Exhibit 99.9(b)
EXECUTION COPY
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THIRD AMENDED AND RESTATED MORTGAGE
LOAN FLOW PURCHASE,
SALE & SERVICING AGREEMENT
dated as of January 1, 2006
between
XXXXXX XXXXXXX MORTGAGE CAPITAL INC.,
Purchaser
and
PHH MORTGAGE CORPORATION
(formerly known as
CENDANT MORTGAGE CORPORATION),
and
XXXXXX'X GATE RESIDENTIAL MORTGAGE TRUST
(formerly known as
CENDANT RESIDENTIAL MORTGAGE TRUST),
Sellers
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms..............................................1
ARTICLE II
SALE AND CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE
FILES; BOOKS AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01 Sale and Conveyance of Mortgage Loans.....................20
Section 2.02 Possession of Mortgage Files..............................21
Section 2.03 Books and Records.........................................22
Section 2.04 Defective Documents; Delivery of Mortgage Loan
Documents.............................................22
Section 2.05 Transfer of Mortgage Loans................................24
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER;
REPURCHASE AND SUBSTITUTION; REVIEW OF MORTGAGE LOANS
Section 3.01 Representations and Warranties of each Seller.............25
Section 3.02 Representations and Warranties of the Servicer............28
Section 3.03 Representations and Warranties as to Individual
Mortgage Loans........................................29
Section 3.04 Repurchase and Substitution...............................45
Section 3.05 Removal of Mortgage Loans from Inclusion Under this
Agreement Upon an Agency Transfer, Whole-Loan
Transfer or a Securitization Transaction on One
or More Reconstitution Dates..........................47
Section 3.06 Review of Mortgage Loans..................................50
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER AND CONDITIONS PRECEDENT TO FUNDING
Section 4.01 Representations and Warranties............................51
Section 4.02 Conditions Precedent to Closing...........................53
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ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01 PHH Mortgage to Act as Servicer; Servicing Standards;
Additional Documents; Consent of the Purchaser.........55
Section 5.02 Collection of Mortgage Loan Payments......................57
Section 5.03 Notice of Specially Serviced Mortgage Loans and
Foreclosure Sale......................................57
Section 5.04 Establishment of Collection Account; Deposits in
Collection Account....................................58
Section 5.05 Permitted Withdrawals from the Collection Account.........59
Section 5.06 Establishment of Escrow Accounts; Deposits in Escrow......60
Section 5.07 Permitted Withdrawals From Escrow Accounts................60
Section 5.08 Payment of Taxes, Insurance and Other Charges;
Maintenance of Primary Insurance Policies;
Collections Thereunder................................61
Section 5.09 Transfer of Accounts......................................62
Section 5.10 Maintenance of Hazard Insurance...........................62
Section 5.11 Maintenance of Mortgage Impairment Insurance Policy.......64
Section 5.12 Fidelity Bond; Errors and Omissions Insurance.............64
Section 5.13 Management of REO Properties..............................65
Section 5.14 Sale of Specially Serviced Mortgage Loans and REO
Properties............................................66
Section 5.15 Realization Upon Specially Serviced Mortgage Loans and
REO Properties........................................67
Section 5.16 Investment of Funds in the Collection Account.............69
Section 5.17 MERS......................................................70
Section 5.18 Pledged Asset Mortgage Loans..............................70
Section 5.19 Inspections...............................................74
Section 5.20 Transfer of Servicing.....................................74
Section 5.21 Fair Credit Reporting Act.................................76
ARTICLE VI
REPORTS; REMITTANCES; ADVANCES
Section 6.01 Remittances...............................................76
Section 6.02 Reporting.................................................77
Section 6.03 Monthly Advances by the Servicer..........................77
Section 6.04 Non-recoverable Advances..................................78
Section 6.05 Itemization of Servicing Advances.........................78
Section 6.06 Officers' Certificate.....................................78
Section 6.07 Compliance with REMIC Provisions..........................78
ARTICLE VII
GENERAL SERVICING PROCEDURES
Section 7.01 Enforcement of Due-on-Sale Clauses, Assumption
Agreements............................................79
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Section 7.02 Satisfaction of Mortgages and Release of Mortgage
Files.................................................80
Section 7.03 Servicing Compensation....................................80
Section 7.04 Annual Statement as to Compliance.........................81
Section 7.05 Annual Independent Certified Public Accountants'
Servicing Report or Attestation.......................81
Section 7.06 Purchaser's Right to Examine Servicer Records.............81
ARTICLE VIII
REPORTS TO BE PREPARED BY THE SERVICER
Section 8.01 The Servicer's Reporting Requirements.....................82
Section 8.02 Financial Statements......................................82
ARTICLE IX
THE SELLERS
Section 9.01 Indemnification; Third Party Claims.......................82
Section 9.02 Merger or Consolidation of the Seller.....................83
Section 9.03 Limitation on Liability of the Sellers and Others.........84
Section 9.04 Servicer Not to Resign....................................84
ARTICLE X
DEFAULT
Section 10.01 Events of Default.........................................85
ARTICLE XI
TERMINATION
Section 11.01 Term and Termination......................................87
Section 11.02 Survival..................................................87
ARTICLE XII
GENERAL PROVISIONS
Section 12.01 Successor to the Servicer.................................88
Section 12.02 Governing Law; Jurisdiction; Consent to Service of
Process...............................................88
Section 12.03 Notices...................................................89
Section 12.04 Severability of Provisions................................90
Section 12.05 Schedules and Exhibits....................................90
Section 12.06 General Interpretive Principles...........................90
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Section 12.07 Waivers and Amendments, Noncontractual Remedies;
Preservation of Remedies..............................91
Section 12.08 Captions..................................................91
Section 12.09 Counterparts; Effectiveness...............................91
Section 12.10 Entire Agreement; Amendment...............................91
Section 12.11 Further Assurances........................................91
Section 12.12 Intention of the Seller...................................92
Section 12.13 Waiver of Trial by Jury...................................92
ARTICLE XIII
COMPLIANCE WITH REGULATION AB
Section 13.01 Intent of the Parties; Reasonableness.....................92
Section 13.02 Additional Representations and Warranties of the
Sellers and the Servicer..............................93
Section 13.03 Information to Be Provided by each Seller or the
Servicer..............................................93
Section 13.04 Servicer Compliance Statement.............................98
Section 13.05 Report on Assessment of Compliance and Attestation........98
Section 13.06 Use of Subservicers and Subcontractors....................99
Section 13.07 Indemnification; Remedies................................101
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Schedules
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A. Mortgage Loan Schedule
B. Contents of Mortgage File
B-1 Collateral File
B-2 Credit Documents
C. PHH Guide
Exhibits
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Exhibit 2.05 Form of Assignment, Assumption and Recognition Agreement
Exhibit 5.01 Workout Compensation
Exhibit 5.03(a) Report P4DL ? Notice for Specially Serviced Mortgage Loans
Exhibit 5.03(b) Form of Notice of Foreclosure
Exhibit 5.04-1 Form of Collection Account Certification
Exhibit 5.04-2 Form of Collection Account Letter Agreement
Exhibit 5.06-1 Form of Escrow Account Certification
Exhibit 5.06-2 Form of Escrow Account Letter Agreement
Exhibit 6.02(a) Report P-139 - Monthly Statement of Mortgage Accounts
Exhibit 6.02(b) Report S-50Y - Private Pool Detail Report
Exhibit 6.02(c) Report S-213 - Summary of Curtailments Made Remittance Report
Exhibit 6.02(d) Report S-214 - Summary of Paid in Full Remittance Report
Exhibit 6.02(e) Report S-215 - Consolidation of Remittance Report
Exhibit 6.02(f) Report T-62C - Monthly Accounting Report
Exhibit 6.02(g) Report T-62E - Liquidation Report
Exhibit 8.01 Report P-195 - Delinquency Report
Exhibit 9 Form of Officer's Certificate
Exhibit 10 Form of Warranty Xxxx of Sale
Exhibit 11 Form of Xxxxxxxx-Xxxxx Certification
Exhibit 12 Process Guidelines
Exhibit 13 Form of Indemnification and Contribution Agreement
Exhibit 14 Servicing Criteria to be Addressed in Assessment of Compliance
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THIRD AMENDED AND RESTATED MORTGAGE LOAN FLOW
PURCHASE, SALE & SERVICING AGREEMENT
This Third Amended and Restated Mortgage Loan Flow Purchase, Sale &
Servicing Agreement, dated as of January 1, 2006, among Xxxxxx Xxxxxxx Mortgage
Capital Inc., (the "Purchaser"), PHH Mortgage Corporation (formerly known as
Cendant Mortgage Corporation) ("PHH Mortgage") and Xxxxxx'x Gate Residential
Mortgage Trust (formerly known as Cendant Residential Mortgage Trust) (the
"Trust," together with Cendant Mortgage, the "Sellers" and individually, each a
"Seller").
PRELIMINARY STATEMENT
WHEREAS, the Purchaser and the Sellers are parties to that certain
Second Amended and Restated Mortgage Loan Flow Purchase, Sale & Servicing
Agreement, dated as of September 1, 2005 (the "Original Purchase Agreement"),
pursuant to which the Sellers may sell, from time to time, to the Purchaser, and
the Purchaser may purchase, from time to time, from the Sellers, certain
adjustable and fixed rate residential first lien mortgage loans (the "Mortgage
Loans") on a servicing retained basis as described therein, and which shall be
delivered in pools of whole loans on various dates as provided therein (each, a
"Closing Date");
WHEREAS, at the present time, the Purchaser and the Sellers desire
to amend the Original Purchase Agreement to make certain modifications as set
forth herein;
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Purchaser and the
Sellers agree as follows
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, the Purchaser and the Sellers agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms. Whenever used in this Agreement, the
following words and phrases shall have the following meaning specified in this
Article:
"Acceptance of Assignment and Assumption of Lease Agreement": The
specific agreement creating a first lien on and pledge of the Cooperative Shares
and the appurtenant Proprietary Lease securing a Cooperative Loan.
"Accepted Servicing Practices": With respect to any Mortgage Loan,
those customary mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage Loan
in the jurisdiction where the related Mortgaged Property is located.
"Adjustable Rate Mortgage Loan": A Mortgage Loan purchased pursuant
to this Agreement, the Note Rate of which is adjusted from time to time in
accordance with the terms of the related Mortgage Note.
"Affiliate": When used with reference to a specified Person, any
Person that (i) directly or indirectly controls or is controlled by or is under
common control with the specified Person, (ii) is an officer of, partner in or
trustee of, or serves in a similar capacity with respect to, the specified
person or of which the specified Person is an officer, partner or trustee, or
with respect to which the specified Person serves in a similar capacity, or
(iii) directly or indirectly is the beneficial owner of 10% or more of any class
of equity securities of the specified Person or of which the specified person is
directly or indirectly the owner of 10% or more of any class of equity
securities.
"Agency Transfer": The sale or transfer by Purchaser of some or all
of the Mortgage Loans to Xxxxxx Xxx under its "Cash Purchase Program" or its
"MBS Swap Program" (Special Servicing Option) or to Xxxxxxx Mac under its
"Xxxxxxx Xxx Xxxx Program" or "Gold PC Program", retaining the Servicer as
"servicer thereunder."
"Agreement": This Third Amended and Restated Mortgage Loan Flow
Purchase, Sale & Servicing Agreement between the Purchaser and the Sellers.
"ALTA": The American Land Title Association.
"Appraised Value": With respect to any Mortgaged Property, the
lesser of: (i) the value thereof as determined by an appraisal or a PHH Mortgage
approved AVM (as defined in the PHH Guide) made for the originator of the
Mortgage Loan at the time of origination of the Mortgage Loan by an appraiser
who met the minimum requirements of Xxxxxx Xxx and Xxxxxxx Mac; or (ii) the
purchase price paid for the related Mortgaged Property by the Mortgagor with the
proceeds of the Mortgage Loan; provided that, in the case of a Refinanced
Mortgage Loan, such value of the Mortgaged Property shall be based solely upon
the value determined by an appraisal made for the originator of such Refinanced
Mortgage Loan at the time of origination of such Refinanced Mortgage Loan by an
appraiser who met the minimum requirements of Xxxxxx Mae and Xxxxxxx Mac.
"ARM Loan": An "adjustable rate" Mortgage Loan, the Note Rate of
which is subject to periodic adjustment in accordance with the terms of the
Mortgage Note.
"Assignment": An individual assignment of a Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
of record the sale or transfer of the Mortgage Loan to the Purchaser or, in the
case of a MERS Mortgage Loan, an electronic transmission to MERS, identifying a
transfer of ownership of the related Mortgage to the Purchaser or its designee.
"Assignment of Proprietary Lease": With respect to a Cooperative
Loan, an assignment of the Proprietary Lease sufficient under the laws of the
jurisdiction wherein the related Cooperative Unit is located to reflect the
assignment of such Proprietary Lease.
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"Assignment of Recognition Agreement": With respect to a Cooperative
Loan, an assignment of the Recognition Agreement sufficient under the laws of
the jurisdiction wherein the related Cooperative Unit is located to reflect the
assignment of such Recognition Agreement.
"AVM": Automated Value Model. Electronic system to calculate the
property value from a provider that has been approved by the Seller.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (11 U.S.C.
xx.xx. 101-1330), as amended, modified, or supplemented from time to time, and
any successor statute, and all rules and regulations issued or promulgated in
connection therewith.
"BPO": A broker's price opinion with respect to a Mortgaged
Property.
"Business Day": Any day other than (i) a Saturday or Sunday, or (ii)
a day on which the Federal Reserve is closed.
"PHH Guide": Shall have the meaning set forth in paragraph 3 of the
Preliminary Statement to this Agreement.
"Closing Date": The date or dates on which the Purchaser from time
to time shall purchase, and the Seller from time to time shall sell, the
Mortgage Loans listed on the related Mortgage Loan Schedule.
"Code": The Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Collection Account": The separate trust account or accounts created
and maintained pursuant to Section 5.04 which shall be entitled "PHH Mortgage
Corporation, as servicer and custodian for the Purchaser of Mortgage Loans under
the Third Amended and Restated Mortgage Loan Flow Purchase, Sale & Servicing
Agreement, dated as of January 1, 2006."
"Commission": The United States Securities and Exchange Commission.
"Condemnation Proceeds": All awards or settlements in respect of a
taking of an entire Mortgaged Property or a part thereof by exercise of the
power of eminent domain or condemnation.
"Consent": A document executed by the Cooperative Corporation (i)
consenting to the sale of the Cooperative Unit to the Mortgagor and (ii)
certifying that all maintenance charges relating to the Cooperative Unit have
been paid.
"Control Agreement": With respect to each Pledged Asset Mortgage
Loan, the Pledged Collateral Account Control Agreement between the guarantor or
mortgagor, as applicable, and the related Pledged Asset Servicer, pursuant to
which the guarantor or mortgagor, as applicable, has granted a security interest
in a Securities Account.
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"Convertible Mortgage Loan": Any ARM Loan purchased pursuant to this
Agreement as to which the related Mortgage Note permits the Mortgagor to convert
the Note Rate on such Mortgage Loan to a fixed note rate.
"Cooperative Corporation": With respect to any Cooperative Loan, the
cooperative apartment corporation that holds legal title to the related
Cooperative Project and grants occupancy rights to units therein to stockholders
through Proprietary Leases or similar arrangements.
"Cooperative Lease": With respect to a Cooperative Loan, the lease
with respect to a dwelling unit occupied by the Mortgagor and relating to the
stock allocated to the related dwelling unit.
"Cooperative Lien Search": A search for (a) federal tax liens,
mechanics' liens, lis pendens, judgments of record or otherwise against (i) the
Cooperative Corporation and (ii) the seller of the Cooperative Unit, (b) filings
of Financing Statements and (c) the deed of the Cooperative Project into the
Cooperative Corporation.
"Cooperative Loan": A Mortgage Loan that is secured by a first lien
on and a perfected security interest in Cooperative Shares and the related
Proprietary Lease granting exclusive rights to occupy the related Cooperative
Unit in the building owned by the related Cooperative Corporation.
"Cooperative Project": With respect to any Cooperative Loan, all
real property and improvements thereto and rights therein and thereto owned by a
Cooperative Corporation including without limitation the land, separate dwelling
units and all common elements.
"Cooperative Shares": With respect to any Cooperative Loan, the
shares of stock issued by a Cooperative Corporation and allocated to a
Cooperative Unit and represented by a stock certificates.
"Cooperative Unit": With respect to any Cooperative Loan, a specific
unit in a Cooperative Project.
"Covered Loan": A Mortgage Loan categorized as Covered pursuant to
Appendix E of Standard & Poor's Glossary.
"Credit Documents": Those documents, comprising part of the Mortgage
File, required of the Mortgagor, as described in Section 2 (Specific Loan
Program Guidelines) of the PHH Guide. The Credit Documents are specified on
Schedule B-2 hereto.
"Custodial Agreement": With respect to each Mortgage Loan purchase
hereunder, the applicable Custodial Agreement, among the Purchaser, the Servicer
and the Custodian.
"Custodian": With respect to each Mortgage Loan purchase, the
Custodian named in the applicable Custodial Agreement, or its successor in
interest or assigns or any successor to the Custodian under such Custodial
Agreement as provided therein.
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"Cut-off Date" : The first day of the month in which the respective
Funding Date occurs.
Deemed Material and Adverse Representation: Each representation and
warranty identified as such in Section 3.03 of this Agreement.
"Defect": Shall have the meaning set forth in Section 2.04.
"Defective Mortgage Loan": Shall have the meaning set forth in
Section 3.04.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced
with a Qualified Substitute Mortgage Loan.
"Delinquent Mortgage Loan": Shall have the meaning set forth in
Section 11.01.
"Depositor": The depositor, as such term is defined in Regulation
AB, with respect to any Securitization Transaction.
"Determination Date": The 15th day of each calendar month,
commencing on the 15th day of the month following the Funding Date, or, if such
15th day is not a Business Day, the Business Day immediately preceding such 15th
day.
"Due Date": With respect to any Mortgage Loan, the day of the month
on which each Monthly Payment is due thereon, exclusive of any days of grace.
"Due Period": With respect to each Remittance Date, the period
commencing on the second day of the month immediately preceding the month of
such Remittance Date and ending on the first day of the month of such Remittance
Date.
"Eligible Account": One or more accounts (i) that are maintained
with a depository institution the long-term unsecured debt obligations of which
have been rated by each Rating Agency in one of its two highest rating
categories at the time of any deposit therein, (ii) that are trust accounts with
any depository institution held by the depository institution in its capacity as
a corporate trustee, the deposits in which are insured by the FDIC (to the
limits established by the FDIC) and the uninsured deposits in which are
otherwise secured such that the Purchaser has a claim with respect to the funds
in such accounts or a perfected first security interest against any collateral
securing such funds that is superior to claims of any other depositors or
creditors of the depository institution with which such accounts are maintained.
In addition, solely with respect to Mortgage Loans which are not part of a
Securitization Transaction, "Eligible Account" shall include any accounts that
meet the standards established from time to time by Xxxxxx Xxx or Xxxxxxx Mac,
as applicable, for eligible custodial depositories. In the event that the
Mortgage Loans are subject to a Securitization Transaction, the Servicer agrees
that the definition of Eligible Account shall satisfy the rating requirements
established by each Rating Agency which rates any of the securities issued as
part of such Securitization Transaction.
"Environmental Assessment": A "Phase I" environmental assessment of
a Mortgaged Property prepared by an Independent Person who regularly conducts
environmental
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assessments and who has any necessary license(s) required by applicable law and
has at least five years experience conducting environmental assessments.
"Environmental Conditions Precedent to Foreclosure": Shall have the
meaning set forth in Section 5.15.
"Environmental Laws": All federal, state, and local statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees or other governmental
restrictions relating to the environment or to emissions, discharges or releases
of pollutants, contaminants or industrial, toxic or hazardous substances or
wastes into the environment, including ambient air, surface water, ground water,
or land, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants,
contaminants or industrial, toxic or hazardous substances or wastes or the
cleanup or other remediation thereof.
"Escrow Account": The separate trust account or accounts created and
maintained pursuant to Section 5.06 which shall be entitled "PHH Mortgage
Corporation, as servicer for the Purchaser under the Third Amended and Restated
Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated as of January 1,
2006, and various mortgagors."
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, mortgage insurance premiums, fire and hazard insurance
premiums and other payments required to be escrowed by the Mortgagor with the
mortgagee pursuant to any Mortgage Loan.
"Estoppel Letter": A document executed by the Cooperative
Corporation certifying, with respect to a Cooperative Unit, (i) the appurtenant
Proprietary Lease will be in full force and effect as of the date of issuance
thereof, (ii) the related Stock Certificate was registered in the Mortgagor's
name and the Cooperative Corporation has not been notified of any lien upon,
pledge of, levy of execution on or disposition of such Stock Certificate, and
(iii) the Mortgagor is not in default under the appurtenant Proprietary Lease
and all charges due the Cooperative Corporation have been paid.
"Event of Default": Any one of the conditions or circumstances
enumerated in Section 10.01.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Xxxxxx Xxx": The Federal National Mortgage Association or any
successor organization.
"Xxxxxx Mae Guide": The Xxxxxx Xxx Selling Guide and the Servicing
Guide, collectively, in effect on and after the Funding Date.
"FDIC": The Federal Deposit Insurance Corporation or any successor
organization.
"Fidelity Bond": A fidelity bond to be maintained by the Servicer
pursuant to Section 5.12.
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"Financing Statement": A financing statement in the form of a UCC-1
filed pursuant to the relevant state Uniform Commercial Code to perfect a
security interest in the Cooperative Shares and Pledge Instruments.
"Financing Statement Change": A financing statement in the form of a
UCC-3 filed to continue, terminate, release, assign or amend an existing
Financing Statement.
"Foreclosure Profits": As to any Distribution Date or related
Determination Date and any Mortgage Loan, the excess, if any, of Liquidation
Proceeds, Insurance Proceeds and proceeds from any REO Disposition (net of all
amounts reimbursable therefrom pursuant to Section 5.13, Section 5.14 and
Section 5.15) in respect of each Mortgage Loan or REO Property for which a Cash
Liquidation or REO Disposition occurred in the related prepayment period over
the sum of the Unpaid Principal Balance of such Mortgage Loan or REO Property
(determined, in the case of an REO Disposition, in accordance with Section 5.13,
Section 5.14 and Section 5.15) plus accrued and unpaid interest at the Mortgage
Rate on such Unpaid Principal Balance from the Due Date to which interest was
last paid by the Mortgagor to the first day of the month following the month in
which such Cash Liquidation or REO Disposition occurred.
"Xxxxxxx Mac": The Federal Home Loan Mortgage Corporation or any
successor organization.
"Xxxxxxx Mac Servicing Guide": The Xxxxxxx Mac/ Xxxxxxx Xxx Xxxxxxx'
and Servicers' Guide in effect on and after the Funding Date.
"Funding Date": Each date (up to four per month) that Purchaser
purchases Mortgage Loans from the Sellers hereunder.
"Gross Margin": With respect to each ARM Loan, the fixed percentage
added to the Index on each Rate Adjustment Date, as specified in each related
Mortgage Note and listed in the Mortgage Loan Schedule.
"High Cost Loan": A Mortgage Loan (a) covered by the Home Ownership
and Equity Protection Act of 1994, (b) classified as a "high cost home,"
"threshold," "covered," (excluding New Jersey "Covered Home Loans" as that term
was defined in clause (1) of the definition of that term in the New Jersey Home
Ownership Security Act of 2002 that were originated between November 26, 2003
and July 7, 2004), "high risk home," "predatory" or similar loan under any other
applicable state, federal or local law (or a similarly classified loan using
different terminology under a law imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having high interest
rates, points and/or fees) or (c) a Mortgage Loan categorized as High Cost
pursuant to Appendix E of Standard & Poor's Glossary. For avoidance of doubt,
the parties agree that this definition shall apply to any law regardless of
whether such law is presently, or in the future becomes, the subject of judicial
review or litigation.
"HUD": The United States Department of Housing and Urban
Development, or any successor thereto.
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"Indemnified Party": Each of the Purchaser and any Successor
Servicer and each of their present and former directors, officers, agents,
employees, Affiliates and assignees and each Person, if any, that controls the
Purchaser or Successor Servicer or such Affiliate within the meaning of either
the Securities Act or the Exchange Act.
"Independent": With respect to any specified Person, such Person
who: (i) does not have any direct financial interest or any material indirect
financial interest in the applicable Mortgagor, the Sellers, the Purchaser, or
their Affiliates; and (b) is not connected with the applicable Mortgagor, the
Sellers, the Purchaser, or their respective Affiliates as an officer, employee,
promoter, underwriter, trustee, member, partner, shareholder, director, or
Person performing similar functions.
"Index": With respect to each ARM Loan, the applicable rate index
set forth on the related Mortgage Note.
"Insolvency Proceeding": With respect to any Person: (i) any case,
action, or proceeding with respect to such Person before any court or other
governmental authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding up, or relief of debtors; or
(ii) any general assignment for the benefit of creditors, composition,
marshaling of assets for creditors, or other, similar arrangement in respect of
the creditors generally of such Person or any substantial portion of such
Person's creditors; in any case undertaken under federal, state or foreign law,
including the Bankruptcy Code.
"Insurance Proceeds": Proceeds of any Primary Insurance Policy,
title policy, hazard policy or other insurance policy insuring a Mortgage Loan
or the related Mortgaged Property.
"Legal Documents": Those documents, comprising part of the Mortgage
File, set forth in Schedule B-1 of this Agreement.
"Lender-Paid Mortgage Insurance Rate": With respect to any Mortgage
Loan, the Lender-Paid Mortgage Insurance Rate for any "lender-paid" Primary
Insurance Policy shall be a per annum rate equal to the percentage indicated on
the Mortgage Loan Schedule.
"Lifetime Rate Cap": The provision of each Mortgage Note related to
an Adjustable Rate Mortgage Loan which provides for an absolute maximum Note
Rate thereunder. The Note Rate during the terms of each Adjustable Rate Mortgage
Loan shall not at any time exceed the Note Rate at the time of origination of
such Adjustable Rate Mortgage Loan by more than the amount per annum set forth
on the related Mortgage Loan Schedule.
"Liquidation Proceeds": Amounts, other than Insurance Proceeds and
Condemnation Proceeds, received by the Servicer in connection with the
liquidation of a defaulted Mortgage Loan through trustee's sale, foreclosure
sale or otherwise, other than amounts received following the acquisition of an
REO Property in accordance with the provisions hereof.
"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage Loan,
the original principal balance of such Mortgage Loan divided by the lesser of
the Appraised Value of
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the related Mortgaged Property or the purchase price. The Loan-to-Value Ratio of
any Pledged Asset Mortgage Loan shall be calculated by reducing the principal
balance of such Pledged Asset Mortgage Loan by the amount of the Original
Pledged Asset Requirement with respect to such Mortgage Loan. This is referred
to in the PHH Guide as the effective loan-to- value.
"Losses": Shall have the meaning set forth in Section 9.01.
"MAI Appraiser": With respect to any real property, a member of the
American Institute of Real Estate Appraisers with a minimum of 5 years of
experience appraising real property of a type similar to the real property being
appraised and located in the same geographical area as the real property being
appraised.
"Maximum Rate": With respect to each ARM Loan, the rate per annum
set forth in the related Mortgage Note as the maximum Note Rate thereunder. The
Maximum Rate as to each ARM Loan is set forth on the related Mortgage Loan
Schedule.
"MERS": Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
"MERS Eligible Mortgage Loan": Any Mortgage Loan that under
applicable law and investor requirements is recordable in the name of MERS in
the jurisdiction in which the related Mortgaged Property is located.
"MERS Mortgage Loan": Any Mortgage Loan as to which the related
Mortgage, or an Assignment, has been recorded in the name of MERS, as agent for
the holder from time to time of the Mortgage Note.
"Minimum Rate": With respect to each ARM Loan, the rate per annum
set forth in the related Mortgage Note as the minimum Note Rate thereunder. The
Minimum Rate as to each ARM Loan is set forth on the related Mortgage Loan
Schedule.
"Monthly Advance": The aggregate amount of the advances made by the
Servicer on any Remittance Date pursuant to and as more fully described in
Section 6.03.
"Monthly Payment": The scheduled monthly payment of principal and
interest on a Mortgage Loan which is payable by a Mortgagor under the related
Mortgage Note on each Due Date.
"Monthly Period": Initially, the period from the Funding Date
through to and including the first Record Date during the term hereof, and,
thereafter, the period commencing on the day after each Record Date during the
term hereof and ending on the next succeeding Record Date during the term hereof
(or, if earlier, the date on which this Agreement terminates).
"Mortgage": The mortgage, deed of trust or other instrument securing
a Mortgage Note, which creates a first lien on either (i) with respect to a
Mortgage Loan other than a Cooperative Loan, an unsubordinated estate in fee
simple in real property or (ii) with respect to a Cooperative Loan, the
Proprietary Lease and related Cooperative Shares, which in either case secures
the Mortgage Note.
-9-
"Mortgage File": With respect to a particular Mortgage Loan, those
origination and servicing documents, escrow documents, and other documents as
are specified on Schedule B-1 and B-2 to this Agreement and any additional
documents required to be added to the Mortgage File pursuant to the related
Purchase Price and Terms Letter. These documents shall be stored in a secure
manner using paper or electronic storage.
"Mortgage Loan": Each individual mortgage loan or Cooperative Loan
(including all documents included in the Mortgage File evidencing the same, all
Monthly Payments, Principal Prepayments, Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds, and other proceeds relating thereto, and any and
all rights, benefits, proceeds and obligations arising therefrom or in
connection therewith) which is the subject of this Agreement and the related
Purchase Price and Terms Letter. The Mortgage Loans subject to this Agreement
shall be identified on Mortgage Loan Schedules prepared in connection with each
Funding Date.
"Mortgage Loan Schedule": The list of Mortgage Loans identified on
each Funding Date that sets forth the information with respect to each Mortgage
Loan that is specified on Schedule A hereto (as amended from time to time to
reflect the addition of any Qualified Substitute Mortgage Loans and the
withdrawal of any Deleted Mortgage Loans). A Mortgage Loan Schedule will be
prepared for each Funding Date.
"Mortgage Note": The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
"Mortgaged Property": With respect to a Mortgage Loan, the
underlying property securing repayment of a Mortgage Note.
"Mortgagor": The obligor on a Mortgage Note.
"Negative Amortization": That portion of interest accrued at the
Note Rate in any month which exceeds the Monthly Payment on the related Mortgage
Loan for such month and which, pursuant to the terms of the Mortgage Note, is
added to the principal balance of the Mortgage Loan.
"Non-recoverable Advance": As of any date of determination, any
Monthly Advance or Servicing Advance previously made or any Monthly Advance or
Servicing Advance proposed to be made in respect of a Mortgage Loan which, in
the good faith judgment of the Servicer and in accordance with the servicing
standard set forth in Section 5.01, will not or, in the case of a proposed
advance, would not be ultimately recoverable pursuant to Section 5.05 (3) or (4)
hereof. The determination by the Servicer that it has made a Non-recoverable
Advance or that any proposed advance would constitute a Non-recoverable Advance
shall be evidenced by an Officers' Certificate satisfying the requirements of
Section 6.04 hereof and delivered to the Purchaser on or before the
Determination Date in any month.
"Note Rate": With respect to any Mortgage Loan at any time any
determination thereof is to be made, the annual rate at which interest accrues
thereon.
OCC: Office of the Comptroller of the Currency, or any successor
thereto.
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"Offering Materials": All documents, tapes, or other materials
relating to the Mortgage Loans provided by Seller to Purchaser prior to
Purchaser submitting its bid to purchase the Mortgage loans.
"Officers' Certificate": A certificate signed by (i) the President
or a Vice President and (ii) the Treasurer or the Secretary or one of the
Assistant Treasurers or Assistant Secretaries of the Servicer, and delivered by
the Servicer to the Purchaser as required by this Agreement.
"Original Pledged Asset Requirement": With respect to any Pledged
Asset Mortgage Loan, an amount equal to the Pledged Assets required at the time
of the origination of such Pledged Asset Mortgage Loan. Even though for other
purposes the Original Pledged Asset Requirement may actually exceed thirty
percent (30%) of the original principal balance of a Pledged Asset Mortgage
Loan, solely for purposes of the Required Surety Payment, the Original Pledged
Asset Requirement for a Pledged Asset Mortgage Loan will be deemed not to exceed
thirty percent (30%) of its original principal balance.
"OTS": The Office of Thrift Supervision or any successor thereto.
"Payment Adjustment Date": The date on which Monthly Payments shall
be adjusted. Payment Adjustment Date shall occur on the date which is eleven
months from the first payment date for the Mortgage Loan, unless otherwise
specified in the Mortgage Note, and on each anniversary of such first Payment
Adjustment Date.
"Payoff": With respect to any Mortgage Loan, any payment or recovery
received in advance of the last scheduled Due Date of such Mortgage Loan, which
payment or recovery consists of principal in an amount equal to the outstanding
principal balance of such Mortgage Loan, all accrued and unpaid prepayment
penalties, premiums, and/or interest with respect thereto, and all other unpaid
sums due with respect to such Mortgage Loan.
"Periodic Rate Cap": With respect to each ARM Loan and any Rate
Adjustment Date therefor, the number of basis points that is set forth in the
related Mortgage Loan Schedule and in the related Mortgage Note, which is the
maximum amount by which the Note Rate for such Mortgage Loan may increase or
decrease on such Rate Adjustment Date.
"Periodic Rate Floor": With respect to each Adjustable Rate Mortgage
Loan, the provision of each Mortgage Note which provides for an absolute maximum
amount by which the Mortgage Interest Rate therein may decrease on an Rate
Adjustment Date below the Mortgage Interest Rate previously in effect.
"Permitted Investments": Investments that mature, unless payable on
demand, not later than the Business Day preceding the related Remittance Date;
provided that such investments shall only consist of the following:
(i) direct obligations of, or obligations fully guaranteed as to
principal and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by the full
faith and credit of the United States;
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(ii) repurchase obligations (the collateral for which is held by a
third party) with respect to any security described in clause (i) above,
provided that the long-term unsecured obligations of the party agreeing to
repurchase such obligations are at the time rated by each Rating Agency in
one of its two highest rating categories;
(iii) certificates of deposit, time deposits and bankers'
acceptances of any bank or trust company incorporated under the laws of
the United States or any state, provided that the long-term unsecured debt
obligations of such bank or trust company (or, in the case of the
principal depository institution of a depository institution holding
company, the long-term unsecured debt obligations of the depository
institution holding company) at the date of acquisition thereof have been
rated by each Rating Agency in one of its two highest rating categories;
(iv) commercial paper (having original maturities of not more than
365 days) of any corporation incorporated under the laws of the United
States or any state thereof which on the date of acquisition has been
rated by each Rating Agency in its highest rating category; and
(v) any other demand, money market or time deposit account or
obligation, or interest-bearing or other security or investment,
acceptable to the Purchaser (such acceptance evidenced in writing);
provided further that "Permitted Investments" shall not include any instrument
described hereunder which evidences either the right to receive (a) only
interest with respect to the obligations underlying such instrument or (b) both
principal and interest payments derived from obligations underlying such
instrument and the interest and principal payments with respect to such
instrument provide a yield to maturity at par greater than 120% of the yield to
maturity at par of the underlying obligations.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pledge Agreements": Each Control Agreement and Pledged Asset
Agreement for each Pledged Asset Mortgage Loan.
"Pledge Instruments": With respect to each Cooperative Loan, the
Stock Power, the Assignment of the Proprietary Lease, the Assignment of the
Mortgage Note and the Acceptance of Assignment and Assumption of Lease
Agreement.
"Pledged Asset Agreement": With respect to each Pledged Asset
Mortgage Loan, the Pledge Agreement for Securities Account between the related
mortgagor and the related Pledged Asset Servicer pursuant to which such
mortgagor granted a security interest in the related securities and other
financial assets held therein.
"Pledged Asset Mortgage Loan": Each Mortgage Loan as to which
Pledged Assets, in the form of a security interest in the Securities Account and
the financial assets held therein and having a value, as of the date of
origination of such Mortgage Loan, of at least equal
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to the related Original Pledged Asset Requirement, were required to be provided
at the closing thereof, which is subject to the terms of this Agreement from
time to time.
"Pledged Asset Servicer": The entity responsible for administering
and servicing the Pledged Assets with respect to a Pledged Asset Mortgage Loan.
"Pledged Asset Servicing Agreement": With respect to each Pledged
Asset Mortgage Loan, the Agreement between the related Pledged Asset Servicer
and PHH Mortgage, including any exhibits thereto, pursuant to which such Pledged
Asset Servicer shall service and administer the related Pledged Assets.
"Pledged Assets": With respect to any Pledged Asset Mortgage Loan,
the related Securities Account and the financial assets held therein subject to
a security interest pursuant to the related Pledged Asset Agreement.
"Prepaid Monthly Payment": Any Monthly Payment received prior to its
scheduled Due Date and which is intended to be applied to a Mortgage Loan on its
scheduled Due Date.
"Prepayment Interest Shortfall Amount": With respect to any Mortgage
Loan that was subject to a voluntary (not including discounted payoffs)
Principal Prepayment in full or in part during any Due Period, which Principal
Prepayment was applied to such Mortgage Loan prior to such Mortgage Loan's Due
Date in such Due Period, the amount of interest (net of the related Servicing
Fee for Principal Prepayments in full only) that would have accrued on the
amount of such Principal Prepayment during the period commencing on the date as
of which such Principal Prepayment was applied to such Mortgage Loan and ending
on the day immediately preceding such Due Date, inclusive.
"Primary Insurance Policy": A policy of primary mortgage guaranty
insurance issued by an insurer acceptable under the Underwriting Guidelines and
qualified to do business in the jurisdiction where the Mortgaged Property is
located, in effect with respect to a Mortgage Loan and as so indicated on the
Mortgage Loan Schedule, or any replacement policy therefor obtained by the
Servicer pursuant to Section 5.08.
"Principal Prepayment": Any payment or other recovery of principal
on a Mortgage Loan (including a Payoff), other than a Monthly Payment or a
Prepaid Monthly Payment which is received in advance of its scheduled Due Date,
including any prepayment penalty or premium thereon, which is not accompanied by
an amount of interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment and which is
intended to reduce the principal balance of the Mortgage Loan.
"Principal Prepayment Period": The Due Period preceding the related
Remittance Date occurs.
"Proprietary Lease": The lease on a Cooperative Unit evidencing the
possessory interest of the owner of the Cooperative Shares in such Cooperative
Unit.
"PUD": Shall have the meaning set forth in Section 3.03.
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"Purchase Price": As to each Mortgage Loan to be sold hereunder, the
price set forth in the Mortgage Loan Schedule and the related Purchase Price and
Terms Letter.
"Purchase Price and Terms Letter": With respect to any pool of
Mortgage Loans purchased and sold on any Funding Date, the letter agreement or
the electronic loan confirmation between the Purchaser and Seller (including any
exhibits, schedules and attachments thereto), setting forth the terms and
conditions of such transaction and describing the Mortgage Loans to be purchased
by the Purchaser on such Funding Date. A Purchase Price and Terms Letter may
relate to more than one pool of Mortgage Loans to be purchased on one or more
Funding Dates hereunder.
"Purchase Price Percentage": Shall have the meaning set forth in the
related Purchase Price and Terms Letter.
"Purchaser": Xxxxxx Xxxxxxx Mortgage Capital Inc., or its successor
in interest or any successor under this Agreement appointed as herein provided.
"Purchaser's Account": The account of the Purchaser at a bank or
other entity most recently designated in a written notice by the Purchaser to
the Sellers as the "Purchaser's Account."
"Qualified Appraiser": An appraiser, duly appointed by the Seller,
who had no interest, direct or indirect in the Mortgaged Property or in any loan
made on the security thereof, and whose compensation was not affected by the
approval or disapproval of the Mortgage Loan, and such appraiser and the
appraisal made by such appraiser both satisfied the requirements of Title XI of
FIRREA and the regulations promulgated thereunder, all as in effect on the date
the Mortgage Loan was originated.
