies shall
not be considered in the calculation of the ten percent (10%), the Company may,
in its sole discretion, rescind its offer to sell any of the Mortgage Loans
related the such Mortgage Loan Package to the Purchaser and the Company shall
have no liability therefor.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer.
The Company shall service and administer the Mortgage Loans from the
related Closing Date and shall have full power and authority, acting alone, to
do any and all things in connection with such servicing and administration which
the Company may deem necessary or desirable, consistent with the terms of this
Agreement and with Accepted Servicing Practices.
Consistent with the terms of this Agreement, the Company may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in the Company's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser, provided, however, that the Company shall not make any future
advances with respect to a Mortgage Loan and (unless the Mortgagor is in default
with respect to the Mortgage Loan or such default is, in the judgment of the
Company, imminent and the Company has obtained the prior written consent of the
Purchaser) the Company shall not permit any modification of any material term of
any Mortgage Loan including any modifications that would change the Mortgage
Interest Rate, defer or forgive the payment of principal or
- 31 -
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 Company shall, on the
Business Day immediately preceding the Remittance Date in any month in which any
such principal or interest payment has been deferred, deposit in the Custodial
Account from its own funds, in accordance with Section 5.03, the difference
between (a) such month's principal and one month's interest at the Mortgage Loan
Remittance Rate on the unpaid principal balance of such Mortgage Loan and (b)
the amount paid by the Mortgagor. The Company shall be entitled to reimbursement
for such advances to the same extent as for all other advances made pursuant to
Section 5.03. Without limiting the generality of the foregoing, the Company
shall continue, and is hereby authorized and empowered, to execute and deliver
on behalf of itself and the Purchaser, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Mortgage Loans and with respect to the
Mortgaged Properties. If reasonably required by the Company, the Purchaser shall
furnish the Company with any powers of attorney and other documents necessary or
appropriate to enable the Company to carry out its servicing and administrative
duties under this Agreement.
In servicing and administering the Mortgage Loans, the Company shall
employ procedures (including collection procedures) and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account, giving due consideration to Accepted
Servicing Practices where such practices do not conflict with the requirements
of this Agreement, and the Purchaser's reliance on the Company.
The Mortgage Loans may be subserviced by the Subservicer on behalf of
the Company provided that the Subservicer is a Xxxxxx Xxx-approved lender or a
Xxxxxxx Mac seller/servicer in good standing, and no event has occurred,
including but not limited to a change in insurance coverage, which would make it
unable to comply with the eligibility requirements for lenders imposed by Xxxxxx
Xxx or for seller/servicers imposed by Xxxxxxx Mac, or which would require
notification to Xxxxxx Xxx or Xxxxxxx Mac. The Company may perform any of its
servicing responsibilities hereunder or may cause the Subservicer to perform any
such servicing responsibilities on its behalf, but the use by the Company of the
Subservicer shall not release the Company from any of its obligations hereunder
and the Company shall remain responsible hereunder for all acts and omissions of
the Subservicer as fully as if such acts and omissions were those of the
Company. The Company shall pay all fees and expenses of the Subservicer from its
own funds, and the Subservicer's fee shall not exceed the Servicing Fee.
At the cost and expense of the Company, without any right of
reimbursement from the Custodial Account, the Company shall be entitled to
terminate the rights and responsibilities of the Subservicer and arrange for any
servicing responsibilities to be performed by a successor Subservicer meeting
the requirements in the preceding paragraph, provided, however, that nothing
contained herein shall be deemed to prevent or prohibit the Company, at the
Company's option, from electing to service the related Mortgage Loans itself. In
the event that the Company's responsibilities and duties under this Agreement
are terminated pursuant to Section 9.04, 10.01 or 11.02, and if requested to do
so by the Purchaser, the Company shall at its own cost and expense terminate the
rights and responsibilities of the Subservicer as soon as is reasonably
possible. The Company shall pay all fees, expenses or penalties necessary in
order to
- 32 -
terminate the rights and responsibilities of the Subservicer from the Company's
own funds without reimbursement from the Purchaser.
Notwithstanding any of the provisions of this Agreement relating to
agreements or arrangements between the Company and the Subservicer or any
reference herein to actions taken through the Subservicer or otherwise, the
Company shall not be relieved of its obligations to the Purchaser and shall be
obligated to the same extent and under the same terms and conditions as if it
alone were servicing and administering the Mortgage Loans. The Company shall be
entitled to enter into an agreement with the Subservicer for indemnification of
the Company by the Subservicer and nothing contained in this Agreement shall be
deemed to limit or modify such indemnification.
Any Subservicing Agreement and any other transactions or services
relating to the Mortgage Loans involving the Subservicer shall be deemed to be
between the Subservicer and Company alone, and the Purchaser shall have no
rights, obligations, duties or liabilities with respect to the Subservicer
including no obligation, duty or liability of Purchaser to pay the Subservicer's
fees and expenses. For purposes of distributions and advances by the Company
pursuant to this Agreement, the Company shall be deemed to have received a
payment on a Mortgage Loan when the Subservicer has received such payment.
Section 4.02 Liquidation of Mortgage Loans.
In the event that any payment due under any Mortgage Loan and not
postponed pursuant to Section 4.01 is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Company shall take such action as (1) the Company
would take under similar circumstances with respect to a similar mortgage loan
held for its own account for investment, (2) shall be consistent with Accepted
Servicing Practices, (3) the Company shall determine prudently to be in the best
interest of Purchaser, and (4) is consistent with any related LPMI Policy, if
applicable. In the event that any payment due under any Mortgage Loan is not
postponed pursuant to Section 4.01 and remains delinquent for a period of 90
days or any other default continues for a period of 90 days beyond the
expiration of any grace or cure period, the Company shall commence foreclosure
proceedings, provided that, prior to commencing foreclosure proceedings, the
Company shall notify the Purchaser or its designee in writing of the Company's
intention to do so. In such connection, the Company shall from its own funds
make all necessary and proper Servicing Advances, provided, however, that the
Company shall not be required to expend its own funds in connection with any
foreclosure or towards the restoration or preservation of any Mortgaged
Property, unless it shall determine (a) that such preservation, restoration
and/or foreclosure will increase the proceeds of liquidation of the Mortgage
Loan to Purchaser after reimbursement to itself for such expenses and (b) that
such expenses will be recoverable by it either through Liquidation Proceeds
(respecting which it shall have priority for purposes of withdrawals from the
Custodial Account pursuant to Section 4.05) or through Insurance Proceeds
(respecting which it shall have similar priority).
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure or acceptance of a deed in lieu of foreclosure, in the event
the Company has reasonable cause to believe that a Mortgaged Property is
contaminated by hazardous or toxic
- 33 -
substances or wastes, or if the Purchaser or its designee otherwise requests an
environmental inspection or review of such Mortgaged Property to be conducted by
a qualified inspector. Upon completion of the inspection, the Company shall
promptly provide the Purchaser or its designee with a written report of the
environmental inspection.
After reviewing the environmental inspection report, the Purchaser or
its designee shall determine how the Company shall proceed with respect to the
Mortgaged Property. In the event (a) the environmental inspection report
indicates that the Mortgaged Property is contaminated by hazardous or toxic
substances or wastes and (b) the Purchaser or its designee directs the Company
to proceed with foreclosure or acceptance of a deed in lieu of foreclosure, the
Company shall be reimbursed for all reasonable costs associated with such
foreclosure or acceptance of a deed in lieu of foreclosure and any related
environmental clean up costs, as applicable, from the related Liquidation
Proceeds, or if the Liquidation Proceeds are insufficient to fully reimburse the
Company, the Company shall be entitled to be reimbursed from amounts in the
Custodial Account pursuant to Section 4.05 hereof. In the event the Purchaser or
its designee directs the Company not to proceed with foreclosure or acceptance
of a deed in lieu of foreclosure, the Company shall be reimbursed for all
Servicing Advances made with respect to the related Mortgaged Property from the
Custodial Account pursuant to Section 4.05 hereof.
Section 4.03 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on
all Mortgage Loans are paid in full, the Company shall proceed diligently to
collect all payments due under each of the Mortgage Loans when the same shall
become due and payable and shall take special care in ascertaining and
estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Loan and the Mortgaged Property, to the end
that the installments payable by the Mortgagors will be sufficient to pay such
charges as and when they become due and payable.
Section 4.04 Establishment of and Deposits to Custodial Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand accounts, titled "Countrywide Home Loans
Inc. in trust for the Purchaser of Conventional Residential Conventional
Residential Mortgage Loans, and various Mortgagors". The Custodial Account shall
be established with a Qualified Depository. 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
Company in accordance with Section 4.05. The creation of any Custodial Account
shall be evidenced by a certification in the form of Exhibit D-1 hereto, in the
case of an account established with the Company, or by a letter agreement in the
form of Exhibit D-2 hereto, in the case of an account held by a depository other
than the Company. A copy of such certification or letter agreement shall be
furnished to the Purchaser and, upon request, to any subsequent Purchaser.
The Company shall deposit in the Custodial Account within two Business
Days of receipt, and retain therein, the following collections received by the
Company and payments
- 34 -
made by the Company after the related Cut-off Date, (other than payments of
principal and interest due on or before the related Cut-off Date, or received by
the Company prior to the related Cut-off Date but allocable to a period
subsequent thereto or with respect to each LPMI Loan, in the amount of the LPMI
Fee):
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be
deposited pursuant to Section 4.10, Section 4.11, Section 4.14 and Section
4.15;
(v) all Condemnation Proceeds which are not applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor
in accordance with Section 4.14;
(vi) any amount required to be deposited in the Custodial Account
pursuant to Section 4.01, 4.09, 5.03, 6.01 or 6.02;
(vii) any amounts payable in connection with the repurchase of any
Mortgage Loan pursuant to Section 3.03 and all amounts required to be
deposited by the Company in connection with a shortfall in principal amount
of any Qualified Substitute Mortgage Loan pursuant to Section 3.03;
(viii) with respect to each Principal Prepayment in full or in part,
the Prepayment Interest Shortfall Amount, if any, for the month of
distribution. Such deposit shall be made from the Company's own funds,
without reimbursement therefore, which, in the aggregate, for any month,
shall not exceed one twelfth of 0.50% of the outstanding principal balance
of the Mortgage Loans;
(ix) any amounts required to be deposited by the Company pursuant to
Section 4.11 in connection with the deductible clause in any blanket hazard
insurance policy; and
(x) any amounts received with respect to or related to any REO
Property and all REO Disposition Proceeds pursuant to Section 4.16.
The foregoing requirements for deposit into the Custodial Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges,
prepayment penalties, assumption fees, and other ancillary fees need not be
deposited by the Company into the Custodial Account. Any interest paid on funds
deposited in the Custodial Account by the depository institution shall accrue to
the benefit of the Company and the Company shall be entitled to retain and
withdraw such interest from the Custodial Account pursuant to Section 4.05.
- 35 -
Section 4.05 Permitted Withdrawals From Custodial Account.
The Company shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
(i) to make payments to the Purchaser in the amounts and in the
manner provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances of the Company's funds
made pursuant to Section 5.03, the Company's right to reimburse itself
pursuant to this subclause (ii) being limited to amounts received on the
related Mortgage Loan which represent late payments of principal and/or
interest respecting which any such advance was made, it being understood
that, in the case of any such reimbursement, the Company's right thereto
shall be prior to the rights of Purchaser, except that, where the Company is
required to repurchase a Mortgage Loan pursuant to Section 3.03 or 6.02, the
Company's right to such reimbursement shall be subsequent to the payment to
the Purchaser of the Repurchase Price pursuant to such sections and all
other amounts required to be paid to the Purchaser with respect to such
Mortgage Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances, and for
any unpaid Servicing Fees, the Company's right to reimburse itself pursuant
to this subclause (iii) with respect to any Mortgage Loan being limited to
related Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds and
such other amounts as may be collected by the Company from the Mortgagor or
otherwise relating to the Mortgage Loan, it being understood that, in the
case of any such reimbursement, the Company's right thereto shall be prior
to the rights of Purchaser except where the Company is required to
repurchase a Mortgage Loan pursuant to Section 3.03 or 6.02, in which case
the Company's right to such reimbursement shall be subsequent to the payment
to the Purchasers of the Repurchase Price pursuant to such sections and all
other amounts required to be paid to the Purchasers with respect to such
Mortgage Loan;
(iv) to pay itself interest on funds deposited in the Custodial
Account;
(v) to reimburse itself for expenses incurred and reimbursable to it
pursuant to Section 9.01;
(vi) to pay LPMI Fees in accordance with Section 4.15 hereof;
(vii) to pay any amount required to be paid pursuant to Section 4.16
related to any REO Property, it being understood that in the case of any
such expenditure or withdrawal related to a particular REO Property, the
amount of such expenditure or withdrawal from the Custodial Account shall be
limited to amounts on deposit in the Custodial Account with respect to the
related REO Property;
(viii) to clear and terminate the Custodial Account upon the
termination of this Agreement; and
(ix) to withdraw funds deposited in error.
- 36 -
In the event that the Custodial Account is interest bearing, on each
Remittance Date, the Company shall withdraw all funds from the Custodial Account
except for those amounts which, pursuant to Section 5.01, the Company is not
obligated to remit on such Remittance Date. The Company may use such withdrawn
funds only for the purposes described in this Section 4.05.
Section 4.06 Establishment of and Deposits to Escrow Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Escrow Accounts, in the form of time deposit or demand accounts, titled,
"Countrywide Home Loans Inc., in trust for the Purchaser of Conventional
Residential Mortgage Loans, 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 Company in accordance with Section 4.07. The creation of
any Escrow Account shall be evidenced by a certification in the form of Exhibit
E-1 hereto, in the case of an account established with the Company, or by a
letter agreement in the form of Exhibit E-2 hereto, in the case of an account
held by a depository other than the Company. A copy of such certification shall
be furnished to the Purchaser and, upon request, to any subsequent Purchaser.
The Company shall deposit in the Escrow Account or Accounts within two
Business Days of receipt, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans,
for the purpose of effecting timely payment of any such items as required
under the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or Condemnation
Proceeds which are to be applied to the restoration or repair of any
Mortgaged Property.
The Company shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 4.07. The Company shall be entitled to retain any interest paid on funds
deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Company shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or
that interest paid thereon is insufficient for such purposes.
Section 4.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the
Company only:
(i) to effect timely payments of ground rents, taxes, assessments,
water rates, mortgage insurance premiums, condominium charges, fire and
hazard insurance premiums or other items constituting Escrow Payments for
the related Mortgage;
- 37 -
(ii) to reimburse the Company for any Servicing Advances made by the
Company pursuant to Section 4.08 with respect to a related Mortgage Loan,
but only from amounts received on the related Mortgage Loan which represent
late collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess of
the amounts required under the terms of the related Mortgage Loan;
(iv) for transfer to the Custodial Account and application to reduce
the principal balance of the Mortgage Loan in accordance with the terms of
the related Mortgage and Mortgage Note;
(v) for application to restoration or repair of the Mortgaged
Property in accordance with the procedures outlined in Section 4.14;
(vi) to pay to the Company, or any Mortgagor to the extent required
by law, any interest paid on the funds deposited in the Escrow Account;
(vii) to clear and terminate the Escrow Account on the termination of
this Agreement; and
(viii) to withdraw funds deposited in error.
Section 4.08 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Company shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates,
sewer rents, and other charges which are or may become a lien upon the Mortgaged
Property and the status of LPMI 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 Company 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 Company shall determine that any such payments are made
by the Mortgagor at the time they first become due. The Company assumes full
responsibility for the timely payment of all such bills and shall effect timely
payment of all such charges irrespective of each Mortgagor's faithful
performance in the payment of same or the making of the Escrow Payments, and the
Company shall make advances from its own funds to effect such payments.
Section 4.09 Protection of Accounts.
The Company may transfer the Custodial Account or the Escrow Account to
a different Qualified Depository from time to time. Upon any such transfer, the
Company shall promptly notify the Purchaser and deliver to the Purchaser a
Custodial Account Certification or Escrow Account Certification (as applicable)
in the form of Exhibit D-1 or E-1 to this Agreement.
- 38 -
The Company shall bear any expenses, losses or damages sustained by the
Purchaser because the Custodial Account and/or the Escrow Account are not demand
deposit accounts.
Amounts on deposit in the Custodial Account and the Escrow Account may
at the option of the Company 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
Company 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 Company)
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 Company 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 Company and may be withdrawn at any time by the
Company. Any losses incurred in respect of any such investment shall be
deposited in the Custodial Account or the Escrow Account, by the Company out of
its own funds immediately as realized.
Section 4.10 Maintenance of Hazard Insurance.
The Company shall cause to be maintained for each Mortgage Loan hazard
insurance such that all buildings upon the Mortgaged Property are insured by 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
replacement 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.
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 Company determines in accordance with applicable law 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 Company shall notify
the related Mortgagor that the Mortgagor must obtain such flood insurance
coverage, and if said Mortgagor fails to obtain the
- 39 -
required flood insurance coverage within forty-five (45) days after such
notification, the Company 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 Company
shall verify that the coverage required of the owner's association, including
hazard, flood, liability, and fidelity coverage, is being maintained in
accordance with then current Xxxxxx Xxx requirements, and secure from the
owner's association its agreement to notify the Company promptly of any change
in the insurance coverage or of any condemnation or casualty loss that may have
a material effect on the value of the Mortgaged Property as security.
The Company 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 Company shall determine that the
Mortgaged Property should be insured against loss or damage by hazards and risks
not covered by the insurance required to be maintained by the Mortgagor pursuant
to the terms of the Mortgage, the Company shall communicate and consult with the
Mortgagor with respect to the need for such insurance and bring to the
Mortgagor's attention the desirability of protection of the Mortgaged Property.
All policies required hereunder shall name the Company as loss payee and
shall be endorsed with standard or union mortgagee clauses, without
contribution, which shall provide for at least 30 days prior written notice of
any cancellation, reduction in amount or material change in coverage.
The Company shall not interfere with the Mortgagor's freedom of choice
in selecting either his insurance carrier or agent, provided, however, that the
Company shall not accept any such insurance policies from insurance companies
unless such companies are 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
Company shall determine that such policies provide sufficient risk coverage and
amounts, that they insure the property owner, and that they properly describe
the property address. The Company 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.
Pursuant to Section 4.04, any amounts collected by the Company under any
such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property, or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Company's normal servicing procedures as
specified in Section 4.14) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.05.
- 40 -
Section 4.11 Maintenance of Mortgage Impairment Insurance.
In the event that the Company shall obtain and maintain a blanket policy
insuring against losses arising from fire and hazards covered under extended
coverage on all of the Mortgage Loans, then, to the extent such policy provides
coverage in an amount equal to the amount required pursuant to Section 4.10 and
otherwise complies with all other requirements of Section 4.10, it shall
conclusively be deemed to have satisfied its obligations as set forth in Section
4.10. Any amounts collected by the Company under any such policy relating to a
Mortgage Loan shall be deposited in the Custodial Account subject to withdrawal
pursuant to Section 4.05. Such policy may contain a deductible clause, in which
case, in the event that there shall not have been maintained on the related
Mortgaged Property a policy complying with Section 4.10, and there shall have
been a loss which would have been covered by such policy, the Company shall
deposit in the Custodial Account at the time of such loss the amount not
otherwise payable under the blanket policy because of such deductible clause,
such amount to deposited from the Company's funds, without reimbursement
therefor. Upon request of any Purchaser, the Company shall cause to be delivered
to such 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 such Purchaser.
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions
Insurance.