"Qualified Correspondent": Any Person from which the Seller
purchased Mortgage Loans, provided that the following conditions are satisfied:
(i) such Mortgage Loans were originated pursuant to an agreement between the
Seller and such Person that contemplated that such Person would underwrite
mortgage loans from time to time, for sale to the Seller, in accordance with
underwriting guidelines designated by the Seller ("Designated Guidelines") or
guidelines that do not vary materially from such Designated Guidelines; (ii)
such Mortgage Loans were in fact underwritten as described in clause (i) above
and were acquired by the Seller within 180 days after origination; (iii) either
(x) the Designated Guidelines were, at the time such Mortgage Loans were
originated, used by the Seller in origination of mortgage loans of the same type
as the Mortgage Loans for the Seller's own account or (y) the Designated
Guidelines were, at the time such Mortgage Loans were underwritten, designated
by the Seller on a consistent basis for use by lenders in originating mortgage
loans to be purchased by the Seller; and (iv) the Seller employed, at the time
such Mortgage Loans were acquired by the Seller, pre-purchase or post-purchase
quality assurance procedures (which may involve, among other things, review of a
sample of mortgage loans purchased during a particular time period or through
particular channels) designed to ensure that Persons from which it purchased
mortgage loans properly applied the underwriting criteria designated by the
Seller.
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"Qualified Mortgage Insurer": American Guaranty Corporation,
Commonwealth Mortgage Assurance Company, General Electric Mortgage Insurance
Companies, Mortgage Guaranty Insurance Corporation, PMI Mortgage Insurance
Company, Republic Mortgage Insurance Company or United Guaranty Residential
Insurance Corporation.
"Qualified Substitute Mortgage Loan": A Mortgage Loan substituted by
a Seller for a Deleted Mortgage Loan which must, on the date of such
substitution, (i) have an outstanding principal balance, after deduction of all
scheduled payments due and received in the month of substitution (or in the case
of a substitution of more than one Mortgage Loan for a Deleted Mortgage Loan, an
aggregate principal balance), not in excess of the Unpaid Principal Balance of
the Deleted Mortgage Loan and not less than ninety percent (90%) of the Unpaid
Principal Balance of the Deleted Mortgage Loan (the amount of any shortfall to
be distributed by the applicable Seller to the Purchaser in the month of
substitution), (ii) have a remaining term to maturity not greater than (and not
more than one year less than) that of the Deleted Mortgage Loan, (iii) have a
Note Rate not less than (and not more than one percentage point greater than)
the Note Rate of the Deleted Mortgage Loan, (iv) with respect to each ARM Loan,
have a Minimum Rate not less than that of the Deleted Mortgage Loan, (v) with
respect to each ARM Loan, have a Maximum Rate not less than that of the Deleted
Mortgage Loan and not more than two (2) percentage points above that of the
Deleted Mortgage Loan, (vi) with respect to each ARM Loan, have a Gross Margin
not less than that of the Deleted Mortgage Loan, (vii) with respect to each ARM
Loan, have a Periodic Rate Cap equal to that of the Deleted Mortgage Loan,
(viii) have a Loan-to-Value Ratio at the time of substitution equal to or less
than the Loan-to-Value Ratio of the Deleted Mortgage Loan at the time of
substitution, (ix) with respect to each ARM Loan, have the same Rate Adjustment
Date as that of the Deleted Mortgage Loan, (x) with respect to each ARM Loan,
have an Index as provided herein for all ARM Loans subject to this Agreement,
(xi) comply as of the date of substitution with each representation and warranty
set forth in Sections 3.01, 3.02 and 3.03, (xii) be in the same credit grade
category as the Deleted Mortgage Loan, (xiii) have the same prepayment penalty
term, (xiv) be current in the payment of principal and interest; (xv) be secured
by a Mortgaged Property of the same type and occupancy status as secured the
Deleted Mortgage Loan; and (xvi) have payment terms that do not vary in any
material respect from those of the Deleted Mortgage Loan.
"Rate Adjustment Date": With respect to each ARM Loan, the date on
which the Note Rate adjusts.
"Rating Agency": Standard & Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Xxxxx'x Investors Service, Inc., and Fitch, Inc.
"Recognition Agreement": An agreement among a Cooperative
Corporation, a lender and a Mortgagor with respect to a Cooperative Loan whereby
such parties (i) acknowledge that such lender may make, or intends to make, such
Cooperative Loan, and (ii) make certain agreements with respect to such
Cooperative Loan.
"Reconstitution": Any Securitization Transaction or Whole Loan
Transfer.
"Reconstitution Agreements": The agreement or agreements entered
into by the Purchaser, the Servicer, and/or certain third parties on any
Reconstitution Date with respect to
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any or all of the Mortgage Loans in connection with a Securitization
Transaction, Whole-Loan Transfer or an Agency Transfer, including, but not
limited to, (i) an Assignment, Assumption and Recognition Agreement in
substantially the form of Exhibit 2.05 hereof, (ii) a Xxxxxx Xxx Mortgage
Selling and Servicing Contract, a Pool Purchase Contract, and any and all
servicing agreements and tri-party agreements reasonably required by Xxxxxx Mae
with respect to a Xxxxxx Xxx Transfer, (iii) a Purchase Contract and all
purchase documents associated therewith as set forth in the Xxxxxxx Xxx Xxxxxxx'
& Servicers' Guide, and any and all servicing agreements and tri-party
agreements reasonably required by Xxxxxxx Mac with respect to a Xxxxxxx Mac
Transfer, and (iv) a Pooling and Servicing Agreement, trust agreement,
assignment and assumption agreements, and/or a subservicing/master servicing
agreement and any related custodial agreement, officers' certificates, and
correspondence and related documents related to a Securitization Transaction.
"Reconstitution Date": The date or dates on which any or all of the
Mortgage Loans serviced under this Agreement shall be subject to an Agency
Transfer, a Whole Loan Transfer or a Securitization Transaction.
"Record Date": The close of business of the first Business Day of
the month of the related Remittance Date.
"Refinanced Mortgage Loan": A Mortgage Loan that was made to a
Mortgagor who owned the Mortgaged Property prior to the origination of such
Mortgage Loan and the proceeds of which were used in whole or part to satisfy an
existing mortgage.
"Regulation AB": Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from
time to time, and subject to such clarification and interpretation as have been
provided by the Commission in the adopting release (Asset-Backed Securities,
Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or
by the staff of the Commission, or as may be provided by the Commission or its
staff from time to time.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Internal Revenue Code or any similar tax vehicle
providing for the pooling of assets (such as a Financial Asset Security
Investment Trust).
"Remittance Date": The 18th day of each calendar month, commencing
on the 18th day of the month following the Funding Date, or, if such 18th day is
not a Business Day, then the next Business Day immediately preceding such 18th
day.
"Remittance Rate": With respect to each Mortgage Loan, the related
Note Rate minus the Servicing Fee Rate.
"REO Disposition": The final sale by the Servicer of any REO
Property.
"REO Disposition Proceeds": All amounts received with respect to any
REO Disposition.
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"REO Property": A Mortgaged Property acquired by the Servicer on
behalf of the Purchaser as described in Section 5.13.
"Repurchase Price": With respect to any Defective Mortgage Loan, the
price for such repurchase shall be calculated as follows: (a) during the first
year immediately following the Closing Date, an amount equal to the sum of (i)
the product of (x) the Purchase Price Percentage (as adjusted pursuant the
Purchase Price and Terms Letter) and (y) the then outstanding principal balance
of such Defective Mortgage Loan as of the date of such repurchase, plus (ii)
accrued interest on such Defective Mortgage Loan at the applicable mortgage
interest rate from the date to which interest had last been paid through the
date of such repurchase, plus (iii) the amount of any outstanding advances owed
to the Servicer, and (b) thereafter, an amount equal to the sum of (i) then
outstanding principal balance of such Defective Mortgage Loan as of the date of
such repurchase plus (ii) accrued interest thereon at the mortgage interest rate
from the date to which interest had last been paid through the date of such
repurchase, plus (iii) the amount of any outstanding advances owed to the
Servicer. In the event the Purchaser has securitized or sold the Mortgage Loans,
the price for such repurchase shall be as set forth in clause (b) hereof.
"Required Surety Payment": With respect to any defaulted Pledged
Asset Mortgage Loan for which a claim is payable under the related Surety Bond
under the procedures referred to herein, the lesser of (i) the principal portion
of the realized loss with respect to such Mortgage Loan and (ii) the excess, if
any, of (a) the amount of Pledged Assets required at origination with respect to
such Mortgage Loan (but not more than 30% of the original principal balance of
such Mortgage Loan) over (b) the net proceeds realized by the related Pledged
Asset Servicer from the related Pledged Assets.
"Sale": Shall have the meaning set forth in Section 3.05.
"Scheduled Principal Balance": With respect to any Mortgage Loan,
(i) the outstanding principal balance as of the Funding Date after application
of principal payments due on or before such date whether or not received, minus
(ii) all amounts previously remitted to the Purchaser with respect to such
Mortgage Loan representing (a) payments or other recoveries of principal, or (b)
advances of principal made pursuant to Section 6.03.
"Securities Account": With respect to any Pledged Asset Mortgage
Loans, the account, together with the financial assets held therein, that is the
subject of the related Pledged Asset Agreement.
"Securities Act": The federal Securities Act of 1933, as amended.
"Securitization Transaction": Any transaction involving either (1) a
sale or other transfer of some or all of the Mortgage Loans directly or
indirectly to an issuing entity in connection with an issuance of publicly
offered or privately placed, rated or unrated mortgage-backed securities or (2)
an issuance of publicly offered or privately placed, rated or unrated
securities, the payments on which are determined primarily by reference to one
or more portfolios of residential mortgage loans consisting, in whole or in
part, of some or all of the Mortgage Loans.
-17-
"Security Agreement": The agreement creating a security interest in
the stock allocated to a dwelling unit in the residential cooperative housing
corporation that was pledged to secure such Cooperative Loan and the related
Cooperative Lease.
"Sellers": PHH Mortgage Corporation (formerly known as Cendant
Mortgage Corporation), a New Jersey corporation and Xxxxxx'x Gate Residential
Mortgage Trust (formerly known as Cendant Residential Mortgage Trust), a
Delaware statutory trust, or their successors in interest or any successor under
this Agreement appointed as herein provided.
"Seller Information": As defined in Section 13.07(a).
"Servicer": PHH Mortgage Corporation, a New Jersey corporation, or
with respect to Subsection 13.03(c), as defined therein.
"Servicing Advances": All "out of pocket" costs and expenses that
are customary, reasonable and necessary which are incurred by the Servicer in
the performance of its servicing obligations hereunder, including (without
duplication) (i) reasonable attorneys' fees and (ii) the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the servicing,
management and liquidation of any Specially Serviced Mortgaged Loans and/or any
REO Property, and (d) compliance with the Servicer's obligations under Section
5.08.
"Servicing Criteria": The "servicing criteria" set forth in Item
1122(d) of Regulation AB, as such may be amended from time to time.
"Servicing Event": Any of the following events with respect to any
Mortgage Loan: (i) any Monthly Payment being more than 60 days delinquent; (ii)
any filing of an Insolvency Proceeding by or on behalf of the related Mortgagor,
any consent by or on behalf of the related Mortgagor to the filing of an
Insolvency Proceeding against such Mortgagor, or any admission by or on behalf
of such Mortgagor of its inability to pay such Person's debts generally as the
same become due; (iii) any filing of an Insolvency Proceeding against the
related Mortgagor that remains undismissed or unstayed for a period of 60 days
after the filing thereof; (iv) any issuance of any attachment or execution
against, or any appointment of a conservator, receiver or liquidator with
respect to, all or substantially all of the assets of the related Mortgagor or
with respect to any Mortgaged Property; (v) any receipt by the Servicer of
notice of the foreclosure or proposed foreclosure of any other lien on the
related Mortgaged Property; (vi) any proposal of a material modification (as
reasonably determined by the Seller) to such Mortgage Loan due to a default or
imminent default under such Mortgage Loan; or (vii) in the reasonable judgment
of the Servicer, the occurrence, or likely occurrence within 60 days, of a
payment default with respect to such Mortgage Loan that is likely to remain
uncured by the related Mortgagor within 60 days thereafter.
"Servicing Fee": The annual fee, payable monthly to the Servicer out
of the interest portion of the Monthly Payment actually received on each
Mortgage Loan. The Servicing Fee with respect to each Mortgage Loan for any
calendar month (or a portion thereof) shall be 1/12 of the product of (i) the
Unpaid Principal Balance of the Mortgage Loan and (ii) the Servicing Fee Rate
applicable to such Mortgage Loan.
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"Servicing Fee Rate": Unless otherwise specified on the Mortgage
Loan Schedule, (i) with respect to any ARM Loan, 0.375% per annum; provided
that, prior to the first Rate Adjustment Date with respect to any such Mortgage
Loan, such rate may be, at the Servicer's option, not less than 0.25% per annum;
and (ii) with respect to any Mortgage Loan other than an ARM Loan, 0.25% per
annum.
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a written list of servicing officers furnished by the Servicer
to the Purchaser upon request therefor by the Purchaser, as such list may from
time to time be amended.
"Specially Serviced Mortgage Loan": A Mortgage Loan as to which a
Servicing Event has occurred and is continuing.
"Sponsor": The sponsor, as such term is defined in Regulation AB,
with respect to any Securitization Transaction.
"Standard & Poor's": Standard & Poor's Ratings Services, a division
of The McGraw Hill Companies Inc., and any successor thereto.
"Standard & Poor's Glossary": The Standard & Poor's LEVELS(R)
Glossary, as may be in effect from time to time.
"Static Pool Information": Static pool information as described in
Item 1105(a)(1)-(3) and 1105(c) of Regulation AB.
"Subcontractor": Any vendor, subcontractor or other Person that is
not responsible for the overall servicing (as "servicing" is commonly understood
by participants in the mortgage-backed securities market) of Mortgage Loans but
performs one or more discrete functions identified in Item 1122(d) of Regulation
AB with respect to Mortgage Loans under the direction or authority of the
Servicer or a Subservicer.
"Subservicer": Any Person that services Mortgage Loans on behalf of
the Servicer or any Subservicer and is responsible for the performance (whether
directly or through Subservicers or Subcontractors) of a substantial portion of
the material servicing functions required to be performed by the Seller under
this Agreement or any Reconstitution Agreement that are identified in Item
1122(d) of Regulation AB.
"Stock Certificate": With respect to a Cooperative Loan, the
certificates evidencing ownership of the Cooperative Shares issued by the
Cooperative Corporation.
"Stock Power": With respect to a Cooperative Loan, an assignment of
the Stock Certificate or an assignment of the Cooperative Shares issued by the
Cooperative Corporation.
"Surety Bond": With respect to each Pledged Asset Mortgage Loan, the
surety bond issued by the related Surety Bond Issuer covering such Pledged Asset
Mortgage Loan.
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"Surety Bond Issuer": With respect to each Pledged Asset Mortgage
Loan, the surety bond issuer for the related Surety Bond covering such Pledged
Asset Mortgage Loan.
"Third-Party Originator": Each Person, other than a Qualified
Correspondent, that originated Mortgage Loans acquired by the Seller.
"Transaction Servicer": As defined in Section 13.03(c).
"Transfer Date": In the event the Servicer is terminated as servicer
of a Mortgage Loan, the date on which the Purchaser, or its designee, shall
receive the transfer of servicing responsibilities with respect to such Mortgage
Loan and begin to perform the servicing of such Mortgage Loans and the Servicer
shall cease all servicing responsibilities.
"Trust Financials": Shall have the meaning set forth in Section 3.01
"Underwriting Guidelines": The underwriting guidelines of the
Seller, a copy of which shall be attached as an exhibit to the related
Assignment and Conveyance.
"Uniform Commercial Code": The Uniform Commercial Code as in effect
on the date hereof in the State of New York; provided that if by reason of
mandatory provisions of law, the perfection or the effect of perfection or non
perfection of the security interest in any collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than New York, "Uniform
Commercial Code" shall mean the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non perfection.
"Unpaid Principal Balance": With respect to any Mortgage Loan, at
any time, the actual outstanding principal balance then payable by the Mortgagor
under the terms of the related Mortgage Note including any cumulative Negative
Amortization.
"Warranty Xxxx of Sale": A warranty xxxx of sale with respect to the
Mortgage Loans purchased on a Funding Date in the form annexed hereto as Exhibit
10.
"Whole Loan Transfer": Any sale or transfer of some or all of the
Mortgage Loans, other than a Securitization Transaction.
ARTICLE II
SALE AND CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE
FILES; BOOKS AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01 Sale and Conveyance of Mortgage Loans. Seller agrees to
sell and Purchaser agrees to purchase, from time to time, those certain Mortgage
Loans identified in a Mortgage Loan Schedule, at the price and on the terms set
forth herein and in the related Purchase Price and Terms Letter. Purchaser, on
any Funding Date, shall be obligated to purchase only such Mortgage Loans set
forth in the applicable Mortgage Loan Schedule, subject to the terms and
conditions of this Agreement and the related Purchase Price and Terms Letter.
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Purchaser will purchase Mortgage Loans from Seller, up to four (4)
times per month on such Funding Dates as may be agreed upon by Purchaser and
Seller. The closing shall, at Purchaser's option be either: by telephone,
confirmed by letter or wire as the parties shall agree, or conducted in person
at such place as the parties shall agree. On the Funding Date and subject to the
terms and conditions of this Agreement, each Seller will sell, transfer, assign,
set over and convey to the Purchaser, without recourse except as set forth in
this Agreement, and the Purchaser will purchase, all of the right, title and
interest of the applicable Seller in and to the Mortgage Loans being conveyed by
it hereunder, as identified on the Mortgage Loan Schedule.
Examination of the Mortgage Files may be made by Purchaser or its
designee as follows. No later than 5 Business Days prior to the Funding Date,
Seller will deliver to Purchaser or its custodian, Legal Documents required
pursuant to Schedule B-1. Upon Purchaser's request, Seller shall make the Credit
Documents available in either original paper form or electronic imaged format to
Purchaser for review, at Seller's place of business and during reasonable
business hours. If Purchaser makes such examination prior to the Funding Date
and identifies any Mortgage Loans that do not conform to the PHH Guide, such
Mortgage Loans will be deleted from the Mortgage Loan Schedule at Purchaser's
discretion. Purchaser may, at its option and without notice to Seller, purchase
all or part of the Mortgage Loans without conducting any partial or complete
examination. The fact that Purchaser has conducted or has failed to conduct any
partial or complete examination of the Mortgage Files shall not affect
Purchaser's rights to demand repurchase, substitution or other relief as
provided herein.
On the Funding Date and in accordance with the terms herein,
Purchaser will pay to Seller by 2:00 p.m. Eastern Standard Time, by wire
transfer of immediately available funds, the Purchase Price for the Mortgage
Loans, which shall be calculated in accordance with the terms of the related
Purchase Price and Terms Letter and paid by the Purchaser to the Sellers in
accordance with the instructions to be provided, respectively, by PHH Mortgage
and the Trust. Seller, simultaneously with the payment of the Purchase Price,
shall execute and deliver to Purchaser a Warranty Xxxx of Sale with respect to
the Mortgage Loans in the form annexed hereto as Exhibit 10.
Purchaser shall be entitled to all scheduled principal due on and
after the Cut-off Date, all other recoveries of principal collected after the
Cut-off Date and all payments of interest on the Mortgage Loans (minus that
portion of any such payment which is allocable to the period prior to the
Cut-off Date). Notwithstanding the foregoing, on the first Remittance Date after
the Funding Date the Purchaser shall be entitled to receive the interest accrued
from and including the Cut-off Date through and including the day immediately
preceding the Funding Date. The principal balance of each Mortgage Loan as of
the Cut-off Date is determined after application of payments of principal due on
or before the Cut-off Date whether or not collected. Therefore, payments of
scheduled principal and interest prepaid for a due date beyond the Cut-off Date
shall not be applied to the principal balance as of the Cut-off Date. Such
prepaid amounts shall be the property of Purchaser. Seller shall hold any such
prepaid amounts for the benefit of Purchaser for subsequent remittance by Seller
to Purchaser. All scheduled payments of principal due on or before the Cut-off
Date and collected by Servicer after the Cut-off Date shall belong to Seller.
Section 2.02 Possession of Mortgage Files. Upon the sale of any
Mortgage Loan, the ownership of such Mortgage Loan, including the Mortgage Note,
the Mortgage, the
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contents of the related Mortgage File and all rights, benefits, payments,
proceeds and obligations arising therefrom or in connection therewith, shall
then be vested in the Purchaser, and the ownership of all records and documents
with respect to such Mortgage Loan prepared by or which come into the possession
of the Seller shall immediately vest in the Purchaser and, to the extent
retained by the Seller, shall be retained and maintained, in trust, by the
Seller at the will of the Purchaser in a custodial capacity only. The contents
of such Mortgage File not delivered to the Purchaser are and shall be held in
trust by the Seller for the benefit of the Purchaser as the owner thereof and
the Sellers' possession of the contents of each Mortgage File so retained is at
the will of the Purchaser for the sole purpose of servicing the related Mortgage
Loan, and such retention and possession by the Seller shall be in a custodial
capacity only. Mortgage Files shall be maintained by the Seller and shall be
marked to clearly reflect the sale of the related Mortgage Loan to the
Purchaser. Each Seller shall release from its custody of the contents of any
Mortgage File only in accordance with written instructions from the Purchaser,
except where such release is required as incidental to the Servicer's servicing
of the Mortgage Loans or is in connection with a repurchase or substitution of
any such Mortgage Loan pursuant to Section 3.04.
Any documents released to a Seller or the Servicer in connection
with the foreclosure or servicing of any Mortgage Loan shall be held by such
Person in trust for the benefit of the Purchaser in accordance with this Section
2.02. Such Person shall return to the Purchaser such documents when such
Person's need therefor in connection with such foreclosure or servicing no
longer exists (unless sooner requested by the Purchaser); provided that, if such
Mortgage Loan is liquidated, then, upon the delivery by a Seller or the Servicer
to the Purchaser of a request for the release of such documents and a
certificate certifying as to such liquidation, the Purchaser shall promptly
release and, to the extent necessary, deliver to such Person such documents.
Section 2.03 Books and Records. The sale of each of its Mortgage
Loans shall be reflected on the applicable Seller's balance sheet and other
financial statements as a sale of assets by the applicable Seller. Each Seller
shall be responsible for maintaining, and shall maintain, a complete set of
books and records for the Mortgage Loans it conveyed to the Purchaser which
shall be clearly marked to reflect the sale of each Mortgage Loan to the
Purchaser and the ownership of each Mortgage Loan by the Purchaser.
Section 2.04 Defective Documents; Delivery of Mortgage Loan
Documents. If, subsequent to the related Funding Date, the Purchaser or either
Seller finds any document or documents constituting a part of a Mortgage File to
be defective or missing in any material respect (in this Section 2.04, a
"Defect"), the party discovering such Defect shall promptly so notify the other
parties. If the Defect pertains to the Mortgage Note or the Mortgage, then the
applicable Seller shall have a period of 60 days within which to correct or cure
any such defect after the earlier of such Seller's discovery of same or such
Seller being notified of same. If such Defect can ultimately be cured but is not
reasonably expected to be cured within such 60-day period, such Seller shall
have such additional time as is reasonably determined by the Purchaser to cure
or correct such Defect, provided that such Seller has commenced curing or
correcting such Defect and is diligently pursuing same; and provided, however,
that in no event shall the cure period be extended beyond 90 days after notice
or discovery of such Defect. If the Defect pertains to any other document
constituting a part of a Mortgage File, then such Seller shall have
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a period of 60 days within which to correct or cure any such Defect after the
earlier of such Seller's discovery of same or such Seller being notified of
same. If such Defect can ultimately be cured but is not reasonably expected to
be cured within the 60-day period, then such Seller shall have such additional
time as is reasonably determined by the Purchaser to cure or correct such Defect
provided such Seller has commenced curing or correcting such Defect and is
diligently pursuing same; and provided, however, that in no event shall the cure
period be extended beyond 90 days after notice or discovery of such Defect. PHH
Mortgage hereby covenants and agrees that, if any material Defect cannot be
corrected or cured, the related Mortgage Loan shall automatically constitute,
upon the expiration of the applicable cure period described above and without
any further action by any other party, a Defective Mortgage Loan, whereupon PHH
Mortgage shall repurchase such Mortgage Loan by paying to the Purchaser the
Repurchase Price therefor in accordance with Section 3.04.
The applicable Seller will, with respect to each Mortgage Loan to be
purchased by the Purchaser, deliver and release to the Purchaser on the related
Funding Date (or on such earlier date as may be specified in the related
Purchase Price and Terms Letter), the Legal Documents as set forth in Section
2.01. If the applicable Seller cannot deliver an original Mortgage with evidence
of recording thereon, original assumption, modification and substitution
agreements with evidence of recording thereon or an original intervening
assignment with evidence of recording thereon within the time periods specified
in the preceding sentence, then such Seller shall promptly deliver to the
Purchaser such original Mortgages and original intervening assignments with
evidence of recording indicated thereon upon receipt thereof from the public
recording official, except in cases where the original Mortgage or original
intervening assignments are retained permanently by the recording office, in
which case, such Seller shall deliver a copy of such Mortgage or intervening
assignment, as the case may be, certified to be a true and complete copy of the
recorded original thereof. If the applicable Seller cannot deliver the original
security instrument or if an original intervening assignment has been lost, then
the applicable Seller will deliver a copy of such security instrument or
intervening assignment, certified by the local public recording official. If the
original title policy has been lost, the applicable Seller will deliver a
duplicate original title policy.
If the original Mortgage was not delivered pursuant to the preceding
paragraph, then the applicable Seller shall use its best efforts to promptly
secure the delivery of such originals and shall cause such originals to be
delivered to the Purchaser promptly upon receipt thereof. Notwithstanding the
foregoing, if the original Mortgage, original assumption, modification, and
substitution agreements, the original of any intervening assignment or the
original policy of title insurance is not so delivered to the Purchaser within
180 days following the Funding Date, then, upon written notice by the Purchaser
to PHH Mortgage, the Purchaser may, in its sole discretion, then elect (by
providing written notice to PHH Mortgage) to treat such Mortgage Loan as a
Defective Mortgage Loan, whereupon PHH Mortgage shall repurchase such Mortgage
Loan by paying to the Purchaser the Repurchase Price therefor in accordance with
Section 3.04. It is understood that from time to time certain local recorder
offices become backlogged with document volume. It is agreed that the Seller
will provide an Officers' Certificate to document that the Seller has performed
all necessary tasks to ensure delivery of the required documentation within 180
days and the delay beyond 180 is caused by the backlog. If the delay exceeds 240
days, regardless of the backlog the Purchaser may elect to collect the documents
with its own resources with the reasonable cost and expense to be borne by the
Seller.
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The fact that the Purchaser has conducted or failed to conduct any partial or
complete examination of the Mortgage Files shall not affect its right to demand
repurchase or any other remedies provided in this Agreement.
At the Purchaser's request, the Assignments shall be promptly
recorded in the name of the Purchaser or in the name of a Person designated by
the Purchaser in all appropriate public offices for real property records. If
any such Assignment is lost or returned unrecorded because of a defect therein,
then the applicable Seller shall promptly prepare a substitute Assignment to
cure such defect and thereafter cause each such Assignment to be duly recorded.
All recording fees related to such a one-time recordation of the Assignments to
or by a Seller shall be paid by the applicable Seller.
Section 2.05 Transfer of Mortgage Loans. Subject to the provisions
of this Section 2.05, the Purchaser shall have the right, without the consent of
the Sellers, at any time and from time to time, to assign any of the Mortgage
Loans and all or any part of its interest in this Agreement and designate any
person to exercise any rights of the Purchaser hereunder, and the assignees or
designees shall accede to the rights and obligations hereunder of the Purchaser
with respect to such Mortgage Loans. The Sellers recognize that the Mortgage
Loans may be divided into "packages" for resale.
All of the provisions of this Agreement shall inure to the benefit
of the Purchaser and any of its assignees or designees. All references to the
Purchaser shall be deemed to include its assignees or designees. Utilizing
resources reasonably available to the Seller without incurring any cost except
the Seller's overhead and employees' salaries, the applicable Seller shall
cooperate in any such assignment of the Mortgage Loans and this Agreement;
provided that the Purchaser shall bear all costs associated with any such
assignment of the Mortgage Loans and this Agreement other than such Seller's
overhead or employees' salaries.
The Servicer and Purchaser agree that the Servicer shall continue to
remit funds and make available via Servicer's website remittance reports to no
more than four (4) Persons (not including the Servicer or any Affiliate or
transferee thereof) at any given time with respect to any Mortgage Loans sold on
a particular Funding Date.
The Servicer and the Purchaser acknowledge that the Servicer shall
continue to remit payments to the Purchaser on the Remittance Date after the
transfer of the Mortgage Loans, unless the Servicer was notified in writing of
the new record owner of the Mortgage Loans prior to the immediately preceding
Record Date, in which case, the Servicer shall remit to the new record owner (or
trustee or master servicer, as the case may be) of the Mortgage Loans.
Any prospective assignees of the Purchaser who have entered into a
commitment to purchase any of the Mortgage Loans may review and underwrite the
Servicer's servicing and origination operations, upon reasonable prior notice to
the Servicer, and the Servicer shall cooperate with such review and underwriting
to the extent such prospective assignees request information or documents that
are reasonably available and can be produced without unreasonable expense or
effort. The Servicer shall make the Mortgage Files related to the Mortgage Loans
held by the Servicer available at the Servicer's principal operations center for
review by any such prospective assignees during normal business hours upon
reasonable prior
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notice to the Servicer (in no event less than 10 Business Days prior notice).
The Servicer may, in its sole discretion, require that such prospective
assignees sign a confidentiality agreement with respect to such information
disclosed to the prospective assignee which is not available to the public at
large and a release agreement with respect to its activities on the Servicer's
premises.
The Servicer shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the Servicer
shall note transfers of Mortgage Loans. The Purchaser may, subject to the terms
of this Agreement, sell and transfer, in whole or in part, any or all of the
Mortgage Loans; provided that no such sale and transfer shall be binding upon
the Servicer unless such transferee shall agree in writing to an Assignment,
Assumption and Recognition Agreement, in substantially the form of Exhibit 2.05
attached hereto, and an executed copy of such Assignment, Assumption and
Recognition Agreement shall have been delivered to the Servicer. The Servicer
shall evidence its acknowledgment of any transfers of the Mortgage Loans to any
assignees of the Purchaser by executing such Assignment, Assumption and
Recognition Agreement. The Servicer shall xxxx its books and records to reflect
the ownership of the Mortgage Loans by any such assignees, and the previous
Purchaser shall be released from its obligations hereunder accruing after the
date of transfer to the extent such obligations relate to Mortgage Loans sold by
the Purchaser. This Agreement shall be binding upon and inure to the benefit of
the Purchaser and the Servicer and their permitted successors, assignees and
designees.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER;
REPURCHASE AND SUBSTITUTION; REVIEW OF MORTGAGE LOANS
Section 3.01 Representations and Warranties of each Seller. Each
Seller, as to itself, represents, warrants and covenants to the Purchaser that
as of each Funding Date or as of such date specifically provided herein:
(1) Due Organization and Authority. The Seller is a New Jersey
corporation, validly existing, and in good standing under the laws of its
jurisdiction of incorporation or formation and has all licenses necessary to
carry on its business as now being conducted and is licensed, qualified and in
good standing in the states where the Mortgaged Property is located if the laws
of such state require licensing or qualification in order to conduct business of
the type conducted by the Seller. The Seller has corporate power and authority
to execute and deliver this Agreement and to perform its obligations hereunder;
the execution, delivery and performance of this Agreement (including all
instruments of transfer to be delivered pursuant to this Agreement) by the
Seller and the consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement has been duly executed and delivered
and constitutes the valid, legal, binding and enforceable obligation of the
Seller, except as enforceability may be limited by (i) bankruptcy, insolvency,
liquidation, receivership, moratorium, reorganization or other similar laws
affecting the enforcement of the rights of creditors and (ii) general principles
of equity, whether enforcement is sought in a proceeding in equity or at law.
All requisite corporate action has been taken by the Seller to make this
Agreement valid and binding upon the Seller in accordance with its terms;
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(2) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition or origination of the Mortgage Loans by the Seller,
the sale of the Mortgage Loans to the Purchaser, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a breach
of any of the terms, conditions or provisions of the Seller's charter or by-laws
or any legal restriction or any agreement or instrument to which the Seller is
now a party or by which it is bound, or constitute a default or result in an
acceleration under any of the foregoing, or result in the violation of any law,
rule, regulation, order, judgment or decree to which the Seller or its property
is subject, or result in the creation or imposition of any lien, charge or
encumbrance that would have an adverse effect upon any of its properties
pursuant to the terms of any mortgage, contract, deed of trust or other
instrument, or impair the ability of the Purchaser to realize on the Mortgage
Loans, impair the value of the Mortgage Loans, or impair the ability of the
Purchaser to realize the full amount of any insurance benefits accruing pursuant
to this Agreement;
(3) Ability to Perform; Solvency. The Seller does not believe, nor
does it have any reason or cause to believe, that it cannot perform each and
every covenant contained in this Agreement. The Seller is solvent and the sale
of the Mortgage Loans will not cause the Seller to become insolvent. The sale of
the Mortgage Loans is not undertaken with the intent to hinder, delay or defraud
any of Seller's creditors;
(4) No Material Default. Neither the Seller nor any of its
Affiliates is in material default under any agreement, contract, instrument or
indenture of any nature whatsoever to which the Seller or any of its Affiliates
is a party or by which it (or any of its assets) is bound, which default would
have a material adverse effect on the ability of the Seller to perform under
this Agreement, nor, to the best of the Seller's knowledge, has any event
occurred which, with notice, lapse of time or both, would constitute a default
under any such agreement, contract, instrument or indenture and have a material
adverse effect on the ability of the Seller to perform its obligations under
this Agreement;
(5) Financial Statements. The Seller has delivered to the Purchaser
financial statements as to its last three complete fiscal years and any later
quarter ended more than 60 days prior to the execution of this Agreement. All
such financial statements fairly present the pertinent results of operations and
changes in financial position for each of such periods and the financial
position at the end of each such period of the Seller and its subsidiaries and
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as set forth in the
notes thereto. In addition, the Seller has delivered information as to its loan
gain and loss experience in respect of foreclosures and its loan delinquency
experience for the immediately preceding three year period, in each case with
respect to mortgage loans owned by it and such mortgage loans serviced for
others during such period, and all such information so delivered shall be true
and correct in all material respects. There has been no change in the business,
operations, financial condition, properties or assets of the Seller since the
date of the Seller's financial statements that would have a material adverse
effect on its ability to perform its obligations under this Agreement. The
Seller has completed any forms requested by the Purchaser in a timely manner and
in accordance with the provided instructions;
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(6) No Change in Business. There has been no change in the business,
operations, financial condition, properties or assets of the applicable Seller
since (i) in the case of PHH Mortgage, the date of its financial statements and
(ii) in the case of the Trust, the date of delivery of the Trust Financials,
that would have a material adverse effect on the ability of the applicable
Seller to perform its obligations under this Agreement;
(7) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Seller, before any court,
administrative agency or other tribunal asserting the invalidity of this
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Seller, or in any
material impairment of the right or ability of the Seller to carry on its
business substantially as now conducted, or in any material liability on the
part of the Seller, or which would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Seller contemplated herein, or which
would be likely to impair materially the ability of the Seller to perform under
the terms of this Agreement;
(8) No Consent Required. No consent, approval, authorization or
order is required for the transactions contemplated by this Agreement from any
court, governmental agency or body, or federal or state regulatory authority
having jurisdiction over the Seller is required or, if required, such consent,
approval, authorization or order has been or will, prior to the related Closing
Date, be obtained;
(9) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction;
(10) No Brokers. The Seller has not dealt with any broker,
investment banker, agent or other person that may be entitled to any commission
or compensation in connection with the sale of the Mortgage Loans;
(11) No Untrue Information. Neither this Agreement nor any
information, statement, tape, diskette, report, form, or other document
furnished or to be furnished pursuant to this Agreement or any Reconstitution
Agreement or in connection with the transactions contemplated hereby (including
any Securitization Transaction or Whole Loan Transfer) contains or will contain
any untrue statement of fact or omits or will omit to state a fact necessary to
make the statements contained herein or therein not misleading;
(12) Non-solicitation. The Seller agrees that it shall not solicit
any Mortgagors (in writing or otherwise) to refinance any of the Mortgage Loans;
provided that mass advertising or mailings (such as placing advertisements on
television, on radio, in magazines or in newspapers or including messages in
billing statements) that are not exclusively directed towards the Mortgagors
shall not constitute solicitation and shall not violate this covenant;
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(13) Privacy. The Seller agrees and acknowledges that as to all
nonpublic personal information received or obtained by it with respect to any
Mortgagor: (a) such information is and shall be held by Seller in accordance
with all applicable law, including but not limited to the privacy provisions of
the Xxxxx-Xxxxx Xxxxxx Act, as may be amended from time to time; (b) such
information is in connection with a proposed or actual secondary market sale
related to a transaction of the Mortgagor for purposes of 16 C.F.R.
ss.313.14(a)(3); and (c) Seller is hereby prohibited from disclosing or using
any such information other than to carry out the express provisions of this
Agreement, or as otherwise permitted by applicable law;
(14) Seller's Origination. The Seller's decision to originate any
mortgage loan or to deny any mortgage loan application is an independent
decision based upon the Underwriting Guidelines, and is in no way made as a
result of Purchaser's decision to purchase, or not to purchase, or the price
Purchaser may offer to pay for, any such mortgage loan, if originated; and
(15) Fair Consideration. The consideration received by the Seller
upon the sale of the Mortgage Loans under this Agreement constitutes fair
consideration and reasonably equivalent value for the Mortgage Loans.
Section 3.02 Representations and Warranties of the Servicer. The
Servicer represents, warrants and covenants to the Purchaser that as of the
Funding Date or as of such date specifically provided herein:
(1) Ability to Service. Servicer has the facilities, procedures, and
experienced personnel necessary for the sound servicing of mortgage loans of the
same type as the Mortgage Loans. The Servicer is duly qualified, licensed,
registered and otherwise authorized under all applicable federal, state and
local laws, and regulations, if applicable, meets the minimum capital
requirements set forth by HUD, the OTS, the OCC or the FDIC, if applicable, and
is in good standing to enforce, originate, sell mortgage loans to, and service
mortgage loans in the jurisdiction wherein the Mortgaged Properties are located;
(2) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Servicer, before any court,
administrative agency or other tribunal asserting the invalidity of this
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Servicer, or in any
material impairment of the right or ability of the Servicer to carry on its
business substantially as now conducted, or in any material liability on the
part of the Servicer, or which would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Servicer contemplated herein, or which
would be likely to impair materially the ability of the Servicer to perform
under the terms of this Agreement;
(3) Collection Practices. The collection practices used by the
Servicer with respect to each Mortgage Note and Mortgage have been in all
respects legal, proper and prudent in the mortgage servicing business;
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(4) MERS. The Servicer is a member of MERS in good standing, and
will comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the MERS Mortgage Loans for as long as such
Mortgage Loans are registered with MERS;
(5) Non-solicitation. The Servicer agrees that it shall not solicit
any Mortgagors (in writing or otherwise) to refinance any of the Mortgage Loans;
provided that mass advertising or mailings (such as placing advertisements on
television, on radio, in magazines or in newspapers or including messages in
billing statements) that are not exclusively directed towards the Mortgagors
shall not constitute solicitation and shall not violate this covenant;
(6) Privacy. The Servicer agrees and acknowledges that as to all
nonpublic personal information received or obtained by it with respect to any
Mortgagor: (a) such information is and shall be held by Servicer in accordance
with all applicable law, including but not limited to the privacy provisions of
the Xxxxx-Xxxxx Bliley Act, as may be amended from time to time; (b) such
information is in connection with a proposed or actual secondary market sale
related to a transaction of the Mortgagor for purposes of 16 X.X.X.xx.
313.14(a)(3); and (c) Servicer is hereby prohibited from disclosing or using any
such information other than to carry out the express provisions of this
Agreement, or as otherwise permitted by applicable law; and
(7) Reasonable Servicing Fee. The Servicer acknowledges and agrees
that the Servicing Fee represents reasonable compensation for performing such
services and that the entire Servicing Fee shall be treated by the Servicer, for
accounting and tax purposes, as compensation for the servicing and
administration of the Mortgage Loans pursuant to this Agreement.
Section 3.03 Representations and Warranties as to Individual
Mortgage Loans. With respect to each Mortgage Loan, the applicable Seller hereby
makes the following representations and warranties to the Purchaser on which the
Purchaser specifically relies in purchasing such Mortgage Loan. Such
representations and warranties speak as of the Funding Date unless otherwise
indicated, but shall survive any subsequent transfer, assignment or conveyance
of such Mortgage Loans:
(1) Mortgage Loans as Described. Such Mortgage Loan complies with
the terms and conditions set forth herein, and all of the information set forth
in the related Mortgage Loan Schedule is complete, true and correct;
(2) Delivery to the Custodian. The Mortgage Note, the Mortgage, the
Assignment and any other documents required to be delivered with respect to each
Mortgage Loan pursuant to the Custodial Agreement, shall be delivered to the
Custodian all in compliance with the specific requirements of the Custodial
Agreement. With respect to each Mortgage Loan, the Seller will be in possession
of a complete Mortgage File in compliance with Exhibit 2 hereto, except for such
documents as will be delivered to the Custodian;
(3) Owner of Record. The Seller is the owner of record of each
Mortgage and the indebtedness evidenced by each Mortgage Note, except for the
Assignments of Mortgage
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which have been sent for recording, and upon recordation the Seller will be the
owner of record of each Mortgage and the indebtedness evidenced by each Mortgage
Note, and upon the sale of the Mortgage Loans to the Purchaser, the Seller will
retain the Mortgage Files with respect thereto in trust only for the purpose of
servicing and supervising the servicing of each Mortgage Loan;
(4) Payments Current. All payments required to be made up to the
related Closing Date for the Mortgage Loan under the terms of the Mortgage Note
have been made and credited. No payment required under the Mortgage Loan is 30
days or more delinquent nor has any payment under the Mortgage Loan been 30 days
or more delinquent at any time since the origination of the Mortgage Loan;
(5) No Outstanding Charges. There are no defaults in complying with
the terms of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable. The
Seller has not advanced funds, or induced, solicited or knowingly received any
advance of funds by a party other than the Mortgagor, directly or indirectly,
for the payment of any amount required under the Mortgage Loan, except for
interest accruing from the date of the Mortgage Note or date of disbursement of
the Mortgage Loan proceeds, whichever is earlier, to the day which precedes by
one month the related Due Date of the first installment of principal and
interest;
(6) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination except by a written instrument which has been
recorded, if necessary to protect the interests of the Purchaser, and which has
been delivered to the Custodian or to such other Person as the Purchaser shall
designate in writing, and the terms of which are reflected in the related
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the issuer of any related Primary Insurance
Policy and the title insurer, if any, to the extent required by the policy, and
its terms are reflected on the related Mortgage Loan Schedule, if applicable. No
Mortgagor has been released, in whole or in part, except in connection with an
assumption agreement, approved by the issuer of any related Primary Insurance
Policy and the title insurer, to the extent required by the policy, and which
assumption agreement is part of the Mortgage File delivered to the Custodian or
to such other Person as the Purchaser shall designate in writing and the terms
of which are reflected in the related Mortgage Loan Schedule;
(7) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part, 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;
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(8) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are provided for in the Underwriting Guidelines. If
required by the National Flood Insurance Act of 1968, as amended, each Mortgage
Loan is covered by a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration as in effect which
policy conforms with the Underwriting Guidelines. All individual insurance
policies contain a standard mortgagee clause naming the Seller and its
successors and assigns as mortgagee, and all premiums thereon have been paid.
The Mortgage obligates the Mortgagor thereunder to maintain the hazard insurance
policy at the Mortgagor's cost and expense, and on the Mortgagor's failure to do
so, authorizes the holder of the Mortgage to obtain and maintain such insurance
at such Mortgagor's cost and expense, and to seek reimbursement therefor from
the Mortgagor. Where required by state law or regulation, the Mortgagor has been
given an opportunity to choose the carrier of the required hazard insurance,
provided the policy is not a "master" or "blanket" hazard insurance policy
covering a condominium, or any hazard insurance policy covering the common
facilities of a planned unit development. The hazard insurance policy is the
valid and binding obligation of the insurer, is in full force and effect, and
will be in full force and effect and inure to the benefit of the Purchaser upon
the consummation of the transactions contemplated by this Agreement. The Seller
has not engaged in, and has no knowledge of the Mortgagor's having engaged in,
any act or omission which would impair the coverage of any such policy, the
benefits of the endorsement provided for herein, or the validity and binding
effect of either including, without limitation, no unlawful fee, commission,
kickback or other unlawful compensation or value of any kind has been or will be
received, retained or realized by any attorney, firm or other person or entity,
and no such unlawful items have been received, retained or realized by the
Seller;
(9) Compliance with Applicable Laws. Any and all requirements of any
federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
predatory and abusive lending, equal credit opportunity and disclosure laws
applicable to the Mortgage Loan, including, without limitation, any provisions
relating to a Prepayment Penalty, have been complied with, the consummation of
the transactions contemplated hereby will not involve the violation of any such
laws or regulations, and the Seller shall maintain in its possession, available
for the Purchaser's inspection, and shall deliver to the Purchaser upon demand,
evidence of compliance with all such requirements. This representation and
warranty is a Deemed Material and Adverse Representation;
(10) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the Mortgage, in whole
or in part, nor has any instrument been executed that would effect any such
release, cancellation, subordination or rescission. The Seller has not waived
the performance by the Mortgagor of any action, if the Mortgagor's failure to
perform such action would cause the Mortgage Loan to be in default, nor has the
Seller waived any default resulting from any action or inaction by the
Mortgagor;
(11) Valid First Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien on the Mortgaged Property, including all
buildings and improvements on the
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Mortgaged Property and all installations and mechanical, electrical, plumbing,
heating and air conditioning systems located in or annexed to such buildings,
and all additions, alterations and replacements made at any time with respect to
the foregoing. The lien of the Mortgage is subject only to:
(a) the lien of current real property taxes and assessments not yet
due and payable;
(b) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording
acceptable to prudent mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy delivered
to the originator of the Mortgage Loan and (a) specifically referred to or
otherwise considered in the appraisal made for the originator of the
Mortgage Loan or (b) which do not adversely affect the Appraised Value of
the Mortgaged Property set forth in such appraisal; and
(c) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the security
intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan establishes and
creates a valid, subsisting, enforceable and perfected first lien and first
priority security interest on the property described therein and the Seller has
full right to sell and assign the same to the Purchaser.
With respect to any Cooperative Loan, the related Mortgage is a
valid, subsisting and enforceable first priority security interest on the
related cooperative shares securing the Mortgage Note, subject only to (a) liens
of the related residential cooperative housing corporation for unpaid
assessments representing the Mortgagor's pro rata share of the related
residential cooperative housing corporation's payments for its blanket mortgage,
current and future real property taxes, insurance premiums, maintenance fees and
other assessments to which like collateral is commonly subject and (b) other
matters to which like collateral is commonly subject which do not materially
interfere with the benefits of the security interest intended to be provided by
the related Security Agreement;
(12) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor in
connection with a Mortgage Loan are genuine, and each is the legal, valid and
binding obligation of the maker thereof enforceable in accordance with its
terms. All parties to the Mortgage Note, the Mortgage and any other such related
agreement had legal capacity to enter into the Mortgage Loan and to execute and
deliver the Mortgage Note, the Mortgage and any such agreement, and the Mortgage
Note, the Mortgage and any other such related agreement have been duly and
properly executed by other such related parties. No fraud, error, omission,
misrepresentation, negligence or similar occurrence with respect to a Mortgage
Loan has taken place on the part of the Seller in connection with the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan. The documents, instruments and agreements
submitted for loan
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underwriting were not falsified and contain no untrue statement of material fact
or omit to state a material fact required to be stated therein or necessary to
make the information and statements therein not misleading. No fraud, error,
omission, misrepresentation, negligence or similar occurrence with respect to a
Mortgage Loan has taken place on the part of any Person, including without
limitation, the Mortgagor, any appraiser, any builder or developer, or any other
party involved in the origination of the Mortgage Loan or in the application for
any insurance in relation to such Mortgage Loan. The Seller has reviewed all of
the documents constituting the Servicing File and has made such inquiries as it
deems necessary to make and confirm the accuracy of the representations set
forth herein;
(13) Valid Execution of Documents. All parties to the Mortgage Note
and the Mortgage related to such Mortgage Loan had legal capacity to enter into
such Mortgage Loan and to execute and deliver the related Mortgage Note and the
related Mortgage and the related Mortgage Note and the related Mortgage have
been duly and properly executed by such parties; with respect to each
Cooperative Loan, all parties to the Mortgage Note and the Mortgage Loan had
legal capacity to execute and deliver the Mortgage Note, the Acceptance of
Assignment and Assumption of Lease Agreement, the Proprietary Lease, the Stock
Power, the Recognition Agreement, the Financing Statement and the Assignment of
Proprietary Lease and such documents have been duly and properly executed by
such parties; each Stock Power (i) has all signatures guaranteed or (ii) if all
signatures are not guaranteed, then such Cooperative Shares will be transferred
by the stock transfer agent of the Cooperative Corporation if the Seller
undertakes to convert the ownership of the collateral securing the related
Cooperative Loan;
(14) Full Disbursement of Proceeds. The Mortgage Loan has been
closed and the proceeds of the Mortgage Loan have been fully disbursed and there
is no requirement for future advances thereunder, and any and all requirements
as to completion of any on-site or off-site improvement and as to disbursements
of any escrow funds therefor have been complied with. All costs, fees and
expenses incurred in making or closing the Mortgage Loan and the recording of
the Mortgage were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(15) Ownership. The Seller is the sole owner of record and holder of
the Mortgage Loan and the indebtedness evidenced by each Mortgage Note and upon
the sale of the Mortgage Loans to the Purchaser, the Seller will retain the
Mortgage Files or any part thereof with respect thereto not delivered to the
Custodian, the Purchaser or the Purchaser's designee, in trust only for the
purpose of servicing and supervising the servicing of each Mortgage Loan. The
Mortgage Loan is not assigned or pledged, and the Seller has good, indefeasible
and marketable title thereto, and has full right to transfer and sell the
Mortgage Loan to the Purchaser free and clear of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or security interest, and
has full right and authority subject to no interest or participation of, or
agreement with, any other party, to sell and assign each Mortgage Loan pursuant
to this Agreement and following the sale of each Mortgage Loan, the Purchaser
will own such Mortgage Loan free and clear of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or security interest. The
Seller intends to relinquish all rights to possess, control and monitor the
Mortgage Loan. After the related Closing Date, the Seller will have no right to
modify or alter the terms of the sale of the Mortgage Loan and the Seller will
have no obligation or right to repurchase the Mortgage Loan or substitute
another Mortgage Loan, except as provided in this Agreement;
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(16) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (1) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2) either (i) organized
under the laws of such state, or (ii) qualified to do business in such state, or
(iii) a federal savings and loan association, a savings bank or a national bank
having a principal office in such state, or (3) not doing business in such
state;
(17) Title Insurance. With respect to a Mortgage Loan which is not a
Cooperative Loan, the Mortgage Loan is covered by an ALTA lender's title
insurance policy or other generally acceptable form of policy or insurance
acceptable under the Underwriting Guidelines and each such title insurance
policy is issued by a title insurer acceptable under the Underwriting Guidelines
and qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring the Seller, its successors and assigns, as to the first
priority lien of the Mortgage in the original principal amount of the Mortgage
Loan (or to the extent a Mortgage Note provides for negative amortization, the
maximum amount of negative amortization in accordance with the Mortgage),
subject only to the exceptions contained in clauses (a) and (b) of paragraph
(11) of this Subsection 3.03, and in the case of Adjustable Rate Mortgage Loans,
against any loss by reason of the invalidity or unenforceability of the lien
resulting from the provisions of the Mortgage providing for adjustment to the
Note Rate and Monthly Payment. Where required by state law or regulation, the
Mortgagor has been given the opportunity to choose the carrier of the required
mortgage title insurance. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress, and against encroachments by or upon
the Mortgaged Property or any interest therein. The Seller, its successor and
assigns, are the sole insureds of such lender's title insurance policy, and such
lender's title insurance policy is valid and remains in full force and effect
and will be in force and effect upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such lender's
title insurance policy, and no prior holder of the related Mortgage, including
the Seller, has done, by act or omission, anything which would impair the
coverage of such lender's title insurance policy, including without limitation,
no unlawful fee, commission, kickback or other unlawful compensation or value of
any kind has been or will be received, retained or realized by any attorney,
firm or other person or entity, and no such unlawful items have been received,
retained or realized by the Seller;
(18) No Defaults. Other than payments due but not yet 30 days or
more delinquent, there is no default, breach, violation or event which would
permit acceleration existing under the Mortgage or the Mortgage Note and no
event which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or event
which would permit acceleration, and neither the Seller nor any of its
affiliates nor any of their respective predecessors, have waived any default,
breach, violation or event which would permit acceleration;
(19) No Mechanics' Liens. There are no mechanics' or similar liens
or claims which have been filed for work, labor or material (and no rights are
outstanding that under law could give rise to such liens) affecting the related
Mortgaged Property which are or may be liens prior to, or equal or coordinate
with, the lien of the related Mortgage;
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(20) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the Mortgaged
Property lay wholly within the boundaries and building restriction lines of the
Mortgaged Property, and no improvements on adjoining properties encroach upon
the Mortgaged Property. No improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning law or regulation;
(21) Origination; Payment Terms. The Mortgage Loan was originated by
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act, a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or other similar institution which is supervised and examined by a federal or
state authority. Principal payments on the Mortgage Loan commenced no more than
seventy days after funds were disbursed in connection with the Mortgage Loan.
The Note Rate as well as, in the case of an Adjustable Rate Mortgage Loan, the
Lifetime Rate Cap and the Periodic Rate Cap and the Periodic Rate Floor are as
set forth on the related Mortgage Loan Schedule. The Note Rate is adjusted, with
respect to Adjustable Rate Mortgage Loans, on each Rate Adjustment Date to equal
the Index plus the Gross Margin (rounded up or down to the nearest 0.125%),
subject to the Periodic Rate Cap. The Mortgage Note is payable in equal monthly
installments of principal and interest, which installments of interest, with
respect to Adjustable Rate Mortgage Loans, are subject to change due to the
adjustments to the Note Rate on each Rate Adjustment Date, with interest
calculated and payable in arrears, sufficient to amortize the Mortgage Loan
fully by the stated maturity date, over an original term of not more than
fifteen years from commencement of amortization. Unless otherwise specified on
the related Mortgage Loan Schedule, the Mortgage Loan is payable on the first
day of each month. The Mortgage Loan by its original terms or any modification
thereof, does not provide for amortization beyond its scheduled maturity date;
(22) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, the
Mortgage contains an enforceable provision for the acceleration of the payment
of the unpaid principal balance of the Mortgage Loan in the event that the
Mortgaged Property is sold or transferred without the prior written consent of
the mortgagee thereunder;
(23) Prepayment Penalty. No Mortgage Loan is subject to any
prepayment penalty. This representation and warranty is a Deemed Material and
Adverse Representation;
(24) Mortgaged Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property. The Mortgaged Property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were intended
and each Mortgaged Property is in good repair. There have not been any
condemnation proceedings with respect to the Mortgaged Property and the Seller
has no knowledge of any such proceedings in the future;
(25) Customary Provisions. The Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby,
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including, (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. Upon default by a
Mortgagor on a Mortgage Loan and foreclosure on, or trustee's sale of, the
Mortgaged Property pursuant to the proper procedures, the holder of the Mortgage
Loan will be able to deliver good and merchantable title to the Mortgaged
Property. There is no homestead or other exemption available to a Mortgagor
which would interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage, subject to applicable
federal and state laws and judicial precedent with respect to bankruptcy and
right of redemption or similar law;
(26) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines (a
copy of which is attached to the related Assignment and Conveyance as Exhibit
C). The Mortgage Note and Mortgage are on forms acceptable to Xxxxxxx Mac or
Xxxxxx Mae and no representations have been made to a Mortgagor that are
inconsistent with the mortgage instruments used;
(27) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a Qualified Appraiser, duly appointed by the Seller, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of Xxxxxx Xxx or Xxxxxxx Mac and Title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 and the regulations
promulgated thereunder, all as in effect on the date the Mortgage Loan was
originated;
(28) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by the Purchaser to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(29) LTV, Primary Insurance Policy. No Mortgage Loan has an LTV
greater than 100%. Any Mortgage Loan that had at the time of origination an LTV
in excess of 80% is insured as to payment defaults by a Primary Insurance
Policy. Any Primary Insurance Policy in effect covers the related Mortgage Loan
for the life of such Mortgage Loan. All provisions of such Primary Insurance
Policy have been and are being complied with, such policy is in full force and
effect, and all premiums due thereunder have been paid. No action, inaction, or
event has occurred and no state of facts exists that has, or will result in the
exclusion from, denial of, or defense to coverage. Any Mortgage Loan subject to
a Primary Insurance Policy obligates the Mortgagor thereunder to maintain the
Primary Insurance Policy and to pay all premiums and charges in connection
therewith. The Note Rate for the Mortgage Loan as set forth on the related
Mortgage Loan Schedule is net of any such insurance premium;
(30) Occupancy of the Mortgaged Property. As of the related Closing
Date the Mortgaged Property is lawfully occupied under applicable law. All
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property and, with respect to
the use and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained from
the
-36-
appropriate authorities. Unless otherwise specified on the related Mortgage Loan
Schedule, the Mortgagor represented at the time of origination of the Mortgage
Loan that the Mortgagor would occupy the Mortgaged Property as the Mortgagor's
primary residence;
(31) Supervision and Examination by a Federal or State Authority.
Each Mortgage Loan either was (a) closed in the name of the PHH Mortgage, or (b)
closed in the name of another entity that is either a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or an institution which is supervised and examined by a federal or state
authority, or a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act (a "HUD
Approved Mortgagee"), and was so at the time such Mortgage Loan was originated
(PHH Mortgage or such other entity, the "Originator") or (c) closed in the name
of a loan broker under the circumstances described in the following sentence. If
such Mortgage Loan was originated through a loan broker, such Mortgage Loan met
the Originator's underwriting criteria at the time of origination and was
originated in accordance with the Originator's policies and procedures and the
Originator acquired such Mortgage Loan from the loan broker contemporaneously
with the origination thereof. The Mortgage Loans that the Trust is selling to
Purchaser were originated by or on behalf of PHH Mortgage and subsequently
assigned to the Trust;
(32) Adjustments. All of the terms of the related Mortgage Note
pertaining to interest rate adjustments, payment adjustments and adjustments of
the outstanding principal balance, if any, are enforceable and such adjustments
will not affect the priority of the lien of the related Mortgage; all such
adjustments on such Mortgage Loan have been made properly and in accordance with
the provisions of such Mortgage Loan;
(33) Insolvency Proceedings; Servicemembers Civil Relief Act. To the
best of the Seller's knowledge, the related Mortgagor is not the subject of any
Insolvency Proceeding;
(34) Servicemembers Civil Relief Act. The Mortgagor has not notified
the Seller, and the Seller has no knowledge of any relief requested or allowed
to the Mortgagor under the Servicemembers Civil Relief Act or other similar
state statute;
(35) Xxxxxx Mae/Xxxxxxx Mac Documents. Such Mortgage Loan was closed
on standard Xxxxxx Mae or Xxxxxxx Mac documents or on such documents otherwise
acceptable to them;
(36) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
any other similar provisions which may constitute a "buydown" provision. The
Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan
does not have a shared appreciation or other contingent interest feature;
(37) Recordation. Each original Mortgage was recorded and all
subsequent assignments of the original Mortgage (other than the assignment to
the Purchaser) have been
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recorded in the appropriate jurisdictions wherein such recordation is necessary
to perfect the lien thereof as against creditors of the Seller, or is in the
process of being recorded;
(38) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the applicable Cut-off Date have been consolidated with
the outstanding principal amount secured by the Mortgage, and the secured
principal amount, as consolidated, bears a single interest rate and single
repayment term. The lien of the Mortgage securing the consolidated principal
amount is expressly insured as having first lien priority by a title insurance
policy, an endorsement to the policy insuring the mortgagee's consolidated
interest or by other title evidence acceptable to Xxxxxx Mae and Xxxxxxx Mac.
The consolidated principal amount does not exceed the original principal amount
of the Mortgage Loan;
(39) Balloon Loans. Unless otherwise disclosed in the Offering
Materials or the Mortgage Loan Schedule, no Mortgage Loan has a balloon payment
feature. With respect to any Mortgage Loan with a balloon payment feature, the
Mortgage Note is payable in Monthly Payments based on a thirty year amortization
schedule and has a final Monthly Payment substantially greater than the
proceeding Monthly Payment which is sufficient to amortize the remaining
principal balance of the Mortgage Loan;
(40) Condominium Units/PUDs. If the residential dwelling on the
Mortgaged Property is a condominium unit or a unit in a planned unit development
(other than a de minimis planned unit development) such condominium or planned
unit development project meets the eligibility requirements of the PHH Guide;
(41) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan. No Mortgage Loan is covered by the Home Ownership and Equity Protection
Act of 1994 and no Mortgage Loan is in violation of any comparable state or
local law. The Mortgaged Property is not located in a jurisdiction where a
breach of this representation with respect to the related Mortgage Loan may
result in additional assignee liability to the Purchaser, as determined by
Purchaser in its reasonable discretion. This representation and warranty is a
Deemed Material and Adverse Representation;
(42) No Rehabilitation Loan. Unless otherwise disclosed in the
Offering Materials or the Mortgage Loan Schedule, no Mortgage Loan was made in
connection with (a) the construction or rehabilitation of a Mortgaged Property
or (b) facilitating the trade-in or exchange of a Mortgaged Property;
(43) No Adverse Conditions. The Seller has no knowledge of any
circumstances or condition with respect to the Mortgage, the Mortgage Property
(or with respect to a Cooperative Loan, the Acceptance of Assignment and
Assumption of Lease Agreement, the Cooperative Unit or the Cooperative Project),
the Mortgagor or the Mortgagor's credit standing that can reasonably be expected
to cause the Mortgage Loan to be an unacceptable investment, cause the Mortgage
Loan to become delinquent, or adversely affect the value of the Mortgage Loan;
(44) Scheduled Interest. Interest on each Mortgage Loan is
calculated on the basis of a 360-day year consisting of twelve 30-day months;
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(45) No Violation of Environmental Laws. To the best of the Seller's
knowledge, there is no pending action or proceeding directly involving the
Mortgaged Property in which compliance with any environmental law, rule or
regulation is an issue; there is no violation of any environmental law, rule or
regulation with respect to the Mortgage Property; and nothing further remains to
be done to satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property;
(46) Negative Amortization. Unless otherwise disclosed in the
Offering Materials or the Mortgage Loan Schedule, no Mortgage Loan is subject to
negative amortization;
(47) Cooperative Lien Search. With respect to each Cooperative Loan,
a Cooperative Lien Search has been made by a company competent to make the same
which company is acceptable to Xxxxxx Mae and qualified to do business in the
jurisdiction where the Cooperative Unit is located;
(48) Cooperative Loan - Proprietary Lease. With respect to each
Cooperative Loan, (i) the terms of the related Proprietary Lease is longer than
the terms of the Cooperative Loan, (ii) there is no provision in any Proprietary
Lease which requires the Mortgagor to offer for sale the Cooperative Shares
owned by such Mortgagor first to the Cooperative Corporation, (iii) there is no
prohibition in any Proprietary Lease against pledging the Cooperative Shares or
assigning the Proprietary Lease and (iv) the Recognition Agreement is on a form
of agreement published by the Aztech Document Systems, Inc. or includes
provisions which are no less favorable to the lender than those contained in
such agreement;
(49) Cooperative Loan - UCC Financing Statement. With respect to
each Cooperative Loan, each original UCC financing statement, continuation
statement or other governmental filing or recordation necessary to create or
preserve the perfection and priority of the first priority lien and security
interest in the Cooperative Shares and Proprietary Lease has been timely and
properly made. Any security agreement, chattel mortgage or equivalent document
related to the Cooperative Loan and delivered to the Mortgagor or its designee
establishes in the Mortgagor a valid and subsisting perfected first lien on and
security interest in the Mortgaged Property described therein, and the Mortgagor
has full right to sell and assign the same;
(50) Cooperative Loan- Acceptance of Assignment and Assumption of
Lease Agreement. With respect to each Cooperative Loan, each Acceptance of
Assignment and Assumption of Lease Agreement contains enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for the
realization of the benefits of the security provided thereby. The Acceptance of
Assignment and Assumption of Lease Agreement contains an enforceable provision
for the acceleration of the payment of the Unpaid Principal Balance of the
Mortgage Note in the event the Cooperative Unit is transferred or sold without
the consent of the holder thereof;
(51) Imaging. Each imaged document represents a true, complete, and
correct copy of the original document in all respects, including, but not
limited to, all signatures conforming with signatures contained in the original
document, no information having been added or deleted, and no imaged document
having been manipulated or altered in any manner.
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Each imaged document is clear and legible, including, but not limited to,
accurate reproductions of photographs. No original documents have been or will
be altered in any manner;
(52) Qualified Mortgage. The Mortgage Loan is a qualified mortgage
under Section 860G(a)(3) of the Code;
(53) No Adverse Selection. The Seller used no adverse selection
procedures in selecting the Mortgage Loans among the outstanding first lien
residential mortgagee loans owned by it which were available for inclusion in
the Mortgage Loans;
(54) Leaseholds. If the Mortgage Loan is secured by a long-term
residential lease, (1) the lessor under the lease holds a fee simple interest in
the land; (2) the terms of such lease expressly permit the mortgaging of the
leasehold estate, the assignment of the lease without the lessor's consent and
the acquisition by the holder of the Mortgage of the rights of the lessee upon
foreclosure or assignment in lieu of foreclosure or provide the holder of the
Mortgage with substantially similar protections; (3) the terms of such lease do
not (a) allow the termination thereof upon the lessee's default without the
holder of the Mortgage being entitled to receive written notice of, and
opportunity to cure, such default, (b) allow the termination of the lease in the
event of damage or destruction as long as the Mortgage is in existence, (c)
prohibit the holder of the Mortgage from being insured (or receiving proceeds of
insurance) under the hazard insurance policy or policies relating to the
Mortgaged Property or (d) permit any increase in rent other than pre-established
increases set forth in the lease; (4) the original term of such lease is not
less than 15 years; (5) the term of such lease does not terminate earlier than
five years after the maturity date of the Mortgage Note; and (6) the Mortgaged
Property is located in a jurisdiction in which the use of leasehold estates in
transferring ownership in residential properties is a widely accepted practice;
(55) Assumability. With respect to each Adjustable Rate Mortgage
Loan, the Mortgage Loan Documents provide that after the related first Rate
Adjustment Date, a related Mortgage Loan may only be assumed if the party
assuming such Mortgage Loan meets certain credit requirements stated in the
Mortgage Loan Documents;
(56) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by,
and the Seller has complied with, all applicable law with respect to the making
of the Mortgage Loans. The Seller shall maintain such statement in the Mortgage
File;
(57) No Defense to Insurance Coverage. No action has been taken or
failed to be taken, no event has occurred and no state of facts exists or has
existed on or prior to the related Funding Date (whether or not known to the
Seller on or prior to such date) which has resulted or will result in an
exclusion from, denial of, or defense to coverage under any primary mortgage
insurance (including, without limitation, any exclusions, denials or defenses
which would limit or reduce the availability of the timely payment of the full
amount of the loss otherwise due thereunder to the insured), provided this shall
not include the failure of such insurer to pay by reason of such insurer's
breach of such insurance policy or such insurer's financial inability to pay;
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(58) Prior Servicing. Each Mortgage Loan has been serviced in
compliance with Accepted Servicing Practices;
(59) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Seller to the Purchaser, that Seller has full right and
authority and is not precluded by law or contract from furnishing such
information to the Purchaser and the Purchaser is not precluded from furnishing
the same to any subsequent or prospective purchaser of such Mortgage. The Seller
has and shall in its capacity as servicer, for each Mortgage Loan, fully
furnished, in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (e.g., favorable and unfavorable)
on its borrower credit files to Equifax, Experian and Trans Union Credit
Information Company (three of the credit repositories), on a monthly basis. This
representation and warranty is a Deemed Material and Adverse Representation;
(60) Convertible Loans. With respect to ARM Loans, unless otherwise
set forth in the Mortgage Loan Schedule, the Mortgage Loan is not a Convertible
Mortgage Loan;
(61) Type of Mortgaged Property. With respect to a Mortgage Loan
that is not a Cooperative Loan and is not secured by an interest in a leasehold
estate, the Mortgaged Property is a fee simple estate that consists of a single
parcel of real property with a detached single family residence erected thereon,
or a two- to four-family dwelling, or an individual residential condominium unit
in a condominium project, or an individual unit in a planned unit development,
or an individual unit in a residential cooperative housing corporation;
provided, however, that any condominium unit, planned unit development or
residential cooperative housing corporation shall conform with the Underwriting
Guidelines. No portion of the Mortgaged Property (or underlying Mortgaged
Property, in the case of a Cooperative Loan) is used for commercial purposes,
and since the date of origination, no portion of the Mortgaged Property has been
used for commercial purposes; provided, that Mortgaged Properties which contain
a home office shall not be considered as being used for commercial purposes as
long as the Mortgaged Property has not been altered for commercial purposes and
is not storing any chemicals or raw materials other than those commonly used for
homeowner repair, maintenance and/or household purposes. None of the Mortgaged
Properties are Manufactured Homes, log homes, mobile homes, geodesic domes or
other unique property types. This representation and warranty is a Deemed
Material and Adverse Representation;
(62) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in clause (j) above;
(63) Acceptable Investment. There are no circumstances or conditions
with respect to the Mortgage, the Mortgaged Property, the Mortgagor, the
Mortgage File or the Mortgagor's credit standing that can reasonably be expected
to cause private institutional investors who invest in prime mortgage loans
similar to the Mortgage Loan to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage Loan to become delinquent, or adversely affect
the value or marketability of the Mortgage Loan, or cause the Mortgage Loan to
prepay during any period materially faster or slower than the mortgage loans
originated by the Seller generally. No Mortgaged Property is located in a state,
city, county or other local
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jurisdiction which the Buyer has determined in its sole good faith discretion
would cause the related Mortgage Loan to be ineligible for whole loan sale or
securitization in a transaction consistent with the prevailing sale and
securitization industry (including, without limitation, the practice of the
rating agencies) with respect to substantially similar mortgage loans;
(64) Transfer of Mortgage Loans. The Assignment (except with respect
to any Mortgage that has been recorded in the name of MERS or its designee) with
respect to each Mortgage Loan is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged Property is
located;
(65) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination, servicing and collection practices used by the
Seller with respect to the Mortgage Loan have been in all respects in compliance
with Accepted Servicing Practices, applicable laws and regulations, and have
been in all respects legal and proper. With respect to escrow deposits and
Escrow Payments, all such payments are in the possession of, or under the
control of, the Seller and there exist no deficiencies in connection therewith
for which customary arrangements for repayment thereof have not been made. All
Escrow Payments have been collected in full compliance with state and federal
law and the provisions of the related Mortgage Note and Mortgage. An escrow of
funds is not prohibited by applicable law and has been established in an amount
sufficient to pay for every item that remains unpaid and has been assessed but
is not yet due and payable. No escrow deposits or Escrow Payments or other
charges or payments due the Seller have been capitalized under the Mortgage or
the Mortgage Note. All Note Rate adjustments have been made in strict compliance
with state and federal law and the terms of the related Mortgage and Mortgage
Note on the related Rate Adjustment Date. If, pursuant to the terms of the
Mortgage Note, another index was selected for determining the Note Rate, the
same index was used with respect to each Mortgage Note which required a new
index to be selected, and such selection did not conflict with the terms of the
related Mortgage Note. The Seller executed and delivered any and all notices
required under applicable law and the terms of the related Mortgage Note and
Mortgage regarding the Note Rate and the Monthly Payment adjustments. Any
interest required to be paid pursuant to state, federal and local law has been
properly paid and credited;
(66) Conversion to Fixed Interest Rate. The Mortgage Loan does not
contain a provision whereby the Mortgagor is permitted to convert the Note Rate
from an adjustable rate to a fixed rate;
(67) Other Insurance Policies; No Defense to Coverage. No action,
inaction or event has occurred and no state of facts exists or has existed on or
prior to the Closing Date that has resulted or will result in the exclusion
from, denial of, or defense to coverage under any applicable hazard insurance
policy, Primary Insurance Policy or bankruptcy bond (including, without
limitation, any exclusions, denials or defenses which would limit or reduce the
availability of the timely payment of the full amount of the loss otherwise due
thereunder to the insured), irrespective of the cause of such failure of
coverage. The Seller has caused or will cause to be performed any and all acts
required to preserve the rights and remedies of the Purchaser in any insurance
policies applicable to the Mortgage Loans including, without limitation, any
necessary notifications of insurers, assignments of policies or interests
therein, and establishments of coinsured, joint loss payee and mortgagee rights
in favor of the Purchaser.
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In connection with the placement of any such insurance, no commission, fee, or
other compensation has been or will be received by the Seller or by any officer,
director, or employee of the Seller or any designee of the Seller or any
corporation in which the Seller or any officer, director, or employee had a
financial interest at the time of placement of such insurance;
(68) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(69) Escrow Analysis. If applicable, with respect to each Mortgage,
the Seller has within the last twelve months (unless such Mortgage was
originated within such twelve month period) analyzed the required Escrow
Payments for each Mortgage and adjusted the amount of such payments so that,
assuming all required payments are timely made, any deficiency will be
eliminated on or before the first anniversary of such analysis, or any overage
will be refunded to the Mortgagor, in accordance with RESPA and any other
applicable law;
(70) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the ground lease
will not terminate earlier than five years after the maturity date of the
Mortgage Loan; (3) the ground lease does not provide for termination of the
lease in the event of lessee's default without the mortgagee being entitled to
receive written notice of, and a reasonable opportunity to cure the default; (4)
the ground lease permits the mortgaging of the related Mortgaged Property; (5)
the ground lease protects the mortgagee's interests in the event of a property
condemnation; (6) all ground lease rents, other payments, or assessments that
have become due have been paid; and (7) the use of leasehold estates for
residential properties is a widely accepted practice in the jurisdiction in
which the Mortgaged Property is located;
(71) Single-premium credit life insurance policy. No Mortgagor was
required to purchase any single premium credit insurance policy (e.g., life,
mortgage, disability, property, accident, unemployment or health insurance
product) or debt cancellation agreement as a condition of obtaining the
extension of credit. No Mortgagor obtained a prepaid single premium credit
insurance policy (e.g., life, mortgage, disability, property, accident,
unemployment, mortgage or health insurance) in connection with the origination
of the Mortgage Loan. No proceeds from any Mortgage Loan were used to purchase
single premium credit insurance policies or debt cancellation agreements as part
of the origination of, or as a condition to closing, such Mortgage Loan. This
representation and warranty is a Deemed Material and Adverse Representation;
(72) Tax Service Contract. Each Mortgage Loan is covered by a paid
in full, life of loan, tax service contract issued by First American Real Estate
Tax Service, and such contract is transferable;
(73) Origination. No predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to the
ability of the Mortgagor to repay and the extension of credit which has no
apparent benefit to the Mortgagor, were employed in the origination of the
Mortgage Loan;
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(74) Cooperative Loans. With respect to a Mortgage Loan that is a
Cooperative Loan, the stock that is pledged as security for the Mortgage Loan is
held by a person as a tenant-stockholder (as defined in Section 216 of the Code)
in a cooperative housing corporation (as defined in Section 216 of the Code);
(75) Mortgagor Bankruptcy. On or prior to the date 60 days after the
related Closing Date, the Mortgagor has not filed and will not file a bankruptcy
petition or has not become the subject and will not become the subject of
involuntary bankruptcy proceedings or has not consented to or will not consent
to the filing of a bankruptcy proceeding against it or to a receiver being
appointed in respect of the related Mortgaged Property;
(76) No Prior Offer. The Mortgage Loan has not previously been
offered for sale;
(77) Georgia Fair Lending Act. There is no Mortgage Loan that was
originated (or modified) on or after October 1, 2002 and before March 7, 2003
which is secured by property located in the State of Georgia. There is no
Mortgage Loan that was originated on or after March 7, 2003 that is a "high cost
home loan" as defined under the Georgia Fair Lending Act. This representation
and warranty is a Deemed Material and Adverse Representation;
(78) No Arbitration. No Mortgagor with respect to any Mortgage Loan
originated on or after August 1, 2004 agreed to submit to arbitration to resolve
any dispute arising out of or relating in any way to the mortgage loan
transaction. This representation and warranty is a Deemed Material and Adverse
Representation;
(79) Flood Service Contract. Each Mortgage Loan is covered by a paid
in full, life of loan, flood service contract issued by First American Real
Estate Tax Service or Fidelity, and such contract is transferable;
(80) Origination Practices/No Steering. No Mortgagor was encouraged
or required to select a mortgage loan product offered by the Mortgage Loan's
originator which is a higher cost product designed for less creditworthy
borrowers, unless at the time of the Mortgage Loan's origination, such Mortgagor
did not qualify taking into account credit history and debt-to-income ratios for
a lower-cost credit product then offered by the Mortgage Loan's originator or
any affiliate of the Mortgage Loan's originator. If, at the time of loan
application, the Mortgagor may have qualified for a lower-cost credit product
then offered by any mortgage lending affiliate of the Mortgage Loan's
originator, the Mortgage Loan's originator referred the Mortgagor's application
to such affiliate for underwriting consideration. This representation and
warranty is a Deemed Material and Adverse Representation;
(81) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs, in part, objective
mathematical principles which relate the Mortgagor's income, assets and
liabilities to the proposed payment and such underwriting methodology does not
rely on the extent of the Mortgagor's equity in the collateral as the principal
determining factor in approving such credit extension. Such underwriting
methodology confirmed that at the time of origination (application/approval) the
Mortgagor had
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a reasonable ability to make timely payments on the Mortgage Loan. This
representation and warranty is a Deemed Material and Adverse Representation;
(82) Points and Fees. No Mortgagor was charged "points and fees"
(whether or not financed) in an amount greater than (i) $1,000, or (ii) 5% of
the principal amount of such Mortgage Loan, whichever is greater. For purposes
of this representation, such 5% limitation is calculated in accordance with
Xxxxxx Mae's anti-predatory lending requirements as set forth in the Xxxxxx Mae
Guides and "points and fees" (x) include origination, underwriting, broker and
finder fees and charges that the mortgagee imposed as a condition of making the
Mortgage Loan, whether they are paid to the mortgagee or a third party; and (y)
exclude bona fide discount points, fees paid for actual services rendered in
connection with the origination of the Mortgage Loan (such as attorneys' fees,
notaries fees and fees paid for property appraisals, credit reports, surveys,
title examinations and extracts, flood and tax certifications, and home
inspections), the cost of mortgage insurance or credit-risk price adjustments,
the costs of title, hazard, and flood insurance policies, state and local
transfer taxes or fees, escrow deposits for the future payment of taxes and
insurance premiums, and other miscellaneous fees and charges that, in total, do
not exceed 0.25% of the principal amount of such Mortgage Loan. This
representation and warranty is a Deemed Material and Adverse Representation; and
(83) Fees Charges. All points, fees and charges (including finance
charges) and whether or not financed, assessed, collected or to be collected in
connection with the origination and servicing of each Mortgage Loan have been
disclosed in writing to the Mortgagor in accordance with applicable state and
federal law and regulation. This representation and warranty is a Deemed
Material and Adverse Representation.