The Company shall maintain with responsible companies, at its own
expense, a blanket Fidelity Bond and an Errors and Omissions Insurance Policy,
with broad coverage on all officers, employees or other persons acting in any
capacity requiring such persons to handle funds, money, documents or papers
relating to the Mortgage Loans ("Company Employees"). Any such Fidelity Bond and
Errors and Omissions Insurance Policy shall be in the form of the Mortgage
Banker's Blanket Bond and shall protect and insure the Company against losses,
including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such Company Employees. Such Fidelity Bond and Errors and
Omissions Insurance Policy also shall protect and insure the Company against
losses in connection with the release or satisfaction of a Mortgage Loan without
having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 4.12 requiring such Fidelity Bond and Errors and
Omissions Insurance Policy shall diminish or relieve the Company from its duties
and obligations as set forth in this Agreement. The minimum coverage under any
such bond and insurance policy shall be acceptable to Xxxxxx Mae or Xxxxxxx Mac.
Upon the request of any Purchaser, the Company shall cause to be delivered to
such Purchaser a certified true copy of such fidelity bond and insurance policy.
Section 4.13 Inspections.
The Company shall inspect the Mortgaged Property as often as deemed
necessary by the Company 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 Company 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
Company shall keep a written report of each such inspection.
- 41 -
Section 4.14 Restoration of Mortgaged Property.
The Company need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Accepted Servicing Practices. At a minimum, the Company
shall comply with the following conditions in connection with any such release
of Insurance Proceeds or Condemnation Proceeds:
(i) the Company shall receive satisfactory independent verification
of completion of repairs and issuance of any required approvals with respect
thereto;
(ii) the Company shall take all steps necessary to preserve the
priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to mechanics' and materialmen's liens;
(iii) the Company shall verify that the Mortgage Loan is not in
default; and
(iv) pending repairs or restoration, the Company shall place the
Insurance Proceeds or Condemnation Proceeds in the Custodial Account.
If the Purchaser is named as an additional loss payee, the Company is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.
Section 4.15 Maintenance of LPMI Policy; Claims.
With respect to LPMI Loans, maintain in full force and effect an LPMI
Policy, 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. In the event that the interest payments made with respect to any LPMI
Loan are less than the LPMI Fee, the Company 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 4.05. In the event that
such LPMI Policy shall be terminated, the Company 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
Company 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 Company shall in no event have any responsibility or
liability for any failure to recover under the LPMI Policy for such reason. If
the Company determines that recoveries are so jeopardized, it shall notify the
Purchaser and the Mortgagor, if required, and obtain from another Qualified
Insurer a replacement insurance policy. The Company shall not take any action
which would result in noncoverage under any applicable LPMI Policy of any loss
which, but for the actions of the Company would have been covered thereunder. In
connection with any assumption or substitution agreement entered into or to be
entered into pursuant to Section 6.01, the Company shall promptly notify the
insurer under the related 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
- 42 -
under such LPMI Policy. If such LPMI Policy is terminated as a result of such
assumption or substitution of liability, the Company shall obtain a replacement
LPMI Policy as provided above.
(b) In connection with its activities as servicer, the Company
agrees to prepare and present, on behalf of itself and the Purchaser, claims to
the insurer under any LPMI Policy in a timely fashion in accordance with the
terms of such LPMI Policy and, in this regard, to take such action as shall be
necessary to permit recovery under any LPMI Policy respecting a defaulted
Mortgage Loan. Pursuant to Section 4.04, any amounts collected by the Company
under any LPMI Policy shall be deposited in the Custodial Account, subject to
withdrawal pursuant to Section 4.05.
(c) Purchaser, in its sole discretion, at any time, may (i) either
obtain an additional LPMI Policy on any Mortgage Loan which already has a LPMI
Policy in place, or (ii) obtain a LPMI Policy for any Mortgage Loan which does
not already have a LPMI Policy in place. In any event, the Company agrees to
administer such LPMI Policies in accordance with the Agreement or any
Reconstitution Agreement.
Section 4.16 Title, Management and Disposition of REO Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser or its designee, or in the event the
Purchaser is not authorized or permitted to hold title to real property in the
state where the REO Property is located, or would be adversely affected under
the "doing business" or tax laws of such state by so holding title, the deed or
certificate of sale shall be taken in the name of such Person or Persons as
shall be consistent with an Opinion of Counsel obtained by the Company from any
attorney duly licensed to practice law in the state where the REO Property is
located. The Person or Persons holding such title other than the Purchaser shall
acknowledge in writing that such title is being held as nominee for the
Purchaser or its designee.
The Company shall manage, conserve, protect and operate each REO
Property for the Purchaser solely for the purpose of its prompt disposition and
sale. The Company, either itself or through an agent selected by the Company,
shall manage, conserve, protect and operate the REO Property in the same manner
that it manages, conserves, protects and operates other foreclosed property for
its own account, and in the same manner that similar property in the same
locality as the REO Property is managed. The Company shall attempt to sell the
same (and may temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the Company
deems to be in the best interest of the Purchaser.
The Company shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event within one year
after title has been taken to such REO Property, unless (i) (A) a REMIC election
has not been made with respect to the arrangement under which the Mortgage Loans
and the REO Property are held, and (ii) the Company determines, 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
- 43 -
Property the Company shall report monthly to the Purchaser as to the progress
being made in selling such REO Property.
The Company shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
The disposition of REO Property shall be carried out by the Company at
such price, and upon such terms and conditions, as the Company deems to be in
the best interests of the Purchaser. The proceeds of sale of the REO Property
shall be promptly deposited in the Custodial Account. As soon as practical
thereafter the expenses of such sale shall be paid and the Company shall
reimburse itself for any related unreimbursed Servicing Advances, unpaid
Servicing Fees and unreimbursed advances made pursuant to Section 5.03, 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.
The Company shall withdraw the Custodial Account funds necessary for the
proper operation, management and maintenance of the REO Property, including the
cost of maintaining any hazard insurance pursuant to Section 4.10 and the fees
of any managing agent of the Company, a Subservicer, or the Company itself. The
REO management fee shall be an amount that is reasonable and customary in the
area where the Mortgaged Property is located. The Company shall make monthly
distributions on each Remittance Date to the Purchasers of the net cash flow
from the REO Property (which shall equal the revenues from such REO Property net
of the expenses described in the Section 4.16 and of any reserves reasonably
required from time to time to be maintained to satisfy anticipated liabilities
for such expenses).
Section 4.17 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 5.02, the
Company shall furnish to the Purchaser on or before the Remittance Date each
month a statement with respect to any REO Property covering the operation of
such REO Property for the previous month and the Company's efforts in connection
with the sale of such REO Property and any rental of such REO Property
incidental to the sale thereof for the previous month. That statement shall be
accompanied by such other information as the Purchaser shall reasonably request.
Section 4.18 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed in lieu of foreclosure, the Company
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
- 44 -
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged
Property.
Following the foreclosure sale or abandonment of any Mortgaged Property,
the Company shall report to the Purchaser such foreclosure or abandonment as
required pursuant to Section 6050J of the Code.
Section 4.20 Credit Reporting
For each Mortgage Loan, the Company shall accurately and fully furnish,
in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information on its borrower credit files to
each of the following credit repositories: Equifax Credit Information Services,
Inc., TransUnion, LLC and Experian Information Solution, Inc. on a monthly
basis.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances.
On each Remittance Date the Company shall remit by wire transfer of
immediately available funds to the Purchaser (a) all amounts deposited in the
Custodial Account as of the close of business on the Determination Date (net of
charges against or withdrawals from the Custodial Account pursuant to Section
4.05), plus (b) all amounts, if any, which the Company is obligated to
distribute pursuant to Section 5.03, minus (c) any amounts attributable to
Principal Prepayments received after the applicable Principal Prepayment Period
which amounts shall be remitted on the following Remittance Date, together with
any additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayment in accordance with Section 4.04(viii),
and minus (d) any amounts attributable to Monthly Payments collected but due on
a Due Date or Dates subsequent to the first day of the month of the Remittance
Date, which amounts shall be remitted on the Remittance Date next succeeding the
Due Period for such amounts.
With respect to any remittance received by the Purchaser after the
second Business Day following the Business Day on which such payment was due,
the Company shall pay to the Purchaser interest on any such late payment at an
annual rate equal to the Prime Rate, adjusted as of the date of each change,
plus three percentage points, but in no event greater than the maximum amount
permitted by applicable law. Such interest shall be deposited in the Custodial
Account by the Company on the date such late payment is made and shall cover the
period commencing with the day following such second Business Day and ending
with the Business Day on which such payment is made, both inclusive. Such
interest shall be remitted along with the distribution payable on the next
succeeding Remittance Date. The payment by the Company of any such interest
shall not be deemed an extension of time for payment or a waiver of any Event of
Default by the Company.
- 45 -
Section 5.02 Statements to Purchaser.
Not later than the 10th day of each calendar month, the Company shall
furnish to the Purchaser or its designee (a) a Monthly Remittance Advice, with a
trial balance report as to the Due Period in the month of remittance, and (b) a
monthly default report as to the preceding calendar month, in each case, (i) by
electronic medium, and (ii) in a form, mutually acceptable to the parties.
In addition, not more than 60 days after the end of each calendar year,
the Company 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.
Section 5.03 Monthly Advances by Company.
On the Business Day immediately preceding each Remittance Date, either
(a) the Company shall deposit in the Custodial Account from its own funds or (b)
if funds are on deposit in the Custodial Account which are not required to be
remitted on the related Remittance Date, the Company may make an appropriate
entry in its records that such funds shall be applied toward the related Monthly
Advance (provided, that any funds so applied shall be replaced by the Company no
later than the Business Day immediately preceding the next Remittance Date), in
each case, in an aggregate amount equal to all Monthly Payments (with interest
adjusted to the Mortgage Loan Remittance Rate) which were due on the Mortgage
Loans during the applicable Due Period and which were delinquent at the close of
business on the immediately preceding Determination Date or which were deferred
pursuant to Section 4.01. The Company's obligation to make such Monthly Advances
as to any Mortgage Loan will continue through the last Monthly Payment due prior
to the payment in full of the Mortgage Loan, or through the last Remittance Date
prior to the Remittance Date for the distribution of all Liquidation Proceeds
and other payments or recoveries (including Insurance Proceeds and Condemnation
Proceeds) with respect to the Mortgage Loan.