Section 3.04 Repurchase and Substitution. It is understood and
agreed that the representations and warranties set forth in Sections 3.01, 3.02
and 3.03 shall survive the sale of the Mortgage Loans to the Purchaser and shall
inure to the benefit of the Purchaser, notwithstanding any restrictive or
qualified endorsement on any Mortgage Note or Assignment or the examination of
any Mortgage File.
Upon discovery by either of the Sellers or the Purchaser of a breach
of any of the representations and warranties contained in Sections 3.01, 3.02 or
3.03 that materially and adversely affects the interest of the Purchaser (or
that materially and adversely affects the interests of the Purchaser in the
related Mortgage Loan, in the case of a representation or warranty relating to a
particular Mortgage Loan), the party discovering such breach shall give prompt
written notice to the other.
Unless permitted a greater period of time to cure as set forth in
Section 2.04, the applicable Seller shall have a period of 60 days from the
earlier of either discovery by or receipt of written notice from the Purchaser
to the Seller of any breach of any of the representations and warranties
contained in Sections 3.01, 3.02 or 3.03 that materially and adversely affects
the interest of the Purchaser (or that materially and adversely affects the
interests of the Purchaser in the related Mortgage Loan, in the case of a
representation or warranty relating to a particular Mortgage Loan) (a "Defective
Mortgage Loan"; provided that "Defective Mortgage Loan" shall also include (a)
any Mortgage Loan treated or designated as such in accordance with Section 2.04
and (b) any Mortgage Loan regarding which the Mortgagor fails to make the first
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regularly scheduled payment of principal and interest within 30 days of its Due
Date) within which to correct or cure such breach. If such breach can ultimately
be cured but is not reasonably expected to be cured within the 60-day period,
then the applicable Seller shall have such additional time, if any, as is
reasonably determined by the Purchaser to cure such breach, provided that the
Seller has commenced curing or correcting such breach and is diligently pursuing
same. Notwithstanding anything to the contrary contained herein, (i) within
sixty (60) days after the earlier of either discovery by, or notice to, the
Seller of any breach of the representation and warranty set forth in clause (52)
of Subsection 3.03, the Seller shall repurchase such Mortgage Loan at the
Repurchase Price and (ii) any breach of a Deemed Material and Adverse
Representation shall automatically be deemed to materially and adversely affect
the value of the Mortgage Loans or the interest of the Purchaser therein. Each
Seller hereby covenants and agrees with respect to each Mortgage Loan conveyed
by it that, if any breach relating thereto cannot be corrected or cured within
the applicable cure period or such additional time, if any, as is reasonably
determined by the Purchaser, then such Seller shall, at the direction of the
Purchaser, repurchase the Defective Mortgage Loan at the applicable Repurchase
Price. Notwithstanding anything to the contrary contained herein, if the first
regularly scheduled payment of principal and interest due under any Mortgage
Loan has been delinquent more than 30 days, the Purchaser may, by written notice
to the applicable Seller, require that the Seller repurchase the related
Mortgage Loan. However, if the Seller provides evidence that the delinquency was
due to a servicing setup error, no repurchase shall be required. Within 10
Business Days following the delivery of any such written notice from the
Purchaser, the applicable Seller shall repurchase the specified Mortgage Loan by
paying the Repurchase Price therefor by wire transfer of immediately available
funds directly to the Purchaser's Account.
Except with respect to any breach of the representation and warranty
set forth in clause (52) of Subsection 3.03, the applicable Seller may, at its
option and assuming that such Seller has a Qualified Substitute Mortgage Loan or
Qualified Substitute Mortgage Loans, rather than repurchase the Mortgage Loan as
provided above, remove such Mortgage Loan ("Deleted Mortgage Loan") and
substitute in its place a Qualified Substitute Mortgage Loan or Qualified
Substitute Mortgage Loans, provided that no such substitution shall be effected
after the Mortgage Loan has been conveyed as part of a Sale transaction as
described in Section 3.05 hereof and no such substitution shall be effected more
than 180 days after the related Funding Date. If the applicable Seller has no
Qualified Substitute Mortgage Loan, it shall repurchase the Defective Mortgage
Loan.
As to any Deleted Mortgage Loan for which the applicable Seller
substitutes a Qualified Substitute Mortgage Loan or Qualified Substitute
Mortgage Loans, the applicable Seller shall effect such substitution by
delivering to the Purchaser or its designee for such Qualified Substitute
Mortgage Loan or Qualified Substitute Mortgage Loans the Legal Documents as are
required by Section 2. In the event of a repurchase or substitution, the Seller
shall, simultaneously with such reassignment, give written notice (by
telecopier, electronically or otherwise) to the Purchaser that such repurchase
or substitution has taken place, amend the related Mortgage Loan Schedule to
reflect the withdrawal of the Deleted Mortgage Loan from this Agreement, and, in
the case of substitution, identify the Qualified Substitute Mortgage Loan or
Qualified Substitute Mortgage Loans and amend the related Mortgage Loan Schedule
to reflect the addition of such Qualified Substitute Mortgage Loan or Qualified
Substitute Mortgage
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Loans to this Agreement. Upon such substitution, such Qualified Substitute
Mortgage Loan or Qualified Substitute Mortgage Loans shall be subject to the
terms of this Agreement in all respects, and the applicable Seller shall be
deemed to have made with respect to such Qualified Substitute Mortgage Loan or
Qualified Substitute Mortgage Loans, as of the date of substitution, the
covenants, representations and warranties set forth in Sections 3.01, 3.02 and
3.03. The Seller shall effect such substitution by delivering to the Custodian
for such Qualified Substitute Mortgage Loan the documents required by Section
2.03, with the Mortgage Note endorsed as required by Section 2.03. No
substitution will be made in any calendar month after the Determination Date for
such month.
For any month in which the applicable Seller substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
applicable Seller will determine the amount (if any) by which the aggregate
principal balance of all such Qualified Substitute Mortgage Loans as of the date
of substitution (after application of scheduled principal payments due in the
month of substitution which have been received or as to which an advance has
been made) is less than the aggregate outstanding principal balance of all such
Deleted Mortgage Loans. The amount of such shortfall shall be paid by the
applicable Seller on the date of such substitution) by wire transfer of
immediately available funds directly to the Purchaser's Account.
Any repurchase of a Defective Mortgage Loan required hereunder shall
be accomplished by payment of the applicable Repurchase Price within 3 Business
Days of expiration of the applicable time period referred to above in paragraph
3.04 by wire transfer of immediately available funds directly to the Purchaser's
Account. It is understood and agreed that the obligations of a Seller (a) set
forth in this Section 3.04 to cure any breach of such Seller's representations
and warranties contained in Sections 3.01, 3.02 and 3.03 or to repurchase the
Defective Mortgage Loan or Defective Mortgage Loans and (b) set forth in Section
9.01 to indemnify the Indemnified Parties in connection with any breach of a
Seller's representations and warranties contained in Sections 3.01, 3.02 and
3.03 shall constitute the sole remedies of the Purchaser respecting a breach of
such representations and warranties.
The parties further agree that, in recognition of the Trust's rights
against PHH Mortgage with respect to the Mortgage Loans acquired by it from PHH
Mortgage and conveyed to the Purchaser hereunder, the Purchaser shall have the
right to cause PHH Mortgage to repurchase directly any Defective Mortgage Loan
(other than as a result of a breach by the Trust of Section 3.03(3) or 3.03(16)
hereof, in which case the Purchaser shall have the right to cause the Trust to
repurchase directly the Defective Mortgage Loan) acquired hereunder by the
Purchaser from the Trust.
Section 3.05 Removal of Mortgage Loans from Inclusion Under this
Agreement Upon an Agency Transfer, Whole-Loan Transfer or a Securitization
Transaction on One or More Reconstitution Dates. Without incurring undue effort
or any cost except the Seller's overhead or employees' salaries, each Seller
shall take reasonable steps to assist the Purchaser, if the Purchaser so
requests by 15 days' advance written notice to the related Seller or Sellers (it
is agreed that electronic mail shall be considered valid notification if not
followed by verbal communication by the Purchaser to the related Seller or
Sellers), in re-selling the Mortgage
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Loans in (i) an Agency Transfer, (ii) a Whole Loan Transfer or (iii) a
Securitization Transaction (each, a "Sale") in each case retaining the Servicer
as the servicer or subservicer thereof, or as applicable the "seller/servicer."
Unless otherwise agreed to between the Purchaser and the Servicer,
the Purchaser shall give the Servicer 15 days notice of any Sale. The Servicer
shall cooperate with the Purchaser in connection with each Sale in accordance
with this Section. In connection therewith the Servicer shall:
(1) negotiate in good faith and timely execute any Reconstitution
Agreements, required by Purchaser to effectuate the foregoing; provided such
agreements create no materially greater obligation or cost on the part of the
Servicer than otherwise set forth in this Agreement;
(2) represent to the Purchaser, the depositor, the trustee, and the
initial purchaser of the securities issued in connection with any Sale that: (1)
that the Servicer has serviced the Mortgage Loans in accordance with the terms
of this Agreement, and has otherwise complied with all covenants and obligations
hereunder, and (2) that the Servicer has taken no action that would, nor omitted
to take any required action the omission of which would, have the effect of
impairing any mortgage insurance or guarantee on the Mortgage Loans. The
Servicer also agrees to represent the accuracy of any information provided to
the Purchaser by the Servicer for inclusion in any prospectus supplement,
offering memorandum or term sheet prepared in connection with any Sale;
(3) provide as applicable:
(a) any and all information regarding delinquencies and defaults
with respect to Servicer's Mortgage Loan portfolio and appropriate
verification of information which may be reasonably available to the
Servicer, whether through letters of its auditors and counsel or
otherwise, as the Purchaser shall request;
(b) such additional statements, certificates or other similar
documents of the Servicer or reports from the Servicer's accountants in
connection with a Securitization Transaction and in substance as required
by applicable law; and
(c) such additional representations, warranties, covenants, opinions
of counsel, letters from auditors, financial description of the Servicer
as servicer for inclusion in any offering documents to be distributed to
potential investors in connection with a Sale with respect to the Mortgage
Loans, and certificates of public officials or officers of the Servicer as
are reasonably believed necessary by the trustee, any Rating Agency, the
Purchaser, as the case may be, in connection with such Sale. The Purchaser
shall pay all third party costs associated with the preparation of such
information;
(4) enter into any other servicing, custodial or other similar
agreements, that are consistent with the provisions of this Agreement, and which
contain such provisions as are customary in securitizations rated "AAA"
(including a securitization involving a REMIC);
(5) restate the representations and warranties contained in Article
III hereof as of the closing date of such Sale; provided, however, that with
respect to the representations and
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warranties set forth in Section 3.03 (4), (20), (21), (25), (31), and (58), the
Seller or Servicer may make such additional qualifications as are reasonably
necessary to make such representations and warranties accurate at the time of
such restatement;
(6) provide such opinions of counsel as are customary in such
transactions, provided, however, that any opinion of outside counsel shall be
provided at Purchaser's expense;
(7) to execute, deliver and satisfy all conditions set forth in any
indemnity agreement required by the Purchaser or any participant in such Sale,
including, without limitation, an Indemnification and Contribution Agreement in
substantially the form attached hereto as Exhibit 13; and
(8) provide Xxxxxxxx-Xxxxx certification in the form of Exhibit 11.
In connection with a Securitization Transaction, the Purchaser may
be required to engage a master servicer or trustee to determine the allocation
of payments to and make remittances to the certificateholders, at the
Purchaser's sole cost and expense. In the event that a master servicer or
trustee is requested by the Purchaser to determine the allocation of payments
and to make remittances to the certificateholders, the Servicer agrees to
service the Mortgage Loans in accordance with the reasonable and customary
requirements of such Securitization Transaction, which may include the
Servicer's acting as a subservicer in a master servicing arrangement. With
respect to the then owners of the Mortgage Loans, the Servicer shall thereafter
deal solely with such master servicer or trustee, as the case may be with
respect to such Mortgage Loans which are subject to the Securitization
Transaction and shall not be required to deal with any other party with respect
to such Mortgage Loans. The cost of such Securitization Transaction shall be
borne by the Purchaser, other than the Seller's overhead or employees' salaries.
The Servicer shall indemnify each Indemnified Party and hold each of
them harmless from and against any losses, damages, liabilities, penalties,
fines, forfeitures, reasonable and necessary legal fees and related costs,
judgments, and any other costs, fees and expenses that each of them may sustain
arising from any false statements or omissions with respect to information
provided by or on behalf of the Servicer in connection with any Sale.
In the event the Purchaser has elected to have the Servicer hold
record title to the Mortgages, prior to a Reconstitution Date the Servicer or
its designee shall prepare an Assignment of the Mortgage in blank from the
Servicer, acceptable to Xxxxxx Mae or Xxxxxxx Mac, as applicable, the trustee or
such third party, as the case may be, for each Mortgage Loan that is part of a
Sale and shall pay all preparation and recording costs associated therewith. The
Servicer shall execute each Assignment of the Mortgage, track such Assignments
of the Mortgage to ensure they have been recorded and deliver them as required
by Xxxxxx Mae or Xxxxxxx Mac, as applicable, the trustee or such third party, as
the case may be, upon the Servicer's receipt thereof. Additionally, the Servicer
shall prepare and execute, at the direction of the Purchaser, any note
endorsements in connection with any and all Reconstitution Agreements.
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All Mortgage Loans not sold or transferred pursuant to a Sale shall
remain subject to this Agreement.
With respect to any Mortgage Loans sold in a Securitization
Transaction where the Servicer remains as the servicer, the Servicer agrees that
on or before March 1st each year following the year such Securitization
Transaction occurs, the Servicer shall deliver to the depositor and the trustee,
a certification in the form attached as Exhibit 11 hereto, executed by a senior
officer of the Servicer in charge of servicing for use in connection with any
Form 10-K to be filed with the Securities and Exchange Commission with respect
to the securitization trust. The obligation to provide such certification will
terminate to the extent the related securitization trust's obligation to file
reports under the Exchange Act terminates. The Servicer shall indemnify and hold
harmless the Indemnified Parties from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses arising out of or based upon any
breach of the Servicer's obligations under this paragraph or the Servicer's
material misstatement or omission, bad faith or willful misconduct in connection
therewith.
Notwithstanding any provisions of this Agreement to the contrary,
all Mortgage Loans sold or transferred to Xxxxxx Mae or Xxxxxxx Mac shall be
serviced in accordance with the Xxxxxx Mae Guide or the Xxxxxxx Mac Servicing
Guide, as applicable, as the same may be amended from time to time. The Servicer
further agrees that it will service the related Mortgage Loans in accordance
with the terms of any Xxxxxx Mae or Xxxxxxx Mac requirements which are in
addition to those set forth in the Xxxxxx Mae Guide or the Xxxxxxx Mac Servicing
Guide. The Servicer acknowledges that the Purchaser may from to time sell or
transfer certain of the Mortgage Loans to Xxxxxx Mae and/ or Xxxxxxx Mac or
deliver certain securities secured by the Mortgage Loans to Xxxxxx Mae or
Xxxxxxx Mac to be guaranteed. In the event such sale or delivery occurs, the
Servicer agrees that it shall deliver to Xxxxxx Mae or Xxxxxxx Mac, all reports,
certificates, and other documentation required by each such agency and that it
shall remit to Xxxxxx Mae or Xxxxxxx Mac, as applicable, all amounts required to
be remitted in accordance with such agency's guaranty program. The Purchaser and
the Servicer agree that any Mortgage Loans sold by the Purchaser to Xxxxxx Mae,
will be managed in accordance with the Process Guidelines set forth in Exhibit
12 hereto. The Servicer acknowledges that the requirements of the Process
Guidelines are in addition to the Servicer's obligations to service the Loans in
accordance with the Xxxxxx Xxx Guide and Accepted Servicing Practices.
Section 3.06 Review of Mortgage Loans. From the related Funding Date
until the date 30 days after the related Funding Date, the Purchaser shall have
the right to review the Mortgage Files and obtain BPOs on the Mortgaged
Properties relating to the Mortgage Loans purchased on the related Funding Date,
with the results of such BPO reviews to be communicated to the Seller for a
period up to 30 days after the related Funding Date. In addition, the Purchaser
shall have the right to reject any Mortgage Loan which in the Purchaser's sole
determination (i) fails to conform to the PHH Guide, (ii) is not an acceptable
credit risk, or (iii) the value which based on the related BPO varies by more
than plus or minus 15% from the lesser of (A) the original appraised value of
the Mortgaged Property or (B) the purchase price of the Mortgaged Property. In
the event the Purchaser so rejects any Mortgage Loan, the Seller shall
repurchase the rejected Mortgage Loan at the Repurchase Price in the manner
prescribed in Section 3.04 upon receipt of notice from the Purchaser of the
rejection of such Mortgage Loan.
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Any rejected Mortgage Loan shall be removed from the related Mortgage Loan
Schedule. The Seller shall make available all files required by Purchaser in
order to complete its review. To the extent that during the course of the
Purchaser's initial review, the Purchaser discovers that the Mortgage Loans do
not otherwise comport with the terms of the PHH Guide or this Agreement, the
Purchaser shall have the right to carry out additional due diligence reviews,
which additional due diligence shall be at the expense of the Seller.
Purchaser's decision to increase its level of due diligence review or obtain
additional BPO's or other property evaluations is at its sole discretion. The
additional reviews may be for any reason including but not limited to credit
quality, property valuations, and data integrity. Any review performed by the
Purchaser prior to the related Funding Date shall not limit the Purchaser's
rights or the Seller's obligations under this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER AND CONDITIONS PRECEDENT TO FUNDING
Section 4.01 Representations and Warranties.
The Purchaser represents, warrants and covenants to the Seller that
as of each Funding Date or as of such date specifically provided herein:
(1) Due Organization. The Purchaser is an entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, and has all licenses necessary to carry on its business now being
conducted and is licensed, qualified and in good standing under the laws of each
state where a Mortgaged Property is located or is otherwise exempt under
applicable law from such qualification or is otherwise not required under
applicable law to effect such qualification; no demand for such qualification
has been made upon the Purchaser by any state having jurisdiction and in any
event the Purchaser is or will be in compliance with the laws of any such state
to the extent necessary to enforce each Mortgage Loan.
(2) Due Authority. The Purchaser had the full power and authority
and legal right to acquire the Mortgage Loans that it acquired. The Purchaser
has the full power and authority to hold each Mortgage Loan, to sell each
Mortgage Loan and to execute, deliver and perform, and to enter into and
consummate, all transactions contemplated by this Agreement. The Purchaser has
duly authorized the execution, delivery and performance of this Agreement, has
duly executed and delivered this Agreement, and this Agreement, assuming due
authorization, execution and delivery by the Seller, constitutes a legal, valid
and binding obligation of the Purchaser, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, reorganization, receivership,
conservatorship, insolvency, moratorium and other laws relating to or affecting
creditors' rights generally or the rights of creditors of banks and to the
general principles of equity (whether such enforceability is considered in a
proceeding in equity or at law);
(3) No Conflict. None of the execution and delivery of this
Agreement, the acquisition or origination, as applicable, of the Mortgage Loans
by the Purchaser, the purchase of
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the Mortgage Loans, the consummation of the transactions contemplated hereby, or
the fulfillment of or compliance with the terms and conditions of this
Agreement, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Purchaser's organizational documents and bylaws
or any legal restriction or any agreement or instrument to which the Purchaser
is now a party or by which it is bound, or constitute a default or result in an
acceleration under any of the foregoing, or result in the violation of any law,
rule, regulation, order, judgment or decree to which the Purchaser or its
property is subject, or impair the ability of the Purchaser to realize on the
Mortgage Loans, or impair the value of the Mortgage Loans;
(4) Ability to Perform. The Purchaser does not believe, nor does it
have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(5) No Material Default. The Purchaser is not in material default
under any agreement, contract, instrument or indenture of any nature whatsoever
to which the Purchaser is a party or by which it (or any of its assets) is
bound, which default would have a material adverse effect on the ability of the
Purchaser to perform under this Agreement, nor, to the best of the Purchaser's
knowledge, has any event occurred which, with notice, lapse of time or both
would constitute a default under any such agreement, contract, instrument or
indenture and have a material adverse effect on the ability of the Purchaser to
perform its obligations under this Agreement;
(6) No Change in Business. There has been no change in the business,
operations, financial condition, properties or assets of the Purchaser since the
date of the Purchaser's financial statements that would have a material adverse
effect on the ability of the Purchaser to perform its obligations under this
Agreement;
(7) Litigation Pending. There is no action, suit, proceeding or
investigation pending against the Purchaser, which, either in any one instance
or in the aggregate, if determined adversely to the Purchaser would adversely
affect the Purchaser's ability to purchase the Mortgage Loans;
(8) Broker. The Purchaser has not dealt with any broker or agent or
anyone else who might be entitled to a fee or commission in connection with this
transaction.
(9) No Consent Required. No consent, approval, authorization or
order of any court or governmental agency or body is required for the execution,
delivery and performance by the Purchaser of or compliance by the Purchaser with
this Agreement, the purchase of the Mortgage Loans from the Seller or the
consummation of the transactions contemplated by this Agreement or, if required,
such approval has been obtained prior to the Funding Date;
(10) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement is in the ordinary course of
business of the Purchaser;
(11) Non-Petition Agreement. The Purchaser covenants and agrees that
it shall not, prior to the date which is one year and one day (or if longer, the
applicable preference period then in effect) after the payment in full of all
rated obligations of Xxxxxx'x Gate Residential Mortgage Trust, acquiesce,
petition or otherwise, directly or indirectly, invoke or cause Xxxxxx'x
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Xxxx Xxxxxxxxxxx Mortgage Trust to invoke the process of any governmental
authority for the purpose of commencing or sustaining a case against Xxxxxx'x
Gate Residential Mortgage Trust under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator, or other similar official of Xxxxxx'x Gate
Residential Mortgage Trust. This covenant and agreement shall be binding upon
the Purchaser and any assignee or transferee of the Purchaser;
(12) No Untrue Information. Neither this Agreement nor any statement
or instrument furnished or to be furnished pursuant to this Agreement contains
or will contain any materially untrue statement of fact or omits or will omit to
state a fact necessary to make the statements contained therein not misleading;
(13) Non-solicitation. The Purchaser agrees that it shall not
solicit any Mortgagors (in writing or otherwise) to refinance any of the
Mortgage Loans; provided that mass advertising or mailings (such as placing
advertisements on television, on radio, in magazines or in newspapers or
including messages in billing statements) that are not exclusively directed
towards the Mortgagors shall not constitute solicitation and shall not violate
this covenant;
(14) Privacy. Purchaser agrees and acknowledges that as to all
nonpublic personal information received or obtained by it with respect to any
Mortgagor: (a) such information is and shall be held by Purchaser in accordance
with all applicable law, including but not limited to the privacy provisions of
the Xxxxx-Xxxxx Bliley Act, as may be amended from time to time; (b) such
information is in connection with a proposed or actual secondary market sale
related to a transaction of the Mortgagor for purposes of 16
C.F.R.ss.313.14(a)(3); and (c) Purchaser is hereby prohibited from disclosing or
using any such information other than to carry out the express provisions of
this Agreement, or as otherwise permitted by applicable law; and
(15) MERS. The Purchaser is a member of MERS in good standing, and
will comply in all material respects with the rules and procedures of MERS in
connection with the Purchaser's performance of its obligations under this
Agreement with respect to the Mortgage Loans, for as long as such Mortgage Loans
are registered with MERS.
Section 4.02 Conditions Precedent to Closing. Each purchase of
Mortgage Loans hereunder shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Seller under
the PHH Guide, and of the Sellers and Purchaser under this Agreement shall
be true and correct as of the related Funding Date, and no event shall
have occurred which, with notice or the passage of time, would constitute
an Event of Default under this Agreement or under the PHH Guide;
(b) On or before the each Funding Date, the Seller shall submit to
the Purchaser fully executed originals of the following documents:
(i) this Agreement, in four counterparts;
(ii) the Custodial Agreement, in four counterparts;
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(iii) an Officers' Certificate, in the form of Exhibit 9 hereto,
including all attachments thereto;
(iv) an Opinion of Counsel to the Seller;
(v) a certificate or other evidence of merger or change of name,
signed or stamped by the applicable regulatory authority, if any, which
states that the Mortgage Loans were acquired by the Seller by merger or
acquired or originated by the Seller while conducting business under a
name other than its present name, if applicable;
(vi) the related Purchase Price and Terms Letter, together with the
related Mortgage Loan Schedule;
(c) The closing documents for the Mortgage Loans to be purchased on
each Funding Date shall consist of fully executed originals of the
following documents:
(i) the related Purchase Price and Terms Letter together with the
related Mortgage Loan Schedule;
(ii) this Agreement, as originally executed (subject to amendments),
in four counterparts;
(iii) the Custodial Agreement, as originally executed (subject to
amendments), in four counterparts;
(iv) an Officers' Certificate, in the form of Exhibit 9 hereto, as
originally executed (subject to amendments), including all attachments
thereto;
(v) an Opinion of Counsel to the Seller (to the extent requested by
the Seller with respect to a specific sale of Mortgage Loans);
(vi) the related Mortgage Loan Schedule, one copy to be attached to
each counterpart of this Agreement, and to each counterpart of the related
Custodial Agreement; and
(vii) an Assignment, Assumption and Recognition Agreement, in the
form of Exhibit 2.05 hereto.
(d) All other terms and conditions of this Agreement and the
Purchase Price and Terms Letter shall have been complied with.
Subject to the foregoing conditions, Purchaser shall pay to Seller
on each Funding Date the applicable Purchase Price as provided herein.
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ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01 PHH Mortgage to Act as Servicer; Servicing Standards;
Additional Documents; Consent of the Purchaser. (1) The Servicer, as independent
contract servicer, shall service and administer the Mortgage Loans and REO
Property from and after each Funding Date in accordance with the terms and
provisions of the Mortgage Loans, applicable law and the terms and provisions of
this Agreement for and on behalf of, and in the best interests of, the Purchaser
(without taking into account any relationship the Servicer may have with any
Mortgagor or other Person, the participation, if any, of the Servicer in any
financing provided in connection with the sale of any Mortgaged Property, or the
Servicer's obligation to advance any expenses or incur any costs in the
performance of its duties hereunder) in accordance with a standard that is not
less than the higher of (a) the same care, skill, prudence and diligence with
which it services similar assets held for its own or its Affiliates' account and
(b) the same care, skill, prudence and diligence with which it services similar
assets for third party institutional investors, in each case giving due
consideration to customary and usual standards of practice of prudent
institutional mortgage loan servicers utilized with respect to mortgage loans
comparable to the Mortgage Loans. Subject to the foregoing standards, in
connection with such servicing and administration, the Servicer shall seek to
maximize the timely recovery of principal and interest on the Mortgage Notes;
provided that nothing contained herein shall be construed as an express or
implied guarantee by the Servicer of the collectibility of payments on the
Mortgage Loans or shall be construed as impairing or adversely affecting any
rights or benefits specifically provided by this Agreement to the Seller,
including with respect to Servicing Fees.
In the event that any of the Mortgage Loans included on the Mortgage
Loan Schedule for a particular Funding Date are Pledged Asset Mortgage Loans,
such Pledged Asset Mortgage Loans will be serviced in accordance with Section
5.18 hereof.
(2) To the extent consistent with Section 5.01(1) and further
subject to any express limitations set forth in this Agreement, the Servicer
(acting alone or, solely in the circumstances permitted hereunder, acting
through a subservicer) shall have full power and authority to do or cause to be
done any and all things that it may deem necessary or desirable in connection
with such servicing and administration, including the power and authority (a) to
execute and deliver, on behalf of the Purchaser, customary consents or waivers
and other instruments and documents (including estoppel certificates), (b) to
consent to transfers of any Mortgaged Property and assumptions of the Mortgage
Notes and related Mortgages, (c) to submit claims to collect any Insurance
Proceeds and Liquidation Proceeds, (d) to consent to the application of any
Insurance Proceeds or Condemnation Proceeds to the restoration of the applicable
Mortgaged Property or otherwise, (e) to bring an action in a court of law,
including an unlawful detainer action, to enforce rights of the Purchaser with
respect to any Mortgaged Property, (f) to execute and deliver, on behalf of the
Purchaser, documents relating to the management, operation, maintenance, repair,
leasing, marketing and sale of any Mortgaged Property or any REO Property, and
(g) to effectuate foreclosure or other conversion of the ownership of the
Mortgaged Property securing any Mortgage Loan; provided that the Servicer shall
not take any action not provided for in this Agreement that is materially
inconsistent with or materially prejudices the interest of the Purchaser in any
Mortgage Loan or under this
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Agreement. If reasonably requested by the Servicer, the Purchaser shall furnish
the Servicer with any powers of attorney and other documents reasonably
necessary or appropriate to enable the Servicer to service and administer the
Mortgage Loans and the REO Properties, including documents relating to the
foreclosure, receivership, management, operation, maintenance, repair, leasing,
marketing and sale (in foreclosure or otherwise) of any Mortgaged Property or
any REO Property. Nothing contained in this Agreement shall limit the ability of
the Servicer to lend money to (whether on a secured or unsecured basis), and
otherwise generally engage in any kind of business or dealings with, any
Mortgagor as though the Servicer were not a party to this Agreement or to the
transactions contemplated hereby.
(3) Notwithstanding anything to the contrary contained herein:
(a) the Servicer acknowledges that the Purchaser will retain title
to, and ownership of, the Mortgage Loans and the REO Properties and that
the Servicer does not hereby acquire any title to, security interest in,
or other rights of any kind in or to any Mortgage Loan or REO Property or
any portion thereof;
(b) the Servicer shall not file any lien or any other encumbrance
on, exercise any right of setoff against, or attach or assert any claim in
or on any Mortgage Loan or REO Property, unless authorized pursuant to a
judicial or administrative proceeding or a court order;
(c) the Servicer shall, in servicing the Mortgage Loans, follow and
comply with the servicing guidelines established by Xxxxxx Xxx or Xxxxxxx
Mac, as applicable, provided that the Servicer shall specifically notify
the Purchaser in writing and obtain the Purchaser's written consent prior
to the Servicer taking any of the following actions: (1) modifying,
amending or waiving any of the financial terms of, or making any other
material modifications to, a Mortgage Loan, except the Servicer may be
permitted to do so in the event of a Specially Serviced Mortgage Loan or,
upon the Mortgagor's request, accept a principal prepayment and
re-amortize the then remaining principal balance over the then remaining
term of the loan (resulting in a lower scheduled monthly payment but no
change in the maturity date); (2) selling any Specially Serviced Mortgage
Loan; (3) making, with respect to any Specially Serviced Mortgage Loan or
REO Property, Servicing Advances provided that the Servicer shall not be
required to so advise the Purchaser to the extent that each related
Servicing Advance as to the related Mortgaged Property or REO Property is
in the best interests of the Purchaser or other owner of the Mortgage Loan
and that are deemed to be recoverable by the Servicer; (4) forgiving
principal or interest on, or permitting to be satisfied at a discount, any
Mortgage Loan except in the event of a Specially Serviced Mortgage Loan;
(5) accepting substitute or additional collateral, or releasing any
collateral, for a Mortgage Loan. If the Purchaser has not approved or
rejected in writing any proposed action(s) recommended by the Servicer to
be taken hereunder within 5 Business Days of the date such recommendation
is made, then the Purchaser shall be deemed to have rejected such
recommended action(s) and the Servicer shall not take any such action(s);
(d) the Servicer shall notify the Purchaser of any modification,
waiver or amendment of any term of any Mortgage Loan and the date thereof
and shall deliver to
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the Purchaser, for deposit in the related Mortgage File, an original
counterpart of the agreement relating to such modification, waiver or
amendment promptly following the execution thereof;
(e) in accordance with the Xxxxxx Mae Guide and the Xxxxxxx Mac
Servicing Guide, the Servicer shall be entitled to workout compensation as
it relates to repayment plans, loan modifications, short-sales and deed-in
lieu of foreclosure as evidenced in Exhibit 5.01;
(f) the Servicer shall remain primarily liable for the full
performance of its obligations hereunder notwithstanding any appointment
by the Servicer of a subservicer or subservicers hereunder; and
(g) the Purchaser may at any time and from time to time, in its sole
discretion, terminate the Servicer's servicing obligations hereunder with
respect to (1) any REO Property upon 10 Business Days written notice to
the Servicer, or (2) any Mortgage Loan that, in accordance with the
Purchaser's internal credit classification criteria, has been classified
as "doubtful" or a "loss," upon 30 calendar days written notice to the
Servicer, and Purchaser shall in each case reimburse Servicer all Monthly
Advances and take all necessary steps to assume such servicing. Upon the
effectiveness of any such termination of the Servicer's servicing
obligations with respect to any such REO Property or Mortgage Loan, the
Servicer shall deliver all agreements, documents, and instruments related
thereto to the Purchaser, in accordance with applicable law.
Section 5.02 Collection of Mortgage Loan Payments. Continuously from
the date hereof until the principal and interest on all Mortgage Loans are paid
in full, the Servicer will proceed diligently to collect all payments due under
each Mortgage Loan when the same shall become due and payable and shall, to the
extent such procedures shall be consistent with this Agreement and the terms and
provisions of any related Primary Insurance Policy, follow such collection
procedures as it follows with respect to mortgage loans comparable to the
Mortgage Loans, which procedures shall in any event comply with the servicing
standards set forth in Section 5.01. Furthermore, the Servicer shall ascertain
and estimate annual ground rents, taxes, assessments, fire and hazard insurance
premiums, mortgage insurance premiums, and all other charges that, as provided
in the Mortgages, will become due and payable to the end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable.
Section 5.03 Notice of Specially Serviced Mortgage Loans and
Foreclosure Sale. (a) The Servicer shall, within five (5) calendar days
following each Record Date, deliver to the Purchaser monthly reports
substantially in the form of Exhibit 5.03(a) with respect to all Specially
Serviced Mortgage Loans. The Servicer shall, within one (1) Business Day
following the occurrence of any foreclosure sale with respect to any Mortgaged
Property, deliver to the Purchaser a notice of foreclosure sale substantially in
the form of Exhibit 5.03(b).
(b) Following the foreclosure sale or abandonment of any Mortgaged
Property, the Servicer shall report such foreclosure or abandonment as
required pursuant to Section 6050J of the Code.
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Section 5.04 Establishment of Collection Account; Deposits in
Collection Account. The Servicer shall segregate and hold all funds collected
and received pursuant to each Mortgage Loan separate and apart from any of its
own funds and general assets and shall establish and maintain one or more
Collection Accounts, in the form of time deposit or demand accounts. Any funds
deposited in the Collection Account shall at all times be fully insured to the
full extent permitted under applicable law. The creation of any Collection
Account shall be evidenced by a certification in the form of Exhibit 5.04-1
attached hereto, in the case of an account established with the Servicer, or a
letter agreement in the form of Exhibit 5.04-2 attached hereto, in the case of
an account held by a depository other than the Servicer. In either case, a copy
of such certification or letter agreement shall be furnished to the Purchaser.
The Servicer shall deposit in the Collection Account, within two
Business Days of receipt (or as otherwise required pursuant to this Agreement in
the case of clauses (8), (9) and (10) of this Section 5.04) and retain therein
the following payments and collections received or made by it subsequent to each
Funding Date, or received by it prior to the Funding Date but allocable to a
period subsequent thereto, other than in respect of principal and interest on
the Mortgage Loans due on or before the Funding Date:
(1) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(2) all payments on account of interest less the Servicing Fee on
the Mortgage Loans;
(3) all Liquidation Proceeds;
(4) all REO Proceeds;
(5) all Insurance Proceeds, including amounts required to be
deposited pursuant to Sections 5.10 and 5.11, other than proceeds to be held in
the Escrow Account and applied to the restoration or repair of the Mortgaged
Properties or released to the applicable Mortgagors in accordance with the
Servicer's normal servicing procedures, the related Mortgages or applicable law;
(6) all Condemnation Proceeds affecting any Mortgaged Property which
are not released to a Mortgagor in accordance with the Servicer's normal
servicing procedures, the related Mortgage or applicable law;
(7) any Monthly Advances in accordance with Section 6.03;
(8) any amounts required to be deposited by the Servicer pursuant to
Section 5.11 in connection with the deductible clause in any blanket hazard
insurance policy, such deposit to be made from the Servicer's own funds without
reimbursement therefor;
(9) any amounts required to be deposited by the Servicer pursuant to
Section 5.16 in connection with any losses on Permitted Investments; and
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(10) any amounts required to be deposited in the Collection Account
pursuant to Sections 7.01 or 7.02 or otherwise pursuant to the terms hereof.
The foregoing requirements for deposit in the Collection Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of servicing fees, late
payment charges and assumption fees, to the extent permitted by Section 7.01,
need not be deposited by the Servicer in the Collection Account and shall be
retained by the Servicer as additional compensation.
Section 5.05 Permitted Withdrawals from the Collection Account . The
Servicer may, from time to time in accordance with the provisions hereof,
withdraw amounts from the Collection Account for the following purposes (without
duplication):
(1) to reimburse itself for unreimbursed Monthly Advances and
Servicing Advances that the Servicer has determined to be Non-Recoverable
Advances as provided in Section 6.04;
(2) to make payments to the Purchaser in the amounts, at the times
and in the manner provided for in Section 6.01;
(3) to reimburse itself for Monthly Advances, the Servicer's right
to reimburse itself pursuant to this Subsection (3) being limited to amounts
received on the related Mortgage Loan which represent late payments of principal
and/or interest with respect to which any such Monthly Advance was made;
(4) to reimburse itself for unreimbursed Servicing Advances and for
unreimbursed Monthly Advances, the Servicer's right to reimburse itself pursuant
to this Subsection (4) with respect to any Mortgage Loan being limited to
related Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds and such
other amounts as may be collected by the Servicer from the Mortgagor or
otherwise relating to the Mortgage Loan, it being understood that, in the case
of such reimbursement, the Servicer's right thereto shall be prior to the rights
of the Purchaser, except that, where a Seller or the Servicer is required to
repurchase (or substitute a Qualified Substitute Mortgage Loan for) a Mortgage
Loan pursuant to Sections 2.04, 3.04 and/or 7.02, the Servicer's right to such
reimbursement shall be subsequent and subordinate to the payment to the
Purchaser of the applicable Repurchase Price (or delivery of a Qualified
Substitute Mortgage Loan) and all other amounts required to be paid to the
Purchaser with respect to such Mortgage Loan;
(5) to pay to itself as additional servicing compensation any
interest earned on funds in the Collection Account (all such interest to be
withdrawn monthly not later than each Remittance Date), and any prepayment
penalties or premiums relating to any Principal Prepayments; provided that no
such amounts shall be payable as servicing compensation to the extent they
relate to a Mortgage Loan with respect to which a default, breach, violation, or
event of acceleration exists or would exist but for the lapse of time, the
giving of notice, or both;
(6) to pay to itself with respect to each Mortgage Loan that has
been repurchased pursuant to Sections 2.04, 3.04 and/or 7.02 all amounts
received thereon and not
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distributed as of the date on which the related Repurchase Price is determined
(except to the extent that such amounts constitute part of the Repurchase Price
to be remitted to the Purchaser);
(7) to remove any amounts deposited into the Collection Account in
error; and
(8) to clear and terminate the Collection Account upon the
termination of this Agreement, with any funds contained therein to be
distributed in accordance with the terms of this Agreement.
The Servicer shall keep and maintain a separate, detailed
accounting, on a Mortgage Loan-by-Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Collection Account pursuant to this Section.
All funds required to be deposited in the Collection Account shall be held in
trust for the Purchaser until withdrawn in accordance with this Section 5.05.
Section 5.06 Establishment of Escrow Accounts; Deposits in Escrow.
The Servicer shall segregate and hold all funds collected and received pursuant
to each Mortgage Loan which constitute Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Escrow Accounts, in the form of time deposit or demand accounts. Any funds
deposited in the Escrow Accounts shall at all times be fully insured to the full
extent permitted under applicable law. The creation of any Escrow Account shall
be evidenced by a certification in the form shown on Exhibit 5.06-1 attached
hereto, in the case of an account established with the Servicer, or a letter
agreement in the form shown on Exhibit 5.06-2 attached hereto, in the case of an
account held by a depository other than the Servicer, such depository having
been consented to by the Purchaser. In either case, a copy of such certification
or letter agreement shall be furnished to the Purchaser.
The Servicer shall deposit in each Escrow Account within two
Business Days of receipt, and retain therein, (i) all Escrow Payments collected
on account of the related Mortgage Loans for the purpose of effecting timely
payment of any such items as required under the terms of this Agreement, and
(ii) all Insurance Proceeds which are to be applied to the restoration or repair
of any Mortgaged Property. The Servicer shall make withdrawals therefrom only to
effect such payments as are required under Sections 5.07 and/or 5.08. The
Servicer shall be entitled to retain any interest paid on funds deposited in the
Escrow Account by the depository institution other than interest on escrowed
funds required by law to be paid to the Mortgagor and, to the extent required by
law, the Servicer shall pay interest on escrowed funds to the Mortgagor
notwithstanding that the Escrow Account is non-interest bearing or that interest
paid thereon is insufficient for such purposes, without any right of
reimbursement therefor.
Section 5.07 Permitted Withdrawals From Escrow Accounts. Withdrawals
from any Escrow Account may be made by the Servicer only (i) to effect timely
payments of ground rents, taxes, assessments, hazard insurance premiums, Primary
Insurance Policy premiums, if applicable, and comparable items constituting
Escrow Payments for the related Mortgage, (ii) to reimburse the Servicer for any
Servicing Advance made by the Servicer with respect to a related Mortgage Loan
but only from amounts received on the related Mortgage Loan that represent late
payments or collections of Escrow Payments thereunder, (iii) to refund to the
Mortgagor any funds as may be determined to be overages, (iv) if permitted by
applicable law, for transfer to the
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Collection Account in accordance with the terms of this Agreement, (v) for
application to the restoration or repair of the Mortgaged Property in accordance
with the terms of the related Mortgage Loan, (vi) to pay to the Servicer, or to
the Mortgagor to the extent required by law, any interest paid on the funds
deposited in the Escrow Account, (vii) to reimburse a Mortgagor in connection
with the making of the Payoff of the related Mortgage Loan or the termination of
all or part of the escrow requirement in connection with the Mortgage Loan,
(viii) to remove any amounts deposited into the Escrow Account in error; or (ix)
to clear and terminate the Escrow Account on the termination of this Agreement.
Section 5.08 Payment of Taxes, Insurance and Other Charges;
Maintenance of Primary Insurance Policies; Collections Thereunder. With respect
to each Mortgage Loan, the Servicer shall maintain accurate records reflecting
the status of ground rents, taxes, assessments, and other charges which are or
may become a lien upon the Mortgaged Property and the status of Primary
Insurance Policy premiums and fire and hazard insurance coverage and shall
obtain, from time to time, all bills for the payment of such charges, including
renewal premiums, and shall effect payment thereof prior to the applicable
penalty or termination date and at a time appropriate for securing maximum
discounts allowable, employing for such purpose deposits of the Mortgagor in the
Escrow Account which shall have been estimated and accumulated by the Servicer
in amounts sufficient for such purposes, as allowed under the terms of the
Mortgage and applicable law. If a Mortgage does not provide for Escrow Payments,
then the Servicer shall require that any such payments be made by the Mortgagor
at the time they first become due. The Servicer assumes full responsibility for
the timely payment of all such bills and shall effect timely payments of all
such bills irrespective of the Mortgagor's faithful performance in the payment
of same or the making of the Escrow Payments and shall make advances from its
own funds to effect such payments but shall be entitled to reimbursement thereof
in accordance with the terms of this Agreement.
The Servicer shall maintain in full force and effect a Primary
Insurance Policy, conforming in all respects to the description set forth in
Section 3.03(30), issued by an insurer described in that Section, with respect
to each Mortgage Loan for which such coverage is required. Such coverage will be
maintained until the Loan-to-Value Ratio of the related Mortgage Loan is reduced
to 75% or less in the case of a Mortgage Loan having a Loan-to-Value Ratio at
origination in excess of 80% or until such time, if any, as such insurance is
required to be released in accordance with the provisions of applicable law
including, but not limited to, the Homeowners Protection Act of 1998. The
Servicer shall assure that all premiums due under any Primary Insurance Policy
are paid in a timely manner, but, shall be entitled to reimbursement pursuant to
the terms of this Agreement for premiums paid by the Servicer on behalf of any
Mortgagor who is obligated to pay such premiums but fails to do so. The Servicer
shall not cancel or refuse to renew any Primary Insurance Policy in effect on
the related Funding Date that is required to be kept in force under this
Agreement unless a replacement Primary Insurance Policy for such canceled or
nonrenewed policy is obtained from and maintained with an insurer that satisfies
the standards set forth in Section 3.03(30). The Servicer shall not take any
action which would result in noncoverage under any applicable Primary Insurance
Policy of any loss which, but for the actions of the Servicer, would have been
covered thereunder. In connection with any assumption or substitution agreement
entered into or to be entered into pursuant to Section 7.01, the Servicer shall
promptly notify the insurer under the related Primary Insurance Policy, if any,
of such assumption or substitution of liability in accordance with the terms of
such
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policy and shall take all actions which may be required by such insurer as a
condition to the continuation of coverage under the Primary Insurance Policy. If
such Primary Insurance Policy is terminated as a result of such assumption or
substitution of liability, then the Servicer shall obtain, and, except as
otherwise provided above, maintain, a replacement Primary Insurance Policy as
provided above.
In connection with its activities as servicer, the Servicer agrees
to prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any Primary Insurance Policy in a timely fashion in accordance
with the terms of such policies and, in this regard, to take such action as
shall be necessary to permit recovery under any Primary Insurance Policy
respecting a defaulted Mortgage Loan. Pursuant to Section 5.04, any amounts
collected by the Servicer under any Primary Insurance Policy shall be deposited
in the Collection Account, subject to withdrawal in accordance with Section
5.05.
Purchaser, in its sole discretion, at any time, may (i) either
obtain an additional Primary Insurance Policy on any Mortgage Loan which already
has a Primary Insurance Policy in place, or (ii) obtain a Primary Insurance
Policy for any Mortgage Loan which does not already have a Primary Insurance
Policy in place. Upon the mutual agreement of the Purchaser and the Servicer,
such Primary Insurance Policy will be administered by the Servicer in accordance
with the terms of this Agreement or any Reconstitution Agreement.
Section 5.09 Transfer of Accounts. The Servicer may transfer the
Collection Account or any Escrow Account to a different depository institution
from time to time; provided that (i) no such transfer shall be made unless all
certifications or letter agreements required under Section 5.04 or Section 5.06,
as applicable, have been executed and delivered by the parties thereto; and (ii)
concurrently upon any such transfer, the Servicer shall give written notice
thereof to the Purchaser. Notwithstanding anything to the contrary contained
herein, the Collection Account and each Escrow Account shall at all times
constitute Eligible Accounts.
Section 5.10 Maintenance of Hazard Insurance. The Servicer shall
cause to be maintained for each Mortgage Loan fire and hazard insurance with
extended coverage as is customary in the area where the Mortgaged Property is
located in an amount that is at least equal to the lesser of (a) the maximum
insurable value of the improvements securing such Mortgage Loan and (b) the
greater of (1) the Unpaid Principal Balance of such Mortgage Loan or (2) an
amount such that the proceeds thereof shall be sufficient to prevent the
Mortgagor and/or the loss payee from becoming a co insurer.
If any Mortgaged Property is in an area identified by the Federal
Emergency Management Agency as having special flood hazards and such flood
insurance has been made available, then the Servicer will cause to be maintained
a flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration with a generally acceptable insurance
carrier rated "A" or better in Best's or in accordance with then current Xxxxxx
Mae, Xxxxxxx Mac, GNMA or VA guidelines, as applicable, in an amount
representing coverage not less than the lesser of (a) the minimum amount
required, under the terms of coverage, to compensate for any damage or loss on a
replacement cost basis (or the outstanding principal balance of the related
Mortgage Loan if replacement cost coverage is not available for the type of
building insured) or (b) the maximum amount of insurance which is available
under
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the Flood Disaster Protection Act of 1973, as amended (assuming that the area in
which such Mortgaged Property is located is participating in such program). If
at any time during the term of the Mortgage Loan, the Servicer determines in
accordance with applicable law and pursuant to the then current Xxxxxx Mae or
Xxxxxxx Mac guidelines, as applicable, that a Mortgaged Property is located in a
special flood hazard area and is not covered by flood insurance or is covered in
an amount less than the amount required by the Flood Disaster Protection Act of
1973, as amended, the Servicer shall notify the related Mortgagor that the
Mortgagor must obtain such flood insurance coverage, and if said Mortgagor fails
to obtain the required flood insurance coverage within forty-five (45) days
after such notification, the Servicer shall immediately force place the required
flood insurance on the Mortgagor's behalf.
The Servicer shall also maintain on each REO Property fire, hazard
and liability insurance, and to the extent required and available under the
Flood Disaster Protection Act of 1973, as amended, flood insurance with extended
coverage in an amount which is at least equal to the lesser of (a) the maximum
insurable value of the improvements which are a part of such property and (b)
the outstanding principal balance of the related Mortgage Loan at the time it
became an REO Property plus accrued interest at the Note Rate and related
Servicing Advances.
All such policies shall be endorsed with standard mortgagee clauses
with loss payable to the Servicer, or upon request to the Purchaser, and shall
provide for at least 30 days prior written notice of any cancellation, reduction
in the amount of, or material change in, coverage to the Servicer. The Servicer
shall not interfere with the Mortgagor's freedom of choice in selecting either
his insurance carrier or agent, provided that the Servicer shall not accept any
such insurance policies from insurance companies unless such companies (a)
currently reflect (1) a general policyholder's rating of B+ or better and a
financial size category of III or better in Best's Key Rating Guide, or (2) a
general policyholder's rating of "A" or "A-" or better in Best's Key Rating
Guide, and (b) are licensed to do business in the state wherein the related
Mortgaged Property is located. Notwithstanding the foregoing, the Servicer may
accept a policy underwritten by Lloyd's of London or, if it is the only coverage
available, coverage under a state's Fair Access to Insurance Requirement (FAIR)
Plan. If a hazard policy becomes in danger of being terminated, or the insurer
ceases to have the ratings noted above, the Servicer shall notify the Purchaser
and the related Mortgagor, and shall use its best efforts, as permitted by
applicable law, to obtain from another qualified insurer a replacement hazard
insurance policy substantially and materially similar in all respects to the
original policy. In no event, however, shall a Mortgage Loan be without a hazard
insurance policy at any time, subject only to Section 5.11.
Pursuant to Section 5.04, any amounts collected by the Servicer
under any such policies other than amounts to be deposited in the Escrow Account
and applied to the restoration or repair of the Mortgaged Property or REO
Property, or released to the Mortgagor in accordance with the Servicer's normal
servicing procedures, shall be deposited in the Collection Account within two
Business Days of receipt, subject to withdrawal in accordance with Section 5.05.
Any cost incurred by the Servicer in maintaining any such insurance shall not,
for the purpose of calculating remittances to the Purchaser, be added to the
Unpaid Principal Balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit.
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If a Mortgage is secured by a unit in a condominium project, the
Servicer shall verify that the coverage required of the owner's association,
including hazard, flood, liability, and fidelity coverage, is being maintained
in accordance with the PHH Guide (with respect to any loans originated in
connection with PHH Mortgage's non-warrantable condominium program) or the
applicable Xxxxxx Xxx or Xxxxxxx Mac guidelines, and secure from the owner's
association its agreement to notify the Servicer promptly of any change in the
insurance coverage or of any condemnation or casualty loss that may have a
material effect on the value of the Mortgaged Property as security.
It is understood and agreed that no earthquake or other additional
insurance need be required by the Servicer of the Mortgagor or maintained on
property acquired in respect of the Mortgage Loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance.
Section 5.11 Maintenance of Mortgage Impairment Insurance Policy. If
the Servicer obtains and maintains a blanket policy issued by an issuer that has
a Best's Key rating of A+ insuring against hazard losses on all of the Mortgage
Loans, then, to the extent such policy provides coverage in an amount equal to
the amount required pursuant to Section 5.10 and otherwise complies with all
other requirements of Section 5.10, it shall conclusively be deemed to have
satisfied its obligations as set forth in Section 5.10, it being understood and
agreed that such policy may contain a deductible clause, in which case the
Servicer shall, if there shall not have been maintained on the related Mortgaged
Property or REO Property a policy complying with Section 5.10 and there shall
have been one or more losses which would have been covered by such policy,
deposit in the Collection Account the amount not otherwise payable under the
blanket policy because of such deductible clause; provided that the Servicer
shall not be entitled to obtain reimbursement therefor. In connection with its
activities as servicer of the Mortgage Loans, the Servicer agrees to prepare and
present, on behalf of the Purchaser, claims under any such blanket policy in a
timely fashion in accordance with the terms of such policy. Upon request of the
Purchaser, the Servicer shall cause to be delivered to the Purchaser a certified
true copy of such policy and a statement from the insurer thereunder that such
policy shall in no event be terminated or materially modified without 30 days'
prior written notice to the Purchaser.
Section 5.12 Fidelity Bond; Errors and Omissions Insurance. The
Servicer shall maintain, at its own expense, a blanket fidelity bond and an
errors and omissions insurance policy, with broad coverage with responsible
companies that would meet the requirements of Xxxxxx Mae and Xxxxxxx Mac on all
officers, employees or other Persons acting in any capacity with regard to the
Mortgage Loans to handle funds, money, documents and papers relating to the
Mortgage Loans. The Fidelity Bond and errors and omissions insurance shall be in
the form of the "Mortgage Banker's Blanket Bond" and shall protect and insure
the Servicer against losses, including losses arising by virtue of any Mortgage
Loan not being satisfied in accordance with the procedures set forth in Section
7.02 and/or losses resulting from or arising in connection with forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of or by such
Persons. Such Fidelity Bond shall also protect and insure the Servicer against
losses in connection with the failure to maintain any insurance policies
required pursuant to this Agreement and the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby. No provision of this Section 5.12 requiring the Fidelity Bond
and errors and omissions insurance shall diminish or relieve the Servicer from
its
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duties and obligations as set forth in this Agreement. The minimum coverage
under any such bond and insurance policy shall be at least equal to the
corresponding amounts required by Xxxxxx Mae in the Xxxxxx Xxx Guide and by
Xxxxxxx Mac in the Xxxxxxx Mac Servicing Guide. The Servicer shall cause to be
delivered to the Purchaser upon request: (i) a certified true copy of the
Fidelity Bond and insurance policy; (ii) a written statement from the surety and
the insurer that such Fidelity Bond or insurance policy shall in no event be
terminated or materially modified without 30 days' prior written notice to the
Purchaser; and (iii) written evidence reasonably satisfactory to the Purchaser
that such Fidelity Bond or insurance policy provides that the Purchaser is a
beneficiary or loss payee thereunder.
Section 5.13 Management of REO Properties If title to any Mortgaged
Property is acquired in foreclosure or by deed in lieu of foreclosure (each, an
"REO Property"), the deed or certificate of sale shall be taken in the name of
the Purchaser or the Person (which may be the Servicer for the benefit of the
Purchaser) designated by the Purchaser, or in the event the Purchaser notifies
the Servicer that the Purchaser or such Person is not authorized or permitted to
hold title to real property in the state where the REO Property is located, or
would be adversely affected under the "doing business" or tax laws of such state
by so holding title, the deed or certificate of sale shall be taken in the name
of such Person or Persons as shall be consistent with an opinion of counsel
obtained by the Purchaser from an attorney duly licensed to practice law in the
state where the REO Property is located. The Servicer (acting alone or through a
subservicer), on behalf of the Purchaser, shall, subject to Section 5.01(3)(c),
dispose of any REO Property pursuant to Section 5.14. Unless an appraisal
prepared by an MAI Appraiser who is Independent in accordance with the
provisions of 12 C.F.R. ss.225.65 shall have been obtained in connection with
the acquisition of such REO Property, promptly following any acquisition by the
Purchaser (through the Servicer) of an REO Property, the Servicer shall obtain a
narrative appraisal thereof (at the expense of the Purchaser) in order to
determine the fair market value of such REO Property. The Servicer shall also
cause each REO Property to be inspected promptly upon the acquisition of title
thereto and shall cause each REO Property to be inspected at least annually
thereafter, and Servicer shall be entitled to be reimbursed for expenses in
connection therewith in accordance with this Agreement. The Servicer shall make
or cause to be made a written report of each such inspection. Such reports shall
be retained in the Mortgage File and copies thereof shall be forwarded by the
Servicer to the Purchaser. The Servicer shall also furnish to the Purchaser the
applicable reports required under Section 8.01.
Notwithstanding anything to the contrary contained herein, if a
REMIC election has been or is to be made with respect to the arrangement under
which the Mortgage Loans and the REO Properties are held, then the Servicer
shall manage, conserve, protect and operate each REO Property in a manner that
does not cause such REO Property to fail to qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) of the Code or result in the receipt by
such REMIC of any "income from non-permitted assets" within the meaning of
Section 860F(a)(2)(B) or any "net income from foreclosure property" within the
meaning of Section 860G (c)(2) of the Code (or comparable provisions of any
successor or similar legislation).
The Servicer shall deposit and hold all revenues and funds collected
and received in connection with the operation of each REO Property in the
Collection Account, and the
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Servicer shall account separately for revenues and funds received or expended
with respect to each REO Property.
The Servicer shall have full power and authority, subject only to
the specific requirements and prohibitions of this Agreement (and, in
particular, Section 5.01(3)(c)), to do any and all things in connection with any
REO Property as are consistent with the servicing standards set forth in Section
5.01. In connection therewith, the Servicer shall deposit or cause to be
deposited within two (2) Business Day of receipt in the Collection Account all
revenues and collections received or collected by it with respect to each REO
Property, including all proceeds of any REO Disposition. Subject to Section
5.15, the Servicer shall withdraw (without duplication) from the Collection
Account, but solely from the revenues and collections received or collected by
it with respect to a specific REO Property, such funds necessary for the proper
operation, management and maintenance of such REO Property, including the
following:
(1) all insurance premiums due and payable in respect of such REO
Property;
(2) all real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien thereon;
(3) all customary and reasonable costs and expenses necessary to
maintain, repair, appraise, evaluate, manage or operate such REO Property
(including the customary and reasonable costs incurred by any "managing agent"
retained by the Servicer in connection with the maintenance, management or
operation of such REO Property);
(4) all reasonable costs and expenses of restoration improvements,
deferred maintenance and tenant improvements; and
(5) all other reasonable costs and expenses, including reasonable
attorneys' fees, that the Servicer may suffer or incur in connection with its
performance of its obligations under this Section (other than costs and expenses
that the Servicer is expressly obligated to bear pursuant to this Agreement).
To the extent that amounts on deposit in the Collection Account are
insufficient for the purposes set forth in clauses (1) through (5) above, the
Servicer shall, subject to Section 6.04, advance the amount of funds required to
cover the shortfall with respect thereto. The Servicer shall promptly notify the
Purchaser in writing of any failure by the Servicer to make a Servicing Advance
of the type specified in clauses (1) or (2) above (irrespective of whether such
Servicing Advance is claimed to be non-recoverable by the Servicer pursuant to
Section 6.04).
Following the consummation of an REO Disposition, the Servicer shall
remit to the Purchaser, in accordance with Section 6.01, any proceeds from such
REO Disposition in the Collection Account following the payment of all expenses
and Servicing Advances relating to the subject REO Property.
Section 5.14 Sale of Specially Serviced Mortgage Loans and REO
Properties. The Servicer shall offer to sell any REO Property in the manner that
is in the best interests of the Purchaser or other owner of the REO, but no
later than the time determined by the Servicer to be
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sufficient to result in the sale of such REO Property on or prior to the time
specified in Section 5.15. In accordance with the servicing standards set forth
in Section 5.01, the Servicer or designated agent of the Servicer shall solicit
bids and offers from Persons for the purchase of any Specially Serviced Mortgage
Loan or REO Property.
The Servicer shall act on behalf of the Purchaser in negotiating and
taking any other action necessary or appropriate in connection with the sale of
any Specially Serviced Mortgage Loan or REO Property, including the collection
of all amounts payable in connection therewith. The Servicer shall manage and
negotiate terms of sale on Specially Serviced Mortgage Loans or REO Properties
with the same care, skill, prudence and diligence with which Servicer manages
its own REO Properties. The proceeds of any sale after deduction of the expenses
of such sale incurred in connection therewith shall be promptly deposited in (a)
if such sale is an REO Disposition, in the Collection Account in accordance with
Section 5.13 and (b) in any other circumstance, the Collection Account in
accordance with Section 5.04.
Section 5.15 Realization Upon Specially Serviced Mortgage Loans and
REO Properties. The Servicer shall foreclose upon or otherwise comparably
convert the ownership of properties securing such of the Specially Serviced
Mortgage Loans as come into and continue in default and as to which (a) in the
reasonable judgment of the Servicer, no satisfactory arrangements can, in
accordance with prudent lending practices, be made for collection of delinquent
payments pursuant to Section 5.01 and (b) such foreclosure or other conversion
is otherwise in accordance with Section 5.01. Prior to commencing foreclosure
proceedings, the Servicer shall notify the Purchaser in writing of the
Servicer's intention to do so. The Servicer shall not be required to expend its
own funds in connection with any foreclosure or towards the restoration, repair,
protection or maintenance of any property unless it shall determine that such
expenses will be recoverable to it as Servicing Advances either through
Liquidation Proceeds or through Insurance Proceeds (in accordance with Section
5.05) or from any other source relating to the Specially Serviced Mortgage Loan.
The Servicer shall be required to advance funds for all other costs and expenses
incurred by it in any such foreclosure proceedings; provided that it shall be
entitled to reimbursement thereof from the proceeds of liquidation of the
related Mortgaged Property, as contemplated by Section 5.05.
Upon any Mortgaged Property becoming an REO Property, the Servicer
shall promptly notify the Purchaser thereof, specifying the date on which such
Mortgaged Property became an REO Property. Pursuant to its efforts to sell such
REO Property, the Servicer shall, either itself or through an agent selected by
it, protect and conserve such REO Property in accordance with the servicing
standards set forth in Section 5.01 and may, subject to Section 5.01(3)(c) and
incident to its conservation and protection of the interests of the Purchaser,
rent the same, or any part thereof, for the period to the sale of such REO
Property.
Notwithstanding anything to the contrary contained herein, the
Purchaser shall not, and the Servicer shall not on the Purchaser's behalf,
acquire any real property (or personal property incident to such real property)
except in connection with a default or a default that is imminent on a Mortgage
Loan. If the Purchaser acquires any real property (or personal property incident
to such real property) in connection with such a default, then such property
shall be disposed of by the Servicer in accordance with this Section and Section
5.14 as soon as possible
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but in no event later than 3 years after its acquisition by the Servicer on
behalf of the Purchaser, unless the Servicer obtains, at the expense of the
Purchaser, in a timely fashion an extension from the Internal Revenue Service
for an additional specified period.
Any recommendation of the Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Servicer that the
proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding. If the Servicer determines that the proceeds of such
foreclosure would not exceed the costs and expenses of bringing such a
proceeding, the Servicer will request the Purchaser to allow Servicer to pursue
a Deed in Lieu of Foreclosure or recommend to the Purchaser to perform a
charge-off of the remaining principal balance, delinquent interest and any and
all fees and/or expenses the Servicer has advanced or incurred through Customary
Servicing Procedures. The income earned from the management of any REO Property,
net of reimbursement to the Servicer for Servicing Advances, incurred with
respect to such REO Property under Section 5.13, shall be applied to the payment
of the costs and expenses set forth in Section 5.13(4), with any remaining
amounts to be promptly deposited in the Collection Account in accordance with
Section 5.13.
If, in the exercise of its servicing obligations with respect to any
Mortgaged Property hereunder, the Servicer deems it is necessary or advisable to
obtain an Environmental Assessment, then the Servicer shall so obtain an
Environmental Assessment, it being understood that all reasonable costs and
expenses incurred by the Servicer in connection with any such Environmental
Assessment (including the cost thereof) shall be deemed to be Servicing Advances
recoverable by the Servicer pursuant to Section 5.13(4). Upon completion of the
inspection, the Seller shall promptly provide a written Environmental Assessment
report to the Purchaser. Such Environmental Assessment shall (a) assess whether
(1) such Mortgaged Property is in material violation of applicable Environmental
Laws or (2) after consultation with an environmental expert, taking the actions
necessary to comply with applicable Environmental Laws is reasonably likely to
produce a greater recovery on a net present value basis than not taking such
actions, and (b) identify whether (1) any circumstances are present at such
Mortgaged Property relating to the use, management or disposal of any hazardous
materials for which investigation, testing, monitoring, containment, clean-up or
re mediation could be required under any federal, state or local law or
regulation, or (2) if such circumstances exist, after consultation with an
environmental expert, taking such actions is reasonably likely to produce a
greater recovery on a present value basis than not taking such actions. (The
conditions described in the immediately preceding clauses (a) and (b) shall be
referred to herein as "Environmental Conditions Precedent to Foreclosure.") If
any such Environmental Assessment so warrants, the Servicer is hereby authorized
to and shall perform such additional environmental testing as it deems necessary
and prudent to establish the satisfaction of the foregoing Environmental
Conditions Precedent to Foreclosure or to proceed as set forth below (such
additional testing thereafter being included in the term "Environmental
Assessment").
If an Environmental Assessment deemed necessary or advisable by the
Servicer in accordance with this Section 5.15 establishes that any of the
Environmental Conditions Precedent to Foreclosure is not satisfied with respect
to any Mortgaged Property, but the Servicer in good faith reasonably believes
that it is in the best economic interest of the Purchaser to proceed against
such Mortgaged Property and, if title thereto is acquired, to take such
remedial, corrective or other action with respect to the unsatisfied condition
or conditions as may be
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prescribed by applicable law to satisfy such condition or conditions, then the
Servicer shall so notify the Purchaser. If, pursuant to Section 5.01(3)(c), the
Purchaser has notified the Servicer in writing to proceed against such Mortgaged
Property, then the Servicer shall so proceed. The cost of any remedial,
corrective or other action contemplated by the preceding sentence in respect of
any of the Environmental Conditions Precedent to Foreclosure that is not
satisfied shall not be an expense of the Servicer and the Servicer shall not be
required to expend or risk its own funds or otherwise incur any financial
liability in connection with any such action.
If an Environmental Assessment deemed necessary or advisable by the
Servicer in accordance with this Section 5.15 establishes that any of the
Environmental Conditions Precedent to Foreclosure is not satisfied with respect
to any Mortgaged Property and, in accordance with Section 5.01(3)(c), the
Purchaser elects or is deemed to have elected not to proceed against such
Mortgaged Property, then the Servicer shall, subject to Section 5.01(3)(c), take
such action as it deems to be in the best economic interest of the Purchaser
(other than proceeding against the Mortgaged Property or directly or indirectly
becoming the owner or operator thereof) as determined in accordance with the
servicing standard set forth in Section 5.01 and is hereby authorized at such
time as it deems appropriate to release such Mortgaged Property from the lien of
the related Mortgage.
Prior to the Servicer taking any action with respect to the use,
management or disposal of any hazardous materials on any Mortgaged Property, the
Servicer shall request the approval of the Purchaser in accordance with Section
5.01(3)(c) and, if such action is approved by the Purchaser, (a) keep the
Purchaser apprised of the progress of such action; and (b) take such action in
compliance with all applicable Environmental Laws.
Section 5.16 Investment of Funds in the Collection Account. The
Servicer may direct any depository institution which holds the Collection
Account to invest the funds in the Collection Account in one or more Permitted
Investments bearing interest. Any such Permitted Investment shall be made in the
name of the Servicer in trust for the benefit of the Purchaser. All such
Permitted Investments shall be held to maturity, unless payable on demand. In
the event amounts on deposit in the Collection Account are at any time invested
in a Permitted Investment payable on demand, the Servicer shall:
(a) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such Permitted
Investment may otherwise mature hereunder in an amount equal to the lesser
of (1) all amounts then payable thereunder and (2) the amount required to
be withdrawn on such date; and
(b) demand payment of all amounts due thereunder promptly upon
determination by the Servicer or notice from the Purchaser that such
Permitted Investment would not constitute a Permitted Investment in
respect of funds thereafter on deposit in the Collection Account.
All income and gain realized from investment of funds deposited in
the Collection Account shall be for the benefit of the Servicer and shall be
subject to its withdrawal in accordance with Section 5.05. The Servicer shall,
out of its own funds, deposit in the Collection
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Account the amount of any loss incurred in respect of any Permitted Investment
immediately upon realization of such loss.
Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Purchaser may elect to take such action, or instruct the
Servicer to take such action, as may be appropriate to enforce such payment or
performance, including the institution and prosecution of appropriate
proceedings, at the expense of the Servicer.
Section 5.17 MERS. In the case of each MERS Mortgage Loan, the
Servicer shall, as soon as practicable after the Purchaser's request (but in no
event more than 30 days thereafter with respect to each Mortgage Loan that was a
MERS Mortgage Loan as of the Funding Date, or 90 days thereafter with respect to
each Mortgage Loan that was a MERS Eligible Mortgage Loan as of the Funding Date
and subsequent to the Funding Date becomes a MERS Mortgage Loan), the Servicer
shall take such actions as are necessary to cause the Purchaser to be clearly
identified as the owner of each MERS Mortgage Loan on the records of MERS for
purposes of the system of recording transfers of beneficial ownership of
mortgages maintained by MERS. Each of the Purchaser and the Servicer shall
maintain in good standing its membership in MERS. In addition, each of the
Purchaser and the Servicer shall comply with all rules, policies and procedures
of MERS, including the Rules of Membership, as amended, and the MERS Procedures
Manual, as amended. With respect to all MERS Mortgage Loans serviced hereunder,
the Servicer shall promptly notify MERS as to any transfer of beneficial
ownership or release of any security interest in such Mortgage Loans. The
Servicer shall cooperate with the Purchaser and any successor owner or successor
servicer to the extent necessary to ensure that any transfer of ownership or
servicing is appropriately reflected on the MERS system.
Section 5.18 Pledged Asset Mortgage Loans
(a) Representations of Servicer:
(1) Servicer hereby represents and warrants to Purchaser that
prior to its assignment to Purchaser of the security interest in and to
any Pledged Assets set forth in Section 5.18(b) hereof, Servicer had a
first priority perfected security interest in each Securities Account,
and/or, if necessary to perfect a first priority security interest in each
asset contained in such Securities Account, a first priority perfected
security interest in each such asset contained in such Securities Account
and following Servicer's assignment of the Pledged Asset Agreements and
such security interest in and to any Pledged Assets, Purchaser has a first
priority perfected security interest in each Securities Account, and/or,
if necessary to perfect a first priority security interest in each asset
contained in such Securities Account, a perfected first priority security
interest in each such asset contained in such Securities Account. Servicer
hereby represents and warrants to Purchaser that prior to the related
Pledged Asset Servicer's assignment to the Servicer of the security
interest in and to any Pledged Assets, the related Pledged Asset Servicer
had a first priority perfected security interest in each Securities
Account, and/or, if necessary to perfect a first priority security
interest in each asset contained in such Securities Account, a first
priority perfected security interest in each such asset contained
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in such Securities Account and following such Pledged Asset Servicer's
assignment of the Pledged Asset Agreements and such security interest in
and to any Pledged Assets, the Servicer had a first priority perfected
security interest in each Securities Account, and/or, if necessary to
perfect a first priority security interest in each asset contained in such
Securities Account, a perfected first priority security interest in each
such asset contained in such Securities Account.
(2) Servicer represents and warrants to Purchaser that each
Pledged Asset Mortgage Loan is insured under the terms and provisions of a
Surety Bond subject to the limitations set forth therein. Servicer
covenants that within 2 Business Days after the Funding Date for any
purchase of Pledged Asset Mortgage Loans, Servicer will deliver to each
Surety Bond Issuer any instrument required to be delivered under the
related Surety Bond, executed by the necessary parties, and that all other
requirements for transferring coverage under the related Surety Bonds in
respect of such Pledged Asset Mortgage Loans to the Purchaser shall be
complied with. Servicer shall indemnify each Indemnified Party and hold it
harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs,
judgments, and any other costs, fees and expenses that are related to or
arise from the non-payment of Required Surety Payments with respect to the
Pledged Asset Mortgage Loans purchased by Purchaser from applicable Seller
under this Agreement. The indemnification obligation provided in this
subparagraph 2 with respect to each Pledged Asset Mortgage Loan shall
expire upon receipt by the related Surety Bond Issuer of the necessary
documentation referred to in this paragraph, signed by the appropriate
parties thereto.
(3) Servicer represents and warrants that the assignment of
rights to Purchaser under each Surety Bond, as described herein, will not
result in Purchaser assuming any obligations or liabilities of Servicer
with respect thereto.
(4) Servicer represents and warrants that each Pledged Asset
Servicing Agreement and the Pledge Agreements are in full force and effect
as of the Funding Date and their provisions have not been waived, amended
or modified in any respect, nor has any notice of termination been given
thereunder. Servicer represents to Purchaser that as of the Funding Date,
neither Servicer nor any Pledged Asset Servicer is in default under the
related Pledged Asset Servicing Agreement.
(b) Assignment of Security Interest.
(1) With respect to each Pledged Asset Mortgage Loan sold to
Purchaser under this Agreement, the Servicer hereby assigns to the
Purchaser its security interest in and to any related Pledged Assets, all
of its rights in each related Pledge Agreement, its right to receive
amounts due or to become due in respect of any related Pledged Assets and
its rights as beneficiary under the related Surety Bond in respect of any
Pledged Asset Mortgage Loans.
(c) Servicing of Pledged Assets.
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(1) The parties acknowledge that pursuant to each Pledged
Asset Servicing Agreement between Servicer and the related Pledged Asset
Servicer, the Securities Accounts and other Pledged Assets in which
Purchaser shall (pursuant to the terms of this Agreement) have a security
interest, shall continue to be maintained and serviced by such Pledged
Asset Servicer. Servicer represents and warrants that the terms of each
Pledged Asset Servicing Agreement are not inconsistent with any of the
provisions of this Agreement. Subject to Subsection (c)(2) below, the
Servicer shall service and administer the Securities Accounts and other
Pledged Assets, in accordance with (i) prudent business practices and
procedures employed in the industry to administer securities accounts and
additional collateral similar to that securing the Pledged Asset Mortgage
Loans; (ii) the terms of the related Pledge Agreements; and (iii) the
terms of this Agreement. Servicer's obligations under this Section 5.18(c)
will be subject to the provisions of Section 9.04 hereof.
(2) Notwithstanding any other provision of this Agreement to
the contrary, except as provided below in this Subsection (c)(2), the
Servicer shall have no duty or obligation to service and administer the
Pledged Assets, and the Servicer shall not be deemed to be the Pledged
Asset Servicer with respect to any Pledged Asset Mortgage Loan, unless and
until the related Pledged Asset Servicer's obligations to administer the
Pledged Asset as provided in the related Pledged Asset Servicing Agreement
have been terminated with respect to such Pledged Asset Mortgage Loans
sold hereunder, in which case the Servicer shall be bound to service and
administer the related Pledged Assets and the related Surety Bond in
accordance with the provisions of this Agreement and the related Pledge
Agreements, from the date of such termination. The Servicer shall enforce
the obligations of each Pledged Asset Servicer to service and administer
the Pledged Assets as provided in the related Pledged Asset Servicing
Agreement, and shall take appropriate action thereunder if any Pledged
Asset Servicer fails to substantially comply with its obligations to
administer the Pledged Assets. Such enforcement, including without
limitation, the legal prosecution of claims, termination of the related
Pledged Asset Servicing Agreement with respect to the related Pledged
Asset Mortgage Loans, and the pursuit of other appropriate remedies, shall
be carried out as the Servicer, in its good faith business judgment, would
require were it the owner of the related Securities Accounts and other
Pledged Assets. Without in any way limiting any other remedies set forth
herein, Servicer shall indemnify each Indemnified Party hold it harmless
against any and all Losses that arise with respect to Pledged Asset
Mortgage Loans purchased by Purchaser from Servicer hereunder, provided
that (i) such Losses are caused by the related Pledged Asset Servicer's
failure to administer the Pledged Assets as provided in the related
Pledged Asset Servicing Agreement and in a manner consistent with the
standard set forth in Subsection (c)(1) above, (ii) the indemnification
contained in this Subsection (c)(2) will in no event exceed the Original
Pledged Asset Requirement for the related Pledged Asset Mortgage Loan, and
(iii) such indemnification liability shall be offset to the extent that
the Losses are covered by a Required Surety Payment.
(3) The related Pledged Asset Servicer shall use its best
reasonable efforts to realize upon any related Pledged Assets for such of
the Pledged Asset Mortgage Loans as come into and continue in default and
as to which no satisfactory arrangements can be made for collection of
delinquent payments; provided that the related Pledged
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Asset Servicer shall not obtain title to any such Pledged Assets as a
result of or in lieu of the disposition thereof or otherwise; and provided
further that (i) the related Pledged Asset Servicer shall not proceed with
respect to such Pledged Assets in any manner that would impair the ability
to recover against the related Mortgaged Property, and (ii) the Servicer
shall proceed with any acquisition of REO Property in a manner that
preserves the ability to apply the proceeds of such Pledged Assets against
amounts owed under the defaulted Mortgage Loan. Any proceeds realized from
such Pledged Assets (other than amounts to be released to the Mortgagor or
the related guarantor in accordance with procedures that the Servicer
would follow in servicing loans held for its own account, subject to the
terms and conditions of the related Mortgage and Mortgage Note and to the
terms and conditions of any security agreement, guarantee agreement,
mortgage or other agreement governing the disposition of the proceeds of
such Pledged Assets) shall be deposited in the Collection Account, subject
to withdrawal pursuant to Section 5.05 hereof; provided, that such
proceeds shall not be so deposited if the Required Surety Payment in
respect of such Pledged Asset Mortgage Loan has been deposited in the
Collection Account or otherwise paid to the Purchaser (except to the
extent of any such proceeds taken into account in calculating the amount
of the Required Surety Payment).
(4) Servicer's obligations to administer the Securities
Accounts shall terminate upon termination of the related Pledged Asset
Agreement. Purchaser acknowledges coverage under the terms and provisions
of the related Surety Bond as to any particular Pledged Asset Mortgage
Loan shall terminate upon termination of the related Pledged Asset
Agreement; provided, however, that such termination shall not affect
claims arising under this Agreement or the related Surety Bond prior to
the date of termination of the related Pledged Asset Agreement.
(5) The Pledged Asset Servicer with respect to each Pledged
Asset Mortgage Loan may, without the consent of the Purchaser, amend or
modify a Pledged Asset Agreement in any non-material respect to reflect
administrative or account changes, provided that the same are consistent
with the PHH Guide.
(d) Surety Bonds.