In no event shall the Company be obligated to make an advance under this
section 5.03 if at the time of such advance it deems such advance to be
non-recoverable. The Company shall promptly deliver an officer's certificate to
the Purchaser upon determining that any advance is non-recoverable. In the event
that upon liquidation of the Mortgage Loan, the Liquidation Proceeds are
insufficient to reimburse the Company for any Monthly Advances, the Company
shall notify the Purchaser of such shortfall by registered mail with sufficient
supporting documentation. The Purchaser shall respond to the Company within 60
days of receipt of such request. In the event that the Purchaser fails to
respond within 60 days, the Company shall have the right to deduct such
shortfall from the next remittance to be paid to the Purchaser.
- 46 -
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Transfers of Mortgaged Property.
The Company shall use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note and to deny assumption by
the person to whom the Mortgaged Property has been or is about to be sold
whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains liable on the Mortgage and the Mortgage Note. When the
Mortgaged Property has been conveyed by the Mortgagor, the Company shall, to the
extent it has knowledge of such conveyance, exercise its rights to accelerate
the maturity of such Mortgage Loan under the "due-on-sale" clause applicable
thereto, provided, however, that the Company shall not exercise such rights if
prohibited by law from doing so or if the exercise of such rights would impair
or threaten to impair any recovery under the related LPMI Policy, if any.
If the Company reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, the Company shall enter into (i) an
assumption and modification agreement with the person to whom such property has
been conveyed, pursuant to which such person becomes liable under the Mortgage
Note and the original Mortgagor remains liable thereon or (ii) in the event the
Company is unable under applicable law to require that the original Mortgagor
remain liable under the Mortgage Note and the Company has the prior consent of
the primary mortgage guaranty insurer, a substitution of liability agreement
with the purchaser of the Mortgaged Property pursuant to which the original
Mortgagor is released from liability and the purchaser of the Mortgaged Property
is substituted as Mortgagor and becomes liable under the Mortgage Note. If an
assumption fee is collected by the Company for entering into an assumption
agreement, it will be retained by the Company as additional servicing
compensation. In connection with any such assumption, neither the Mortgage
Interest Rate borne by the related Mortgage Note, the term of the Mortgage Loan
nor the outstanding principal amount of the Mortgage Loan shall be changed.
To the extent that any Mortgage Loan is assumable, the Company shall
inquire diligently into the creditworthiness of the proposed transferee, and
shall use the Underwriting Guidelines for approving the credit of the proposed
transferee. If the credit of the proposed transferee does not meet such
Underwriting Guidelines, the Company diligently shall, to the extent permitted
by the Mortgage or the Mortgage Note and by applicable law, accelerate the
maturity of the Mortgage Loan.
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Company of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Company shall notify the Purchaser in the
Monthly Remittance Advice as provided in Section 5.02, and may request the
release of any Mortgage Loan Documents. In connection with any such prepayment
in full, the Company shall comply with all applicable laws regarding
satisfaction, release or reconveyance with respect to the Mortgage.
- 47 -
If the Company satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage or should
the Company otherwise prejudice any rights the Purchaser may have under the
mortgage instruments, upon written demand of the Purchaser, the Company shall
repurchase the related Mortgage Loan at the Repurchase Price by deposit thereof
in the Custodial Account within 2 Business Days of receipt of such demand by the
Purchaser. The Company shall maintain the Fidelity Bond and Errors and Omissions
Insurance Policy as provided for in Section 4.12 insuring the Company against
any loss it may sustain with respect to any Mortgage Loan not satisfied in
accordance with the procedures set forth herein.
Section 6.03 Servicing Compensation.
As compensation for its services hereunder, the Company shall be
entitled to withdraw from the Custodial Account or to retain from interest
payments on the Mortgage Loans the amount of its Servicing Fee. The Servicing
Fee shall be payable monthly and shall be computed on the basis of the same
unpaid principal balance and for the period respecting which any related
interest payment on a Mortgage Loan is computed. The Servicing Fee shall be
payable only at the time of and with respect to those Mortgage Loans for which
payment is in fact made of the entire amount of the Monthly Payment. The
obligation of the Purchaser to pay the Servicing Fee is limited to, and payable
solely from, the interest portion of such Monthly Payments collected by the
Company.
Additional servicing compensation in the form of assumption fees, late
payment charges, and prepayment penalties, shall be retained by the Company. The
Company shall be required to pay all expenses incurred by it in connection with
its servicing activities hereunder and shall not be entitled to reimbursement
thereof except as specifically provided for herein.
Section 6.04 Annual Statement as to Compliance.
The Company shall deliver to the Purchaser, on or before March 15 each
year beginning March 15, 2004, an Officer's Certificate, stating that (i) a
review of the activities of the Company during the preceding calendar year and
of performance under this Agreement has been made under such officer's
supervision, and (ii) the Company 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 Company has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and the action being taken by the
Company to cure such default.
Section 6.05 Annual Independent Public Accountants' Servicing Report.
On or before March 15th of each year beginning March 15, 2004, the
Company, at its expense, shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to each Purchaser to the effect that such firm has examined
certain documents and records relating to the servicing of the Mortgage Loans
and this Agreement and that such firm is of the opinion that the provisions of
Article II and Article IV have been complied with, and that, on the basis of
such examination
- 48 -
conducted substantially in compliance with the Single Attestation Program for
Mortgage Bankers, nothing has come to their attention which would indicate that
such servicing has not been conducted in compliance therewith, except for (i)
such exceptions as such firm shall believe to be immaterial, and (ii) such other
exceptions as shall be set forth in such statement.
Section 6.06 Right to Examine Company Records.
The Purchaser shall have the right to examine and audit any and all of
the books, records, or other information of the Company, whether held by the
Company or by another on its behalf, with respect to or concerning this
Agreement or the Mortgage Loans, during business hours or at such other times as
may be reasonable under applicable circumstances, upon reasonable advance notice
at the sole cost and expense of the Purchaser.
Section 6.07 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 Company 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
Company shall receive written instruction from the Purchaser that such
authorization and instruction is terminated.
ARTICLE VII
AGENCY TRANSFER; PASS-THROUGH TRANSFER
Section 7.01 Removal of Mortgage Loans from Inclusion Under this
Agreement Upon an Agency Transfer, or a Pass-Through
Transfer on One or More Reconstitution Dates.
The Purchaser and the Company agree that with respect to any
Pass-Through Transfer, Whole Loan Transfer or Agency Transfers, as applicable,
the Company shall cooperate with the Purchaser in effecting such transfers and
shall negotiate in good faith and execute any Reconstitution Agreement required
to effectuate the foregoing, provided that such Reconstitution Agreement shall
be reasonably acceptable to the Company, shall not materially increase the
Company's obligations or liabilities hereunder, nor diminish any of the
Company's rights and remedies, and provide to any master servicer or the
trustee, as applicable, and/or the Purchaser any and all publicly available
information and appropriate verification of information which may be reasonably
available to the Company, whether through letters of its auditors and counsel or
otherwise, as the Purchaser, trustee or a master servicer shall reasonably
request as to the related Mortgage Loans. Purchaser shall reimburse Company for
any and all costs or expenses incurred by Company in complying with such
requests for information for which the Company shall, if requested by the
Purchaser, provide indemnification through an indemnification agreement or
otherwise; provided, however, each Purchaser and depositor shall indemnify the
Company and its subsidiaries and affiliates for all information not specifically
provided by the Company for inclusion in any disclosure statement. Such
information may be included in any disclosure
- 49 -
document prepared in connection with the Pass-Through Transfer, Whole Loan
Transfer or Agency Transfer, as applicable. The Company shall execute any
Reconstitution Agreements required within a reasonable period of time after
receipt of such agreements which time shall not exceed ten (10) Business Days
from the date of receipt of such Reconstitution Agreement.
Nothing in this Section 7.01 shall be deemed to materially increase the
Company's obligations or liabilities under this Agreement.
Any Reconstitution Agreement may require the Company to remit premium
payments with respect to any LPMI Policy or "pool insurance policy" to the
related insurer;
(a) With respect to each Pass-Through Transfer, Whole Loan Transfer
or Agency Transfer entered into by the Purchaser, the Company agrees:
(i) to cooperate reasonably with the Purchaser, Xxxxxx Xxx, Xxxxxxx
Mac, the trustee or a third party purchaser and any prospective purchaser, at
the Purchaser's expense, with respect to all reasonable requests and due
diligence procedures including participating in meetings with rating agencies,
Xxxxxx Mae, Xxxxxxx Mac, bond insurers, guarantors, loss mitigation or credit
risk management advisors and such other parties as the Purchaser shall designate
and participating in meetings with prospective purchasers of the Mortgage Loans
or interests therein and providing information contained in the Mortgage Loan
Schedule including any diskette or other related data tapes provided as
reasonably requested by such purchasers;
(ii) to negotiate and execute one or more loss mitigation advisory or
credit risk management agreements between the Company and any loss mitigation or
credit risk management advisor designated by the Purchaser in its sole
discretion;
(iii) to deliver to the Purchaser and to any Person designated by
the Purchaser (a) specifically for inclusion in any prospectus or other offering
material such publicly available information regarding the Company, its
financial condition and its mortgage loan delinquency, foreclosure and loss
experience and any additional information reasonably requested by the Purchaser,
(b) any similar non-public, unaudited financial information (which the Purchaser
may, at its option and at its cost, have audited by certified public
accountants) and such other information as is reasonably requested by the
Purchaser and which the Company is capable of providing without unreasonable
effort or expense, and to indemnify the Purchaser and its affiliates for
material misstatements contained in such information specifically provided for
inclusion in a prospectus or other offering material, and if such
indemnification from the Company is provided, the Purchaser shall indemnify the
Company and its affiliates for material misstatements contained in such
prospectus or offering material that was not specifically provided by the
Company for inclusion in such prospectus or offering material, and (c) such
statements and audit letters of reputable, certified public accountants
pertaining to information provided by the Company pursuant to clause (a) above
as shall be reasonably requested by the Purchaser; and
(iv) to provide, on an ongoing basis from information obtained
through its servicing of the Mortgage Loans, any information necessary to enable
the "tax matters person" for any REMIC in a Pass-Through Transfer, including any
master servicer or trustee acting in
- 50 -
such capacity, to perform its obligations in accordance with applicable law and
customary secondary mortgage market standards for securitized transactions.
(b) The Company shall provide to the Purchaser or issuer, as the
case may be, and any other participants in such Agency Transfer, Whole Loan
Transfer or Pass-Through Transfer, (i) any and all information with respect to
itself, its servicing portfolio or the Mortgage Loans and appropriate
verification of information which may be reasonably available to the Company,
whether through letters of its auditors and counsel or otherwise, as the
Purchaser or any such other participant shall request upon reasonable demand and
(ii) such additional corporate representations, warranties, covenants, opinions
of counsel, letters from auditors, and certificates of officers of the Company
as are reasonably believed necessary in connection with such transactions,
including but not limited to the delivery to the party filing the certificate
pursuant to Section 302 of the Sarbanes Oxley Act of 2002, as amended, and any
regulations promulgated thereunder (collectively, the "Sarbanes Act") of
certificates or other related information, no later than March 15th of the
applicable year and such other times as may be required under the Sarbanes Act,
from time to time, upon reasonable demand and notice to the Company. The Company
shall indemnify and hold harmless such party filing the certificate pursuant to
Section 302 of the Sarbanes Act (the "Beneficiary") from and against any losses,
damages, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of a breach by the Company of
its obligations delineated in this paragraph; provided, however, that the
Company shall not be obligated to indemnify or hold harmless the Beneficiary
from or against any losses, damages, penalties, fines, forfeitures, reasonable
legal fees and related costs, judgments and other costs and expenses arising out
of the negligence, bad faith or willful misconduct of the Beneficiary.
(c) To the extent required by the applicable Reconstitution
Agreements or otherwise requested by the Purchaser in connection with a
Reconstitution, the Company shall prepare Assignments of Mortgage in form and
substance acceptable to Xxxxxx Xxx, Xxxxxxx Mac, the trustee or such third
party, as the case may be, for each Mortgage Loan that is part of a
Reconstitution. The Company shall execute each Assignment of Mortgage, track
such Assignments of Mortgage to ensure they have been recorded and deliver them
as required by Xxxxxx Mae, Xxxxxxx Mac, the trustee or such third party, as the
case may be, upon the Company's receipt thereof. The Purchaser shall pay all
fees associated with the preparation, recording and tracking of such Assignments
of Mortgage.
All Mortgage Loans not sold or transferred pursuant to an Agency
Transfer, Pass-Through Transfer or Whole Loan Transfer and any and all Mortgage
Loans repurchased by the Purchaser pursuant to Section 7.03 below with respect
to an Agency Transfer, Pass-Through Transfer or Whole Loan Transfer shall be
subject to this Agreement and shall continue to be serviced in accordance with
the terms of this Agreement and with respect thereto this Agreement shall remain
in full force and effect.
(d) If required at any time by the Rating Agencies, Purchaser or
successor Purchaser in connection with any Agency Transfer, Pass-Through
Transfer or Whole Loan Transfer, the Company shall deliver such additional
documents from its Mortgage File within 10 days to the Custodian, successor
Purchaser or other designee of the Purchaser as the Rating Agencies, Purchaser
or successor Purchaser may require.
- 51 -
ARTICLE VIII
COMPANY TO COOPERATE
Section 8.01 Provision of Information.
During the term of this Agreement, the Company shall furnish to the
Purchaser such periodic, special, or other reports or information and copies or
originals of any documents contained in the Servicing File for each Mortgage
Loan, whether or not provided for herein, as shall be necessary, reasonable, or
appropriate with respect to the Purchaser, any regulatory requirement pertaining
to the Purchaser or the purposes of this Agreement. All such reports, documents
or information shall be provided by and in accordance with all reasonable
instructions and directions which the Purchaser may give. Purchaser shall pay
any costs related to any special reports.
The Company shall execute and deliver all such instruments and take all
such action as the Purchaser may reasonably request from time to time, in order
to effectuate the purposes and to carry out the terms of this Agreement.
Section 8.02 Financial Statements; Servicing Facility.
In connection with marketing the Mortgage Loans, the Purchaser may make
available to a prospective Purchaser a Consolidated Statement of Operations of
the Company for the most recently completed five fiscal years for which such a
statement is available, as well as a Consolidated Statement of Condition at the
end of the last two fiscal years covered by such Consolidated Statement of
Operations. The Company also shall make available any comparable interim
statements to the extent any such statements have been prepared by or on behalf
of the Company (and are available upon request to members or stockholders of the
Company or to the public at large). If it has not already done so, the Company
shall furnish promptly to the Purchaser copies of the statement specified above.
Unless requested by the Purchaser, the Company shall not be required to deliver
any documents which are publicly available on XXXXX.
The Company also shall make available to Purchaser or prospective
Purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions respecting recent developments affecting the Company or the
financial statements of the Company, and to permit any prospective Purchaser to
inspect the Company's servicing facilities or those of any Subservicer for the
purpose of satisfying such prospective Purchaser that the Company and any
Subservicer have the ability to service the Mortgage Loans as provided in this
Agreement.
- 52 -
ARTICLE IX
THE COMPANY
Section 9.01 Indemnification; Third Party Claims.
The Company 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 Company 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 Company immediately
shall notify the Purchaser if a claim is made by a third party with respect to
this Agreement or the Mortgage Loans, assume (with the prior written consent of
the Purchaser) the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or the Purchaser in respect
of such claim. The Company shall follow any written instructions received from
the Purchaser in connection with such claim. The Purchaser promptly shall
reimburse the Company for all amounts advanced by it pursuant to the preceding
sentence except when the claim is in any way related to the Company's
indemnification pursuant to Section 3.03, or the failure of the Company to (a)
service and administer the Mortgage Loans in strict compliance with the terms of
this Agreement, and/or (b) comply with applicable law.
Section 9.02 Merger or Consolidation of the Company.
The Company shall keep in full effect its existence, rights and
franchises as a corporation, and shall obtain and preserve its qualification to
do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform its
duties under this Agreement.
Any person into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Company shall be a party, or any Person succeeding to the business of the
Company, shall be the successor of the Company hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, provided, however, that
the successor or surviving Person shall be an institution (i) having a net worth
of not less than $25,000,000, (ii) whose deposits are insured by the FDIC
through the BIF or the SAIF, and (iii) which is a Xxxxxx Xxx and Xxxxxxx
Mac-approved company in good standing.
Section 9.03 Limitation on Liability of Company and Others.
Neither the Company nor any of the directors, officers, employees or
agents of the Company shall be under any liability to the Purchaser for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment, provided, however, that
this provision shall not protect the Company or any such Person against any
Breach of warranties or representations made herein, or failure to perform its
obligations in
- 53 -
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 Company and any director, officer,
employee or agent of the Company may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Company shall not be under any obligation to
appear in, prosecute or defend any legal action which is not incidental to its
duties to service the Mortgage Loans in accordance with this Agreement and which
in its opinion may involve it in any expense or liability, provided, however,
that the Company may, with the consent of the Purchaser, undertake any such
action which it may deem necessary or desirable in respect to this Agreement and
the rights and duties of the parties hereto. In such event, the Company shall be
entitled to reimbursement from the Purchaser of the reasonable legal expenses
and costs of such action.
Section 9.04 Limitation on Resignation and Assignment by Company.
The Purchaser has entered into this Agreement with the Company and
subsequent Purchasers will purchase the Mortgage Loans in reliance upon the
independent status of the Company, and the representations as to the adequacy of
its servicing facilities, plant, personnel, records and procedures, its
integrity, reputation and financial standing, and the continuance thereof.
Therefore, the Company shall neither assign this Agreement or the servicing
hereunder or delegate its rights or duties hereunder or any portion hereof (to
other than a Subservicer) 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; provided, however, notwithstanding any of the foregoing or any
other provision in this Agreement, the Company may assign its right and
obligations hereunder to Servicing LP or any entity that is directly or
indirectly owned or controlled by the Company and the Company guarantees the
performance by Servicing LP or such entity of all obligations hereunder.
The Company shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Company and the Purchaser or upon
the determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Company. Any such
determination permitting the resignation of the Company shall be evidenced by an
Opinion of Counsel to such effect delivered to the Purchaser which Opinion of
Counsel shall be in form and substance acceptable to the Purchaser. No such
resignation shall become effective until a successor shall have assumed the
Company's responsibilities and obligations hereunder in the manner provided in
Section 12.01.
Without in any way limiting the generality of this Section 9.04, in the
event that the Company either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof (to other than a Subservicer) or sell or otherwise dispose of all or
substantially all of its property or assets, without the prior written consent
of the Purchaser, then the Purchaser shall have the right to terminate this
Agreement upon notice given as set forth in Section 10.01, without any payment
of any penalty or damages and without any liability whatsoever to the Company or
any third party.
- 54 -
ARTICLE X
DEFAULT
Section 10.01 Events of Default.
Each of the following shall constitute an Event of Default on the part
of the Company:
(i) any failure by the Company to remit to the Purchaser any payment
required to be made under the terms of this Agreement which continues
unremedied for a period of two days after the date upon which written notice
of such failure, requiring the same to be remedied, shall have been given to
the Company by the Purchaser; or
(ii) failure by the Company duly to observe or perform in any
material respect any other of the covenants or agreements on the part of the
Company set forth in this Agreement which continues unremedied for a period
of 30 days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Company by the
Purchaser; or
(iii) the Company fails to be in compliance with the "doing business"
or licensing laws of any jurisdiction which noncompliance materially and
adversely affects the Company's ability to service the Mortgage Loans in
compliance with the terms of 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 Company by
the Purchaser; or
(iv) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, including bankruptcy,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against
the Company and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days; or
(v) the Company shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling
of assets and liabilities or similar proceedings of or relating to the
Company or of or relating to all or substantially all of its property; or
(vi) the Company shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of any
applicable insolvency, bankruptcy or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend payment of
its obligations or cease its normal business operations for three Business
Days; or
(vii) the Company ceases to meet the qualifications of Xxxxxx Xxx or
Xxxxxxx Mac lender; or
- 55 -
(viii) the Company fails to maintain a minimum net worth of
$25,000,000; or
(ix) the Company attempts to assign its right to servicing
compensation hereunder or the Company 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 (to other than a Subservicer) in violation of Section 9.04.