(1) If a Required Surety Payment is payable pursuant to the
related Surety Bond with respect to any Pledged Asset Mortgage Loan, as
determined by the Servicer, the related Pledged Asset Servicer shall so
notify the related Surety Bond Issuer promptly. The Servicer shall cause
the prompt completion of any necessary documentation relating to the
related Surety Bond and shall cause the prompt submission of such
documentation to the related Surety Bond Issuer as a claim for a required
surety. The Purchaser shall execute such documentation if requested by the
related Pledged Asset Servicer.
(2) In the event that the Servicer receives a Required Surety
Payment from a Surety Bond Issuer on behalf of the Purchaser, the Servicer
shall deposit such Required Surety Payment in the Collection Account and
shall distribute such Required Surety Payment, or the proceeds thereof, in
accordance with the provisions hereof applicable to Insurance Proceeds.
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(3) Purchaser will cooperate with Servicer to transfer to
Purchaser the coverage of each Surety Bond in respect of the related
Pledged Asset Mortgage Loans.
Section 5.19 Inspections. The Servicer shall inspect the Mortgaged
Property as often as deemed necessary by the Servicer to assure itself that the
value of the Mortgaged Property is being preserved. In addition, if any Mortgage
Loan is more than 60 days delinquent, the Servicer shall immediately inspect the
Mortgaged Property and shall conduct subsequent inspections in accordance with
Accepted Servicing Practices or as may be required by the primary mortgage
insurer or guarantor. The Servicer shall keep a written report of each such
inspection.
Section 5.20 Transfer of Servicing. On the related Transfer Date, if
any, the Purchaser, or its designee, shall assume all servicing responsibilities
related to, and the Servicer shall cease all servicing responsibilities related
to, the related Mortgage Loans subject to the servicing transfer or such
Transfer Date. On or prior to the related Transfer Date, the Servicer shall, at
its sole cost and expense, take such steps as may be necessary or appropriate to
effectuate and evidence the transfer of the servicing of the related Mortgage
Loans to the Purchaser, or its designee, including but not limited to the
following:
(1) Notice to Mortgagors. The Servicer shall mail to the Mortgagor
of each related Mortgage Loan a letter advising such Mortgagor of the transfer
of the servicing of the related Mortgage Loan to the Purchaser, or its designee,
in accordance with the Xxxxxxxx Xxxxxxxx National Affordable Housing Act of
1990, as amended; provided, however, the content and format of the letter shall
have the prior approval of the Purchaser. The Servicer shall provide the
Purchaser with copies of all such related notices no later than the related
Transfer Date.
(2) Notice to Taxing Authorities and Insurance Companies. The
Servicer shall transmit to the applicable taxing authorities and insurance
companies (including primary mortgage insurance policy insurers, if applicable)
and/or agents, notification of the transfer of the servicing to the Purchaser,
or its designee, and instructions to deliver all notices, tax bills and
insurance statements, as the case may be, to the Purchaser or its designee from
and after the related Transfer Date. The Servicer shall provide the Purchaser
with copies of all such notices no later than the related Transfer Date.
(3) Delivery of Servicing Records. The Servicer shall forward to the
Purchaser, or its designee, all servicing records and the Mortgage Files in the
Servicer's possession relating to each related Mortgage Loan.
(4) Escrow Payments. The Servicer shall provide to the Purchaser, or
its designee, in immediately available funds by wire transfer an amount equal to
the balance in the related Escrow Account net of all Escrow Payments, suspense
balances, servicing advances and loss draft balances associated with the related
Mortgage Loans. The Servicer shall provide the Purchaser with an accounting
statement, in electronic format reasonably acceptable to the Purchaser, of
Escrow Payments, servicing advances, suspense balances and loss draft balances
sufficient to enable the Purchaser to reconcile the amount of such payment with
the accounts related to the Mortgage Loans. Additionally, the Servicer shall
wire transfer to the Purchaser the
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amount of any agency, trustee or prepaid Mortgage Loan payments and all other
similar amounts held by the Servicer.
(5) Payoffs and Assumptions. For a period of thirty days after the
Transfer Date, the Servicer shall promptly deliver to the Purchaser, or its
designee, within a reasonable time period, copies of all assumption and payoff
statements generated by the Servicer on the related Mortgage Loans prior to the
related Transfer Date.
(6) Mortgage Payments Received Prior to Transfer Date. Prior to the
related Transfer Date all payments received by the Servicer on each related
Mortgage Loan shall be properly applied by the Servicer to the account of the
each related Mortgagor.
(7) Mortgage Payments Received after Transfer Date. For a period of
sixty days after the Transfer Date any related Monthly Payments received by the
Servicer shall be forwarded to the Purchaser by overnight mail on the date of
receipt. After the initial sixty day period such payments may be delivered by
regular mail or such other method(s) as may be agreed to by the parties. The
Servicer shall notify the Purchaser of the particulars of the payments, which
notification requirement shall be satisfied if the Servicer forwards with its
payment sufficient information to permit appropriate processing of the payment
by the Purchaser.
(8) Misapplied Payments. Misapplied payments shall be processed as
follows:
(i) All parties shall cooperate in correcting misapplication errors;
(ii) The party receiving notice of a misapplied payment occurring
prior to the related Transfer Date and discovered after such Transfer Date
shall immediately notify the other party;
(iii) If a misapplied payment received prior to the related Transfer
Date cannot be identified and such misapplied payment has resulted in a
shortage in a Collection Account or Escrow Account, the Servicer shall be
liable for the amount of such shortage. The Servicer shall reimburse the
Purchaser for the amount of such shortage within thirty (30) days after
receipt of written demand therefor from the Purchaser;
(iv) If a misapplied payment received prior to the related Transfer
Date caused the payment to be incorrectly calculated as the result of an
inaccurate outstanding principal balance, a check shall be issued to the
party shorted by the improper payment application within five (5) Business
Days after notice thereof by the other party; and
(1) Any check issued under the provisions of this Section
5.20(8) shall be accompanied by a statement indicating the corresponding
Servicer, the Mortgage Loan identification number and an explanation of
the allocation of any such payments.
(9) Books and Records. On the related Transfer Date, the books,
records and accounts of the Servicer with respect to the related Mortgage Loans
shall be delivered in accordance with all applicable Purchaser requirements.
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(10) Reconciliation. The Servicer shall, on or before the related
Transfer Date, reconcile principal balances and make any monetary adjustments
required by the Purchaser. Any such monetary adjustments will be transferred
between the Servicer and the Purchaser as appropriate.
(11) IRS Forms. The Servicer shall or shall file all IRS forms 1099,
1099A, 1098 or 1041 and K-1 which are required to be filed on or before the
related Transfer Date in relation to the servicing and ownership of the related
Mortgage Loans. The Servicer shall provide copies of such forms to the Purchaser
upon request and shall reimburse the Purchaser for any costs or penalties
incurred by the Purchaser due to the Servicer's failure to comply with this
paragraph.
Section 5.21 Fair Credit Reporting Act. For each Mortgage Loan, the
Servicer shall furnish, in accordance with the Fair Credit Reporting Act and its
implementing regulations, accurate and complete information (e.g., favorable and
unfavorable) on its borrower credit files, to Equifax, Experian, and Trans Union
Credit Information Company, or their successors, on a monthly basis. The
Servicer shall provide evidence of such monthly reporting to the Purchaser upon
request.
ARTICLE VI
REPORTS; REMITTANCES; ADVANCES
Section 6.01 Remittances. (1) On each Remittance Date, the Servicer
shall remit to the Purchaser (a) all amounts credited to the Collection Account
as of the close of business on the last day of the related Due Period (including
(1) the amount of any Principal Prepayment, together with interest thereon at
the related Remittance Rate to the end of the month in which prepayment of the
related Mortgage Loan occurs except when such Principal Prepayment is received
on the last day of the related Due Period in which case interest calculated at
the related Remittance Rate to the end of the month in which prepayment of the
related Mortgage Loan occurs shall not be remitted, (2) all proceeds of any REO
Disposition net of amounts payable to the Servicer pursuant to Section 5.13, (3)
prior to the occurrence of any Securitization Transaction with respect to the
Mortgage Loans, any Foreclosure Profits and (4) after the occurrence of a
Securitization Transaction, Foreclosure Profits shall be distributed to the
related trustee or as otherwise directed in the related Reconstitution
Agreements), net of charges against or withdrawals from the Collection Account
in accordance with Section 5.05, which charges against or withdrawals from the
Collection Account the Servicer shall make solely on such Remittance Date, plus
(b) all Monthly Advances, if any, which the Servicer is obligated to remit
pursuant to Section 6.03; provided that the Servicer shall not be required to
remit, until the next following Remittance Date, any amounts attributable to
Monthly Payments collected but due on a Due Date or Dates subsequent to the
related Due Period.
(2) All remittances made to the Purchaser on each Remittance
Date will be made to the Purchaser by wire transfer of immediately available
funds accordingly to the instructions that will be provided by Purchaser to the
Servicer.
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(3) With respect to any remittance received by the Purchaser after
the Business Day on which such payment was due, the Servicer shall pay to the
Purchaser interest on any such late payment at an annual rate equal to One-month
LIBOR (as published in the Wall Street Journal) plus 200 basis points, but in no
event greater than the maximum amount permitted by applicable law. Such interest
shall be paid by the Servicer to the Purchaser on the date such late payment is
made and shall cover the period commencing with the Business Day on which such
payment was due and ending with the Business Day on which such payment is made,
both inclusive. Such interest shall be remitted along with such late payment.
Neither the payment by the Servicer nor the acceptance by the Purchaser of any
such interest shall be deemed an extension of time for payment or a waiver by
the Purchaser of any Event of Default.
Section 6.02 Reporting. On or before the 5th Business Day of each
month during the term hereof, the Servicer shall deliver to the Purchaser
monthly accounting reports in the form of Exhibits 6.02(a) through 6.02(g)
attached hereto with respect to the most recently ended Due Period. Such monthly
accounting reports shall include information as to the aggregate Unpaid
Principal Balance of all Mortgage Loans, the scheduled amortization of all
Mortgage Loans, any delinquencies and the amount of any Principal Prepayments as
of the most recently ended Record Date. Such monthly reports shall be available
by the Servicer for the Purchaser on Servicer's secured web site. The Servicer
shall provide training, secured access and password(s) to the Purchaser on the
operation of the website.
Utilizing resources reasonably available to the Servicer and to the
extent the requested data is contained within the Servicer's electronic systems
without incurring any cost except the Servicer's overhead and employees'
salaries, the Servicer shall furnish to the Purchaser during the term of this
Agreement such periodic, special or other reports, information or documentation,
whether or not provided for herein, as shall be reasonably requested by the
Purchaser with respect to Mortgage Loans or REO Properties (provided, the
Purchaser shall have given the Servicer reasonable notice and opportunity to
prepare such reports, information or documentation), including any reports,
information or documentation reasonably required to comply with any regulations
of any governmental agency or body having jurisdiction over the Purchaser, all
such reports or information to be as provided by and in accordance with such
applicable instructions and directions as the Purchaser may reasonably request.
If any of such reports are not customarily prepared by the Servicer or require
that the Servicer program data processing systems to create the reports, then
the Purchaser shall pay to the Servicer a fee mutually agreed to by the
Purchaser and the Servicer taking into account the Servicer's actual time and
cost in preparing such reports. The Servicer agrees to execute and deliver all
such instruments and take all such action as the Purchaser, from time to time,
may reasonably request in order to effectuate the purposes and to carry out the
terms of this Agreement.
Section 6.03 Monthly Advances by the Servicer. (1) Not later than
the close of business on the Business Day immediately preceding each Remittance
Date, the Servicer shall deposit in the Collection Account an amount equal to
all Monthly Payments not previously advanced by the Servicer (with interest
adjusted to the Remittance Rate) that were due on a Mortgage Loan and delinquent
at the close of business on the related Determination Date. The Servicer may
reduce the total amount to be deposited in the Collection Account as required by
the foregoing sentence by the amount of funds in the Collection Account which
represent Prepaid Monthly Payments; provided, however, that after any
Securitization Transaction, the
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Servicer or its parent must meet the criteria of the Rating Agencies at the time
that the Servicer proposes to use Prepaid Monthly Payments for the making of any
Monthly Advances from such funds.
(2) The Servicer's obligations to make Monthly Advances as to any
Mortgage Loan will continue through the last Monthly Payment due prior to the
payment in full of the Mortgage Loan, or through the Remittance Date prior to
the Remittance Date for the remittance of all Liquidation Proceeds and other
payments or recoveries (including Insurance Proceeds or Condemnation Proceeds)
with respect to the Mortgage Loan; provided that such obligation shall cease if
the Servicer furnishes to the Purchaser an Officers' Certificate evidencing the
determination by the Servicer in accordance with Section 6.04 that an advance
with respect to such Mortgage Loan would constitute a Non-recoverable Advance.
(3) On the Business Day prior to the Remittance Date, the Servicer
shall deposit into the Collection Account payments on account of Prepayment
Interest Shortfall Amount in an aggregate amount equal to the lesser of (i) the
aggregate amount of Prepayment Interest Shortfall Amount for the related
Remittance Date resulting solely from Principal Prepayments during the related
Due Period, and (ii) the total amount of the servicing compensation that would
be payable to the Servicer if no Principal Prepayment was made during the Due
Period related to such Remittance Date. Such payments shall be deposited into
the Collection Account.
Section 6.04 Non-recoverable Advances. The determination by the
Servicer that it has made a Non-recoverable Advance or that any Monthly Advance
or Servicing Advance, if made, would constitute a Non-recoverable Advance shall
be evidenced by an Officers' Certificate delivered to the Purchaser detailing
the reasons for such determination.
Section 6.05 Itemization of Servicing Advances. The Servicer shall
provide the Purchaser with an itemization of all Servicing Advances incurred or
made by the Servicer hereunder as the Purchaser may from time to time reasonably
request.
Section 6.06 Officers' Certificate. The Seller shall deliver to the
Purchaser an Officers' Certificate in the form attached hereto as Exhibit 9 on
the Initial Funding Date and upon Purchaser's reasonable request thereafter.
Section 6.07 Compliance with REMIC Provisions. If a REMIC election
has been made with respect to the arrangement under which the Mortgage Loans and
REO Property are held, the Servicer shall not take any action, cause the REMIC
to take any action or fail to take (or fail to cause to be taken) any action,
that under the REMIC Provisions, if taken or not taken, as the case may be,
could (i) endanger the status of the REMIC as a REMIC or (ii) result in the
imposition of a tax upon the REMIC (including but not limited to the tax on
"prohibited transactions" as defined in Section 860(a)(2) of the Code and the
tax on "contributions" to a REMIC set forth in Section 860(D) of the Code)
unless the Servicer has received an Opinion of Counsel (at the expense of the
party seeking to take such action) to the effect that the contemplated action
will not endanger such REMIC status or result in the imposition of any tax on
the REMIC.
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ARTICLE VII
GENERAL SERVICING PROCEDURES
Section 7.01 Enforcement of Due-on-Sale Clauses, Assumption
Agreements. (1) The Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance by any Mortgagor of the Mortgaged Property
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under any "due-on-sale" clause applicable thereto; provided that the Servicer
shall not exercise any such rights if prohibited by law from doing so or if the
exercise of such rights would impair or threaten to impair any recovery under
the related Primary Insurance Policy, if any.
(2) If the Servicer is prohibited from enforcing such "due-on-sale"
clause, then the Servicer will attempt to enter into an assumption agreement
with the Person to whom the Mortgaged Property has been conveyed or is proposed
to be conveyed, pursuant to which such Person becomes liable under the Mortgage
Note and, to the extent permitted by applicable state law, the Mortgagor remains
liable thereon. (For purposes of this Section 7.01, the term "assumption" is
deemed to also include a sale of the Mortgaged Property subject to the Mortgage
that is not accompanied by an assumption or substitution of liability
agreement.)
(3) If the Servicer receives a request for any Mortgage Loan to be
assumed, then the Servicer shall inquire into the creditworthiness of the
proposed transferee and shall use the same underwriting criteria for approving
the credit of the proposed transferee that are used with respect to underwriting
mortgage loans of the same type as the Mortgage Loans. Where an assumption is
allowed, the Servicer, with the prior written consent of the primary mortgage
insurer, if any, and subject to the conditions of Section 7.01(3), shall, and is
hereby authorized to, enter into a substitution of liability agreement with the
Person to whom the Mortgaged Property is proposed to be conveyed pursuant to
which the original mortgagor is released from liability and such Person is
substituted as mortgagor and becomes liable under the related Mortgage Note. Any
such substitution of liability agreement shall be in lieu of an assumption
agreement. In no event shall the Note Rate, the amount of the Monthly Payment or
the final maturity date be changed. The Servicer shall notify the Purchaser that
any such substitution of liability or assumption agreement has been completed by
forwarding to the Purchaser the original of any such substitution of liability
or assumption agreement, which document shall be added to the related
Purchaser's Mortgage File and shall, for all purposes, be considered a part of
such Purchaser's Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. Any fee collected by the Servicer for
entering into an assumption or substitution of liability agreement shall be
retained by the Servicer as additional compensation for servicing the Mortgage
Loans.
If the credit of the proposed transferee does not meet such
underwriting criteria, then the Servicer shall, to the extent permitted by the
Mortgage or the Mortgage Note and by applicable law, accelerate the maturity of
the Mortgage Loan.
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Section 7.02 Satisfaction of Mortgages and Release of Mortgage
Files. Upon the payment in full of any Mortgage Loan, the Servicer will
immediately notify the Purchaser by a certification of a Servicing Officer,
which certification shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required to
be deposited in the Collection Account pursuant to Section 5.04 have been or
will be so deposited and shall request delivery to it of the Purchaser's
Mortgage File held by the Purchaser. Upon receipt of such certification and
request, the Purchaser shall promptly release the related mortgage documents to
the Servicer and the Servicer shall promptly prepare and process any
satisfaction or release. No expense incurred in connection with any instrument
of satisfaction or deed of reconveyance shall be chargeable to the Collection
Account.
If the Servicer satisfies or releases a Mortgage without having
obtained payment in full of the indebtedness secured by the Mortgage, or should
it otherwise take such action which results in a reduction of the coverage under
the Primary Insurance Policy, if any, then the Servicer shall promptly give
written notice thereof to the Purchaser, and, within 10 Business Days following
written demand therefor from the Purchaser to the Servicer, the Servicer shall
repurchase the related Mortgage Loan by paying to the Purchaser the Repurchase
Price therefor by wire transfer of immediately available funds directly to the
Purchaser's Account.
From time to time and as appropriate for the servicing or
foreclosure of the Mortgage Loan, including for this purpose collection under
any Primary Insurance Policy, the Purchaser shall, upon request of the Servicer
and delivery to the Purchaser of a servicing receipt signed by a Servicing
Officer, release the Purchaser's Mortgage File held by the Purchaser to the
Servicer. Such servicing receipt shall obligate the Servicer to return the
related mortgage documents to the Purchaser when the need therefor by the
Servicer no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Collection Account or the Purchaser's Mortgage File or such document has been
delivered to an attorney, or to a public trustee or other public official as
required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
nonjudicially, and the Servicer has delivered to the Purchaser a certificate of
a Servicing Officer certifying as to the name and address of the Person to which
such Purchaser's Mortgage File or such document was delivered and the purpose or
purposes of such delivery. Upon receipt of a certificate of a Servicing Officer
stating that such Mortgage Loan was liquidated and the Liquidation Proceeds were
deposited in the Collection Account, the servicing receipt shall be released by
the Purchaser to the Servicer.
Section 7.03 Servicing Compensation. As compensation for its
services hereunder, the Servicer shall be entitled to retain from interest
payments on the Mortgage Loans the amount provided for as the Servicing Fee. The
Servicing Fee in respect of a Mortgage Loan for a particular month shall become
payable only upon the receipt by the Servicer from the Mortgagor of the full
Monthly Payment in respect of such Mortgage Loan. Additional servicing
compensation in the form of assumption fees, as provided in Section 7.01, late
payment charges and other servicer compensation for modifications, short sales
as provided in Section 5.01(e), and other shall be retained by the Servicer to
the extent not required to be deposited in the Collection Account. In the event
that Liquidation Proceeds, Insurance Proceeds and proceeds from any REO
Disposition exceeds the Unpaid Principal Balance of such Mortgage Loan plus
unpaid interest accrued thereon at a per annum rate equal to the related
Remittance Rate, the
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Servicer shall be entitled to retain therefrom and pay to itself any Servicing
Fee, Monthly Advances and Servicing Advances considered to be accrued but
unpaid. The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided for herein.
Section 7.04 Annual Statement as to Compliance. The Servicer shall
deliver to the Purchaser on or before March 10, 2006, an Officer's Certificate
stating that (1) a review of the activities of the Servicer during the preceding
calendar year and if performance under this Agreement has been made under such
officer's supervision, and (2) to the best of such officer's knowledge, based on
such review, the Servicer has fulfilled all its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof and the action being taken by the Servicer to cure
such default.
Section 7.05 Annual Independent Certified Public Accountants'
Servicing Report or Attestation. On or before March 10, 2006, the Servicer, at
its expense, shall cause a firm of independent public accountants which is a
member of the American Institute of Certified Public Accountants to furnish a
statement to the Purchaser to the effect that such firm has, with respect to the
Servicer's overall servicing operations, examined such operations in accordance
with the requirements of the Uniform Single Attestation Program for Mortgage
Bankers, stating such firm's conclusions relating thereto.
Section 7.06 Purchaser's Right to Examine Servicer Records. The
Purchaser shall have the right to examine and audit, during business hours or at
such other times as are reasonable under applicable circumstances, upon 10 days
advance notice any and all of (i) the credit and other loan files relating to
the Mortgage Loans or the Mortgagors, (ii) any and all books, records,
documentation or other information of the Servicer (whether held by the Servicer
or by another) relating to the servicing of the Mortgage Loans and (iii) any and
all books, records, documentation or other information of the Servicer (whether
held by the Servicer or by another) that are relevant to the performance or
observance by the Servicer of the terms, covenants or conditions of this
Agreement. In particular, the Servicer shall maintain in its possession,
available for inspection by the Purchaser, or its designee and shall deliver to
the Purchaser upon demand, evidence of compliance with all federal, state and
local laws, rules and regulations, and requirements of Xxxxxx Xxx or Xxxxxxx
Mac, as applicable, to the extent the Seller is required by law or Accepted
Servicing Practices to maintain such evidence. The Servicer shall be obligated
to make the foregoing information available to the Purchaser at the site where
such information is stored; provided that the Purchaser shall be required to pay
all reasonable costs and expenses incurred by the Servicer in making such
information available. To the extent that original documents are not required
for purposes of realization of Liquidation Proceeds or Insurance Proceeds,
documents maintained by the Servicer may be in the form of microfilm or
microfiche or such other reliable means of recreating original documents,
including but not limited to, optical imagery techniques so long as the Servicer
complies with the requirements of the Xxxxxx Mae Guide, as amended from time to
time.
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ARTICLE VIII
REPORTS TO BE PREPARED BY THE SERVICER
Section 8.01 The Servicer's Reporting Requirements. Electronic
Format. If requested by the Purchaser, the Servicer shall supply any and all
information regarding the Mortgage Loans and the REO Properties, including all
reports required to be delivered pursuant to Section 5.03, Section 6.02 and this
Section 8.01, to the Purchaser in electronic format reasonably acceptable to
Purchaser, unless otherwise limited by the servicing system utilized by the
Servicer.
Section 8.02 Financial Statements. The Servicer understands that, in
connection with marketing the Mortgage Loans, the Purchaser may make available
to any prospective purchaser of the Mortgage Loans the Servicer's audited
financial statements for the two fiscal years immediately preceding any Sale of
the Mortgage Loans, together with any additional statements required pursuant to
the next sentence. During the term hereof, the Servicer will deliver to the
Purchaser audited financial statements for each of its fiscal years following
the Funding Date and all other financial statements prepared following the
Funding Date to the extent any such statements are available upon request to the
public at large.
The Servicer also agrees to make available upon reasonable notice
and during normal business hours to any prospective purchasers of the Mortgage
Loans a knowledgeable financial or accounting officer for the purpose of
answering questions respecting recent developments affecting the Servicer or the
financial statements of the Servicer which may affect, in any material respect,
the Servicer's ability to comply with its obligations under this Agreement, and
to permit any prospective purchasers upon reasonable notice and during normal
business hours to inspect the Servicer's servicing facilities for the purpose of
satisfying such prospective purchasers that the Servicer has the ability to
service the Mortgage Loans in accordance with this Agreement.
ARTICLE IX
THE SELLERS
Section 9.01 Indemnification; Third Party Claims(1) . Each Seller
and Servicer shall indemnify and hold harmless the Purchaser and any Successor
Servicer and each of their present and former directors, officers, agents,
employees, Affiliates and assignees and each Person, if any, that controls the
Purchaser or Successor Servicer or such Affiliate within the meaning of either
the Securities Act or the Exchange Act (each, an "Indemnified Party"), from and
against any costs, damages, expenses (including reasonable attorneys' fees and
costs, irrespective of whether or not incurred in connection with the defense of
any actual or threatened action, proceeding, or claim), fines, forfeitures,
injuries, liabilities or losses ("Losses") suffered or sustained in any way by
any such Person, no matter how or when arising (including Losses incurred or
sustained in connection with any judgment, award, settlement or repurchase
hereunder), in connection with or relating to the Seller's or Servicer's failure
(i) to observe and perform any or all of the Seller's or Servicer's duties,
obligations, covenants, agreements, warranties or representations contained in
this Agreement or in the Purchase Price and Terms
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Agreement or (ii) to comply with all applicable requirements contained in this
Agreement or the Purchase Price and Terms Agreement with respect to the
servicing of the Mortgage Loan, provided, however, in the case of both of the
preceding clauses (i) and (ii), PHH Mortgage shall have no obligation to
indemnify an Indemnified Party for a breach by the Trust of the Trust's
representations contained in Sections 3.01, 3.03(3) or 3.03(16) hereof. In the
event of a breach by the Trust of the Trust's representations in Section 3.01,
3.03(3) or 3.03(16), the Indemnified Party's sole right to indemnification shall
be from the Trust. The applicable Seller shall immediately (i) notify the
Purchaser if a claim is made by a third party with respect to this Agreement,
any Reconstitution Agreement, any Mortgage Loan and/or any REO Property (and
shall promptly notify the trustee with respect to any claim made by a third
party with respect to any Reconstitution Agreement) (ii) assume (with the prior
written consent of the Purchaser) the defense of any such claim and pay all
expenses in connection therewith, including attorneys' fees, and (iii) promptly
pay, discharge and satisfy any judgment, award, or decree that may be entered
against it or the Purchaser in respect of such claim. The applicable Seller
shall follow any written instructions received from the Purchaser in connection
with such claim. Nothing contained herein shall prohibit the Purchaser, at its
expense, from retaining its own counsel to assist in any such proceedings or to
observe such proceedings; provided that neither Seller shall be obligated to pay
or comply with any settlement to which it has not consented. The Seller agrees
that it will not enter into any settlement of any such claim without the consent
of the Purchaser. In addition to the obligations of the Seller set forth in this
Section 9.01, the Purchaser may pursue any and all remedies otherwise available
at law or in equity, including, but not limited to, the right to seek damages.
The Servicer shall be reimbursed from amounts on deposit in the Collection
Account for all amounts advanced by it pursuant to the second preceding sentence
except when the claim in any way relates to the Servicer's indemnification
pursuant to this Section 9.01.
Notwithstanding anything to the contrary contained herein, in no
event shall a termination of this Agreement or the Servicer hereunder terminate
any indemnification obligations of the Servicer or each Seller under this
Agreement, which obligations shall survive any such termination.
Section 9.02 Merger or Consolidation of the Seller. Each Seller will
keep in full effect its existence, rights and franchises as a corporation or a
Delaware statutory trust, as applicable, under the laws of the state of its
organization and will obtain and preserve its qualification to do business as a
foreign entity in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement or any of
the Mortgage Loans and to perform its duties under this Agreement.
Any Person into which a Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation (including by
means of the sale of all or substantially all of such Seller's assets to such
Person) to which the Seller shall be a party, or any Person succeeding to the
business of the Seller, shall be the successor of the Seller hereunder, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
that, unless otherwise consented to by the Purchaser, the successor or surviving
Person, in the case of a merger or consolidation, etc. of the Servicer, shall be
an institution qualified to service mortgage loans on behalf of Xxxxxx Xxx and
Xxxxxxx Mac in accordance with the requirements of Section 3.02(1),
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shall not cause a rating on any security backed by a Mortgage Loan to be
downgraded and shall satisfy the requirements of Section 12.01 with respect to
the qualifications of a successor to such Seller.
Section 9.03 Limitation on Liability of the Sellers and Others.
Neither the Sellers nor any of the officers, employees or agents of the Sellers
shall be under any liability to the Purchaser for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement or pursuant to the express written instructions of the Purchaser, or
for errors in judgment made in good faith; provided that this provision shall
not protect the Sellers or any such Person against any breach of warranties or
representations made herein, or failure to perform its obligations in compliance
with any standard of care set forth in this Agreement, or any liability which
would otherwise be imposed by reasons of willful misfeasance, bad faith,
negligence or any breach in the performance of the obligations and duties
hereunder. The Sellers and any officer, employee or agent of the Sellers may
rely in good faith on any document of any kind reasonably believed by the
Sellers or such Person to be genuine and prima facie properly executed and
submitted by any Person respecting any matters arising hereunder.
The Sellers shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to their duties
hereunder and which in their opinion may involve them in any expense or
liability; provided that the Sellers may in their discretion undertake any such
action that it may deem necessary or desirable in respect of this Agreement and
the rights and duties of the parties hereto. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities for which the Sellers shall be entitled to be
reimbursed therefor out of the Collection Account. This indemnity shall survive
the termination of this Agreement.
Section 9.04 Servicer Not to Resign. With respect to the retention
by PHH Mortgage of the servicing of the Mortgage Loans and the REO Properties
hereunder, PHH Mortgage acknowledges that the Purchaser has acted in reliance
upon PHH Mortgage's independent status, the adequacy of its servicing
facilities, plan, personnel, records and procedures, its integrity, reputation
and financial standing and the continuance thereof. Consequently, PHH Mortgage
shall not assign the servicing rights retained by it hereunder to any third
party nor resign from the obligations and duties hereby imposed on it except (i)
with the approval of the Purchaser, such approval not to be unreasonably
withheld, or (ii) 3 Business Days following any determination that its duties
hereunder are no longer permissible under applicable law and such incapacity
cannot be cured by PHH Mortgage. Any determination permitting the transfer of
the servicing rights or the resignation of PHH Mortgage under Subsection (ii)
hereof shall be evidenced by an opinion of counsel to such effect delivered to
the Purchaser, which opinion of counsel shall be in form and substance
reasonably acceptable to the Purchaser.
Without in any way limiting the generality of this Section 9.04, in
the event that the Seller either shall sell or otherwise dispose of all or
substantially all of its property or assets (including its rights hereunder),
without the prior written consent of the Purchaser, which consent shall not be
unreasonably withheld, then the Purchaser shall have the right to terminate this
Agreement upon notice given as set forth in Section 10.01, without any payment
of any penalty or damages and without any liability whatsoever to the Servicer
or any third party;
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provided however, that in the event a sale or merger as described above occurs
without notice to the Seller or the Purchaser, the Purchaser agrees that upon
its receipt of notice of such sale or merger, it will review fully all
information provided by the Purchaser regarding the successor servicer,
including information regarding the adequacy of its servicing facilities,
personnel, records and procedures, its integrity, reputation and financial
standing, prior to making any determination to terminate this Agreement. In the
event that such successor servicer is not acceptable to the Purchaser, the
Purchaser shall have the right to terminate in its sole discretion, the
successor servicer's rights under this servicing agreement.
ARTICLE X
DEFAULT
Section 10.01 Events of Default. In case one or more of the
following events shall occur and be continuing:
(1) any failure by the Servicer to remit to the Purchaser any
payment required to be made under the terms of this Agreement which continues
unremedied for a period of 3 Business Days unless such failure to remit is due
to a cause beyond the Servicer's control, including an act of God, act of civil,
military or governmental authority, fire, epidemic, flood, blizzard, earthquake,
riot, war, or sabotage, provided that the Servicer gives the Purchaser notice of
such cause promptly and uses its reasonable efforts to correct such failure to
remit and does so remit within 2 Business Days following the end of the duration
of the cause of such failure to remit;
(2) any failure on the part of a Seller/Servicer duly to observe or
perform in any material respect any of the covenants or agreements on the part
of such Seller/Servicer set forth in this Agreement which continues unremedied
for a period of 30 days (or, in the case of (i) the annual statement of
compliance required under Section 7.04, (ii) the annual independent public
accountants' servicing report or attestation required under Section 7.05, or
(iii) the certification required under Section 3.05 in the form of Exhibit 11,
five (5) days) after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the applicable Seller/Servicer
by the Purchaser; provided that such 30-day period shall not begin with respect
to any failure to cure, repurchase or substitute in accordance with Sections
2.04 and/or 3.04 until the expiration of the cure periods provided for in
Sections 2.04 and/or 3.04, as applicable;
(3) any filing of an Insolvency Proceeding by or on behalf of a
Seller/Servicer, any consent by or on behalf of a Seller/Servicer to the filing
of an Insolvency Proceeding against it, or any admission by or on behalf of a
Seller/Servicer of its inability to pay its debts generally as the same become
due, suspension of a Seller/Servicer's payment obligations or cessation of the
Servicer's normal business operations for three Business Days (as a result of an
occurrence specific to the Servicer);
(4) any filing of an Insolvency Proceeding against a Seller/Servicer
that remains undismissed or unstayed for a period of 60 days after the filing
thereof;
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(5) any issuance of any attachment or execution against, or any
appointment of a conservator, receiver or liquidator with respect to, all or
substantially all of the assets of a Seller/Servicer;
(6) any failure or inability of PHH Mortgage to be eligible to
service Mortgage Loans for Xxxxxx Xxx, or Xxxxxxx Mac;
(7) any sale, transfer, assignment, or other disposition by a
Seller/Servicer of all or substantially all of its property or assets to a
Person who does not meet the qualifications enumerated or incorporated by
reference into Section 9.02, any assignment by a Seller/Servicer of this
Agreement or any of a Seller's/Servicer's rights or obligations hereunder except
in accordance with Section 9.04, or any action taken or omitted to be taken by a
Seller/Servicer in contemplation or in furtherance of any of the foregoing,
without the consent of the Purchaser;
(8) any failure by the Seller to be in compliance with applicable
"doing business" or licensing laws of any jurisdiction where Mortgaged Property
is located; or
(9) the failure of the Servicer to maintain a minimum net worth of
$25,000,000;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Purchaser, by notice in writing to the Sellers may, in
addition to whatever rights the Purchaser may have at law or in equity to
damages, including injunctive relief and specific performance, terminate all the
rights and obligations of the Sellers under this Agreement and in and to the
Mortgage Loans and the proceeds thereof subject to Section 12.01, without the
Purchaser's incurring any penalty or fee of any kind whatsoever in connection
therewith; provided that, upon the occurrence of an Event of Default under
Subsection (3), (4) or (5) of this Section 10.01, this Agreement and all
authority and power of the Sellers hereunder (whether with respect to the
Mortgage Loans, the REO Properties or otherwise) shall automatically cease. On
or after the receipt by the Sellers of such written notice, all authority and
power of the Sellers under this Agreement (whether with respect to the Mortgage
Loans or otherwise) shall cease. Notwithstanding the occurrence of an Event of
Default, the Sellers or the Servicer, as applicable, shall be entitled to all
amounts due to such party and remaining unpaid on such date of termination.
If any of the Mortgage Loans are MERS Mortgage Loans, in connection
with the termination or resignation (as described in Section 9.04) of the
Servicer hereunder, either (i) the successor servicer shall represent and
warrant that it is a member of MERS in good standing and shall agree to comply
in all material respects with the rules and procedures of MERS in connection
with the servicing of the MERS Mortgage Loans, or (ii) the predecessor servicer
shall cooperate with the successor servicer either (x) in causing MERS to
execute and deliver an assignment of Mortgage in recordable form to transfer the
Mortgage from MERS to the Purchaser and to execute and deliver such other
notices, documents and other instruments as may be necessary to effect a
transfer of such Mortgage Loan or servicing of such Mortgage Loan on the MERS
system to the successor servicer or (y) in causing MERS to designate on the MERS
system the successor servicer as the servicer of such Mortgage Loan.
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ARTICLE XI
TERMINATION
Section 11.01 Term and Termination (1) The servicing obligations of
the Servicer under this Agreement may be terminated as provided in Section 10.01
hereof.
(2) In any case other than as provided under Subsection (1) hereof,
the respective obligations and responsibilities of the Sellers hereunder shall
terminate upon: (a) the later of the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan or the disposition of
all REO Property and the remittance of all funds due hereunder; or (b) the
mutual written consent of the Sellers and the Purchaser.
(3) Upon any termination of this Agreement or the servicing
obligations of the Servicer hereunder, then the Servicer shall prepare, execute
and deliver all agreements, documents and instruments, including all Servicer
Mortgage Files, and do or accomplish all other acts or things necessary or
appropriate to effect such termination, all at the Servicer's sole expense. In
any such event, the Servicer agrees to cooperate with the Purchaser in effecting
the termination of the Servicer's servicing responsibilities hereunder,
including the transfer to the Purchaser or its designee for administration by it
of all cash amounts which shall at the time be contained in, or credited by the
Servicer to, the Collection Account and/or the Escrow Account or thereafter
received with respect to any Mortgage Loan or REO Property.
(4) Notwithstanding and in addition to the foregoing, in the event
that (i) a Mortgage Loan becomes delinquent for a period of 91 days or more (a
"Delinquent Mortgage Loan") or (ii) a Mortgage Loan becomes an REO Property, the
Purchaser may at its election terminate this Agreement with respect to such
Delinquent Mortgage Loan or REO Property upon 30 days' written notice to the
Servicer; provided that, upon termination of the Agreement with respect to such
Delinquent Mortgage Loan or REO Property, the Purchaser shall reimburse the
Servicer for all outstanding Servicing Advances, Monthly Advances and Servicing
Fees.
Section 11.02 Survival. Notwithstanding anything to the contrary
contained herein, the representations and warranties of the parties contained
herein and in any certificate or other instrument delivered pursuant hereto, as
well as the other covenants hereof (including those set forth in Section 9.01)
that, by their terms, require performance after the termination by this
Agreement, shall survive the delivery and payment for the Mortgage Loans on each
Funding Date as well as the termination of this Agreement and shall inure to the
benefit of the parties, their successors and assigns. Sellers further agree that
the representations, warranties and covenants made by Sellers herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by Purchaser notwithstanding any investigation heretofore made by
Purchaser or on Purchaser's behalf.
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ARTICLE XII
GENERAL PROVISIONS
Section 12.01 Successor to the Servicer. Upon the termination of the
Servicer's servicing responsibilities and duties under this Agreement pursuant
to Sections 9.04, 10.01, or 11.01, the Purchaser shall (i) succeed to and assume
all of the Servicer's responsibilities, rights, duties and obligations under
this Agreement or (ii) appoint a successor servicer which shall succeed to all
rights and assume all of the responsibilities, duties and liabilities of the
Servicer under this Agreement prior to the termination of the Servicer's
responsibilities, duties and liabilities under this Agreement. If the Servicer's
duties, responsibilities and liabilities under this Agreement should be
terminated pursuant to the aforementioned Sections, then the Servicer shall
continue to discharge such duties and responsibilities during the period from
the date it acquires knowledge of such termination until the effective date
thereof (if applicable) all on the terms and conditions contained herein and
shall take no action whatsoever that might impair or prejudice the rights or
financial condition of its successor. The termination of the Servicer's
servicing responsibilities pursuant to any of the aforementioned Sections shall
not, among other things, relieve the Servicer of its obligations pursuant to
Section 2.04 and/or 7.02, the representations and warranties or other
obligations set forth in Sections 2.04, 3.01, 3.02 and 3.03 and the remedies
available to the Purchaser under the various provisions of this Agreement. In
addition, such termination or resignation shall not affect any claims that the
Purchaser may have against the Servicer arising prior to any such termination or
resignation.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Servicer and to the Purchaser an instrument
accepting such appointment, wherein the successor shall make the representations
and warranties set forth in Section 3.02, whereupon such successor shall become
fully vested with all the rights, powers, duties, responsibilities, obligations
and liabilities of the Servicer, with like effect as if originally named as a
party to this Agreement.