In each and every such case, so long as an Event of Default shall not
have been remedied, in addition to whatsoever rights the Purchaser may have at
law or equity to damages, including injunctive relief and specific performance,
the Purchaser, by notice in writing to the Company, may terminate all the rights
and obligations of the Company under this Agreement and in and to the Mortgage
Loans and the proceeds thereof. Notwithstanding the foregoing, with respect to
the Event of Default delineated in (iii) above, the Purchaser may terminate all
the rights and obligations of the Company under this Agreement solely with
respect to the Mortgage Loans affected by such Event of Default.
Upon receipt by the Company of such written notice, all authority and
power of the Company under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in the successor appointed
pursuant to Section 12.01. Upon written request from any Purchaser, the Company
shall prepare, execute and deliver to the successor entity designated by the
Purchaser any and all documents and other instruments, place in such successor's
possession all Mortgage Files, and do or cause to be done all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, including but not limited to the transfer and endorsement or
assignment of the Mortgage Loans and related documents, at the Company's sole
expense. The Company shall cooperate with the Purchaser and such successor in
effecting the termination of the Company's responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Company to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Section 10.02 Waiver of Defaults.
By a written notice, the Purchaser may waive any default by the Company
in the performance of its obligations hereunder and its consequences. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
- 56 -
ARTICLE XI
TERMINATION
Section 11.01 Termination.
This Agreement shall terminate upon either: (i) the later of the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or the disposition of any REO Property with respect to the last
Mortgage Loan and the remittance of all funds due hereunder; or (ii) mutual
consent of the Company and the Purchaser in writing.
Section 11.02 Termination Without Cause.
The Purchaser may terminate, after providing 30 days' written notice, at
its sole option, any rights the Company may have hereunder, without cause, as
provided in this Section 11.02. Any such notice of termination shall be in
writing and delivered to the Company by registered mail as provided in Section
12.05.
In the event the Purchaser terminates the Company without cause with
respect to some or all of the Mortgage Loans, the Purchaser shall be required to
pay to the Company a Termination Fee in an amount equal to 2.00% of the
outstanding principal balance of the terminated Mortgage Loans as of the date of
such termination.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Company.
Prior to termination of the Company's responsibilities and duties under
this Agreement pursuant to Sections 9.04, 10.01, 11.01 or pursuant to Section
11.02 after the 30 day period has expired, the Purchaser shall, (i) succeed to
and assume all of the Company's responsibilities, rights, duties and obligations
under this Agreement, or (ii) appoint a successor having the characteristics set
forth in clauses (i) through (iii) of Section 9.02 and which shall succeed to
all rights and assume all of the responsibilities, duties and liabilities of the
Company under this Agreement prior to the termination of Company's
responsibilities, duties and liabilities under this Agreement. In connection
with such appointment and assumption, the Purchaser may make such arrangements
for the compensation of such successor out of payments on Mortgage Loans as it
and such successor shall agree. In the event that the Company's duties,
responsibilities and liabilities under this Agreement should be terminated
pursuant to the aforementioned sections, the Company shall discharge such duties
and responsibilities during the period from the date it acquires knowledge of
such termination until the effective date thereof with the same degree of
diligence and prudence which it is obligated to exercise under this Agreement,
and shall take no action whatsoever that might impair or prejudice the rights or
financial condition of its successor. The resignation or removal of the Company
pursuant to the aforementioned sections shall not become effective until a
successor shall be appointed pursuant to this Section 12.01 and shall in no
event relieve the Company of the representations and
- 57 -
warranties made pursuant to Sections 3.01 and 3.02 and the remedies available to
the Purchaser under Sections 3.03, 3.04, and 3.06, it being understood and
agreed that the provisions of such Sections 3.01, 3.02, 3.03, 3.04, and 3.06
shall be applicable to the Company notwithstanding any such sale, assignment,
resignation or termination of the Company, or the termination of this Agreement.
Any termination or resignation of the Company or termination of this
Agreement pursuant to Section 9.04, 10.01, 11.01 or 11.02 shall not affect any
claims that any Purchaser may have against the Company arising out of the
Company's actions or failure to act prior to any such termination or
resignation.
The Company shall deliver promptly to the successor servicer the Funds
in the Custodial Account and Escrow Account and all Mortgage Files and related
documents and statements held by it hereunder and the Company shall account for
all funds and shall execute and deliver such instruments and do such other
things as may reasonably be required to more fully and definitively vest in the
successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Company.
Upon a successor's acceptance of appointment as such, the Company shall
notify by mail the Purchaser of such appointment in accordance with the
procedures set forth in Section 12.05.
Section 12.02 Amendment.
This Agreement may be amended from time to time by the Company and the
Purchaser by written agreement signed by the Company and the Purchaser.
Section 12.03 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 12.04 Duration of Agreement.
This Agreement shall continue in existence and effect until terminated
as herein provided. This Agreement shall continue notwithstanding transfers of
the Mortgage Loans by the Purchaser.
Section 12.05 Notices.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered at or mailed
by registered mail, postage prepaid, addressed as follows:
- 58 -
(i) if to the Company:
Countrywide Home Loans Inc.,
0000 Xxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
or such other address as may hereafter be furnished to the Purchaser in
writing by the Company;
(ii) if to Purchaser:
Xxxxxx Brothers Bank, FSB
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Contract Finance
Section 12.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
Section 12.07 Relationship of Parties.
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of the
Company shall be rendered as an independent contractor and not as agent for the
Purchaser.
Section 12.08 Execution; Successors and Assigns.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Section 8.04, this Agreement
shall inure to the benefit of and be binding upon the Company and the Purchaser
and their respective successors and assigns.
Section 12.09 Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Company's expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option accordance
with Section 14 of the Purchase Agreement.
- 59 -
Section 12.10 Assignment by Purchaser.
The Purchaser shall have the right, without the consent of the Company
but subject to the limit set forth in Section 2.02 hereof, to assign, in whole
or in part, its interest under this Agreement with respect to some or all of the
Mortgage Loans, and designate any person to exercise any rights of the Purchaser
hereunder, by (i) executing an Assignment and Assumption Agreement substantially
in the form of Exhibit G hereto or (ii) in connection with a Pass-Through
Transfer, through any related Reconstitution Agreement or assignment agreement
with an affiliate of the Purchaser, a depositor, a trustee or any other
appropriate party in such Pass-Through Transfer. 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 to the extent provided in the Assignment and
Assumption Agreement or Reconstitution Agreement or other assignment agreement
in a Pass-Through Transfer. All references to the Purchaser in this Agreement
shall be deemed to include its assignee or designee.
Section 12.11 No Personal Solicitation.
From and after the related Closing Date, the Company hereby agrees that
it will not take any action or permit or cause any action to be taken by any of
its agents or affiliates, or by any independent contractors or independent
mortgage brokerage companies on the Company's behalf, to personally, by
telephone or mail, solicit the Mortgagor under any Mortgage Loan for the purpose
of refinancing such Mortgage Loan; provided, that the Company may solicit any
Mortgagor for whom the Company has received a request for verification of
mortgage, a request for demand for payoff, a mortgagor initiated written or
verbal communication indicating a desire to prepay the related Mortgage Loan, or
the mortgagor initiates a title search, provided further, it is understood and
agreed that promotions undertaken by the Company or any of its affiliates which
(i) concern optional insurance products or other additional products or (ii) are
directed to the general public at large, including, without limitation, mass
mailings based on commercially acquired mailing lists, newspaper, radio and
television advertisements shall not constitute solicitation under this Section
12.11 nor is the Company prohibited from responding to unsolicited requests or
inquiries made by a Mortgagor or an agent of a Mortgagor. Notwithstanding the
foregoing, the following solicitations, if undertaken by the Company or any
affiliate of the Company, shall not be prohibited under this Section 12.11: (i)
solicitations that are directed to the general public at large, including,
without limitation, mass mailings based on commercially acquired mailing lists
and newspaper, radio, television and other mass media advertisements; (ii)
borrower messages included on, and statement inserts provided with, the monthly
statements sent to Mortgagors; provided, however, that similar messages and
inserts are sent to the borrowers of other mortgage loans serviced by the
Company.
[Signature page follows]
- 60 -
IN WITNESS WHEREOF, the Company and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the day and year first above written.
XXXXXX BROTHERS BANK, FSB
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
COUNTRYWIDE HOME LOANS, INC.
By:
------------------------------------
Name: Xxxxx Xxxxxxx
Title: Executive Vice President
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the __ day of ________, 200_ before me, a Notary Public in and for
said State, personally appeared ________, known to me to be Vice President of
Xxxxxx Brothers Bank, FSB, the federal savings association that executed the
within instrument and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal
the day and year in this certificate first above written.
----------------------------------------
Notary Public
My Commission expires __________________
STATE OF )
) ss.:
COUNTY OF )
On the __ day of _______, 200_ before me, a Notary Public in and for
said State, personally appeared __________, known to me to be ______________ of
Countrywide Home Loans, Inc. the corporation that executed the within instrument
and also known to me to be the person who executed it on behalf of said
corporation, and acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal
the day and year in this certificate first above written.