The Servicer shall promptly deliver to the successor the funds in
the Collection Account and the Escrow Account and the Mortgage Files and related
documents and statements held by it hereunder and the Servicer shall account for
all funds. The Servicer shall execute and deliver such instruments and do such
other things all as may reasonably be required to more fully and definitely vest
and confirm in the successor all such rights, powers, duties, responsibilities,
obligations and liability of the Servicer. The successor shall make such
arrangements as it may deem appropriate to reimburse the Servicer for
unrecovered Servicing Advances which the successor retains hereunder and which
could otherwise have been recovered by the Servicer pursuant to this Agreement
but for the appointment of the successor Servicer.
Section 12.02 Governing Law; Jurisdiction; Consent to Service of
Process. This Agreement is to be governed by, and construed in accordance with
the internal laws of the State of New York without giving effect to principals
of conflicts of laws. The obligations, rights, and remedies of the parties
hereunder shall be determined in accordance with such laws. Each of the
Purchaser and the Servicer irrevocably (i) submits to the exclusive jurisdiction
of the courts of the state of New York and the federal courts of the United
States of America for the Southern District of New York for the purpose of any
action or proceeding relating to this agreement;
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(ii) waives, to the fullest extent permitted by law, the defense of an
inconvenient forum in any action or proceeding in any such court; and (iii)
consents to service of process upon it by mailing a copy thereof by certified
mail addressed to it as provided for notices hereunder.
Section 12.03 Notices. Any notices or other communications permitted
or required hereunder shall be in writing and shall be deemed conclusively to
have been given if personally delivered, sent by courier with delivery against
signature therefor, mailed by registered mail, postage prepaid, and return
receipt requested or transmitted by telex, telegraph or telecopier and confirmed
by a similar writing mailed or sent by courier as provided above, to the address
set forth below:
(a) if to the Purchaser:
Xxxxxx Xxxxxxx Mortgage Capital Inc.
1221 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxxx - Whole Loan Operations
Manager
Fax: 000-000-0000
Email: xxxxx.xxxxxxxxxx@xxxxxxxxxxxxx.xxx
with copies to:
Xxxx Xxxxxxxx
Xxxxxx Xxxxxxx - Servicing Oversight
0000 X-Xxx Xxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Fax: 000-000-0000
Email: xxxx.xxxxxxxx@xxxxxxxxxxxxx.xxx
Xxxxx Xxxxxx Xxxxxx Xxxxxxx - RFPG 0000 Xxxxxxxx,
00xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000 Fax: 000-000-0000
Email: xxxxx.xxxxxx@xxxxxxxxxxxxx.xxx
(b) if to PHH Mortgage: Xxxxx X. Xxxxxx
PHH Mortgage Corporation - Vice President, Secondary
Marketing
0000 Xxxxxx Xxx
Xx. Xxxxxx, Xxx Xxxxxx 00000
Fax: [____________]
Email: [______________]
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(b) if to Xxxxxx'x Gate Residential Mortgage Trust:: c/o
PHH Mortgage Corporation, as Administrator Xxxxx X.
Xxxxxx PHH Mortgage Corporation - Vice President,
Secondary Marketing 0000 Xxxxxx Xxx Xx. Xxxxxx, Xxx
Xxxxxx 00000
Fax: [____________]
Email: [______________]
or such other address as may hereafter be furnished to the other
party by like notice.
Section 12.04 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, the invalidity of any such covenant, agreement,
provision or term of this Agreement shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Section 12.05 Schedules and Exhibits. The schedules and exhibits
that are attached to this Agreement are hereby incorporated herein and made a
part hereof by this reference.
Section 12.06 General Interpretive Principles. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(1) the terms defined in this Agreement have the meanings assigned
to them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;
(2) any reference in this Agreement to this Agreement or any other
agreement, document, or instrument shall be a reference to this Agreement or any
other such agreement, document, or instrument as the same has been amended,
modified, or supplemented in accordance with the terms hereof and thereof (as
applicable);
(3) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(4) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a document are to
designated articles, sections, subsections, paragraphs and other subdivisions of
this Agreement, unless the context shall otherwise require;
(5) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(6) a reference to a "day" shall be a reference to a calendar day;
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(7) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(8) the terms "include" and "including" shall mean without
limitation by reason of enumeration.
Section 12.07 Waivers and Amendments, Noncontractual Remedies;
Preservation of Remedies. This Agreement may be amended, superseded, canceled,
renewed or extended and the terms hereof may be waived, only by a written
instrument signed by authorized representatives of the parties or, in the case
of a waiver, by an authorized representative of the party waiving compliance. No
such written instrument shall be effective unless it expressly recites that it
is intended to amend, supersede, cancel, renew or extend this Agreement or to
waive compliance with one or more of the terms hereof, as the case may be. No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any such right, power or privilege, or any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege. The rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies that any party may otherwise have at law or in equity.
Section 12.08 Captions. All section titles or captions contained in
this Agreement or in any schedule or exhibit annexed hereto or referred to
herein, and the table of contents to this Agreement, are for convenience only,
shall not be deemed a part of this Agreement and shall not affect the meaning or
interpretation of this Agreement.
Section 12.09 Counterparts; Effectiveness. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument. This Agreement shall become
effective as of the date first set forth herein upon the due execution and
delivery of this Agreement by each of the parties hereto.
Section 12.10 Entire Agreement; Amendment. This Agreement (including
the schedules and exhibits annexed hereto or referred to herein), together with
the PHH Guide, contains the entire agreement between the parties hereto with
respect to the transactions contemplated hereby and supersedes all prior
agreements, written or oral, with respect thereto. No amendment, modification or
alteration of the terms or provisions of this Agreement shall be binding unless
the same shall be in writing and duly executed by the authorized representatives
of the parties hereto.
Section 12.11 Further Assurances. Each party hereto shall take such
additional action as may be reasonably necessary to effectuate this Agreement
and the transactions contemplated hereby. The Sellers will promptly and duly
execute and deliver to the Purchaser such documents and assurances and take such
further action as the Purchaser may from time to time reasonably request in
order to carry out more effectively the intent and purpose of this Agreement and
to establish and protect the rights and remedies created or intended to be
created in favor of the Purchaser.
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Section 12.12 Intention of the Seller. Each Seller intends that the
conveyance of such Seller's right, title and interest in and to the Mortgage
Loans to the Purchaser shall constitute a sale and not a pledge of security for
a loan. If such conveyance is deemed to be a pledge of security for a loan,
however, the applicable Seller intends that the rights and obligations of the
parties to such loan shall be established pursuant to the terms of this
Agreement. Each Seller also intends and agrees that, in such event, (i) the
applicable Seller shall be deemed to have granted to the Purchaser and its
assigns a first priority security interest in such Seller's entire right, title
and interest in and to the Mortgage Loans, all principal and interest received
or receivable with respect to the Mortgage Loans, all amounts held from time to
time in the accounts mentioned pursuant to this Agreement and all reinvestment
earnings on such amounts, together with all of the applicable Seller's right,
title and interest in and to the proceeds of any title, hazard or other
insurance policies related to such Mortgage Loans and (ii) this Agreement shall
constitute a security agreement under applicable law. All rights and remedies of
the Purchaser under this Agreement are distinct from, and cumulative with, any
other rights or remedies under this Agreement or afforded by law or equity and
all such rights and remedies may be exercised concurrently, independently or
successively.
Section 12.13 Waiver of Trial by Jury. THE SELLER AND THE PURCHASER
EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY
DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT.
ARTICLE XIII
COMPLIANCE WITH REGULATION AB
Section 13.01 Intent of the Parties; Reasonableness. The Purchaser,
each Seller and the Servicer acknowledges and agrees that the purpose of Article
XIII of this Agreement is to facilitate compliance by the Purchaser and any
Depositor with the provisions of Regulation AB and related rules and regulations
of the Commission. Although Regulation AB is applicable by its terms only to
offerings of asset-backed securities that are registered under the Securities
Act, the Seller and the Servicer acknowledges that investors in privately
offered securities may require that the Purchaser or any Depositor provide
comparable disclosure in unregistered offerings. References in this Agreement to
compliance with Regulation AB include provision of comparable disclosure in
private offerings.
Neither the Purchaser nor any Depositor shall exercise its right to
request delivery of information or other performance under these provisions
other than in good faith, or for purposes other than compliance with the
Securities Act, the Exchange Act and the rules and regulations of the Commission
thereunder (or the provision in a private offering of disclosure comparable to
that required under the Securities Act). Each Seller and the Servicer
acknowledges that interpretations of the requirements of Regulation AB may
change over time, whether due to interpretive guidance provided by the
Commission or its staff, consensus among participants in the asset-backed
securities markets, advice of counsel, or otherwise, and agrees to comply with
requests made by the Purchaser or any Depositor in good faith for delivery of
information under these provisions on the basis of evolving interpretations of
Regulation AB. In connection with any Securitization Transaction, the Sellers
and the Servicer shall cooperate fully
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with the Purchaser to deliver to the Purchaser (including any of its assignees
or designees) and any Depositor, any and all statements, reports,
certifications, records and any other information necessary in the good faith
determination of the Purchaser or any Depositor to permit the Purchaser or such
Depositor to comply with the provisions of Regulation AB, together with such
disclosures relating to the Sellers, the Servicer, any Subservicer, any
Third-Party Originator and the Mortgage Loans, or the servicing of the Mortgage
Loans, reasonably believed by the Purchaser or any Depositor to be necessary in
order to effect such compliance.
Section 13.02 Additional Representations and Warranties of the
Sellers and the Servicer.
(a) Each Seller and/or the Servicer, as applicable, as to itself,
shall be deemed to represent to the Purchaser and to any Depositor, as of
the date on which information is first provided to the Purchaser or any
Depositor under Subsection 13.03 that, except as disclosed in writing to
the Purchaser or such Depositor prior to such date: (i) the Servicer is
not aware and has not received notice that any default, early amortization
or other performance triggering event has occurred as to any other
securitization due to any act or failure to act of the Servicer; (ii) the
Servicer has not been terminated as servicer in a residential mortgage
loan securitization, either due to a servicing default or to application
of a servicing performance test or trigger; (iii) no material
noncompliance with the applicable servicing criteria with respect to other
securitizations of residential mortgage loans involving the Servicer as
servicer has been disclosed or reported by such Servicer; (iv) no material
changes to the Servicer's policies or procedures with respect to the
servicing function it will perform under this Agreement and any
Reconstitution Agreement for mortgage loans of a type similar to the
Mortgage Loans have occurred during the three-year period immediately
preceding the related Securitization Transaction; (v) there are no aspects
of the Servicer's financial condition that could have a material adverse
effect on the performance by such Servicer of its servicing obligations
under this Agreement or any Reconstitution Agreement; (vi) there are no
material legal or governmental proceedings pending (or known to be
contemplated) against the Seller, the Servicer, any Subservicer or any
Third-Party Originator; and (vii) there are no affiliations, relationships
or transactions relating to any Seller, the Servicer, any Subservicer or
any Third-Party Originator with respect to any Securitization Transaction
and any party thereto identified by the related Depositor of a type
described in Item 1119 of Regulation AB.
(b) If so requested by the Purchaser or any Depositor on any date
following the date on which information is first provided to the Purchaser
or any Depositor under Subsection 13.03, each Seller and the Servicer
shall, within five Business Days following such request, confirm in
writing the accuracy of the representations and warranties set forth in
paragraph (a) of this Section or, if any such representation and warranty
is not accurate as of the date of such request, provide reasonably
adequate disclosure of the pertinent facts, in writing, to the requesting
party.
Section 13.03 Information to Be Provided by each Seller or the
Servicer. In connection with any Securitization Transaction, the Sellers or the
Servicer shall (i) within five
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Business Days following request by the Purchaser or any Depositor, provide to
the Purchaser and such Depositor (or, as applicable, cause each Third-Party
Originator and each Subservicer to provide), in writing and in form and
substance reasonably satisfactory to the Purchaser and such Depositor, the
information and materials specified in paragraphs (a), (b), (c) and (f) of this
Section, and (ii) as promptly as practicable following notice to or discovery by
any Seller or the Servicer, provide to the Purchaser and any Depositor (in
writing and in form and substance reasonably satisfactory to the Purchaser and
such Depositor) the information specified in paragraph (d) of this Section.
(a) If so requested by the Purchaser or any Depositor, the Sellers
shall provide such information regarding (i) each Seller, as originator of
the Mortgage Loans (including as an acquirer of Mortgage Loans from a
Qualified Correspondent), or (ii) each Third-Party Originator, and (iii)
as applicable, each Subservicer, as is requested for the purpose of
compliance with Items 1103(a)(1), 1105, 1110, 1117 and 1119 of Regulation
AB. Such information shall include, at a minimum:
(A) the originator's form of organization;
(B) a description of the originator's origination program and
how long the originator has been engaged in originating residential
mortgage loans, which description shall include a discussion of the
originator's experience in originating mortgage loans of a similar
type as the Mortgage Loans; information regarding the size and
composition of the originator's origination portfolio; and
information that may be material, in the good faith judgment of the
Purchaser or any Depositor, to an analysis of the performance of the
Mortgage Loans, including the originators' credit-granting or
underwriting criteria for mortgage loans of similar type(s) as the
Mortgage Loans and such other information as the Purchaser or any
Depositor may reasonably request for the purpose of compliance with
Item 1110(b)(2) of Regulation AB;
(C) a description of any material legal or governmental
proceedings pending (or known to be contemplated) against each
Seller, each Third-Party Originator and each Subservicer; and
(D) a description of any affiliation or relationship between
each Seller, each Third-Party Originator, each Subservicer and any
of the following parties to a Securitization Transaction, as such
parties are identified to the Sellers, by the Purchaser or any
Depositor in writing in advance of such Securitization Transaction:
(1) the sponsor;
(2) the depositor;
(3) the issuing entity;
(4) any servicer;
(5) any trustee;
(6) any originator;
(7) any significant obligor;
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(8) any enhancement or support provider; and
(9) any other material transaction party.
(b) If so requested by the Purchaser or any Depositor, the Sellers
shall provide (or, as applicable, cause each Third-Party Originator to
provide) Static Pool Information with respect to the mortgage loans (of a
similar type as the Mortgage Loans, as reasonably identified by the
Purchaser as provided below) originated by (i) the Sellers, if any Seller
is an originator of Mortgage Loans (including as an acquirer of Mortgage
Loans from a Qualified Correspondent), and/or (ii) each Third-Party
Originator. Such Static Pool Information shall be prepared in form and
substance reasonably satisfactory to the Purchaser, by each Seller (or
Third-Party Originator) on the basis of its reasonable, good faith
interpretation of the requirements of Item 1105(a)(1)-(3) of Regulation
AB. To the extent that there is reasonably available to the Sellers (or
Third-Party Originator) Static Pool Information with respect to more than
one mortgage loan type, the Purchaser or any Depositor shall be entitled
to specify whether some or all of such information shall be provided
pursuant to this paragraph. Such Static Pool Information for each vintage
origination year or prior securitized pool, as applicable, shall be
presented in increments no less frequently than quarterly over the life of
the mortgage loans included in the vintage origination year or prior
securitized pool. The most recent periodic increment must be as of a date
no later than 135 days prior to the date of the prospectus or other
offering document in which the Static Pool Information is to be included
or incorporated by reference. The Static Pool Information shall be
provided in an electronic format that provides a permanent record of the
information provided, such as a portable document format (pdf) file, or
other such electronic format reasonably required by the Purchaser or the
Depositor, as applicable.
Promptly following notice or discovery of a material error in Static
Pool Information provided pursuant to the immediately preceding paragraph
(including an omission to include therein information required to be provided
pursuant to such paragraph), the Seller shall provide corrected Static Pool
Information to the Purchaser or any Depositor, as applicable, in the same format
in which Static Pool Information was previously provided to such party by the
Seller.
If so requested by the Purchaser or any Depositor, each Seller shall
provide (or, as applicable, cause each Third-Party Originator to provide), at
the expense of the requesting party (to the extent of any additional incremental
expense associated with delivery pursuant to this Agreement), such agreed-upon
procedures letters of certified public accountants reasonably acceptable to the
Purchaser or Depositor, as applicable, pertaining to Static Pool Information
relating to prior securitized pools for securitizations closed on or after
January 1, 2006 or, in the case of Static Pool Information with respect to such
Seller's or Third-Party Originator's originations or purchases, to calendar
months commencing January 1, 2006, as the Purchaser or such Depositor shall
reasonably request. Such letters shall be addressed to and be for the benefit of
such parties as the Purchaser or such Depositor shall designate, which may
include, by way of example, any Sponsor, any Depositor and any broker dealer
acting as underwriter, placement agent or initial purchaser with respect to a
Securitization Transaction. Any such statement or letter may take the form of a
standard, generally applicable document accompanied by a reliance letter
authorizing reliance by the addressees designated by the Purchaser or such
Depositor.
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(c) If so requested by the Purchaser or any Depositor, the Servicer
shall provide such information regarding the Servicer, as servicer of the
Mortgage Loans, and each Subservicer (the Servicer and each Subservicer,
for purposes of this paragraph, a "Transaction Servicer"), as is requested
for the purpose of compliance with Item 1108 of Regulation AB. Such
information shall include, at a minimum:
(A) the Transaction Servicer's form of organization;
(B) a description of how long the Transaction Servicer has
been servicing residential mortgage loans; a general discussion of
the Transaction Servicer's experience in servicing assets of any
type as well as a more detailed discussion of the Transaction
Servicer's experience in, and procedures for, the servicing function
it will perform under this Agreement and any Reconstitution
Agreements; information regarding the size, composition and growth
of the Transaction Servicer's portfolio of residential mortgage
loans of a type similar to the Mortgage Loans and information on
factors related to the Transaction Servicer that may be material, in
the good faith judgment of the Purchaser or any Depositor, to any
analysis of the servicing of the Mortgage Loans or the related
asset-backed securities, as applicable, including, without
limitation:
(1) whether any prior securitizations of mortgage loans
of a type similar to the Mortgage Loans involving the
Transaction Servicer have defaulted or experienced an early
amortization or other performance triggering event because of
servicing during the three-year period immediately preceding
the related Securitization Transaction;
(2) the extent of outsourcing the Transaction Servicer
utilizes;
(3) whether there has been previous disclosure of
material noncompliance with the applicable servicing criteria
with respect to other securitizations of residential mortgage
loans involving the Transaction Servicer as a servicer during
the three-year period immediately preceding the related
Securitization Transaction;
(4) whether the Transaction Servicer has been terminated
as servicer in a residential mortgage loan securitization,
either due to a servicing default or to application of a
servicing performance test or trigger; and
(5) such other information as the Purchaser or any
Depositor may reasonably request for the purpose of compliance
with Item 1108(b)(2) of Regulation AB;
(C) a description of any material changes during the
three-year period immediately preceding the related
Securitization Transaction to the Transaction Servicer's
policies or procedures with respect to the servicing function
it will perform under this Agreement and any Reconstitution
Agreements for mortgage loans of a type similar to the
Mortgage Loans;
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(D) information regarding the Transaction Servicer's
financial condition, to the extent that there is a material
risk that an adverse financial event or circumstance involving
the Transaction Servicer could have a material adverse effect
on the performance by the Servicer of its servicing
obligations under this Agreement or any Reconstitution
Agreement;
(E) information regarding advances made by the
Transaction Servicer on the Mortgage Loans and the Transaction
Servicer's overall servicing portfolio of residential mortgage
loans for the three-year period immediately preceding the
related Securitization Transaction, which may be limited to a
statement by an authorized officer of the Transaction Servicer
to the effect that the Transaction Servicer has made all
advances required to be made on residential mortgage loans
serviced by it during such period, or, if such statement would
not be accurate, information regarding the percentage and type
of advances not made as required, and the reasons for such
failure to advance;
(F) a description of the Transaction Servicer's
processes and procedures designed to address any special or
unique factors involved in servicing loans of a similar type
as the Mortgage Loans;
(G) a description of the Transaction Servicer's
processes for handling delinquencies, losses, bankruptcies and
recoveries, such as through liquidation of mortgaged
properties, sale of defaulted mortgage loans or workouts; and
(H) information as to how the Transaction Servicer
defines or determines delinquencies and charge-offs, including
the effect of any grace period, re-aging, restructuring,
partial payments considered current or other practices with
respect to delinquency and loss experience.
(d) If so requested by the Purchaser or any Depositor for the
purpose of satisfying its reporting obligation under the Exchange Act with
respect to any class of asset-backed securities, each Seller and the
Servicer shall (or shall cause each Subservicer and Third-Party Originator
to) (i) notify the Purchaser and any Depositor in writing of (A) any
material litigation or governmental proceedings pending against such
Seller or the Servicer, any Subservicer or any Third-Party Originator and
(B) any affiliations or relationships that develop following the closing
date of a Securitization Transaction between such Seller or the Servicer,
any Subservicer or any Third-Party Originator and any of the parties
specified in clause (D) of paragraph (a) of this Section (and any other
parties identified in writing by the requesting party) with respect to
such Securitization Transaction, and (ii) provide to the Purchaser and any
Depositor a description of such proceedings, affiliations or
relationships.
(e) As a condition to the succession to the Servicer or any
Subservicer as servicer or subservicer under this Agreement or any
Reconstitution Agreement by any
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Person (i) into which the Servicer or such Subservicer may be merged or
consolidated, or (ii) which may be appointed as a successor to the
Servicer or any Subservicer, the Servicer shall provide to the Purchaser
and any Depositor, at least 15 calendar days prior to the effective date
of such succession or appointment, (x) written notice to the Purchaser and
any Depositor of such succession or appointment and (y) in writing and in
form and substance reasonably satisfactory to the Purchaser and such
Depositor, all information reasonably requested by the Purchaser or any
Depositor in order to comply with its reporting obligation under Item 6.02
of Form 8-K with respect to any class of asset-backed securities.
(f) In addition to such information as the Servicer, as servicer, is
obligated to provide pursuant to other provisions of this Agreement, if so
requested by the Purchaser or any Depositor, the Servicer shall provide
such information regarding the performance or servicing of the Mortgage
Loans as is reasonably required by the Purchaser or any Depositor to
facilitate preparation of distribution reports in accordance with Item
1121 of Regulation AB and to permit the Purchaser or such Depositor to
comply with the provisions of Regulation AB relating to Static Pool
Information regarding the performance of the Mortgage Loans on the basis
of the Purchaser's or such Depositor's reasonable, good faith
interpretation of the requirements of Item 1105(a)(1)-(3) of Regulation AB
(including without limitation as to the format and content of such Static
Pool Information). Such information shall be provided concurrently with
the monthly reports otherwise required to be delivered by the Servicer
under this Agreement commencing with the first such report due in
connection with the applicable Securitization Transaction.
Section 13.04 Servicer Compliance Statement. On or before March 1 of
each calendar year, commencing in 2007, the Servicer shall deliver to the
Purchaser and any Depositor a statement of compliance addressed to the Purchaser
and such Depositor and signed by an authorized officer of the Servicer, to the
effect that (i) a review of the Servicer's activities during the immediately
preceding calendar year (or applicable portion thereof) and of its performance
under this Agreement and any applicable Reconstitution Agreement during such
period has been made under such officer's supervision, and (ii) to the best of
such officers' knowledge, based on such review, the Servicer has fulfilled all
of its obligations under this Agreement and any applicable Reconstitution
Agreement in all material respects throughout such calendar year (or applicable
portion thereof) or, if there has been a failure to fulfill any such obligation
in any material respect, specifically identifying each such failure known to
such officer and the nature and the status thereof.
Section 13.05 Report on Assessment of Compliance and Attestation.
(a) On or before March 1 of each calendar year, commencing in 2007, the Servicer
shall:
(i) deliver to the Purchaser and any Depositor a report (in form and
substance reasonably satisfactory to the Purchaser and such Depositor)
regarding the Servicer's assessment of compliance with the Servicing
Criteria during the immediately preceding calendar year, as required under
Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation
AB. Such report shall be addressed to the Purchaser and such Depositor and
signed by an authorized officer of the Servicer, and shall address each of
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the Servicing Criteria specified on a certification substantially in the
form of Exhibit 14 hereto delivered to the Purchaser concurrently with the
execution of this Agreement;
(ii) deliver to the Purchaser and any Depositor a report of a
registered public accounting firm reasonably acceptable to the Purchaser
and such Depositor that attests to, and reports on, the assessment of
compliance made by the Servicer and delivered pursuant to the preceding
paragraph. Such attestation shall be in accordance with Rules 1-02(a)(3)
and 2-02(g) of Regulation S-X under the Securities Act and the Exchange
Act;
(iii) cause each Subservicer, and each Subcontractor determined by
the Servicer pursuant to Subsection 13.06(b) to be "participating in the
servicing function" within the meaning of Item 1122 of Regulation AB, to
deliver to the Purchaser and any Depositor an assessment of compliance and
accountants' attestation as and when provided in paragraphs (a) and (b) of
this Section; and
(iv) deliver to the Purchaser, any Depositor and any other Person
that will be responsible for signing the certification (a "Sarbanes
Certification") required by Rules 13a-14(d) and 15d-14(d) under the
Exchange Act (pursuant to Section 302 of the Xxxxxxxx-Xxxxx Act of 2002)
on behalf of an asset-backed issuer with respect to a Securitization
Transaction a certification in the form attached hereto as Exhibit 11.
Each Seller acknowledges that the parties identified in clause
(a)(iv) above may rely on the certification provided by the Servicer pursuant to
such clause in signing a Sarbanes Certification and filing such with the
Commission. Neither the Purchaser nor any Depositor will request delivery of a
certification under clause (a)(iv) above, unless a Depositor is required under
the Exchange Act to file an annual report on Form 10-K with respect to an
issuing entity whose asset pool includes Mortgage Loans.
(b) Each assessment of compliance provided by a Subservicer pursuant
to Subsection 13.05(a)(i) shall address each of the Servicing Criteria
specified on a certification substantially in the form of Exhibit 14
hereto delivered to the Purchaser concurrently with the execution of this
Agreement or, in the case of a Subservicer subsequently appointed as such,
on or prior to the date of such appointment. An assessment of compliance
provided by a Subcontractor pursuant to Subsection 13.05(a)(iii) need not
address any elements of the Servicing Criteria other than those specified
by the Servicer pursuant to Subsection 13.06.
Section 13.06 Use of Subservicers and Subcontractors.
The Servicer shall not hire or otherwise utilize the services of any
Subservicer to fulfill any of the obligations of the Servicer as servicers under
this Agreement or any Reconstitution Agreement unless the Servicer complies with
the provisions of paragraph (a) of this Section. The Servicer shall not hire or
otherwise utilize the services of any Subcontractor, and shall not permit any
Subservicer to hire or otherwise utilize the services of any Subcontractor, to
fulfill any of the obligations of the Servicer as servicer under this Agreement
or any Reconstitution Agreement unless the Servicer complies with the provisions
of paragraph (b) of this Section.
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(a) The Servicer shall not hire or otherwise utilize the services of
any Subservicer with respect to the Mortgage Loans without giving the
Purchaser or its designee fifteen (15) calendar days' advance written
notice of the effective date of such hiring or utilization of a
Subservicer, followed by written confirmation of such hiring or
utilization of a Subservicer on the effective date of such engagement and
indicating the circumstances surrounding such hiring or utilization. Any
notices required by this Subsection 13.06(a) shall be sent via telecopier
or certified or registered mail to the addresses set forth below: Xxxx X.
Xxxxxxxx, Servicer Oversight Group, 0000 X-Xxx Xxxxxx, Xxxxx 000, Xxxx
Xxxxx, Xxxxxxx 00000, Telecopy: 000-000-0000, and emailed to:
xxxxx_xxxxxxxx_xxxxxx@xxxxxxxxxxxxx.xxx, with a copy to Xxxxxxx Xxxxxx,
Cadwalader, Xxxxxxxxxx & Xxxx, LLP, Xxx Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, 00000, Telecopy: 000-000-0000, Email: xxxxxxx.xxxxxx@xxx.xxx (or
such other address as such Person may otherwise specify to Servicer). The
Servicer shall cause any Subservicer used by the Servicer (or by any
Subservicer) for the benefit of the Purchaser and any Depositor to comply
with the provisions of this Section and with Subsections 13.02, 13.03(c)
and (e), 13.04, 13.05 and 13.07 of this Agreement to the same extent as if
such Subservicer were the Servicer, and to provide the information
required with respect to such Subservicer under Subsection 13.03(d) of
this Agreement. The Servicer shall be responsible for obtaining from each
Subservicer and delivering to the Purchaser and any Depositor any servicer
compliance statement required to be delivered by such Subservicer under
Subsection 13.04, any assessment of compliance and attestation required to
be delivered by such Subservicer under Subsection 13.05 and any
certification required to be delivered to the Person that will be
responsible for signing the Sarbanes Certification under Subsection 13.05
as and when required to be delivered.
(b) It shall not be necessary for the Servicer to seek the consent
of the Purchaser or any Depositor to the utilization of any Subcontractor.
The Servicer shall promptly upon request provide to the Purchaser and any
Depositor (or any designee of the Depositor, such as a master servicer or
administrator) a written description (in form and substance satisfactory
to the Purchaser and such Depositor) of the role and function of each
Subcontractor utilized by the Servicer or any Subservicer, specifying (i)
the identity of each such Subcontractor, (ii) which (if any) of such
Subcontractors are "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB, and (iii) which elements of the
Servicing Criteria will be addressed in assessments of compliance provided
by each Subcontractor identified pursuant to clause (ii) of this
paragraph.
As a condition to the utilization of any Subcontractor determined to
be "participating in the servicing function" within the meaning of Item 1122 of
Regulation AB, the Servicer shall cause any such Subcontractor used by the
Servicer (or by any Subservicer) for the benefit of the Purchaser and any
Depositor to comply with the provisions of Subsections 13.05 and 13.07 of this
Agreement to the same extent as if such Subcontractor were the Servicer. The
Servicer shall be responsible for obtaining from each Subcontractor and
delivering to the Purchaser and any Depositor any assessment of compliance and
attestation required to be delivered by such Subcontractor under Subsection
13.05, in each case as and when required to be delivered.
-100-
Section 13.07 Indemnification; Remedies.
(a) Each Seller and the Servicer shall indemnify the Purchaser, each
affiliate of the Purchaser, and each of the following parties
participating in a Securitization Transaction: each sponsor and issuing
entity; each Person responsible for the preparation, execution or filing
of any report required to be filed with the Commission with respect to
such Securitization Transaction, or for execution of a certification
pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with
respect to such Securitization Transaction; each broker dealer acting as
underwriter, placement agent or initial purchaser, each Person who
controls any of such parties or the Depositor (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act); and
the respective present and former directors, officers, employees and
agents of each of the foregoing and of the Depositor, and shall hold each
of them harmless from and against any losses, damages, penalties, fines,
forfeitures, legal fees and expenses and related costs, judgments, and any
other costs, fees and expenses that any of them may sustain arising out of
or based upon:
(i) (A) any untrue statement of a material fact contained or alleged
to be contained in any information, report, certification, accountants'
letter or other material provided in written or electronic form under this
Article XIII by or on behalf of any Seller or the Servicer, or provided
under this Article XIII by or on behalf of any Subservicer, Subcontractor
or Third-Party Originator (collectively, the "Seller Information"), or (B)
the omission or alleged omission to state in the Seller Information a
material fact required to be stated in the Seller Information or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, by way of
clarification, that clause (B) of this paragraph shall be construed solely
by reference to the Seller Information and not to any other information
communicated in connection with a sale or purchase of securities, without
regard to whether the Seller Information or any portion thereof is
presented together with or separately from such other information;
(ii) any failure by any Seller, the Servicer, any Subservicer, any
Subcontractor or any Third-Party Originator to deliver any information,
report, certification, accountants' letter or other material when and as
required under this Article XIII, including any failure by the Servicer to
identify pursuant to Subsection 13.06(b) any Subcontractor "participating
in the servicing function" within the meaning of Item 1122 of Regulation
AB; or
(iii) any breach by any Seller or the Servicer of a representation
or warranty set forth in Subsection 13.02(a) or in a writing furnished
pursuant to Subsection 13.02(b) and made as of a date prior to the closing
date of the related Securitization Transaction, to the extent that such
breach is not cured by such closing date, or any breach by any Seller or
the Servicer of a representation or warranty in a writing furnished
pursuant to Subsection 13.02(b) to the extent made as of a date subsequent
to such closing date.
In the case of any failure of performance described in clause
(a)(ii) of this Section, the Sellers and the Servicer shall promptly reimburse
the Purchaser, any Depositor, as
-101-
applicable, and each Person responsible for the preparation, execution or filing
of any report required to be filed with the Commission with respect to such
Securitization Transaction, or for execution of a certification pursuant to Rule
13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to such
Securitization Transaction, for all costs reasonably incurred by each such party
in order to obtain the information, report, certification, accountants' letter
or other material not delivered as required by any Seller, the Servicer, any
Subservicer, any Subcontractor or any Third-Party Originator.
(b) (i) Any failure by any Seller, the Servicer, any Subservicer,
any Subcontractor or any Third-Party Originator to deliver any
information, report, certification, accountants' letter or other material
when and as required under this Article XIII, or any breach by any Seller
or the Servicer of a representation or warranty set forth in Subsection
13.02(a) or in a writing furnished pursuant to Subsection 13.02(b) and
made as of a date prior to the closing date of the related Securitization
Transaction, to the extent that such breach is not cured by such closing
date, or any breach by any Seller or the Servicer of a representation or
warranty in a writing furnished pursuant to Subsection 13.02(b) to the
extent made as of a date subsequent to such closing date, shall, except as
provided in clause (ii) of this paragraph, immediately and automatically,
without notice or grace period, constitute an Event of Default with
respect to the Sellers and the Servicer under this Agreement and any
applicable Reconstitution Agreement, and shall entitle the Purchaser or
Depositor, as applicable, in its sole discretion to terminate the rights
and obligations of the Sellers and the Servicer under this Agreement
and/or any applicable Reconstitution Agreement without payment
(notwithstanding anything in this Agreement or any applicable
Reconstitution Agreement to the contrary) of any compensation to the
Sellers or the Servicer; provided that to the extent that any provision of
this Agreement and/or any applicable Reconstitution Agreement expressly
provides for the survival of certain rights or obligations following
termination of the Servicer as servicer, such provision shall be given
effect.
(ii) Any failure by the Servicer, any Subservicer or any
Subcontractor to deliver any information, report, certification or
accountants' letter when and as required under Subsection 13.04 or
13.05, including (except as provided below) any failure by the
Servicer to identify pursuant to Subsection 13.06(b) any
Subcontractor "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB, which continues unremedied
for ten calendar days after the date on which such information,
report, certification or accountants' letter was required to be
delivered shall constitute an Event of Default with respect to the
Servicer under this Agreement and any applicable Reconstitution
Agreement, and shall entitle the Purchaser or Depositor, as
applicable, in its sole discretion to terminate the rights and
obligations of the Servicer as servicer under this Agreement and/or
any applicable Reconstitution Agreement without payment
(notwithstanding anything in this Agreement to the contrary) of any
compensation to the Servicer; provided that to the extent that any
provision of this Agreement and/or any applicable Reconstitution
Agreement expressly provides for the survival of certain rights or
obligations following termination of the Servicer as servicer, such
provision shall be given effect.
-102-
Neither the Purchaser nor any Depositor shall be entitled to
terminate the rights and obligations of the Servicer pursuant to this
subparagraph (b)(ii) if a failure of the Servicer to identify a
Subcontractor "participating in the servicing function" within the meaning
of Item 1122 of Regulation AB was attributable solely to the role or
functions of such Subcontractor with respect to mortgage loans other than
the Mortgage Loans.
The Sellers and the Servicer shall promptly reimburse the Purchaser
(or any designee of the Purchaser, such as a master servicer) and any
Depositor, as applicable, for all reasonable expenses incurred by the
Purchaser (or such designee) or such Depositor, as such are incurred, in
connection with the termination of the Servicer as servicer and the
transfer of servicing of the Mortgage Loans to a successor servicer. The
provisions of this paragraph shall not limit whatever rights the Purchaser
or any Depositor may have under other provisions of this Agreement and/or
any applicable Reconstitution Agreement or otherwise, whether in equity or
at law, such as an action for damages, specific performance or injunctive
relief.
-103-
IN WITNESS WHEREOF, the Sellers and the Purchaser have caused their
names to be signed hereto by their respective officers as of the date first
written above.
XXXXXX XXXXXXX MORTGAGE CAPITAL INC.
By: ______________________________________
Name:
Title:
PHH MORTGAGE CORPORATION (formerly known
as CENDANT MORTGAGE CORPORATION)
By: ______________________________________
Name:
Title:
XXXXXX'X GATE RESIDENTIAL MORTGAGE TRUST
(formerly known
as CENDANT RESIDENTIAL MORTGAGE TRUST)
By: PHH Mortgage Corporation, as
Administrator
By: ______________________________________
Name:
Title:
SCHEDULE A
MORTGAGE LOAN SCHEDULE
A-1
SCHEDULE B-1
CONTENTS OF PURCHASER'S MORTGAGE FILE
With respect to each Mortgage Loan, the Purchaser's Mortgage
File shall include each of the following items, which shall be available for
inspection by the Purchaser, and which shall be retained by the applicable
Seller or delivered to the Purchaser pursuant to the provisions of the Third
Amended and Restated Mortgage Loan Flow Purchase, Sale & Servicing Agreement.
To be Delivered 5 days prior to Funding Date:
---------------------------------------------
1. The original Mortgage Note bearing all intervening
endorsements, endorsed, at the direction of the Purchaser either (1)
"Pay to the order of "-------," without recourse," or (2) in blank and
signed in the name of the applicable Seller by an authorized officer.
To the extent that there is no space on the face of the Mortgage Notes
for endorsements, the endorsement may be contained on an allonge, if
state law so allows and the Purchaser is so advised by the Seller that
state law so allows. If the Mortgage Loan was acquired by the Seller in
a merger, the endorsement must be by "[Seller], successor by merger to
[name of predecessor]." If the Mortgage Loan was acquired or originated
by the Seller while doing business under another name, the endorsement
must be by "[Seller], formerly known as [previous name]."
2. If the Mortgage Loan is not a MERS Mortgage Loan, the
original Assignment for each Mortgage Loan, in form and substance
acceptable for recording. The Mortgage shall be assigned, at the
direction of the Purchaser either (1) to "---------" or (2) with
assignee's name left blank. The Assignment must be duly recorded only
on the direction of the Purchaser. If the Mortgage Loan was acquired by
the applicable Seller in a merger, the Assignment must be made by "PHH
Mortgage Corporation, successor by merger to [name of predecessor]." If
the Mortgage Loan was acquired or originated by the Seller while doing
business under another name or under an assumed name, the Assignment
must be by "PHH Mortgage Corporation formerly known as [previous name]
or [PHH Mortgage Corporation dba ______________, ] respectively.
3. With respect to each Additional Collateral Mortgage Loan, a
copy of the related Pledge Agreement.
4. With respect to each Additional Collateral Mortgage Loan, a
copy of the UCC-1, to the extent the additional collateral servicer was
required to deliver such UCC-1 to the Servicer, and an original form
UCC-3, if applicable, to the extent the additional collateral servicer
was required to deliver such UCC-3 to the Servicer, together with a
copy of the applicable notice of assignment to and acknowledgment by
the additional collateral servicer.