----------------------------------------
Notary Public
My Commission expires __________________
EXHIBIT A
MORTGAGE LOAN SCHEDULE
(1) the Seller'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;
(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;
(5) a code indicating the loan is a fixed rate or adjustable rate Mortgage
Loan (to be provided in accordance with Standard and Poor's loan type
requirements-Field 14);
(6) Product Description (to be provided in accordance with Standard and
Poor's description categories-Field 7);
(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 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 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);
(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);
A-1
(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 (Y/N);
(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;
(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 principal and interest Payment;
(32) the Annual Payment Cap expressed as a percentage (for Arms only);
(33) the next due date as of the Cut-off Date;
(34) the original principal amount of the Mortgage Loan;
(35) the Senior balances, if applicable
(36) the origination date of the Mortgage Loan;
(37) the principal balance of the Mortgage Loan as of the close of business
on the Cut-off Date; after deduction of payments of principal actually
received on or before the Cut-off Date;
A-2
(38) monthly payment histories on current mortgages (12 months );
(39) prior foreclosure history, if available;
(40) prior bankruptcy history, if available;
(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) the Mortgagor's and Co-Mortgagor's (if applicable) social security
numbers;
(46) the Mortgage Loan FICO score at origination;
(47) the purchase price of the Mortgaged Property (if a purchase);
(48) the Appraisal value of the Mortgaged Property;
(49) the Mortgagor's and Co-Mortgagor's (if applicable) race;
(50) the Mortgagor's and Co-Mortgagor's (if applicable) gender;
(51) the combined annual income;
(52) as of date;
(53) amortization term;
(54) balloon flag;
(55) prepayment penalty flag;
(56) prepayment penalty term;
(57) mortgage insurance provider, or code for LPMI;
(58) mortgage insurance coverage percentage;
(59) mortgage insurance cost;
(60) mortgage insurance certificate number;
A-3
(61) the monthly tax and insurance payment;
(62) the escrow balance as of the Cut-off Date;
(63) The MIN number assigned to each Mortgage Loan, if applicable;
(64) 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;
(65) the Appraisal Type in #64 is an AVM, then a description of the AVM type;
(66) a code indicating whether the loan is High Cost or Covered (HC, CV, HL);
and
(67) a section 32 flag and the origination points and or fees.
A-4
EXHIBIT B
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, and which shall be retained by the Company in the
Servicing File or delivered to the Custodian pursuant to Section 2.01 and 2.03
of the Flow Seller's Warranties and Servicing Agreement to which this Exhibit is
attached (the "Agreement"):
1. The original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of _________ without recourse" and signed in
the name of the Company by an authorized officer (in the event that the
Mortgage Loan was acquired by the Company in a merger, the signature
must be in the following form: "Countrywide Home Loans Inc., successor
by merger to [name of predecessor]"; and in the event that the Mortgage
Loan was acquired or originated by the Company while doing business
under another name, the signature must be in the following form:
"Countrywide Home Loans Inc., formerly known as [previous name]").
2. The original of any guarantee executed in connection with the Mortgage
Note (if any).
3. The original Mortgage, with evidence of recording thereon. If in
connection with any Mortgage Loan, the Company cannot deliver or cause
to be delivered the original Mortgage with evidence of recording thereon
on or prior to the 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
Company shall deliver or cause to be delivered to the Custodian, a
photocopy of such Mortgage, together with (i) in the case of a delay
caused by the public recording office, an Officer's Certificate of the
Company stating that such Mortgage has been dispatched to the
appropriate public recording office for recordation and that the
original recorded Mortgage or a copy of such Mortgage certified by such
public recording office to be a true and complete copy of the original
recorded Mortgage will be promptly delivered to the Custodian upon
receipt thereof by the Company; or (ii) in the case of a Mortgage where
a public recording office retains the original recorded Mortgage or in
the case where a Mortgage is lost after recordation in a public
recording office, a copy of such Mortgage certified by such public
recording office or by the title insurance company that issued the title
policy to be a true and complete copy of the original recorded Mortgage.
4. The originals of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon.
B-1
5. The original Assignment of Mortgage for each Mortgage Loan, in form and
substance acceptable for recording, delivered in blank. If the Mortgage
Loan was acquired by the Company in a merger, the Assignment of Mortgage
must be made by "Countrywide Home Loans Inc., successor by merger to
[name of predecessor]." If the Mortgage Loan was acquired or originated
by the Company while doing business under another name, the Assignment
of Mortgage must be by "Countrywide Home Loans Inc., formerly known as
[previous name]."
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 Company shall deliver or cause to be delivered to the
Custodian, a photocopy of such intervening assignment, together with (i)
in the case of a delay caused by the public recording office, an
Officer's Certificate of the Company stating that such intervening
assignment of mortgage has been dispatched to the appropriate public
recording office for recordation and that such original recorded
intervening assignment of mortgage or a copy of such intervening
assignment of mortgage certified by the appropriate public recording
office or by the title insurance company that issued the title policy to
be a true and complete copy of the original recorded intervening
assignment of mortgage will be promptly delivered to the Custodian upon
receipt thereof by the Company; or (ii) in the case of an intervening
assignment where a public recording office retains the original recorded
intervening assignment or in the case where an intervening assignment is
lost after recordation in a public recording office, a copy of such
intervening assignment certified by such public recording office to be a
true and complete copy of the original recorded intervening assignment.
7. A copy of the mortgagee policy of title insurance or attorney's opinion
of title and abstract of title.
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 4.10 of the Agreement.
10. Residential loan application.
11. Mortgage Loan closing statement.
12. Verification of employment and income, if applicable and available.
13. Verification of acceptable evidence of source and amount of downpayment,
if applicable.
14. Credit report on the Mortgagor, if applicable.
B-2
15. Residential appraisal report, if applicable.
16. Photograph of the Mortgaged Property, if applicable and available.
17. Survey of the Mortgaged Property, if applicable and available.
18. 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., if applicable.
19. All required disclosure statements.
20. If available, termite report, structural engineer's report, water
potability and septic certification.
21. Sales contract, if applicable.
22. 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, if applicable.
B-3
EXHIBIT C
MORTGAGE LOAN DOCUMENTS
The Mortgage Loan Documents for each Mortgage Loan shall include each of
the following items, which shall be delivered to the Custodian pursuant to
Section 2.01 of the Flow Seller's Warranties and Servicing Agreement to which
this Exhibit is annexed (the "Agreement"):
(a) the original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of ___________, without recourse" and signed in the
name of the Company by an authorized officer. To the extent that there is no
room on the face of the Mortgage Note for endorsements, the endorsement may be
contained on an allonge, if state law so allows. If the Mortgage Loan was
acquired by the Company in a merger, the endorsement must be by "Countrywide
Home Loans Inc., successor by merger to [name of predecessor]." If the Mortgage
Loan was acquired or originated by the Company while doing business under
another name, the endorsement must be by "Countrywide Home Loans Inc., formerly
known as [previous name]";
(b) the original of any guarantee executed in connection with the
Mortgage Note;
(c) the original Mortgage with evidence of recording thereon, and the
original recorded power of attorney, if the Mortgage was executed pursuant to a
power of attorney, with evidence of recording thereon;
(d) the originals of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon;
(e) the original Assignment of Mortgage for each Mortgage Loan, in form
and substance acceptable for recording, delivered in blank, or the original
Assignment of Mortgage in recordable form into MERS. If the Mortgage Loan was
acquired by the Company in a merger, the Assignment of Mortgage must be made by
"Countrywide Home Loans Inc., successor by merger to [name of predecessor]." If
the Mortgage Loan was acquired or originated by the Company while doing business
under another name, the Assignment of Mortgage must be by "Countrywide Home
Loans Inc., formerly known as [previous name];" and
(f) the originals of all intervening assignments of mortgage with
evidence of recording thereon, including warehousing assignments, if any.;
X-0
XXXXXXX X-0
CUSTODIAL ACCOUNT CERTIFICATION
_____________________, 200_
Countrywide Home Loans, Inc. hereby certifies that it has established
the account described below as a Custodial Account pursuant to Section 4.04 of
the Flow Seller's Warranties and Servicing Agreement, dated as of June 1, 2004,
Conventional Residential Mortgage Loans.
Title of Account: Countrywide Home Loans, Inc. in trust for the Purchaser
Account Number: _______________
Address of office or branch
of the Company at
which Account is maintained: ________________________________________
________________________________________
________________________________________
________________________________________
Countrywide Home Loans, Inc.
Company
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
X-0-0
XXXXXXX X-0
CUSTODIAL ACCOUNT LETTER AGREEMENT
_________________, 200_
To: ___________________________________
___________________________________
___________________________________
(the "Depository")
As Company under the Flow Seller's Warranties and Servicing Agreement,
dated as of June 1, 2004, Conventional Residential Mortgage Loans (the
"Agreement"), we hereby authorize and request you to establish an account, as a
Custodial Account pursuant to Section 4.04 of the Agreement, to be designated as
"Countrywide Home Loans, Inc., in trust for the Purchaser - Conventional
Residential Mortgage Loans." All deposits in the account shall be subject to
withdrawal therefrom by order signed by the Company. 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.
Countrywide Home Loans, Inc.
Company
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
D-2-1
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:
----------------------------------
D-2-2
EXHIBIT E-1
ESCROW ACCOUNT CERTIFICATION
__________________, 200_
Countrywide Home Loans, Inc. hereby certifies that it has established
the account described below as an Escrow Account pursuant to Section 4.06 of the
Flow Seller's Warranties and Servicing Agreement, dated as of June 1, 2004,
Conventional Residential Mortgage Loans.
Title of Account: "Countrywide Home Loans, Inc. in trust for the Purchaser
and various Mortgagors."
Account Number: __________________
Address of office or branch
of the Company at
which Account is maintained: ________________________________________
________________________________________
________________________________________
________________________________________
Countrywide Home Loans, Inc.
Company
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
E-1-1
EXHIBIT E-2
ESCROW ACCOUNT LETTER AGREEMENT
___________________, 200_
To: ___________________________________
___________________________________
___________________________________
(the "Depository")
As Company under the Flow Seller's Warranties and Servicing Agreement,
dated as of June 1, 2004, Conventional Residential Mortgage Loans (the
"Agreement"), we hereby authorize and request you to establish an account, as an
Escrow Account pursuant to Section 4.07 of the Agreement, to be designated as
"Countrywide Home Loans, Inc., in trust for the Purchaser and various
Mortgagors." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Company. 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.
Countrywide Home Loans, Inc.
Company
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
E-2-1
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:
----------------------------------
E-2-2
EXHIBIT F-1
RESERVED
F-1-1
EXHIBIT F-2
RESERVED
F-2-1
EXHIBIT G
ASSIGNMENT AND ASSUMPTION
_________________, 200_
ASSIGNMENT AND ASSUMPTION, dated __________, between
__________________________________, a ___________________ corporation having an
office at __________________ ("Assignor") and _________________________________,
a __________________ corporation having an office at __________________
("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 purchaser, with respect to the
Mortgage Loans identified on Exhibit A hereto (the "Mortgage Loans") in, to and
under that certain Flow Seller's Warranties and Servicing Agreement,
Conventional Residential Mortgage Loans (the "Flow Seller's Warranties and
Servicing Agreement"), dated as of June 1, 2004, by and between Xxxxxx Brothers
Bank, FSB (the "Purchaser"), and Countrywide Home Loans, Inc. (the "Company"),
and the Mortgage Loans delivered thereunder by the Company to the Assignor.
2. The Assignor warrants and represents to, and covenants with, the
Assignee that:
a. The Assignor is the lawful owner of the Mortgage Loans with the full
right to transfer the Mortgage Loans free from any and all claims and
encumbrances whatsoever;
b. The Assignor has not received notice of, and has no knowledge of, any
offsets, counterclaims or other defenses available to the Company with respect
to the Flow Seller's Warranties and Servicing Agreement or the Mortgage Loans;
c. The Assignor has not waived or agreed to any waiver under, or agreed
to any amendment or other modification of, the Flow Seller's Warranties and
Servicing Agreement, the Custodial Agreement or the Mortgage Loans, including
without limitation the transfer of the servicing obligations under the Flow
Seller's Warranties and Servicing Agreement. The Assignor has no knowledge of,
and has not received notice of, any waivers under or amendments or other
modifications of, or assignments of rights or obligations under, the Flow
Seller's Warranties and Servicing Agreement or the Mortgage Loans; and
d. Neither the Assignor nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner, or
G-1
made any general solicitation by means of general advertising or in any other
manner, or taken any other action which would constitute a distribution of the
Mortgage Loans under the Securities Act of 1933 (the "33 Act") or which would
render the disposition of the Mortgage Loans a violation of Section 5 of the 33
Act or require registration pursuant thereto.
3. The Assignee warrants and represents to, and covenants with, the
Assignor and the Company that:
a. The Assignee agrees to be bound, as Purchaser, by all of the terms,
covenants and conditions of the Flow Seller's Warranties and Servicing
Agreement, the Mortgage Loans and the Custodial Agreement, and from and after
the date hereof, the Assignee assumes for the benefit of each of the Company and
the Assignor all of the Assignor's obligations as Purchaser thereunder;
b. The Assignee understands that the Mortgage Loans have not been
registered under the 33 Act or the securities laws of any state;
c. The purchase price being paid by the Assignee for the Mortgage Loans
are in excess of $250,000 and will be paid by cash remittance of the full
purchase price within 60 days of the sale;
d. The Assignee is acquiring the Mortgage Loans for investment for its
own account only and not for any other person. In this connection, neither the
Assignee nor any Person authorized to act therefor has offered the Mortgage
Loans by means of any general advertising or general solicitation within the
meaning of Rule 502(c) of U.S. Securities and Exchange Commission Regulation D,
promulgated under the 1933 Act;
e. The Assignee considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Mortgage Loans;
f. The Assignee has been furnished with all information regarding the
Mortgage Loans that it has requested from the Assignor or the Company;
g. Neither the Assignee nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner which would constitute a distribution of the Mortgage Loans
under the 33 Act or which would render the disposition of the Mortgage Loans a
violation of Section 5 of the 33 Act or require registration pursuant thereto,
nor will it act, nor has it authorized or will it authorize any person to act,
in such manner with respect to the Mortgage Loans; and
h. Either: (1) the Assignee is not an employee benefit plan ("Plan")
within the meaning of section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or a plan (also "Plan") within the meaning of
section 4975(e)(1) of the Internal
G-2
Revenue Code of 1986 ("Code"), and the Assignee is not directly or indirectly
purchasing the Mortgage Loans on behalf of, investment manager of, as named
fiduciary of, as Trustee of, or with assets of, a Plan; or (2) the Assignee's
purchase of the Mortgage Loans will not result in a prohibited transaction under
section 406 of ERISA or section 4975 of the Code.
i. The Assignee's address for purposes of all notices and correspondence
related to the Mortgage Loans and the Flow Seller's Warranties and Servicing
Agreement is:
_______________________
_______________________
_______________________
Attention: ____________
The Assignee's wire transfer instructions for purposes of all
remittances and payments related to the Mortgage Loans and the Flow Seller's
Warranties and Servicing Agreement are:
_______________________
_______________________
_______________________
G-3
IN WITNESS WHEREOF, the parties have caused this Assignment and
Assumption to be executed by their duly authorized officers as of the date first
above written.
---------------------------------------- -----------------------------------
Assignor Assignee
By:_____________________________________ By:________________________________
Its:____________________________________ Its:_______________________________
G-4
EXHIBIT H
RESERVED
H-1
EXHIBIT I
ASSIGNMENT AND CONVEYANCE
On this [__] day of [___], 200[_], Countrywide Home Loans Inc., as the
Company, under that certain Flow Seller's Warranties and Servicing Agreement,
dated as of [___], 200[_] (the "Agreement") does hereby sell, transfer, assign,
set over and convey to Xxxxxx Brothers Bank, FSB, as Purchaser under the
Agreement all rights, title and interest of the Company in and to the Mortgage
Loans listed on the Mortgage Loan Schedule attached hereto as Exhibit 1,
together with the related Mortgage Files and all rights and obligations arising
under the documents contained therein. Pursuant to Section 2 of the Agreement,
the Company has delivered to the Custodian the documents for each Mortgage Loan
to be purchased as set forth in the Agreement. The ownership of each Mortgage
Note, Mortgage, and the contents of each Mortgage File is vested in the
Purchaser and the ownership of all records and documents with respect to the
related Mortgage Loan prepared by or which come into the possession of the
Company shall immediately vest in the Purchaser and shall be delivered promptly
by the Company to the Purchaser.
The Company confirms to the Purchaser that the representations and
warranties set forth in Section 3 of the Agreement with respect to the Mortgage
Loans listed on the Mortgage Loan Schedule attached hereto as Exhibit 1, and the
representations and warranties in Section 3 of the Agreement with respect to the
Company are true and correct as of the date hereof.
The Mortgage Loans listed on the Mortgage Loan Schedule attached hereto
have the pool characteristics as set forth on Exhibit 2 attached hereto.
The Mortgage Loans listed on the Mortgage Loan Schedule attached hereto
have been underwritten in accordance with the Underwriting Guidelines set forth
in Exhibit 3 attached hereto.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Agreement.
COUNTRYWIDE HOME LOANS, INC.
(Company)
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
I-1
XXXXXX BROTHERS BANK, FSB
(Purchaser)
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
I-2
EXHIBIT 1
MORTGAGE LOAN SCHEDULE
Intentionally Omitted
I-3
EXHIBIT 2
POOL CHARACTERISTICS
The Mortgage Interest Rate shall not exceed [____]% nor be less than
[___]%. With respect to the aggregate unpaid principal balance of the Mortgage
Loans, no more than [___]% of the Mortgage Loans have a balloon payment feature.
With respect to the aggregate unpaid principal balance of all the Mortgage
Loans, the Mortgaged Properties are located as follows: (i) no more than [___]%
are located in California (ii) no more than [___]% are located in Florida and
(iii) no other one state contains more than [__]% of the Mortgaged Properties.
With respect to the aggregate unpaid principal balance of all Mortgage Loans,
(a) no more than [___]% are secured by real property improved by individual
condominium units, (b) no more than [___]% are secured by real property improved
by an individual unit in a planned unit development, and (c) at least [___]% are
secured by real property with a detached one family residence erected thereon.
All of the Mortgaged Properties are owner occupied primary residences. No
Mortgage Loan has a Combined Loan-to-Value Ratio of greater than [_____]%. The
Mortgage Loans have a weighted average Combined Loan-to-Value ration of
[_____]%. With respect to the aggregate unpaid principal balance of the Mortgage
Loans, (a) at least [___]% of the Mortgage Loans were originated under the
Company's full documentation program (b) no more than [___]% of the Mortgage
Loans were originated under the Company's "stated income" documentation program,
and (c) no more than [___]% were originated under Company's "limited"
documentation program. With respect to the aggregate unpaid principal balance of
the Mortgage Loans, (a) no more than [___]% are "cash-out" refinance and/or debt
consolidation mortgage loans, (b) no more than [___]% are rate and term
refinance mortgage loans and (c) at least [___]% are purchase mortgage loans. No
Mortgage Loans has a FICO Score of less than [___]. The weighted average FICO
Score of the Mortgage Loans is [_____]. With respect to the aggregate unpaid
principal balance of the Mortgage Loans, the Mortgage Loans have the following
Credit Grades: (i) [___]% of the Mortgage Loans are Credit Grade "A"; (ii)
[___]% of the Mortgage Loans are Credit Grade "A-"; and (iii) [___]% of the
Mortgage Loans are Credit Grade "B". [___]. With respect to the aggregate unpaid
principal balance of the Mortgage Loans, [___]% of the Mortgage Loans have
prepayment penalty features. With respect to the aggregate unpaid principal
balance of the Mortgage Loans, the weighted average prepayment penalty term of
Mortgage Loans that have prepayment penalties is [___] months. The weighted
average seasoning of the Mortgage Loans is less than [__] months. No Mortgage
Loans has a debt to income ratio greater than [___]. The weighted average debt
to income ratio of the Mortgage Loans is [_____]. No more than [___]% of the
Mortgage Loans has a debt to income ratio greater than 45. No more than [___]%
of the Mortgage Loans has a debt to income ratio greater than 50.
I-4
EXHIBIT 3
UNDERWRITING GUIDELINES
Intentionally Omitted
I-5