5. With respect to each Cooperative Loan, the original stock
certificate and related stock power, in blank, executed by the
Mortgagor with such signature guaranteed and original stock power, in
blank executed by the Seller provided, that if the Seller
B-1-1
delivers a certified copy, the Seller shall deliver the original stock
certificate and stock powers to the Custodian on or prior to the date
which is 120 days after the related Funding Date.
To be delivered within 120 days after the related Funding Date:
---------------------------------------------------------------
1. The original Mortgage with evidence of recording thereon.
If in connection with any Mortgage Loan, the applicable Seller cannot
deliver or cause to be delivered the original Mortgage with evidence of
recording thereon on or prior to the Funding Date because of a delay
caused by the public recording office where such Mortgage has been
delivered for recordation or because such Mortgage has been lost or
because such public recording office retains the original recorded
Mortgage, the applicable Seller shall deliver or cause to be delivered
to the Custodian, a photocopy of such Mortgage, together with (i) in
the case of a delay caused by the public recording office, an Officers'
Certificate of the applicable Seller (or certified by the title
company, escrow agent, or closing attorney) stating that such Mortgage
has been dispatched to the appropriate public recording office for
recordation and that the original recorded Mortgage or a copy of such
Mortgage certified by such public recording office to be a true and
complete copy of the original recorded Mortgage will be promptly
delivered to the Custodian upon receipt thereof by the applicable
Seller; or (ii) in the case of a Mortgage where a public recording
office retains the original recorded Mortgage or in the case where a
Mortgage is lost after recordation in a public recording office, a copy
of such Mortgage certified by such public recording office to be a true
and complete copy of the original recorded Mortgage.
2. To the extent applicable, the original of each power of
attorney, surety agreement or guaranty agreement with respect to such
Mortgage Loan.
3. Originals of any executed intervening assignments of the
Mortgage, with evidence of recording thereon or, if the original
intervening assignment has not yet been returned from the recording
office, a copy of such assignment certified by the applicable Seller to
be a true copy of the original of the assignment which has been sent
for recording in the appropriate jurisdiction in which the Mortgaged
Property is located.
4. Originals of all assumption, modification and substitution
agreements, if any, or, if the originals of any such assumption,
modification and substitution agreements have not yet been returned
from the recording office, a copy of such instruments certified by the
applicable Seller to be a true copy of the original of such instruments
which have been sent for recording in the appropriate jurisdictions in
which the Mortgaged Properties are located.
5. The original mortgagee policy of title insurance or, in the
event such original title policy is unavailable, a certified true copy
of the related policy binder or commitment for title certified to be
true and complete by the title insurance company, in each case,
including an Environmental Protection Agency Endorsement and an
adjustable-rate endorsement.
B-1-2
6. With respect to each Cooperative Loan, the original
Recognition Agreement and the original Assignment of Recognition
Agreement.
7. With respect to each Cooperative Loan, an Estoppel Letter
and/or Consent.
8. With respect to each Cooperative Loan, the Cooperative Lien
Search.
9. With respect to each Cooperative Loan, the guaranty of the
Mortgage Note and Cooperative Loan, if any.
10. With respect to each Cooperative Loan, the original of any
security agreement or similar document executed in connection with the
Cooperative Loan.
11. With respect to each Cooperative Loan, the original
Proprietary Lease and the Assignment of Proprietary Lease executed by
the Mortgagor in blank or if the Proprietary Lease has been assigned by
the Mortgagor to the Seller, then the Seller must execute an assignment
of the Assignment of Proprietary Lease in blank.
12. With respect to each Cooperative Loan, the recorded state
and county Financing Statements and Financing Statement Changes.
From time to time, the Sellers shall forward to the Custodian
additional original documents pursuant to the Agreement or additional documents
evidencing an assumption, modification, consolidation or extension of a Mortgage
Loan approved by the Sellers, in accordance with the Agreement. All such
mortgage documents held by the Custodian as to each Mortgage Loan shall
constitute the "Custodial File."
B-1-3
PHH Mortgage Corporation
Mortgage File Cover Sheet: Credit Documents
(Schedule B-2)
Prepared by:_________________________ Phone: _____________
Location: PHH Mortgage Corporation Fax:________________
Borrower Name: ___________________
Loan Number: ___________________
General :
_______ 1. Mortgage File Cover Sheet Checklist - Inside File
_______ 2. Borrower's Authorization to Obtain Information (Original)
_______ 3. Xxxxxx Xxx 1008(original) or Underwriter's Worksheet (CUW2)
Applications:
_______ 4. Final Signed Typed Loan Application (Form 1003 or personal profile)
______ 5. Initial Signed Loan Application (personal profile, handwritten or typed)
Credit Documentation:
______ 6. Credit Report(s), Merged In-file or RMCR) (original or photocopy)
______ 7. Borrower's explanations (credit, employment, etc., if applicable)
_______ 8. VOM(s) or other form of verification(s) on all mortgages (not required on Aus
scored loans)
______ 9. Separation agreement, divorce decree (if applicable)
_______ 10. Miscellaneous Credit Documents (if applicable)
Employment/Income Documentation:
_______ 11. Copy or Original initial VOE(s); OR
_______ 12. Paystubs dated with 30 days of closing; OR
_______ 13. IRS Form W-2's Original or Copy (for wage earner); OR
_______ 14. IRS Form 1040's, 1120's, 1065's, etc. (2 years for self-employed);
_______ 15. Leases (if applicable)
_______ 16. All documentation required to support Borrower's cash flow for loans Originated.
Asset Documentation:
B-2-2
_______ 17. Copy or Original VOD(s) or source of funds to close (if applicable)
_______ 18. Gift Letter (if applicable) (original)
_______ 19. Verification of original purchase price, real estate sales contract, or HUD-1 on
first mortgage (if applicable)
Property Documentation:
_______ 20. Appraisal, including original photos of subject and comps. (original)
_______ 21. Review Appraisal or second full Appraisal (if required) (original)
_______ 22. 442 Final Inspection
_______ 23. Copy or Original Contract of Sale
_______ 24. Miscellaneous
B-2-1
SCHEDULE C
PHH GUIDE
C-1
EXHIBIT 2.05
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
THIS ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT (this
"Assignment"), dated of _________ __, 200[_], is entered into among
[_________________], a ___________________ (the "Assignee"),
[______________________] (the "Assignor"), [PHH Mortgage Corporation] [Xxxxxx'x
Gate Residential Mortgage Trust] (the "Seller"), with PHH Mortgage Corporation,
as the servicer (the "Servicer").
RECITALS
WHEREAS the Assignor, the Seller and the Servicer have entered into
a certain Third Amended and Restated Mortgage Loan Flow Purchase, Sale and
Servicing Agreement, dated as of January 1, 2006 (as amended or modified to the
date hereof, the "Agreement"), pursuant to which the Assignor has acquired
certain Mortgage Loans pursuant to the terms of the Agreement and Servicer has
agreed to service such Mortgage Loans; and
WHEREAS the Assignee has agreed, on the terms and conditions
contained herein, to purchase from the Assignor all of the Mortgage Loans (the
"Specified Mortgage Loans") which are subject to the provisions of the Agreement
and are listed on the mortgage loan schedule attached as Exhibit I hereto (the
"Specified Mortgage Loan Schedule");
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration (the receipt and sufficiency of
which are hereby acknowledged), the parties agree as follows:
1. Assignment and Assumption
(a) On and of the date hereof, the Assignor hereby sells, assigns
and transfers to the Assignee all of its right, title and interest in the
Specified Mortgage Loans and all rights related thereto as provided under the
Agreement to the extent relating to the Specified Mortgage Loans, the Assignee
hereby accepts such assignment from the Assignor and hereby agrees to the
release of the Assignor from any obligations under the Agreement, to the extent
of the Specified Mortgage Loans, from the date hereof, and the Seller hereby
acknowledges such assignment, assumption and release.
(b) On and as of the date hereof, the Assignor represents and
warrants to the Assignee that the Assignor has not taken any action that would
serve to impair or encumber the Assignee's ownership interest in the Specified
Mortgage Loans since the date of the Assignor's acquisition of the Specified
Mortgage Loans.
2. Recognition of Purchaser
From and after the date hereof, both the Assignee and the Seller
shall note the transfer of the Specified Mortgage Loans to the Assignee in their
respective books and records
Exh. 2.05-1
and shall recognize the Assignee as the owner of the Specified Mortgage Loans,
and Servicer shall service the Specified Mortgage Loans for the benefit of the
Assignee pursuant to the Agreement, the terms of which are incorporated herein
by reference. It is the intention of the Seller, the Servicer, the Assignee and
the Assignor that (a) the Assignee fully enjoy all of the rights and benefits
enjoyed by the Assignor under the Agreement as if the Assignee were a party
thereto and (b) the Assignment shall be binding upon and inure to the benefit of
the Assignee and the Assignor and their successors and assigns.
3. Representations and Warranties
(a) The Assignee represents and warrants that it is a sophisticated
investor able to evaluate the risks and merits of the transactions contemplated
hereby, and that it has not relied in connection therewith upon any statements
or representations of the Seller or the Assignor other than those contained in
the Agreement or this Assignment.
(b) Each of the parties hereto represents and warrants that it is
duly and legally authorized to enter into this Assignment.
(c) Each of the parties hereto represents and warrants that this
Assignment has been duly authorized, executed and delivered by it and (assuming
due authorization, execution and delivery thereof by each of the other parties
hereto) constitutes its legal, valid and binding obligation, enforceable against
it in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
4. Continuing Effect
Except as contemplated hereby, the Agreement shall remain in full
force and effect in accordance with its terms.
5. Governing Law
This Assignment and the rights and obligations hereunder shall be
governed by and construed in accordance with the internal laws of the State of
New York.
6. Notices
Any notices or other communications permitted or required under the
Agreement to be made to the Assignee shall be made in accordance with the terms
of the Agreement and shall be sent to the Assignee as follows:
[_____________________], or to such other address as may hereafter be furnished
by the Assignee to the parties in accordance with the provisions of the
Agreement.
Exh. 2.05-2
7. Counterparts
This Assignment may be executed in counterparts, each of which when
so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same instrument.
8. Definitions
Any capitalized term used but not defined in this Assignment has the
same meaning as in the Agreement.
[Assignment continues with signature page]
Exh. 2.05-3
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
the day and year first above written.
ASSIGNOR:
[__________________]
By:__________________________________
Name:
Title:
SELLER:
[PHH MORTGAGE CORPORATION]
[XXXXXX'X GATE RESIDENTIAL
MORTGAGE TRUST]
By:__________________________________
Name:
Title:
ASSIGNEE:
By:__________________________________
Name:
Title:
SERVICER:
PHH MORTGAGE CORPORATION
By:__________________________________
Name:
Title:
Exh. 2.05-4
EXHIBIT 5.01
WORKOUT COMPENSATION
Exh. 5.01-1
EXHIBIT 5.03(a)
REPORT P4DL ? NOTICE FOR SPECIALLY SERVICED MORTGAGE LOANS
Exh. 5.03(a)-1
EXHIBIT 5.03(b)
FORM OF NOTICE OF FORECLOSURE
Exh. 5.03(b)-1
EXHIBIT 5.04-1
FORM OF COLLECTION ACCOUNT CERTIFICATION
Exh. 5.04-1-1
EXHIBIT 5.04-2
FORM OF COLLECTION ACCOUNT LETTER AGREEMENT
Exh. 5.04-2-1
EXHIBIT 5.06-1
FORM OF ESCROW ACCOUNT CERTIFICATION
Exh. 5.06-1-1
EXHIBIT 5.06-2
FORM OF ESCROW ACCOUNT LETTER AGREEMENT
Exh. 5.06-2-1
EXHIBIT 6.02(a)
REPORT P-139 - MONTHLY STATEMENT OF MORTGAGE ACCOUNTS
Exh. 6.02(a)-1
EXHIBIT 6.02(b)
REPORT S-50Y - PRIVATE POOL DETAIL REPORT
Exh. 6.02(b)-1
EXHIBIT 6.02(c)
REPORT S-213 - SUMMARY OF CURTAILMENTS MADE REMITTANCE REPORT
Exh. 6.02(c)-1
EXHIBIT 6.02(d)
REPORT S-214 - SUMMARY OF PAID IN FULL REMITTANCE REPORT
Exh. 6.02(d)-1
EXHIBIT 6.02(e)
REPORT S-215 - CONSOLIDATION OF REMITTANCE REPORT
Exh. 6.02(e)-1
EXHIBIT 6.02(f)
REPORT T-62C - MONTHLY ACCOUNTING REPORT
Exh. 6.02(f)-1
EXHIBIT 6.02(g)
REPORT T-62E - LIQUIDATION REPORT
Exh. 6.02(g)-1
EXHIBIT 8.01
REPORT P-195 - DELINQUENCY REPORT
Exh. 8.01-1
EXHIBIT 9
FORM OF OFFICER'S CERTIFICATE
Exh. 9-1
EXHIBIT 10
FORM OF WARRANTY XXXX OF SALE
On this _______ day of ________, 200__, [PHH Mortgage Corporation]
[Xxxxxx'x Gate Residential Mortgage Trust] ("Seller") as the Seller under that
certain Third Amended and Restated Mortgage Loan Flow Purchase, Sale & Servicing
Agreement, dated as of January 1, 2006 (the "Agreement") does hereby sell,
transfer, assign, set over and convey to [______________] as Purchaser under the
Agreement, without recourse, but subject to the terms of the Agreement, all
rights, title and interest of the Seller in and to the Mortgage Loans listed on
the Mortgage Loan Schedule attached hereto, together with the related Mortgage
Files and all rights and obligations arising under the documents contained
therein. Pursuant to Section 2.01 of the Agreement, the Seller has delivered to
the Purchaser or its custodian the Legal Documents for each Mortgage Loan to be
purchased as set forth in the Agreement. The contents of each related Mortgage
File required to be retained by PHH Mortgage Corporation ("PHH Mortgage") to
service the Mortgage Loans pursuant to the Agreement and thus not delivered to
the Purchaser are and shall be held in trust by PHH Mortgage for the benefit of
the Purchaser as the owner thereof. PHH Mortgage's possession of any portion of
each such Mortgage File is at the will of the Purchaser for the sole purpose of
facilitating servicing of the related Mortgage Loan pursuant to the Agreement,
and such retention and possession by PHH Mortgage shall be in a custodial
capacity only. The ownership of each Mortgage Note, Mortgage, and the contents
of the Mortgage File and Mortgage File is vested in the Purchaser and the
ownership of all records and documents with respect to the related Mortgage Loan
prepared by or which come into the possession of PHH Mortgage shall immediately
vest in the Purchaser and shall be retained and maintained, in trust, by PHH
Mortgage at the will of the Purchaser in such custodial capacity only.
The Seller confirms to the Purchaser that the representations and
warranties set forth in Sections 3.01, 3.02 and 3.03 of the Agreement are true
and correct as of the date hereof, and that all statements made in the Sellers'
Officer's Certificate and all attachments thereto remain complete, true and
correct in all respects as of the date hereof.
Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Agreement.
Exh. 10-1
[PHH MORTGAGE CORPORATION]
[XXXXXX'X GATE RESIDENTIAL
MORTGAGE TRUST]
(Seller)
By:__________________________________
Name:
Title:
-2-
EXHIBIT 11
FORM OF XXXXXXXX-XXXXX CERTIFICATION
Re: The [ ] agreement dated as of [ ], 200[ ] (the "Agreement"), among
[IDENTIFY PARTIES]
I, ________________________________, the _______________________ of
[NAME OF COMPANY], certify to [the Purchaser], [the Depositor], and the [Master
Servicer] [Securities Administrator] [Trustee], and their officers, with the
knowledge and intent that they will rely upon this certification, that:
1. I have reviewed the servicer compliance statement of the Company
provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"), the report on assessment of the Company's compliance with the
servicing criteria set forth in Item 1122(d) of Regulation AB (the
"Servicing Criteria"), provided in accordance with Rules 13a-18 and 15d-18
under Securities Exchange Act of 1934, as amended (the "Exchange Act") and
Item 1122 of Regulation AB (the "Servicing Assessment"), the registered
public accounting firm's attestation report provided in accordance with
Rules 13a-18 and 15d-18 under the Exchange Act and Section 1122(b) of
Regulation AB (the "Attestation Report"), and all servicing reports,
officer's certificates and other information relating to the servicing of
the Mortgage Loans by the Company during 200[ ] that were delivered by the
Company to the [Depositor] [Master Servicer] [Securities Administrator]
[Trustee] pursuant to the Agreement (collectively, the "Company Servicing
Information");
2. Based on my knowledge, the Company Servicing Information, taken
as a whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in
the light of the circumstances under which such statements were made, not
misleading with respect to the period of time covered by the Company
Servicing Information;
3. Based on my knowledge, all of the Company Servicing Information
required to be provided by the Company under the Agreement has been
provided to the [Depositor] [Master Servicer] [Securities Administrator]
[Trustee];
4. I am responsible for reviewing the activities performed by the
Company as servicer under the Agreement, and based on my knowledge and the
compliance review conducted in preparing the Compliance Statement and
except as disclosed in the Compliance Statement, the Servicing Assessment
or the Attestation Report, the Company has fulfilled its obligations under
the Agreement in all material respects; and
5. The Compliance Statement required to be delivered by the Company
pursuant to the Agreement, and the Servicing Assessment and Attestation
Report required to be provided by the Company and by any Subservicer or
Subcontractor pursuant to the Agreement, have been provided to the
[Depositor] [Master Servicer]. Any material instances of noncompliance
described in such reports have been disclosed to the
Xxx. 00-0
[Xxxxxxxxx] [Master Servicer]. Any material instance of noncompliance with
the Servicing Criteria has been disclosed in such reports.
Date:________________________________
By:__________________________________
Name:
Title:
Exh. 11-2
EXHIBIT 12
PROCESS GUIDELINES
I. Contract
The Purchaser must provide the Company with an Assignment &
Assumption Agreement or similar notice with respect to a transfer to Xxxxxx Mae
no less than five (5) Business Days prior to the last Business Day of the month
of transfer. Such document will confirm that the Mortgage Loans will be serviced
in accordance with the Xxxxxx Xxx Guide. Such document must also confirm that
Mortgage Loans were sold to Xxxxxx Mae under the special servicing option.
II. Requirements for Xxxxxx Xxx sales
A. The Servicing Fee less the Xxxxxx Mae guaranty fee (the "Net
Servicing Fee") under the Xxxxxx Xxx sale must be equal to or
greater than the current Servicing Fee being paid to the Servicer by
the Purchaser. Should the Net Servicing Fee exceed the current
Servicing Fee, any excess will be retained by the Servicer.
B. Preparation and recording of any Assignments of Mortgage with
respect to the Mortgage Loans, other than as required by the
underlying Purchase, Sale & Servicing Agreement, will be the
responsibility of the Purchaser.
C. Information required to transfer the loans into Xxxxxx Mae must be
received no less than five (5) Business Days prior to the last
Business Day of the transaction month.
D. Information regarding the transfer of the loans must be in an Excel
file format with the following data fields:
(i) servicer number; (ii) PHH Mortgage loan number; (iii) balance
sold to Xxxxxx Xxx; (iv) Pass-through rate; (v) interest rate; (vi)
interest rate net of the servicing fee rate and guarantee fee rate;
(vii) Xxxxxx Mae loan number; (viii) contract or pool number; (ix)
if the transaction is an "actual/actual" sale - contract number; and
(x) if the transaction is an "actual/actual" sale - date of first
payment to Xxxxxx Xxx.
E. Balances must be verified with the Servicer before any Mortgage Loan
is sold to Xxxxxx Mae.
F. The servicer number used to deliver any Mortgage Loan to Xxxxxx Xxx
must be approved by the Servicer before such Mortgage Loan is sold.
The Servicer will assess a $500 correction penalty for each pool
sold under a different seller/servicer number than what was
provided.
Xxx. 00-0
X. Final purchase advices and/or the 2006 forms must be received by the
Servicer prior to the last Business Day of the transaction month.
H. Purchaser must provide name and contact information of individual
authorized to discuss the sale terms. Investor name and broker names
need to be provided to the Servicer.
III. Fees
Should the Purchaser sell loans to Xxxxxx Mae or Xxxxxxx Mac
(standard, not REMIC), an additional setup fee may be charged. The Servicer will
establish one investor number on each of the Servicer's related Alltel clients
for the those Mortgage Loans sold by Purchaser to Xxxxxx Mae.
IV. Process Guidelines
A. Monthly reporting to the Purchaser on the status of loans will be
limited to existing Alltel delinquency and trial balance reports.
Reports will be as of each month-end and will be provided to the
Purchaser no later than the twenty (20) days following the related
month-end. The Purchaser will provide contact information for
monthly reporting, repurchase funding and claim settlement
processes.
B. For any Mortgage Loans required to be repurchased by the Purchaser
from Xxxxxx Xxx due to mortgagor credit defaults (rather than
administrative, legal or documentation issues), the Servicer will
notify the Purchaser of the total amount due to Xxxxxx Mae for the
Mortgage Loan to be repurchased no later than the 3rd Business Day
prior to the end of the month of repurchase. The Purchaser will
remit same amount, plus a $100 repurchase processing fee to the
Servicer no later than the last Business Day of the repurchase
month. A late remittance penalty of prime + 2% will be assessed from
the date such remittance was due through the date such remittance
was actually made.
C. Wiring instructions for repurchases by the Purchaser:
[ ]
Account Number: [ ]
Account Name: [ ]
ATTN: [ ], Xxxxxx Xxx
Telephone: [ ]
D. An additional investor number will be established for Mortgage Loans
repurchased by the Purchaser. Such investor number will be
actual/actual remittance with month-end cutoff. Reports and
remittances will be due on the tenth calendar day of each month.
Exh. 12-2
EXHIBIT 13
FORM OF INDEMNIFICATION AND CONTRIBUTION AGREEMENT
This INDEMNIFICATION AND CONTRIBUTION AGREEMENT ("Agreement"), dated
as of [_______], 200_, among [________________] (the "Depositor"), a
[______________] corporation (the "Depositor"), Xxxxxx Xxxxxxx Mortgage Capital
Inc., a New York corporation ("Xxxxxx") and [_____________], a [_______________]
(the "Seller").
W I T N E S S E T H:
--------------------
WHEREAS, the Depositor is acting as depositor and registrant with
respect to the Prospectus, dated [________________], and the Prospectus
Supplement to the Prospectus, [________________] (the "Prospectus Supplement"),
relating to [________________] Certificates (the "Certificates") to be issued
pursuant to a Pooling and Servicing Agreement, dated as of [________________]
(the "P&S"), among the Depositor, as depositor, [________________], as servicer
(the "Servicer"), and [________________], as trustee (the "Trustee");
WHEREAS, as an inducement to the Depositor to enter into the P&S,
and [____________________] (the "Underwriter[s]") to enter into the Underwriting
Agreement, dated [____________________] (the "Underwriting Agreement"), between
the Depositor and the Underwriter[s], and [_______________] (the "Initial
Purchaser[s]") to enter into the Certificate Purchase Agreement, dated
[____________] (the "Certificate Purchase Agreement"), between the Depositor and
the Initial Purchaser[s], Seller has agreed to provide for indemnification and
contribution on the terms and conditions hereinafter set forth;
WHEREAS, Xxxxxx purchased from Seller certain of the Mortgage Loans
underlying the Certificates (the "Mortgage Loans") pursuant to a Third Amended
and Restated Flow Purchase, Sale and Servicing Agreement, dated as of [DATE]
(the "Sale and Servicing Agreement"), by and between Xxxxxx and Seller; and
WHEREAS, pursuant to Subsection 3.05 of the Sale and Servicing
Agreement, the Seller has agreed to indemnify the Depositor, Xxxxxx, the
Underwriter[s], the Initial Purchaser[s] and their respective affiliates,
present and former directors, officers, employees and agents.
NOW THEREFORE, in consideration of the agreements contained herein,
and other valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the Depositor, Xxxxxx and the Seller agree as follows:
1. Indemnification and Contribution.
(a)______The Seller agrees to indemnify and hold harmless the
Depositor, Xxxxxx, the Underwriter[s], the Initial Purchaser[s] and their
respective affiliates and their respective present and former directors,
officers, employees and agents and each person, if any, who
Exh. 13-1
controls the Depositor, Xxxxxx, the Underwriter[s] , the Initial Purchaser[s] or
such affiliate within the meaning of either Section 15 of the Securities Act of
1933, as amended (the "1933 Act"), or Section 20 of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the 1933 Act, the 1934 Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based in whole or in part upon any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus Supplement, the
Offering Circular, the ABS Informational and Computational Materials or in the
Free Writing Prospectus or any omission or alleged omission to state in the
Prospectus Supplement, the Offering Circular, the ABS Informational and
Computational Materials or in the Free Writing Prospectus a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any such
untrue statement or omission or alleged untrue statement or alleged omission
made in any amendment of or supplement to the Prospectus Supplement, the
Offering Circular, the ABS Informational and Computational Materials or the Free
Writing Prospectus and agrees to reimburse the Depositor, Xxxxxx, the
Underwriter[s], the Initial Purchaser[s] or such affiliates and each such
officer, director, employee, agent and controlling person promptly upon demand
for any legal or other expenses reasonably incurred by any of them in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that Seller shall be liable in any such case only to the extent that
any such loss, claim, damage, liability or action arises out of, or is based
upon, any untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with the Seller Information.
The foregoing indemnity agreement is in addition to any liability which Seller
may otherwise have to the Depositor, Xxxxxx, the Underwriter[s], the Initial
Purchaser[s] their affiliates or any such director, officer, employee, agent or
controlling person of the Depositor, Xxxxxx, the Underwriter[s], the Initial
Purchaser[s] or their respective affiliates.
As used herein:
"Seller Information" means any information relating to Seller, the
Mortgage Loans and/or the underwriting guidelines relating to the Mortgage Loans
set forth in the Prospectus Supplement, the Offering Circular, the ABS
Informational and Computational Materials or the Free Writing Prospectus [and
static pool information regarding mortgage loans originated or acquired by the
Seller [and included in the Prospectus Supplement, the Offering Circular, the
ABS Informational and Computational Materials or the Free Writing Prospectus]
[incorporated by reference from the website located at ______________].
"Free Writing Prospectus" means any written communication that
constitutes a "free writing prospectus," as defined in Rule 405 under the 1933
Act.
"ABS Informational and Computational Material" means any written
communication as defined in Item 1101(a) of Regulation AB under the 1933 Act and
the 1934 Act, as amended from time to time.
"Offering Circular" means the offering circular, dated [__________]
relating to the private offering of the [_______________] Certificates.
Exh. 13-2
(b)______Promptly after receipt by any indemnified party under this
Section 1 of notice of any claim or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 1, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 1 except to the extent it has
been materially prejudiced by such failure; and provided, further, however, that
the failure to notify any indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 1.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, except as provided in
the following paragraph, the indemnifying party shall not be liable to the
indemnified party under this Section 1 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
necessary or appropriate for such indemnified party to employ separate counsel;
or (iii) the indemnifying party has failed to assume the defense of such action
and employ counsel reasonably satisfactory to the indemnified party, in which
case, if such indemnified party notifies the indemnifying party in writing that
it elects to employ separate counsel at the expense of the indemnifying party,
the indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to local counsel) at any time for all such indemnified parties.
Each indemnified party, as a condition of the indemnity agreements
contained in this Section 1, shall cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment.
Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and
Xxx. 00-0
expenses of counsel, the indemnifying party agrees that it shall be liable for
any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement.
(a) If the indemnification provided for in this Section 1 is
unavailable to an indemnified party, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities, in such proportion as is appropriate to reflect the relative fault
of the indemnifying party and the indemnified party, respectively, in connection
with the statements or omissions that result in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the indemnified party and indemnifying party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission and any other equitable considerations.
(b) The indemnity and contribution agreements contained in this
Section 1 and the representations and warranties set forth in Section 2 shall
remain operative and in full force and effect regardless of (i) any termination
of this Agreement, (ii) any investigation made by the Depositor, Xxxxxx, the
Underwriter[s], the Initial Purchaser[s], their respective affiliates,
directors, officers, employees or agents or any person controlling the
Depositor, Xxxxxx, the Underwriter[s], the Initial Purchaser[s] or any such
affiliate, and (iii) acceptance of and payment for any of the Offered
Certificates or Private Certificates.
2. Representations and Warranties. Seller represents and warrants
that:
(i) Seller is validly existing and in good standing under the laws
of its jurisdiction of formation or incorporation, as applicable, and has
full power and authority to own its assets and to transact the business in
which it is currently engaged. Seller is duly qualified to do business and
is in good standing in each jurisdiction in which the character of the
business transacted by it or any properties owned or leased by it requires
such qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets or condition
(financial or otherwise) of Seller;
(ii) Seller is not required to obtain the consent of any other
person or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity
or enforceability of this Agreement;
(iii) the execution, delivery and performance of this Agreement by
Seller will not violate any provision of any existing law or regulation or
any order decree of any court applicable to Seller or any provision of the
charter or bylaws of Seller, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which Seller is a
party or by which it may be bound;
Exh. 13-4
(iv) (a) no proceeding of or before any court, tribunal or
governmental body is currently pending or, (b) to the knowledge of Seller,
threatened against Seller or any of its properties or with respect to this
Agreement or the Offered Certificates, in either case, which would have a
material adverse effect on the business, properties, assets or condition
(financial or otherwise) of Seller;
(v) Seller has full power and authority to make, execute, deliver
and perform this Agreement and all of the transactions contemplated
hereunder, and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement. When executed and
delivered, this Agreement will constitute the legal, valid and binding
obligation of each of Seller enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally, by the availability of equitable remedies,
and by limitations of public policy under applicable securities law as to
rights of indemnity and contribution thereunder; and
(vi) this Agreement has been duly executed and delivered by Seller.
3. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to Seller, will be mailed, delivered or
faxed or emailed and confirmed by mail [______________________]; if sent to
Xxxxxx, xxxx be mailed, delivered or faxed or emailed and confirmed by mail to
Xxxxxx Xxxxxxx Mortgage Capital Inc., 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxx Xxxxxxxxxx - Whole Loans Operations Manager, Fax: [_______],
Email: xxxxx.xxxxxxxxxx@xxxxxxxxxxxxx.xxx, with copies to (i) Xxxxxxxx Xxxxx,
Xxxxxx Xxxxxxx - Legal Counsel, Securities, Xxxxxx Xxxxxxx, 0000 Xxxxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Fax [_____], Email:
xxxxxxxx.xxxxx@xxxxxxxxxxxxx.xxx, and (ii) Xxxxxx Xxxxxxx, Xxxxxx Xxxxxxx - SPG
Finance, Xxxxxx Xxxxxxx, 0000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Fax [_____],Email: xxxxxx.xxxxxxx@xxxxxxxxxxxxx.xxx; if to the Depositor, will
be mailed, delivered or telegraphed and confirmed to [____________________]; or
if to the Underwriter[s], will be mailed, delivered or telegraphed and confirmed
to [_____________________]; or if to the Initial Purchaser[s], will be mailed,
delivered or telegraphed and confirmed to [---------------------].
4. Miscellaneous. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without giving effect to
the conflict of laws provisions thereof. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their successors and
assigns and the controlling persons referred to herein, and no other person
shall have any right or obligation hereunder. Neither this Agreement nor any
term hereof may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought. This Agreement may be
executed in counterparts, each of which when so executed and delivered shall be
considered an original, and all such counterparts shall constitute one and the
same instrument. Capitalized terms used but not defined herein shall have the
meanings provided in the P&S.
[SIGNATURE PAGE FOLLOWS]
Exh. 13-5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers hereunto duly authorized, this
__th day of [_____________].
[DEPOSITOR]
By:__________________________________
Name:
Title:
XXXXXX XXXXXXX MORTGAGE CAPITAL INC.
By:__________________________________
Name:
Title:
[SELLER]
By:__________________________________
Name:
Title:
Xxx. 00-0
XXXXXXX 00
XXXXXXXXX XXXXXXXX TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by [the SELLER] [Name
of Subservicer] shall address, at a minimum, the criteria identified as below as
"Applicable Servicing Criteria":
--------------------------- --------------------------------------------------------------------------- ---------------------------
Applicable
Servicing Criteria Servicing Criteria
--------------------------- --------------------------------------------------------------------------- ---------------------------
Reference Criteria
--------------------------- --------------------------------------------------------------------------- ---------------------------
General Servicing Considerations
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(1)(i) Policies and procedures are instituted to monitor any performance or
other triggers and events of default in accordance with the transaction
agreements.
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(1)(ii) If any material servicing activities are outsourced to third parties,
policies and procedures are instituted to monitor the third party's
performance and compliance with such servicing activities.
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(1)(iii) Any requirements in the transaction agreements to maintain a back-up
servicer for the mortgage loans are maintained.
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(1)(iv) A fidelity bond and errors and omissions policy is in effect on the party
participating in the servicing function throughout the reporting period
in the amount of coverage required by and otherwise in accordance with
the terms of the transaction agreements.
--------------------------- --------------------------------------------------------------------------- ---------------------------
Cash Collection and Administration
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(2)(i) Payments on mortgage loans are deposited into the appropriate custodial
bank accounts and related bank clearing accounts no more than two
business days following receipt, or such other number of days specified
in the transaction agreements.
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(2)(ii) Disbursements made via wire transfer on behalf of an obligor
or to an investor are made only by authorized personnel.
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(2)(iii) Advances of funds or guarantees regarding collections, cash flows or
distributions, and any interest or other fees charged for such advances,
are made, reviewed and approved as specified in the transaction
agreements.
--------------------------- --------------------------------------------------------------------------- ---------------------------
Exh. 14-1
--------------------------- --------------------------------------------------------------------------- ---------------------------
Applicable
Servicing Criteria Servicing Criteria
--------------------------- --------------------------------------------------------------------------- ---------------------------
Reference Criteria
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(2)(iv) The related accounts for the transaction, such as cash reserve accounts
or accounts established as a form of overcollateralization, are
separately maintained (e.g., with respect to commingling of cash) as set
forth in the transaction agreements.
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(2)(v) Each custodial account is maintained at a federally insured depository
institution as set forth in the transaction agreements. For purposes of
this criterion, "federally insured depository institution" with respect
to a foreign financial institution means a foreign financial institution
that meets the requirements of Rule 13k-1(b)(1) of the Securities
Exchange Act.
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent unauthorized access.
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(2)(vii) Reconciliations are prepared on a monthly basis for all asset-backed
securities related bank accounts, including custodial accounts and
related bank clearing accounts. These reconciliations are (A)
mathematically accurate; (B) prepared within 30 calendar days after the
bank statement cutoff date, or such other number of days specified in the
transaction agreements; (C) reviewed and approved by someone other than
the person who prepared the reconciliation; and (D) contain explanations
for reconciling items. These reconciling items are resolved within 90
calendar days of their original identification, or such other number of
days specified in the transaction agreements.
--------------------------- --------------------------------------------------------------------------- ---------------------------
Investor Remittances and Reporting
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(3)(i) Reports to investors, including those to be filed with the Commission,
are maintained in accordance with the transaction agreements and
applicable Commission requirements. Specifically, such reports (A) are
prepared in accordance with timeframes and other terms set forth in the
transaction agreements; (B) provide information calculated in accordance
with the terms specified in the transaction agreements; (C) are filed
with the Commission as required by its rules and regulations; and (D)
agree with investors' or the trustee's records as to the total unpaid
principal balance and number of mortgage loans serviced by the Servicer.
--------------------------- --------------------------------------------------------------------------- ---------------------------
Exh. 14-2
--------------------------- --------------------------------------------------------------------------- ---------------------------
Applicable
Servicing Criteria Servicing Criteria
--------------------------- --------------------------------------------------------------------------- ---------------------------
Reference Criteria
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(3)(ii) Amounts due to investors are allocated and remitted in accordance with
timeframes, distribution priority and other terms set forth in the
transaction agreements.
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(3)(iii) Disbursements made to an investor are posted within two business days to
the Servicer's investor records, or such other number of days specified
in the transaction agreements.
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(3)(iv) Amounts remitted to investors per the investor reports agree with
cancelled checks, or other form of payment, or custodial bank statements.
--------------------------- --------------------------------------------------------------------------- ---------------------------
Pool Asset Administration
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(4)(i) Collateral or security on mortgage loans is maintained as required by the
transaction agreements or related mortgage loan documents.
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(4)(ii) Mortgage loan and related documents are safeguarded as required by the
transaction agreements
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(4)(iii) Any additions, removals or substitutions to the asset pool are made,
reviewed and approved in accordance with any conditions or requirements
in the transaction agreements.
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(4)(iv) Payments on mortgage loans, including any payoffs, made in accordance
with the related mortgage loan documents are posted to the Servicer's
obligor records maintained no more than two business days after receipt,
or such other number of days specified in the transaction agreements, and
allocated to principal, interest or other items (e.g., escrow) in
accordance with the related mortgage loan documents.
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(4)(v) The Servicer's records regarding the mortgage loans agree with the
Servicer's records with respect to an obligor's unpaid principal balance.
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(4)(vi) Changes with respect to the terms or status of an obligor's mortgage
loans (e.g., loan modifications or re-agings) are made, reviewed and
approved by authorized personnel in accordance with the transaction
agreements and related pool asset documents.
--------------------------- --------------------------------------------------------------------------- ---------------------------
Exh. 14-3
--------------------------- --------------------------------------------------------------------------- ---------------------------
Applicable
Servicing Criteria Servicing Criteria
--------------------------- --------------------------------------------------------------------------- ---------------------------
Reference Criteria
--------------------------- --------------------------------------------------------------------------- ---------------------------
1122(d)(4)(vii) Loss mitigation or recovery actions (e.g., forbearance plans,
modifications and deeds in lieu of foreclosure, foreclosures and
repossessions, as applicable) are initiated, conducted and concluded in
accordance with the timeframes or other requirements established by the
transaction agreements.
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1122(d)(4)(viii) Records documenting collection efforts are maintained during the period a
mortgage loan is delinquent in accordance with the transaction
agreements. Such records are maintained on at least a monthly basis, or
such other period specified in the transaction agreements, and describe
the entity's activities in monitoring delinquent mortgage loans
including, for example, phone calls, letters and payment rescheduling
plans in cases where delinquency is deemed temporary (e.g., illness or
unemployment).
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1122(d)(4)(ix) Adjustments to interest rates or rates of return for mortgage loans with
variable rates are computed based on the related mortgage loan documents.
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1122(d)(4)(x) Regarding any funds held in trust for an obligor (such as escrow
accounts): (A) such funds are analyzed, in accordance with the obligor's
mortgage loan documents, on at least an annual basis, or such other
period specified in the transaction agreements; (B) interest on such
funds is paid, or credited, to obligors in accordance with applicable
mortgage loan documents and state laws; and (C) such funds are returned
to the obligor within 30 calendar days of full repayment of the related
mortgage loans, or such other number of days specified in the transaction
agreements.
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1122(d)(4)(xi) Payments made on behalf of an obligor (such as tax or insurance payments)
are made on or before the related penalty or expiration dates, as
indicated on the appropriate bills or notices for such payments, provided
that such support has been received by the servicer at least 30 calendar
days prior to these dates, or such other number of days specified in the
transaction agreements.
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1122(d)(4)(xii) Any late payment penalties in connection with any payment to be made on
behalf of an obligor are paid from the servicer's funds and not charged
to the obligor, unless the late payment was due to the obligor's error or
omission.
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Exh. 14-4
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Applicable
Servicing Criteria Servicing Criteria
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Reference Criteria
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1122(d)(4)(xiii) Disbursements made on behalf of an obligor are posted within two business
days to the obligor's records maintained by the servicer, or such other
number of days specified in the transaction agreements.
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1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible accounts are recognized and
recorded in accordance with the transaction agreements.
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1122(d)(4)(xv) Any external enhancement or other support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation AB, is maintained as set forth in
the transaction agreements.
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[NAME OF SELLER] [NAME OF
SUBSERVICER]
Date:________________________________
By:__________________________________
Name:
Title:
Xxx. 00-0
